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Personal Finance
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This interconnectedness has even hit high-quality corporate and mortgage bonds, which are traditionally expected to hold up when stocks decline. Recently, investors have fled various types of bonds to seek the safety of U.S. Treasurys, hurting the liquidity and prices of other bonds. The average intermediate-term bond fund, which typically invests a majority of its money in high-quality bonds, was down 4.2% for the first nine months of 2008.
Separately, high-quality municipal-bond funds have been hurt partly because of worries about the financial strength of the bond insurers that back many muni bonds. The average municipal national intermediate fund is down 2.4% so far this year.
Investors in natural-resources and precious-metals funds have been whipsawed. These funds initially held up as the broad market declined. But in the past few months, these funds have fallen sharply as the prices of oil, gold and other commodities have fallen.
Natural-resources funds are down an average 22% so far in 2008 and precious-metals funds are down 26%. Advisers typically recommend only small investments in such funds.
The recent market volatility has provided a chance for investors to reassess whether they are comfortable with the amount of risk they are taking in their portfolios. Investment adviser Roger Gibson, of Wexford, Pa., says investors hardly think about risk when the stock market is doing well, and may even resist diversifying or putting money in bonds.
Now that the risk is staring investors in the face, they can re-examine whether they are "sleeping well at night," he says.
...
In reply to:
An Ugly Market`s Lessons for Investors
Posted by :
sambala
It`s been almost a year -- a long and painful year for investors -- since stock-market benchmarks including the Dow Jones Industrial Average hit record highs last Oct. 9. The stormy markets since then have caused much upheaval for mutual-fund investors, but also highlight important lessons.
Chief among them: Some supposedly safe investments aren`t as secure as investors thought. And diversification doesn`t always prevent losses in the short term.
Looking at the 12 months through Sept. 30, the Dow industrials fell 22% (before dividend income). Fund investors didn`t find many places to hide because almost all types of funds, including those which invest in bonds, precious-metals stocks and foreign stocks, were hit.
Very Few Winners
Of the 69 stock- and bond-fund categories tracked by research firm Morningstar, only eight had positive returns for the 12 months through September. These are funds which invest in U.S. bonds, short-term municipal bonds and -- the big winner, up 22% -- "bear market" funds which bet against the stock market.
Looking at 2008 to date, meanwhile, the average diversified U.S.-stock fund is down 20% through Sept. 30, according to Morningstar.
One of the biggest surprises this year came from problems with investments which were perceived to be safe. These include money-market funds, which strive to maintain a $1 share price, and ultrashort bond funds, which had been marketed as conservative investments which provide better yields than money funds.
Last month, a big money fund, the $62 billion Reserve Primary Fund, saw the value of its holdings fall to 97 cents a share, due to its investments in Lehman Brothers Holdings, which filed for bankruptcy protection. Concerned about a possible run on other money funds, the U.S. stepped in with a plan to temporarily back the funds.
Also in the past year, several ultrashort bond funds lost 10% to 30% of their value, because they were holding exotic investments which became hard to sell amid the credit crunch and which fell in price.
This reiterates the need for investors to pay attention to the risks of their investments, and not rely on what a broker or marketing material may describe as safe. Also, "it points to the risks of chasing yield," says Christine Benz, director of personal finance at Morningstar.
Reserve Primary Fund`s 12-month yield of 4.04% as of Aug. 31 was the highest among 2,100-plus money funds tracked by Morningstar -- far above the average 2.75%.
Ms. Benz says that if investors find that their money fund has higher than average yields, they should dig into what`s driving that. "If the expense ratio isn`t rock-bottom and yet the fund is at the top of the chart, that could be an indication" of higher risk, she says.
Limits of Diversification
One unsettling phenomenon this year has been that asset classes including stocks, bonds, commodities and real estate have all fallen, though to different degrees. Investors often figure that diversifying their holdings among various asset classes will make it less likely that their overall portfolio will post a loss.
Sometimes in down markets, "in the short term, diversification doesn`t work," says Ross Levin, a financial adviser in Edina, Minn.
