At this stage, your main concern is to have a property as well as to plan for your children future. Here, you may afford to take risk. Your asset should be allocated as follows :
► You need to plan for the days ahead – not only for yourselves, but also for your children. But a property of your own is your top priority at this stage. Keep 40% of your money in property. If you think this is too much, make this percentage to 35%.
► Keep a decent amount of money around 40% in equities. If you think this is too much, make this percentage to 35%.
► You need to have around 10% of your money in savings accounts. Here, if you have put 35% each in property and equity, then put 20% in savings accounts.
► Invest 5% of your savings in debentures and bonds to generate fixed income.
At this stage in your life you just want to plan for your retirement so that later you and your spouse may have a healthy post retirement life. A relaxed and tension-free life is always advisable at this age. Your asset should be allocated as follows :
► Keep a decent amount of money around 35% in equity. Or if you want less risk, you can think of keeping 30% to equity.
► Hopefully, you have already made your investment in a property. Keep not more than 25% of your money in property. If you have put 30% in equity make this portion to 30% too.
► You need to have around 15% of yor money in savings accounts. If you still need some more liquidity, set aside more percentage.
► Keep 15% in debentures and bonds to generate fixed income. If you have put 20% in savings accounts, then make this portion to be 10%.
At this stage in your life you can build your wealth, you may take plenty of risk because at present you do not have any responsibility of kids. Your asset should be allocated as follows –
► Keep a decent amount of money nearly 40% in equity. Or if you want less risk, you can think of keeping 35% to equity.
► You need to now start planning for the days when you may have a family. Hopefully, you have already made your investment in a property. Keep no more than 30% of your money in property. If you have put 35% in equity make this portion to 35% too.
► You don’t need to have more than 10% of your money in savings accounts. If you still need some more liquidity, set aside more percentage.
► Keep 10% of your savings in debentures ad bongs being fixed income instruments.
At his stage, your main priority is to have a property considering your age and absence of responsibilities of kids. You may afford to take risk. Your asset should be allocated as follows :
► Invest a decent amount of savings, nearly 45%, in equity. You should now have relationship with a professional stock broker and a mutual fund adviser too.
► You need to plan for the days when you may have a family. Invest 35% of your savings in property. You ca also think of keeping 40% in property and another 40% in equity.
► In order to have liquidity, you need to have around 10% of your savings in bank accounts. Depending on your day to day needs, you can also reduce the percentage of allocation.
► It is necessary to keep some money around 5% in fixed income instruments.
► And keep 5% in Gold also. Please don’t jump on buying gold at today’s market price – the rate is bit high now. Just wait when the rate of 10gm Gold bar is available at around rupees 12K. Insist on buying Gold bar from reputed banks.
Typically you are at the stage of building wealth with no immediate family to support. So you may be willing to take high risk. Your portfolio should be as follows :
► You may have already started acquiring your own real estate so keep on contributing 40% of your investment in property. If you feel this is bit high you can switch some portions to equity too.
► Keep a good amount of money nearly 40% in equity. Hoping you do have a professional stock broker to maintain your capital.
► And keep around 10% in bullion. We will have a detail discussion on bullion later on.
► You don’t need to have more than 5% of your money in savings accounts.
► Keep around 5% fixed income instruments like debentures and bonds.
Typically you are a person with no liability. So you can afford to take high risk.
Your portfolio should be as follows :
► Keep a significant portion of your savings, around 45%, in equities. This is bit risky, but looking at your age, it's somewhat feasible.
► You should start investing in a real estate. Nearly 40% of your savings should be for the purpose of buying the real estate. You should always consult an expert real estate broker for this.
► You don’t need to have more than 5% of your money in savings accounts. If you need to keep something for any emergency purpose you can think of keeping aside some more percentage.
► You may also keep some money in fixed income instruments, may be to the extent of 5%. Say in Post Office or Bank fixed deposits.
► And keep some nearly 5% in bullion. We will have a detail discussion on bullion later on.
