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Ramalingam

Ramalingam Kalirajan  |7953 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 12, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - Jul 02, 2024Hindi
Money

Hello sir.I am 38 years, married and 1 child.Please help me with a good and wide coverage family health insurance policy.Also, shall I take a family or individual health insurance policy?? Kindly guide me on the same.I don't have any term insurance also.

Ans: Health and term insurance are crucial for financial security. Let's explore your options.

Understanding Health Insurance
Health insurance is vital for protecting your family's finances. It covers medical expenses and ensures you don't dip into savings. For a family of three, wide coverage is essential.

Family vs. Individual Health Insurance
Family Floater Policy
A family floater policy covers all members under one sum insured. This means if one member uses the coverage, the remaining sum is available for others. It’s cost-effective and easy to manage.

Individual Health Policy
An individual policy covers each family member separately. This ensures each person has a dedicated sum insured. While it can be more expensive, it guarantees full coverage for everyone.

Choosing the Right Health Insurance
Coverage Amount
For a family of three, consider a sum insured of at least Rs 10 lakhs. This covers hospitalisation, surgeries, and other medical expenses.

Comprehensive Coverage
Look for policies that cover pre and post-hospitalisation, ambulance charges, daycare treatments, and critical illnesses. Comprehensive policies provide peace of mind.

Network Hospitals
Check if the insurer has a wide network of hospitals, especially near your residence. Cashless treatment facilities make hospitalisation less stressful.

No Claim Bonus
Choose a policy that offers a No Claim Bonus. This increases your sum insured without additional premiums if you don't make any claims.

Additional Benefits to Consider
Maternity Coverage
If you plan to expand your family, consider a policy with maternity coverage. It should cover prenatal and postnatal expenses, delivery charges, and newborn care.

Preventive Health Check-ups
Some policies offer free annual health check-ups. This helps in early detection and prevention of diseases.

Critical Illness Rider
Critical illnesses can drain finances quickly. A rider covers diseases like cancer, heart attack, and stroke. It provides a lump sum amount on diagnosis, helping with treatment costs.

Term Insurance: Protecting Your Family’s Future
Importance of Term Insurance
Term insurance provides financial security to your family in your absence. It pays a lump sum to your beneficiaries if something happens to you. It's essential for safeguarding your family's future.

Choosing the Right Term Insurance
Sum Assured
Choose a sum assured that covers your family's expenses, outstanding loans, and future goals. Typically, 10-15 times your annual income is recommended.

Policy Tenure
Select a tenure that covers you until your major financial obligations are met. Ideally, this should be until your child's education or marriage is complete.

Riders for Enhanced Protection
Consider adding riders like accidental death, disability, and critical illness. These enhance the coverage and provide additional security.

Benefits of Mutual Funds
Mutual funds are excellent for wealth creation. They offer diversification, professional management, and potential for high returns.

Types of Mutual Funds
Equity Funds
Invest primarily in stocks. They offer high returns but come with higher risk. Suitable for long-term goals.

Debt Funds
Invest in fixed income securities like bonds. They are less risky and provide stable returns. Ideal for short to medium-term goals.

Hybrid Funds
Invest in both equity and debt. They balance risk and return, making them suitable for moderate risk-takers.

Power of Compounding
Investing in mutual funds harnesses the power of compounding. Reinvesting returns over time leads to exponential growth. Starting early maximises this benefit.

Disadvantages of Index Funds
Passive Management
Index funds are passively managed. They replicate a market index and do not attempt to outperform it. This limits potential returns.

No Active Strategy
Index funds lack active management strategies. They cannot adjust to market changes, potentially missing opportunities to maximise returns.

Benefits of Actively Managed Funds
Professional Management
Actively managed funds have experienced managers who make investment decisions. They aim to outperform the market by selecting high-potential stocks.

Flexibility
Managers can adjust portfolios based on market conditions. This flexibility can enhance returns and reduce risk.

Disadvantages of Direct Funds
Lack of Guidance
Direct funds require investors to manage their investments. Without professional guidance, making informed decisions can be challenging.

Limited Support
Direct investors may not have access to the same level of support as those using a Certified Financial Planner. This can impact portfolio performance.

Benefits of Investing Through a CFP
Expert Advice
CFPs provide expert advice tailored to your financial goals. They help you choose the right funds and create a diversified portfolio.

Regular Monitoring
CFPs monitor your investments regularly. They make adjustments based on market conditions and your changing needs.

Comprehensive Financial Planning
CFPs offer comprehensive financial planning. They consider your entire financial situation and create a plan to achieve your goals.

Final Insights
Choosing the right health and term insurance is crucial for your family's financial security. A family floater health policy is cost-effective and provides wide coverage. Ensure it has a sufficient sum insured and comprehensive coverage.

Term insurance safeguards your family's future. Choose a sum assured that covers your expenses and future goals. Adding riders enhances protection.

Investing in mutual funds is an excellent way to grow your wealth. Consider equity, debt, and hybrid funds based on your risk tolerance and goals. Actively managed funds offer professional management and flexibility.

Investing through a Certified Financial Planner provides expert advice and regular monitoring. They help you create a diversified portfolio and achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Asked by Anonymous - Feb 13, 2025Hindi
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Why do Debt Funds offer lower returns as compared to Equity Mutual Funds?
Ans: Debt funds and equity mutual funds serve different purposes in an investor's portfolio. Debt funds offer stability and lower risk, while equity mutual funds focus on high growth with higher risk.