In the long run, however, asset classes don`t stay highly correlated, he says. Thus, investors are best served by sticking to their long-term asset allocation plan, even if it doesn`t seem to be working in the short run.
The worst-performing fund categories so far in 2008 are those that invest in foreign stocks, especially the more risky emerging markets. Stock funds that invest in Asia excluding Japan -- a category that includes funds that focus only on China or India -- are down an average 43% through Sept. 30. This is a sharp reversal from last year, when these funds topped the charts with an average return of 48%.
Not Immune to U.S. Pain
When economic problems began in the U.S. last year, many observers thought they wouldn`t much impact countries like China and India, which had rapid domestic economic growth. But it turns out that these countries, too, are being impacted by a global slowdown. That spillover effect, combined with withdrawals from these markets by increasingly risk-averse investors, has sent these markets crashing.
"Globalization and other factors have led to much more interconnectedness in the financial markets," says Kurt Brouwer, a financial planner in Tiburon, Calif.
Cont..... 
Tracked by: 0 Boarder
It`s been almost a year -- a long and painful year for investors -- since stock-market benchmarks including the Dow Jones Industrial Average hit record highs last Oct. 9. The stormy markets since then have caused much upheaval for mutual-fund investors, but also highlight important lessons.
Chief among them: Some supposedly safe investments aren`t as secure as investors thought. And diversification doesn`t always prevent losses in the short term.
Looking at the 12 months through Sept. 30, the Dow industrials fell 22% (before dividend income). Fund investors didn`t find many places to hide because almost all types of funds, including those which invest in bonds, precious-metals stocks and foreign stocks, were hit.
Very Few Winners
Of the 69 stock- and bond-fund categories tracked by research firm Morningstar, only eight had positive returns for the 12 months through September. These are funds which invest in U.S. bonds, short-term municipal bonds and -- the big winner, up 22% -- "bear market" funds which bet against the stock market.
Looking at 2008 to date, meanwhile, the average diversified U.S.-stock fund is down 20% through Sept. 30, according to Morningstar.
One of the biggest surprises this year came from problems with investments which were perceived to be safe. These include money-market funds, which strive to maintain a $1 share price, and ultrashort bond funds, which had been marketed as conservative investments which provide better yields than money funds.
Last month, a big money fund, the $62 billion Reserve Primary Fund, saw the value of its holdings fall to 97 cents a share, due to its investments in Lehman Brothers Holdings, which filed for bankruptcy protection. Concerned about a possible run on other money funds, the U.S. stepped in with a plan to temporarily back the funds.
Also in the past year, several ultrashort bond funds lost 10% to 30% of their value, because they were holding exotic investments which became hard to sell amid the credit crunch and which fell in price.
This reiterates the need for investors to pay attention to the risks of their investments, and not rely on what a broker or marketing material may describe as safe. Also, "it points to the risks of chasing yield," says Christine Benz, director of personal finance at Morningstar.
Reserve Primary Fund`s 12-month yield of 4.04% as of Aug. 31 was the highest among 2,100-plus money funds tracked by Morningstar -- far above the average 2.75%.
Ms. Benz says that if investors find that their money fund has higher than average yields, they should dig into what`s driving that. "If the expense ratio isn`t rock-bottom and yet the fund is at the top of the chart, that could be an indication" of higher risk, she says.
Limits of Diversification
One unsettling phenomenon this year has been that asset classes including stocks, bonds, commodities and real estate have all fallen, though to different degrees. Investors often figure that diversifying their holdings among various asset classes will make it less likely that their overall portfolio will post a loss.
Sometimes in down markets, "in the short term, diversification doesn`t work," says Ross Levin, a financial adviser in Edina, Minn.
In the long run, however, asset classes don`t stay highly correlated, he says. Thus, investors are best served by sticking to their long-term asset allocation plan, even if it doesn`t seem to be working in the short run.