Each one of you must remember that investing is a continuous process, based on certain scientific methods, which would enrich the quality of your lifestyle and help you in achieving your personal goals and aspirations. Designing of portfolio for most of the individuals is a lifetime activity and not an ad-hoc process. You should ensure that you are taking a right decision to invest your heard earned funds in safe place.
First of all, before investing you should have an adequate knowledge of financial market and the various options available for investment then, then only you can plan you portfolio. Your investment strategy should be such that it fulfills your real life need like purchasing a house, receiving regular income, children education & marriage and future financial security.
The whole article is somewhat bigger and I need some more posts to cover every approaches of allocation for different age groups. In a nutshell, we would throw some light, on how you should allocate your savings at different stages in your life to gain maximum advantage. However, the asset allocation depends upon various other factors also, so you should also consider those factors before finally putting your money.
Just see the table below and find out the category in which you fall. [In the table, column depicts the age and rows show the status in which the person falls presently.] You may go to cell number in which you fall and find out what should be your asset allocation. Just click on the category number on the cell and you will be navigated to the corresponding post.
In the next posts we will suggest you an appropriate asset allocation depending upon the category in which you fall.
Tuesday, January 27, 2009
ALTERNATE CREDIT SCORE
Alternative Credit Score acts as one of the prime criterion for loan disbursement for an individual. Credit Score has positive co- relation with income.
Many individuals have thin or non-existent credit files. It indicates that giant U.S. credit bureaus don't have enough information about finances of many individuals and hence they are not assigned any credit score, a figure generated via statistical models that examine outstanding borrowing, history of payments and debt loads. Banks use credit scores to determine eligibility and pricing for mortgages, auto and other loans.
However, this group of people having proper income but devoid ofnecessary credit score is increasing in number which is no less significant and opportunities are opening up for them with extensive effort from the financial institutions who are developing credit values of these people on the basis of what is today popularly termed Alternate Credit Score. It runs parallel to regular credit scores, risk profiles are updated on the basis of diversified data like rent, utility, child care, medical, and other payments. Banks are also coming up in hurried pace to tap this un-trodden territory and it may see a sea change when lot of people will shift more towards banks and move away from high interest bearing payday lenders.
However due to lack of collective data and information of either parties with each other, there remains a vide gap of co-ordination and it may happen that many among the credit seekers fall in hands of several pay day lenders or may end up consuming several products that otherwise wont have a valid presence in their port-folio. One necessary point to remember is the appropriate data should be with the banks and the degree of authenticity is worth mentionable in this Alternate credit Score method.
Thanks
Pamela
USA Insurance Sector - Slow Down
Recession in Global Economy has definitely created a huge impact on world market and insurance sector has also been hit by the financial slow down.
The catastrophic impact has become prominent with several millions being wiped out from the industry and many insurance giants witnessing sluggish growth and even negative return since last year as compared to returns booked and revenue generation analysis on quarterly basis.
Let us brush through a few points to carry forward the analysis.
Several millions were invested in financial institutions according to the portfolio set up which had badly affected the insurance sector on a whole.
Going by the available data, Hartford’s financial erosion reached around $2 billion during third quarter of 2008 as compared to $850 million gain during the same period the year before. MetLife’s accounts witnessed shooting up of costs in leaps and bounds with more than $ 1 Billion draining out to meet the claims and benefits. With rising cost and dampening effect on profit margin Insurance companies coughed large sum of money with little margin to fall back on.
Analyzing the problem from economic point of view, the gross approach of portfolio build up and direction of monetary flow boomeranged in many ways fuelling the problem. The portfolio had major exposure in fixed maturity investments like bonds mainly corporate bonds and with lesser credit liability; the insurance companies are witnessing fast erosion of asset value.
With the fall of value of the bonds, the claims and benefit payments are getting hard for the companies, drawing them to the verge of facing the problem of survival.
The most likely effect of this scenario may be total government assistance to sail through the tough period as well as several mergers and acquisitions may occur.
The question of survival now hovers around for most of the insurance companies.
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