Save/Invest - ProfitablePursuits

Unlocking the Mystery: My Unyielding Resistance to LIC Policies

#LIC #confusions #how to decide #PersonalFinance #Investment #TermInsurance #TaxSavings

Introduction:

In a twist of fate, a close family friend approached me with a proposition that promised immense rewards. He urged me to embark on a financial journey by investing in the renowned LIC policy called Jeevan Tarang 178. For a mere monthly payment of Rs. 3100 over a span of 20 years, the returns would amount to a staggering 14 Lakhs, serving as an enticing investment opportunity. What’s more, this policy also guaranteed a life cover of 7.5 Lakhs until the ripe age of 100, ensuring protection for the unforeseen. The cherry on top? It offered the allure of tax savings under 80C. However, intertwined within this proposition was a personal plea from my dear friend, who found himself in the midst of financial turmoil. By taking on this policy, not only could I secure my future but also provide him with a much-needed commission to alleviate his burdens.

Life Insurance + Investment + Tax savings —– Wah Wah what an amazing deal isn’t it ? 🙂

Initial Reaction:

The magnitude of this offer left me torn, caught between the allure of financial gain and the responsibility to make an informed decision. With a critical eye, I analyzed the proposal and scrutinized its claims. Ultimately, I arrived at a firm decision, albeit one that may have seemed harsh. Allow me to explain the reasoning behind my choice, a choice that embodies a prudent approach to personal finance and long-term stability.

“Logic is the language of clarity, empowering us to unravel complexity and navigate the world with greater understanding.”

“Cracking the code of Life Cover : Eye-Opening Insights into Real worth “

In dissecting the proposed plan, the focus turns to the life cover component, a remarkable 7.5 Lakhs in value. However, research on platforms like Policy Bazaar revealed a startling revelation: a comparable life cover of 75 Lakhs could be obtained for just 100 rupees per month( 10 times more cover!!!) . This revelation triggered doubt and prompted a closer examination of the plan’s cost-effectiveness and motives. By uncovering these numbers, an alternative perspective emerged, revealing the possibility of securing a robust life cover without straining financial resources. This newfound understanding led to an exploration of alternative avenues, potentially reshaping perceptions of life cover and associated costs.

Unleashing the Power of Safe Investments : Exploring potential Returns.

In dissecting the investment aspect of the proposed plan, my focus shifted to finding safer options for the remaining 3000 Rs per month. As I scoured the market, LIC bonds emerged as a promising contender, offering a tempting interest rate of 7.5% per annum. Utilizing a SIP calculator, I was astonished to discover that this investment alone had the potential to generate around 17 Lakhs, surpassing the sum assured and bonus by a significant 3 Lakhs. This revelation sparked a new perspective, prompting me to question the overall viability and potential returns of the original plan. With safer investment avenues and the promise of greater financial gains beckoning, I stood at a crossroads, ready to explore and analyze further, unveiling a realm of possibilities that could reshape my financial future.

Uncovering the Policy’s Constraints: Limitations on Flexibility and Potential Returns

A critical aspect that gave me pause was the policy’s clause of a 20-year lock-in period with no possibility of discontinuation and refund. This realization presented a significant concern as I contemplated the long-term implications. Comparatively, even conservative estimates suggested that Nifty index funds could potentially yield returns of 12%, while maintaining a cautious outlook could still yield a respectable 10%. Eager to explore the potential outcomes, I turned to a SIP calculator to project returns over 20 years using a conservative rate. To my astonishment, the results were mind-blowing: an estimated 23 Lakhs, surpassing the sum assured and bonus by an impressive 9 Lakhs. This revelation emphasized the policy’s limitations, urging me to carefully consider the potential loss of flexibility and missed opportunities for higher returns.

Assessing Tax Savings: Understanding the Impact on Individuals

One crucial aspect of the proposed plan is the potential tax savings under Section 80C. However, upon closer examination, it became apparent that the actual tax savings might be limited. In the best-case scenario, an individual might achieve tax savings of around 10,000 INR. However, it is important to note that many individuals, including myself, have already utilized the provisions of 80C deductions through contributions to the Employee Provident Fund (PF) or other avenues. This realization brings into question the extent to which the proposed plan’s tax benefits truly align with individual financial circumstances. Understanding the impact of tax savings becomes crucial in making informed decisions about the viability and relevance of the policy for each individual’s unique tax situation.

Here’s a summarized table showcasing the key aspects and available options for consideration:

Conclusion:

In the realm of financial decision-making, the proposition of Jeevan Tarang 178 serves as a crossroads where possibilities and caution converge. It prompts us to reflect upon the delicate interplay between security and growth, offering us the opportunity to contemplate the balance between long-term commitments and the allure of flexibility. As we navigate through these considerations, we must not overlook the profound influence of LIC, a catalyst that has nurtured the spirit of entrepreneurship within countless individuals. By delving deeper, exploring alternative avenues, and embracing the wisdom gained along the way, we embark on a personal journey that aligns with our unique aspirations, empowering us to paint a canvas of prosperity and fulfillment.