The worst-performing fund categories so far in 2008 are those that invest in foreign stocks, especially the more risky emerging markets. Stock funds that invest in Asia excluding Japan -- a category that includes funds that focus only on China or India -- are down an average 43% through Sept. 30. This is a sharp reversal from last year, when these funds topped the charts with an average return of 48%.
Not Immune to U.S. Pain
When economic problems began in the U.S. last year, many observers thought they wouldn`t much impact countries like China and India, which had rapid domestic economic growth. But it turns out that these countries, too, are being impacted by a global slowdown. That spillover effect, combined with withdrawals from these markets by increasingly risk-averse investors, has sent these markets crashing.
"Globalization and other factors have led to much more interconnectedness in the financial markets," says Kurt Brouwer, a financial planner in Tiburon, Calif.
Cont........
Tracked by: 0 Boarder
Stock market can be an ideal vehicle towards wealth creation, but the same can be really hazardous if you venture into its treacherous waters without any strategy in place....
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khilji,
I think my hubby was afraid of my rash driving and bought lots of insurance. lol lol... now whats to be done, i am wondering if i should redeem them.. will they give loans against insurance so i can pay back the loan itself when stocks move up..... pss5588 too was mentoining the same thing....
In reply to:
Investment costs
Posted by :
m_i_khilji
Dear radhika_nandlal,
Investment and Insurance are two completely different things.
One should not consider insurance policies as investment. Rather, one should go for top rated mutual funds, if looking for investment (for retirement, child`s marriage and/or education) etc.
Tracked by: 0 Boarder
Dear radhika_nandlal,
Investment and Insurance are two completely different things.
One should not consider insurance policies as investment. Rather, one should go for top rated mutual funds, if looking for investment (for retirement, child`s marriage and/or education) etc....
In reply to:
Investment costs
Posted by : radhika_nandlal
Okay winwath... will take a look, thanks for the info. Abroad the insurance covers docs fee but here its impossible to find such a medical cover. However thanks and yes the returns are a dismal 2-5% and i feel investing in insurance is a waste... one should periodically redeem and reneter there too. LOL
Tracked by: 0 Boarder
Okay winwath... will take a look, thanks for the info. Abroad the insurance covers docs fee but here its impossible to find such a medical cover. However thanks and yes the returns are a dismal 2-5% and i feel investing in insurance is a waste... one should periodically redeem and reneter there too. LOL...
In reply to:
Investment costs
Posted by : winwath
Suggest you take a look at Reliance`s major medical plan - Cost about 6K for my wifey and two kids - covers only hospitalization.
We write a check to the doctor or casual visits. A portion of this is deducted from our taxable income
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How far it is advisable to invest in ELSS in the present market condition ?...
In reply to:
Can it get any WORSE - Global Meltdown !
Posted by : DUstocks
At this point it`s pretty foolish to rule anything out, including the possibility of a crash - if there is anything more left to it yet !
Possibly the only thing to be optimistic about is that it`s always darkest before the dawn and it`s ALREADY very dark right now. I can hardly see anything beyond !
Tracked by: 0 Boarder
Dear Guest
Out of 4 funds in ur portfolio two are infrastructure funds - ICICI Pru Infrs and DSPML TIGER. You better switch from DSPML TIGER to DSPML Top 100, a large cap fund and very consistent n performance. rest all are good funds. Just stay invested. In fact invest more if possible in these funds in this bearish phase. have patience, you will bear the fruit.
regds
Ashport...
In reply to:
Do I need to switch
Posted by : Guest
I have SBI Unbrella Contra, DSPML Tiger, Fidelity Equity, ICICI Pru Infrastructure and all are Growth funds. I am holding for last 3 years and invested via SIPS. Now all gains are nearly wiped out. Should I continue or switch ? I find the
Tracked by: 0 Boarder
Suggest you take a look at Reliance`s major medical plan - Cost about 6K for my wifey and two kids - covers only hospitalization.
We write a check to the doctor or casual visits. A portion of this is deducted from our taxable income
...
