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Archive for November, 2009

The decision to re-finance a home mortgage is a serious decision which should not be taken lightly. Homeowners should give this decision a great deal of consideration to ensure they are making the best possible decision for their financial situation and personal needs. Some factors to consider when deciding whether or not to re-finance is the type of loan to choose, the lender to choose, the costs associated with re-financing and the hassle of the process.

Consider All of the Options

Homeowners who are seriously considering re-financing owe it to themselves to consider all of the options available to them. They may have a friend who recently refinanced with a specific type of loan but this might not be the solution for all homeowners. Each homeowner should consider their situation to be individual and not likely to closely mirror the situations of others.

Some of the options to consider include the type of re-financing loan. The basic options are fixed interest rates and adjustable interest rates. There are also mortgages which combine these two options. The homeowner may have a specific type of mortgage in mind but the lender may or may not be willing to offer the homeowner this type of loan. Lenders are more likely to offer fixed interest mortgages to homeowners with good credit and adjustable rate mortgages to homeowners with poor credit.

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Direct auto insurance literally means auto insurance policy taken directly from the company that is, there is no agent or broker involved in the deal. This is quite economical as cost of brokerage is saved. The cost benefit of removal of middleman is passed on the buyer completely. With the advent of technology and everything is now available on Internet. It is very simple to buy auto insurance online. You need not run from one insurance advisor to another for collecting the insurance quotes.

You just need to look out for individual websites of all insurance companies and fill in the details and wait for their free insurance quote. But, without a doubt it is time consuming and irritating as you need to give same details over and over again. To avoid this inconvenience you can log on to the car insurance comparison websites, here you can compare auto insurance companies on the basis of their quotes. Here, you just need to fill the form once and the insurance companies, process the quotes are send them to you soon. This way you are saved from botheration of giving your personal details over and over again.

You all must be knowing, that auto insurance rates vary from individual to individual as it depends on number of factors like type of vehicle, age, sex, marital status of driver, driving history, safety devices installed in the vehicle, geographical location of the residence, parking area, academic performance and credit score. Thus, computing auto insurance quotes for all requires serious efforts and statistical knowledge.

Buying direct car insurance online helps you make better decision. You can read about the credibility of the insurance company. This is important as recently many cases of fraud car insurance companies have been brought in limelight. Read the reviews and testimonials. To check their promptness and customer support services send them an enquiry email and see how quickly and aptly do they reply.

Once you are satisfied with the company, you need to negotiate the services and features of your policy. As there are many different types of insurance policy available in the market you really need to choose one which suits your needs. Don’t just be lured by the low cost insurance quote. Take a wise decision; it should be features which should be the driving force and not the cost alone.

Uma - I am sick and tired of reading about ’should I buy a ULIP or a MF’ kind of articles. I know people who buy both, I know people who do not buy both, I know people who swear by either one. It takes all kinds to make the world does it not?

However, here are some reasons why I am disillusioned with the industry in general. I started off as a great votary for one life insurance company which came out with plans which had AMC charges of 0.8 per cent (dramatically low) for equity funds. I jumped and bought the product. Then they came out with another double benefit plan — which was unique in its concept of paying an annuity apart from an immediate payment of the death claim. In its original form (as how I bought it) frankly it is a great product if you need life cover and your dependent prefers an annuity because he/she cannot handle investments.

However, as the product grew popular the company added a lot of unnecessary features and dramatically increased the costs. This to me was not very shocking, but unnerved me – tough to make a 30-year commitment to a client with the constant risk of changes lurking. So here are the reasons why I do not like Unit Linked Policies:

1. The terms can change
This is a complete disaster. Once you have bought a product assuming the AMC charges are 0.8 per cent you believe it will not change. However, some ‘Relationship Manager’ will show you clause 37 in font size 7 that says charges are subject to change. This can change the value proposition completely. It is like Tata Motors saying “in the 3rd year you will have to pay Rs 1.2 lakhs for servicing the Nano, and servicing is compulsory”.

2.Employees enthusiasm to buy
Many life insurance employees are lateral entrants from the mutual fund industry, or people new to the financial services industry. They interact with mutual fund agents and in great gusto start doing SIPs in mutual funds! The enthusiasm with which the employees buy mutual funds is far, far greater than their commitment to ULIPs! Those who have any life insurance have term insurance or nothing. No big employee commitment to UL products is visible. It is not to say that the employee understands the product more or less than the end user, but I find it uncomfortable if an Indica dealer moves around in a Santro or a Maruti 800!

3. Stuck to the fund manager
Sadly if a fund manager leaves, you cannot shift your funds to another unit linked plan. In most life insurance companies the equity corpus is small. This means the economies of scale do not kick in, the services of the registrar is not outsourced (so it gets more expensive) and the life company finds it expensive to hire good fund managers. However, fund managers do quit — and you have no clue as to how to react to it. It is of course easy to say ‘we have a process in place’, but look at some of the best performing mutual funds — Prashant Jain, Madhusudhan Kela, Sukumar — all have been with the same funds (schemes) for a very long period, and it helps.

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One of the most common ways of selecting a mutual fund is to invest with the crowd in today’s hot funds. Unfortunately, jumping from one winning fund to another is a recipe for disaster. The mutual funds that the crowd follows typically have had a hot recent performance and tend to gather all the new mutual fund sales.

Investors as a whole are primarily allocating their new investments to a small number of mutual funds and to a smaller number of mutual fund companies. Investors have invested over $400 billion in the 2843 different mutual funds, but one-third of those assets are invested in only 50 of those funds and one-half of those assets are invested in the largest 100 funds.

There are benefits to following the market leaders. Larger mutual fund companies and larger funds have the ability to reduce costs and attract the best professional money managers. However, the biggest limitation is that today’s better-selling mutual fund may not be tomorrow’s winner. This is true for any mutual fund but it seems to plague the best seller, and the one that garners the most attention, the most often.

So buying the equity fund that was yesterday’s best-seller isn’t a strategy that produces excellent returns. You do not have to go fully in the opposite direction and ignore these hot funds, but you should understand their limitations and strengths. They became best-selling funds because they have merit, but you have to access that merit within your own well-diversified portfolio, and not the crowd’s current investment trend.