Disclaimer: This blog post is intended for informational purposes only and should not be considered as financial advice. Always conduct thorough research and consult with a qualified financial professional before making investment decisions. I have used Chat GPT partly to create this blogpost, some content is intentionally made inaccurate. Credits to Fundamental Investor for coining an simple example that is easy to understand.

I hold great respect for LIC and its policies, and it is essential to clarify that this commentary aims to ignite contemplation within readers regarding their investment decisions. By delving into various aspects, it seeks to provoke thought and encourage individuals to critically assess their financial choices. It is through this process of reflection that we can make informed decisions and embark on a path of financial empowerment.

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From Trading to Real Investing: My Journey towards Long-Term Wealth

Introduction:

When I first ventured into the stock market six years ago, I was captivated by the idea of making money through buying and selling. I eagerly sought out advice from a friend and began learning about candlestick patterns like inverted hammers and bullish engulfing. However, memorizing these patterns proved challenging, and despite my efforts to study charts and make informed decisions, I found myself experiencing both wins and losses. Frustration began to set in as I realized that despite the time I invested, I wasn’t seeing any substantial returns.

It was during this period of confusion that I came across a quote from Warren Buffett that deeply resonated with me: “The stock market is a device for transferring money from the impatient to the patient.” Intrigued, I delved further into Buffett’s philosophies and discovered a few essential tricks of the trade that would transform me from a trader to a long-term investor.

Learning from Inspirational Literature:

To deepen my understanding of investing and gain valuable insights from successful investors, I turned to inspirational literature that has withstood the test of time. Here are some notable works that significantly influenced my investment approach:

“The Richest Man in Babylon” by George S. Clason: This timeless classic provided me with invaluable lessons on personal finance and wealth accumulation. It emphasized the importance of “paying yourself first,” living within one’s means, investing in what you understand, and the power of long-term saving. These principles reshaped my perspective on money management and instilled discipline in my financial decisions.
“The Intelligent Investor” by Benjamin Graham: This seminal work by Benjamin Graham, often considered the father of value investing, taught me how to approach investing with a focus on intrinsic value. Graham stressed the importance of analyzing a company’s fundamentals, conducting thorough research, and investing with a margin of safety. I learned to view myself as a part-owner of the company when I purchased its shares, shifting my mindset from speculation to long-term ownership.
“One Up on Wall Street” by Peter Lynch: Lynch, a legendary investor, offered valuable insights into his approach to investing. He emphasized the importance of conducting independent research, investing in companies you understand, and taking advantage of everyday observations and personal experiences. This book gave me a better understanding of how Wall Street works and how I, as an individual investor, could identify potential investment opportunities before they became widely recognized.

By immersing myself in these influential works, I not only gained knowledge and insights from seasoned investors but also developed the mindset required to navigate the stock market successfully.

Embracing the Mindset of an Investor:

As I absorbed the teachings from these influential books and internalized the principles of long-term investing, a profound transformation occurred within me. I began to shift my focus from short-term fluctuations to the fundamental aspects of companies. Patience became my ally, and I understood that enduring wealth accumulation required a long-term perspective.

Conclusion:

My journey from trading to real investing has been a transformative one. I realized that day trading, with its complexities and unpredictable nature, was not the path to sustainable wealth. By understanding the stock market as a social science influenced by human emotions and recognizing the challenges of predicting short-term movements, I embraced the power of long-term investing. Analyzing company financials, learning from influential literature, and adopting the mindset of an investor have been the cornerstones of my success.

So, if you find yourself frustrated with the world of trading, I encourage you to embark on a journey towards real investing. By focusing on a company’s financial health, immersing yourself in valuable literature, and cultivating the patience necessary for long-term wealth accumulation, you too can find financial independence and the ability to retire early. The rewards of this path far outweigh the fleeting excitement of day trading. Start your journey today and unlock the potential for a secure and prosperous future.

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The Power of Capital Allocation and Choosing the Right People to Invest With

#UncleWarren #capitalallocation #Promoters #Oppertuinities

Introduction

In the world of investing, one key principle that resonates strongly is the idea of “you can’t make a good deal with a bad person,” as famously stated by Uncle Warren. As minority shareholders, we entrust our hard-earned money to the directors and key management personnel of the companies we invest in, relying on their expertise to allocate capital wisely and generate returns. In this blog post, I will try to explain the significance of evaluating track records and the examples of successful capital allocators, highlighting the importance of choosing the right people to invest with.

The Significance of Track Records:

Before investing in a company, it is crucial to thoroughly examine the track records of key management personnel. The decisions they have made in the past can provide valuable insights into their ability to allocate capital effectively. A consistent history of making prudent choices is indicative of a capable leader who can navigate through challenging times and seize opportunities when they arise.