Below are the key reasons why debt funds provide lower returns than equity funds.

1. Nature of Underlying Investments
Debt funds invest in bonds, government securities, corporate debt, and fixed-income instruments.

These instruments provide fixed interest, leading to predictable but lower returns.

Equity mutual funds invest in company stocks, which have the potential for higher capital appreciation over time.

2. Risk-Return Tradeoff
Lower risk means lower return potential in debt funds.

Debt investments focus on preserving capital rather than aggressive growth.

Equities are volatile, but over the long term, they tend to generate higher returns.

3. Interest Rate Sensitivity
Debt fund returns depend on interest rate movements in the economy.

Rising interest rates reduce bond prices, lowering returns in debt funds.

Equity funds are less impacted by interest rate changes and benefit from economic growth.

4. Inflation-Adjusted Returns
Debt funds often fail to beat inflation in the long run.

Equity investments provide inflation-adjusted growth due to rising corporate earnings.

Holding equities for longer durations results in compounding benefits.

5. Growth Potential
Equities represent ownership in businesses that expand over time.

Business growth translates to higher share prices and higher returns.

Debt instruments provide fixed interest, which limits potential upside.

6. Tax Efficiency
Equity mutual funds enjoy lower long-term capital gains (LTCG) tax rates compared to debt funds.

Debt fund gains are taxed as per the investor’s income tax slab, reducing post-tax returns.

This tax treatment makes equities more attractive for long-term wealth creation.

7. Market Performance
During economic growth, companies generate higher profits, leading to higher equity returns.

Debt fund returns depend on interest rate cycles, making them less rewarding in growth periods.

Equities have historically outperformed debt over longer durations.

Finally
Debt funds provide safety and stability but offer lower returns.

Equity mutual funds outperform over time due to business expansion and compounding.

A well-balanced portfolio should include both debt and equity, based on financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

...Read more

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Harsh Bharwani  |75 Answers  |Ask -

Entrepreneurship Expert - Answered on Feb 13, 2025

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Sir I am a Engineer by profession snd working in Qatar. Same time i had Cost accountant Degree and passed out way back at 2009. After that no touch with Cost Accounts. Now i am 48 yrs and after few yrs i want to move back to India. But that time if want open a cost accounting firm, what would be the best move i can do to open the consulting firm?
Ans: Hello Mr. Heman,
Reestablishing your career in cost accounting and setting up a consulting firm in India requires careful planning. Start by updating your knowledge through ICAI’s continuing education programs, industry seminars, and professional courses to stay current with evolving regulations and industry practices. Reactivating your ICAI membership and obtaining a Certificate of Practice (CoP) is essential to offer consulting services legally. While still in Qatar, gaining practical exposure by offering freelance or part-time cost auditing or GST advisory services to Indian firms will help establish credibility.

Next, choose a suitable business structure - Sole Proprietorship, LLP, or Private Limited Company - based on your growth plans and compliance preferences. Register your firm with the Ministry of Corporate Affairs and obtain the necessary licenses. Conduct thorough market research to identify your target clients, understand industry needs, and define your service offerings, such as cost audits, financial consulting, and management advisory. A well-structured business plan with clear financial projections will help ensure long-term sustainability.

Investing in technology and infrastructure is crucial. Setting up a professional office, adopting modern accounting software, and leveraging cloud-based financial solutions will enhance efficiency. Building a strong professional network is equally important - reconnect with former colleagues, join industry associations, attend networking events, and establish a digital presence through a website and social media to attract clients.

Lastly, focus on compliance and quality assurance. Adhering to ICAI regulations, tax laws, and ethical standards is critical for maintaining credibility and trust. By systematically following these steps, you can successfully transition back into cost accounting and establish a reputable consulting firm in India, ensuring a stable and rewarding career.

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Milind Vadjikar  |1013 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Feb 13, 2025

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Can I change my plan from star FOH to Star Assure. In plan migration form What I write in PED column. my policy number was taken on 19 February 2021, in the first week of March 2021 suddenly my blood pressure increased, due to which the doctor asked me to undergo angiography. After that the doctor asked to do angioplasty immediately and thus on 18 March 2021 I got angioplasty done. Now I am completely healthy, since my illness occurred within 31 days of taking the policy, company agent told me that there is no provision to cover any health related problem within 31 days. Company agent told me that there is no provision to declare any illness midway. Now I am completely healthy. Company not include my above mentioned health condition in my policy. And compny given me reply "Dear Mr. Jain, We acknowledge the receipt of your mail. With reference to our previous telcon, this is to inform that any disease or ailment/illness if found after inception of policy. It is not required to disclose under policy. But if you still wish to disclose the disease then kindly find the attached PED inclusion form, fill and submit us for further evaluation. Note : To note the disease in the policy PED form is mandatory. We request you to provide the Medical reports/ Discharge summary /any relevant /First consultation paper / medical document of the said procedure/diagnosis, which shall be kept for our reference. " What can I do.
Ans: Hello;

Regarding plan migration feasibility you may check with your insurer/insurance agent.

If you want to inform the insurer about your later acquired illness you may furnish the details to them as per their requirement and check their feedback on the same.

Their feedback will decide your next course of action.

Best wishes;

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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