In reply to:
Investment costs
Posted by : radhika_nandlal
pcspune,
My hubby i feel bought a dumb insurance policy going by the name Jeevan Dhara... when i looked into its scheme i got the shock of my life.. no lump sum payment to my kids on my death and no lump sum payment to me when i am alive. Whats the use of such a policy and i dont understand how my hubby so shortsighted to buy this.. The details of the policy are
Jeevan Dhara plan
Term 15 years
notional cash option Rs 20 lakhs
Amount of annual annuity 2L
Is this a pension plan as i dont see anywhere mention of a bulk amount payable to me I am really not keen on pension plans as i would like to have bulk money.
Would you kindly recommedna health insurance for me, i dont have one as of now and i am 46 years old in good health wiht no BP or sugar or any chronic problems.
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This is a deffered annuity plan. Premium paid along with interest (which is pathetic) 3% if death occurs within 10yrs or 4% within 20yrs and 5% thereafter.
Premiums are discontinued in case of death of the insured. The annuity however will pay for the term assured.
A max of 25% of premium due can be collected lumpsum - tax free.
If this is not in force too long and you pay premiums monthly - discontinue and get a term life insurance
For a healthy 30 yr old male - the term ins for an amount of 30 lakhs is less than 20K per year.
Term life pays benefits only in case of death before the term expire. There is no cash value at the end of the term....
In reply to:
Investment costs
Posted by : radhika_nandlal
pcspune,
My hubby i feel bought a dumb insurance policy going by the name Jeevan Dhara... when i looked into its scheme i got the shock of my life.. no lump sum payment to my kids on my death and no lump sum payment to me when i am alive. Whats the use of such a policy and i dont understand how my hubby so shortsighted to buy this.. The details of the policy are
Jeevan Dhara plan
Term 15 years
notional cash option Rs 20 lakhs
Amount of annual annuity 2L
Is this a pension plan as i dont see anywhere mention of a bulk amount payable to me I am really not keen on pension plans as i would like to have bulk money.
Would you kindly recommedna health insurance for me, i dont have one as of now and i am 46 years old in good health wiht no BP or sugar or any chronic problems.
Tracked by: 0 Boarder
Dear Sharmaji,
Thanks for throwing light on the subject. If, as you said, all Mutual Fund companies start offering Insurance covers, it will be great for Investors. I hope it happens soon.
Regards,
Srikanth shankar Matrubai
...
In reply to:
Fund houses to scrap insurance cum MF products
Posted by : pcspune
Dear Shrikant,
IRDA has no authority to BAN or ALLOW Mutual Fund Houses to offer Free Life Insurance Covers to MF Investors because Group Insurance is offered by IRDA Approved Insurance Companies ( which happens to be SISTER CONCERNS of MF HOUSES).
The Decision to Discontinue the FREE Life Insurance cover was taken by Life Insurance COUNCIL which is a sort of UNION / ASSOCIATION of ALL INSURANCE Companies.
I Expect that in future other MF Companies like HDFC,SBI,HSBC, ICICI,
Canbank, Bharti AXA, TATA, SAHARA etc. may also offer FREE Life Insurance Covers to MF SIP Investors.
This will be EXCELLENT for Future for GROWTH of Mutual Funds.
P.C.Sharma
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Dear SATIJA
In fact this is the most appropriate time to invest. The Great Indian Equity Sale is on. Just go on shopping spree. But choose the funds carefully. Better to invest in Large Cap oriented funds ( preferrably 5* or 4* valueresearch rated funds) and invest thru SIP only.Better to decide your asset allocation depending upon your investment goal, investment horizon and risk profil and stick to that.
Happy investing.
Regds
Ashport...
In reply to:
Investment in Mutual Funds & NFOs
Posted by :
SATIJA
Sir / Madam,
Is this the right time to investment through SIP in equity related / global market / commodity mutual funds keeping in mind the three years horizon. Kindly advise. P. Satija
Tracked by: 0 Boarder
Hi Ravinder,
The method you are asking is possible. I understand that you want to make multiple purchases (SIP across three dates of same month & same Fund).