The Power of Technology: Asian Paints’ Supercomputers:

Asian Paints serves as a prime example of the transformative power of technology in capital allocation. By investing in supercomputers and leveraging extensive data accumulated over 60+ years, the company developed advanced models that streamlined operations and outperformed competitors. This forward-thinking approach illustrates how data-driven decision-making can enhance efficiency, productivity, and overall success.

Diversifying and Reducing Costs: In-house Production of Key Strategic Material (KSM):

Another compelling example of effective capital allocation is when a director identified that the company was spending a considerable amount of money on purchasing key strategic materials (KSM) to produce APIs. Recognizing the opportunity to diversify and reduce costs, the director embarked on a two-pronged strategy. Firstly, they focused on growing the order book for APIs to maximize revenue potential. Simultaneously, they initiated a plan to produce the KSM in-house, eliminating the need for expensive external purchases. This proactive approach not only increased the company’s profitability but also reduced dependence on external suppliers and improved supply chain efficiency.

Seizing Opportunities: The COVID-19 Lockdown Case Study:

During the COVID-19 pandemic, we witnessed remarkable instances of capital allocation. One director recognized the potential during the lockdown and stocked up on raw materials at lower prices when demand was low. Later, when demand surged, the company reaped substantial profits. This astute decision-making showcased the director’s ability to identify and exploit favorable market conditions.

Capitalizing on Market Turmoil: The Stock Market Crash:

In times of market turmoil, such as during the initial days of the COVID-19 crisis, great capital allocators can seize opportunities. One director took advantage of the stock market crash by investing heavily in undervalued mutual funds. Within a year, this move doubled the company’s reserves, underscoring the director’s skill in navigating volatile markets and creating significant value for shareholders.

Conclusion

As investors, it is essential to recognize that our capital allocation decisions go beyond analyzing financials and industry trends. Evaluating the track records of key management personnel is paramount in determining the potential success of our investments. The examples highlighted in this blog post demonstrate the immense value of choosing the right people to entrust our capital with. By aligning ourselves with capable leaders who possess a track record of prudent decision-making and the ability to seize opportunities, we can enhance our chances of achieving favorable investment outcomes. Remember, “you can’t make a good deal with a bad person,” so choose wisely and invest with confidence.

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Seizing Opportunities: A Tale of Smart Investing and Tax Savings

#Stock #LTCG #Zerodha

Introduction :

In the world of finance, being alert to market movements and making informed investment decisions can prove to be immensely rewarding. This is my personal story about recognizing a unique opportunity, navigating the stock market with confidence, and ultimately saving on taxes while maximizing profits. Through this blog, I aim to shed light on the importance of being proactive, leveraging investment platforms, and understanding tax implications for long-term gains.

The Beginning of a Fortuitous Journey:

One fine day, I noticed a peculiar situation with ICICI Bank stock. Despite no inherent problems, it had experienced a correction of approximately 4-5% due to global cues. With 1.5 lakhs in cash at my disposal, I saw this as an opportune moment to invest. Trusting my instincts, I made a move that would soon prove to be a catalyst for my successful journey.

Riding the Wave of Success:

As the business of ICICI Bank thrived, so did my decision to put my faith in the stock. Over the course of a year, the stock experienced a remarkable growth of more than 25%. This not only provided me with substantial financial gains but also instilled confidence in my investment prowess.

Discovering the Power of Information:

During my investment journey, I stumbled upon a feature offered by Zerodha, an online trading platform. This feature allowed me to determine the age of the stocks I owned. Armed with this knowledge, I realized the potential benefits of long-term investments.

Unraveling Tax Implications:

My curiosity led me to explore the tax implications associated with my investments. I discovered that for long-term capital gains up to 1 lakh, no taxes were applicable. This revelation sparked a realization that I could potentially save a significant amount of money by making a strategic move.

Capitalizing on Tax Benefits:

With the ICICI Bank stock having yielded a profit of 30,000 INR, I made a calculated decision to sell my holdings. By doing so, I avoided paying a hefty 3,000 INR in income tax, which is 10% of the profit made for long term capital gains. The small transaction and related fees incurred while selling the stock were inconsequential compared to the substantial tax savings I achieved.

Strategic Buyback and Compensation:

To further enhance my investment strategy, I noticed that the stock price dipped slightly below the selling price the very next day. Seizing this opportunity, I repurchased the stock, ensuring it was no longer in my Demat account. This strategic move helped compensate for the transaction fees incurred during the initial sale and subsequent buyback.

Conclusion:

My journey as an astute investor demonstrates the importance of seizing opportunities in the stock market and understanding the intricacies of taxation. By recognizing a favorable market correction, leveraging information tools provided by trading platforms, and being aware of tax implications, I was able to maximize my profits and save on significant income tax. My story serves as an inspiration for others to stay vigilant, make informed investment decisions, and explore avenues for optimizing their financial gains.

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