CAGR Knowledge Series Archives - Page 4 of 5 - CAGRfunds

January 19, 2021February 22, 2025

5 Money Mantras for 2021

2020 might possibly be the most dynamic teacher we have had in our lives. The year really pushed us to take a step back and take a long, hard look at how our lives are built, the foundation of everyday lives and the framework of how we go about doing it. While the importance of health and a clean lifestyle was brought to the fore, so was the discussion around financial health. 2020 was a year filled with challenges; while the market took a hit, we also saw one of the best equity rallies in a long time! Job security, savings, health insurance and more were the talk of the town, and with good reason. Job security, savings, health insurance and more were the talk of the town, and with good reason.

This is precisely why we’ve come up with 5 simple yet incredibly effective Money Mantras for 2021, to ensure smooth sailing and a strong back-up plan. Read on to know more.

BUILD A BUDGET

One of the easiest yet effective things you could do for your money right now is starting to build a budget. It’s the ultimate tool to help you control your expenses and channel your finances towards achieving any goals you might have set. Budgets, at their core, exist on a balance—if you want to spend more on something, you’ll have to forfeit or spend less on something else. This simple practice gradually teaches you how to prioritise your earnings and spend them wisely on things that actually matter. Usually a budget is a combination of your household, transport, personal and miscellaneous purchases. Nowadays, there are many budget-calculating apps that you can download to help you track your expenses—or better yet, talk to your financial advisor for a more detailed approach.

INVEST IN A GOOD HEALTH INSURANCE

As mentioned earlier, health insurance is the topmost priority in today’s time, and should be treated as such. A good health insurance should cover the basics—this includes hospital charges, pre & post hospitalization included. It should also cover not just you, but your family as well, ensuring that should you ever require the help of your insurance, paying the bill will be the last thing going through your mind. One of the biggest blunders we as a customer make, is to simply assume that we will not require health insurance until we are much older. However, on the contrary, being well-prepared when it comes to your health from an early stage in life will only pay off in the long run.

BUILD AN EMERGENCY FUND

Out of all the financial years so far, if 2020 has not convinced you to build yourself an emergency fund, we doubt what else will! If you’ve been thinking about starting your emergency fund, there’s no better time to do so than now. This will help you face potential job cuts/salary cuts, household damage repair and any medical emergencies with the reassurance that you have your emergency fund to help you out.

DIVERSIFY YOUR INVESTMENT PORTFOLIO

It’s never a good idea to put all your eggs in one basket. The same goes for your investments—diversifying your portfolio will help you stay afloat in the event of an unexpected market crash. And the best part is: it’s not that hard to implement. Diversification operates on a simple idea, that an investment portfolio consisting of different investment types will essentially lead to optimizing the risk. A well-diversified portfolio might include- cash, bonds, stocks, mutual funds, exchange-traded funds. To know more you can contact us and find just the right diversification model for you.

CURB IMPULSE PURCHASES

Our last point ties back to where we started: setting a budget! When you know you have a budget that allows you a certain amount of expenditure, it automatically helps you steer clear of purchases that you really do not need. One of the best ways to figure out whether what you want to buy is something you really need is to give yourself a waiting period: give it 24 hours or sleep on it. If you still feel the need to purchase it, then compare prices online to pick the best one. If not, you’ll realize that what you almost spent your money on was simply a phase.

Although these Money Mantras look simple, their impact is anything but. Stay consistent with your budgeting, investing & savings, and trust us—you’ll see your bank account flourishing in due time. For more information, get in touch with us at cagrfunds@gmail.com

March 16, 2019February 22, 2025

PPFAS – CAGRfunds conviction recommendation

Parag Parikh Long Term Equity Fund (PPLTE) is the only equity fund that is managed by the investment team of PPFAS. As a recent entrant in the Mutual Fund Industry (fund was launched in May 2013), it is not the most popular fund in the market. At least we do not see people including them in the “Top 10 Funds to invest in 2019” list (Frankly, we find such lists to be very silly).

There are several reasons why we believe that PPLTE is a good addition to the portfolio for investors who exhibit all of the following traits:

a) Looking to add equity exposure
b) Willing to not withdraw their investments for 7-8 years
c) Keen to add some overseas diversification to their investments
d) Unwilling to risk capital erosion in lieu of high returns
e) Want to prioritize downside protection for times when markets don’t seem to be too ecstatic

If you think you are the one we are referring to, you should contact us to check if this is a worthy addition to your existing portfolio.

Reasons why we like PPLTE

Sector Allocation

Several things stand out when we look at the sector allocation of this fund.

a) 22% of the corpus is kept in liquid resources, waiting to be deployed when opportunities emerge. Some might say that this will drag returns down (since liquid resources at best earn you around 6-7%), but let us tell you that investing in businesses at a price that seems affordable is better than buying something expensive. Also, investing when one finds good businesses to invest in is also an important consideration for long term wealth generation

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price” – Warren Buffet

b) Substantial overseas exposure (~28%) adds to geographical diversification (orange bars are completely overseas). Out of this total overseas exposure, around 9.7% is in Google and 4.3% in Facebook. That adds to some real diversification to your portfolio! (Source: PPFAS Feb – March Factsheet)

Skin in the game

7.07% of the AUM represents own equity of the key persons in the fund management team. When people who are managing our funds have invested their own savings into the same, we know the commitment is for real. It is a good corporate governance practice to have their own financial being is linked with that of the investors. We give them a big thumbs up for this one.

Out-performance with focus on downside protection

As can be seen from the chart below, the fund has outperformed its benchmark (Nifty / BSE 500 TRI) at all times considering point to point returns. In terms of Alpha, the fund ranks #2 within the Multi-Cap category.

However, out-performance is not what excites us. Active funds, after all, are supposed to out-perform their respective benchmarks.

