Tamilnadu Chief Minister's Comprehensive Health Insurance Scheme

Showing posts with label savings products. Show all posts
Showing posts with label savings products. Show all posts

Tuesday, 3 February 2015

Types of savings products


Ø  Life insurance
o  Many life insurance products apart from an insurance cover have a savings
o  Component,
o  Ex: participating endowment,
o  Participating whole life, where investment risk is borne by insurance  company on behalf of the policyholders and the returns earned are shared  with the policyholders in the form of bonuses.
Ø  Bank deposit
o   Bank deposits are products where an individual has to invest a lump sum amount for a fixed tenure at a fixed rate of interest decided at the time of making the deposit.
o   There are three types of bank deposits-
§   traditional deposits
§  Cumulative de posits
§  Recurring deposits;
Ø  Mutual fund
o  Mutual funds provide risk diversification
o  Managed by asset management companies (AMCs),
o  Brings people with a common objective together. Money collected from these   people is
o  Invested on their behalf and the returns are shared back amongst them.
o  Provides regular income & capital appreciation.
o  The  buying and selling of shares is done through brokerage houses on the two stock exchanges in India-
§  Bombay stock exchange (BSE) and the
§  National stock exchange (NSE).
o   Equity shares provide three types of income to the investor dividend income.
o   Bonus share& capital appreciation.
o   An investor can also incur a capital loss on equity investments.
o   Investors can incur capital loses in equity, if shares are  bought at a higher price and sold at a lower price due to poor financial performance of the company.

savings products

Ø  The amount of the regular investment also depends upon the surplus amount or the disposable income that the individual has, disposable income depends on
o   Individual’s income
o   Number of dependants
o   Current liabilities.
o   Current liabilities.
o   The surplus amount is the spare amount of money left over after an individual has paid all their monthly liabilities.
o   Nobody should be encouraged to commit more to savings and  investment than they can genuinely afford
o   Professional advisors must take account of client’s liabilities as part of their saving and investment advise (Eg home loan, car loan , education loan, personal loan and credit card debts)
o   Existing assets & liabilities:  professional advisers must also consider the individual’s current assets and liabilities as these affect both the client’s needs and their ability to finance them, future accumulation of liabilities like taking new loans impacts the need for savings.

Features and benefits of savings products