Option 1: You can registered for multiple SIP based on the Dates, just filling out forms with reference to your existing folio number
Option 2: If not allowed with option 1 go for multipl folio numbers and you can later combine the folio..
Hope this helps..
Thanks..
Ramanatan S. Laksman...
In reply to:
Multiple SIP Help
Posted by : Guest
Hi All,
Please find the details as follows:
Age -- 24 years
No dependetns.
I new into investment world :)
PORTFOLIO:
1) DSPML TOP 100 Equity: One SIP Rs 1000 Monthly (First week of month).
Have executed three SIP till now.
2) Kotak Opportunities: One SIP Rs 1000 Monthly (First week of every month).
Have executed three SIP till now.
3) Pricipal personal tax saver: One SIP Rs 2000 monthly (First week of every month.)
Have executed three SIP till now.
4) Sundaram TAX Saver: One SIP Rs 1000 monthly (Last week of each month)
First SIP will be paid this month (October, 2008)
Now, my queries are:-
I want to have multiple SIPs (4 per month of Rs 500 each) in Principal persinal tax saver to average out the unit cost. I am investing through Kotak Securties so i have requeted them many times to arrange for such plan and they in turn reply me that it is not possible. They further suggest that i can go for PPT- Growth & PPT- Dividend with one SIP of Rs 1000 in each.
Please advise me how to go ahead with this.
Also I would like to know any recommendations/modifications for my above investment plan.
Thank you all for your valuable time
Regards,
Ravinder
Tracked by: 0 Boarder
Dear Radhika Nandlal,
I have not studied Jeevandhara & other Policies of LIC Except few ULIPS. Hence I can not comment on this.
Pension Plans should be Avoided due to Adverese Tax Laws & very LOW Returns of ANNUITY.
You may Discontinue Further Premium Payment after Carefully understanding Consequences & Possibility of Loss of Principal .
Equity Mutul Funds are the BEST Option. Invest by SIP & Opt for SWP after Retirement.
P.C.Sharma
...
In reply to:
Investment costs
Posted by : radhika_nandlal
pcspune,
My hubby i feel bought a dumb insurance policy going by the name Jeevan Dhara... when i looked into its scheme i got the shock of my life.. no lump sum payment to my kids on my death and no lump sum payment to me when i am alive. Whats the use of such a policy and i dont understand how my hubby so shortsighted to buy this.. The details of the policy are
Jeevan Dhara plan
Term 15 years
notional cash option Rs 20 lakhs
Amount of annual annuity 2L
Is this a pension plan as i dont see anywhere mention of a bulk amount payable to me I am really not keen on pension plans as i would like to have bulk money.
Would you kindly recommedna health insurance for me, i dont have one as of now and i am 46 years old in good health wiht no BP or sugar or any chronic problems.
Tracked by: 0 Boarder
Hi All,
Please find the details as follows:
Age -- 24 years
No dependetns.
I new into investment world :)
PORTFOLIO:
1) DSPML TOP 100 Equity: One SIP Rs 1000 Monthly (First week of month).
Have executed three SIP till now.
2) Kotak Opportunities: One SIP Rs 1000 Monthly (First week of every month).
Have executed three SIP till now.
3) Pricipal personal tax saver: One SIP Rs 2000 monthly (First week of every month.)
Have executed three SIP till now.
4) Sundaram TAX Saver: One SIP Rs 1000 monthly (Last week of each month)
First SIP will be paid this month (October, 2008)
Now, my queries are:-
I want to have multiple SIPs (4 per month of Rs 500 each) in Principal persinal tax saver to average out the unit cost. I am investing through Kotak Securties so i have requeted them many times to arrange for such plan and they in turn reply me that it is not possible. They further suggest that i can go for PPT- Growth & PPT- Dividend with one SIP of Rs 1000 in each.
Please advise me how to go ahead with this.
Also I would like to know any recommendations/modifications for my above investment plan.
Thank you all for your valuable time
Regards,
Ravinder...
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