What seems interesting and commendable to us is the ability of the fund to protect the downside during times of correction. Let us look at the 3 year rolling returns of the fund. The highest rolling return is 25% and the lowest that the fund has given over a 3 year period is 10%.

This means a lot of things for you as an investor if you would have held your investment for a 3 year period at any point in time:

a) You would have generated a CAGR of at least 10% even if you would have exited at the very low point of the market which was some time in the second half of the last year

b) You would not have seen a negative return for a 3 year period on your portfolio EVER

c) You would not have lost your peace of mind over losing your money

For investors who are uncomfortable with too much volatility, the above means a lot. We believe that the reason the fund has been able to demonstrate this performance is because of its patient and down to earth fund managers – Rajeev Thakkar and Raunak Onkar. Although this is not a guarantee for the future, the above track record during testing times gives additional comfort to investors.

Mr. Thakkar is quite active on twitter and we suggest you follow him to understand his ideology if you are an existing investor or are likely to become one.

In case you have any further query, do reach out to us on contact@cagrfunds.com

November 30, 2018February 22, 2025

Do health insurance plans cover maternity expenses?

“Maternity Plans” are not really separate plans. It is a feature which may be covered under normal health plans. However, only a few health plans offer maternity cover as part of their normal health plans.

Key features of maternity cover are as follows:

There is usually a separate waiting period for maternity coverage – This means that any claims with respect to maternity will be catered to only after the maternity specific waiting period is over
Almost all plans have an upper cap on the amount of expenses that will be covered – Usually the coverage ranges from INR 25000 – 50000 per delivery. The reason most policies have an upper cap is because the number of claims for maternity is likely to be very high. The purpose of Health Insurance is to protect you from any sudden outflow of funds due to a medical emergency. The occurrence of maternity is almost certain and hence a limit on the same is warranted
Pre – maternity costs are generally not covered – Most plans which offer maternity coverage generally do not cover any expenses that are incurred towards consultancies and tests
New born coverage – Generally, the new born baby is covered till the end of policy year

Should you buy a health plan only because it provides maternity coverage?

Maternity should ideally be treated as a bonus option. The overall decision behind buying a health plan should ideally be the key features which are relevant for any kind of hospitalization. Imagine a plan providing good maternity coverage but having a claim settlement ratio of 70%. Therefore, choosing a plan just because it provides maternity coverage may not be the best decision to take.

However, in case you have a choice between two equally good plans with one of them providing maternity coverage with or without some extra premium, then it might make sense to take the plan with the maternity clause. Especially, if you are planning a kid in next few years.

Want to discuss more on maternity plans? Write to us on contact@cagrfunds.com.

Have you read about our Cancer Plans?

November 30, 2018February 22, 2025

Everything about Top Up Health Insurance Plans

What are Top Up Plans?

Also known as Deductible Plans, Top Up Health Plans provide a cover over and above a certain base cover. This base cover in most cases come from existing policies. Some Top Up Plans allow deductible options even without an existing insurance policy.

In cases where there is an existing insurance policy, reimbursement against any claim that arises will first be made out of the existing policy. The liability of the Top Up Plan arises only after the set threshold of the existing plan has been exhausted.

In cases where there is no existing policy and the Top Up Plan permits such a situation, expenses up to the threshold level has to be borne by the insured out of his or her own pocket. The liability of the Top – Up Plan arises only after the set threshold has been exhausted.

Example 1:

Ajay has a health insurance cover from his employer of 8 lacs. He purchases a top up plan for 10 lacs with a deductible of 3 lacs. An unfortunate event of hospitalization generates a claim of 9 lacs. Ajay can use either of the following options:

Option 1: Raise a claim of 8 lacs against the employer health plan and balance 1 lac against the top up plan

Option 2: Raise a claim of 3 lacs against the employer health plan and balance 6 lacs against the top up plan

So basically, the top up plan gets activated only when the deductible threshold is crossed.

Example 2:

Vijay does not have any existing health plan except a top up cover of 10 lacs with a deductible of 1 lac. He gets hospitalized and has to raise a claim of 3 lacs. In this case, Ajay will have to pay the initial 1 lacs from his own pocket and the Top – Up Plan will consider only balance amount of 2 lacs for claim settlement.

Why are Top Up plans useful?

These plans are useful for two simple reasons:

A high coverage is available at a significantly low premium
In an event of a medical emergency where the amount of expenses tend to spiral beyond the usual ranges, these plans come to rescue

Who should buy Top Up Plans?

Salaried people who have a basic corporate cover – Smaller hospitalization claims can be covered by the corporate cover and in case of larger expenses, Top Up Plans can be utilized. This also means that post retirement, claims up to the deductible amount will have to be either self – funded or funded through a Base Insurance Plan. However, since deductibles are pre-decided, the same can be set aside as an emergency fund.
Salaried people who plan to change jobs or start on their own – Top Up Plans are an excellent option in this case. The cover and the low cost premium continues irrespective of whether you are salaried or get into entrepreneurship.
People who have sufficient resources for covering up small ticket emergencies – These people can leverage the low premium Top Up Plans to cover themselves for any eventualities
People who have a Base Insurance Plan with a basic cover amount of 5-10 lacs – In cases of severe medical emergencies such as complicated surgeries, the amount of expense usually shoots beyond the normal cover that we usually have. Especially if the treatment is being carried out in one of the plush city hospitals! A Top Up Plan is the umbrella for such unannounced rainy days.

Which are the best Top Up Plans?

Most Insurance Companies now offer top Up Plans. However, one has to select the plan which has the most suitable features and has a low premium. Email us on contact@cagrfunds.com to ask us for the best Top Up Plans.

Why should people with Corporate Insurance cover still have a separate health plan?