The Investment Thread

[Yogesh Sarkar]

+1 to what Big Daddy said. Having said that, I am also of the opinion that one should have independent health insurance as well, just in case you fall sick while transitioning between jobs or in case your next employer does not provides health insurance. Plus you will get extra tax saving for it, under 80D.

As far as your parents are concerned, if your dad has state health insurance, then there is nothing better than that. Because even if it is cumbersome to avail and not cashless, it is usually unlimited. Employer and your own health insurance would be limited to a certain amount, which is ok for normal health issues, but not for major ones, unless you are opting for critical illness plan as well (which might not be available for your parents).

MFs and GMFs aren’t low on risk, they are exposed to same risks as you would be, if you invest in stock market and buy ETF or solid gold. Benefit of going with Mutual Fund Companies is, you do not have to manage your portfolio actively and you can chose to invest in Blue Chip Companies, while paying SIPs as low as Rs. 500 a month! If you were to buy those shares yourself, you will need substantially more amount.

If you still wish to invest directly in the stock market, here is what I would suggest:

Stocks: Rs. 5000
Equity MF: Rs. 1000
Gold MF: Rs. 2000 or 1 unit of Gold ETF (around 3k right now)
RD: Rs. 1000
Debt Fund: Rs. 1000

Debt fund would earn you the least interest; however you just need to think of it as an extra contingency fund, that you will break, before selling your stocks, MFs and RD.

 

[Apoorv SHarma]

Check with your company to see if you can add your parents in your health care plan for extra cost. My brother has my parents covered that way. Usually these corporate plans provide great coverage and come out cheap because companies also chip in to maintain employee loyalty.

I checked, they can't cover my parents.

+1 to what Big Daddy said. Having said that, I am also of the opinion that one should have independent health insurance as well, just in case you fall sick while transitioning between jobs or in case your next employer does not provides health insurance. Plus you will get extra tax saving for it, under 80D.

As far as your parents are concerned, if your dad has state health insurance, then there is nothing better than that. Because even if it is cumbersome to avail and not cashless, it is usually unlimited. Employer and your own health insurance would be limited to a certain amount, which is ok for normal health issues, but not for major ones, unless you are opting for critical illness plan as well (which might not be available for your parents).

MFs and GMFs aren’t low on risk, they are exposed to same risks as you would be, if you invest in stock market and buy ETF or solid gold. Benefit of going with Mutual Fund Companies is, you do not have to manage your portfolio actively and you can chose to invest in Blue Chip Companies, while paying SIPs as low as Rs. 500 a month! If you were to buy those shares yourself, you will need substantially more amount.

If you still wish to invest directly in the stock market, here is what I would suggest:

Stocks: Rs. 5000
Equity MF: Rs. 1000
Gold MF: Rs. 2000 or 1 unit of Gold ETF (around 3k right now)
RD: Rs. 1000
Debt Fund: Rs. 1000

Debt fund would earn you the least interest; however you just need to think of it as an extra contingency fund, that you will break, before selling your stocks, MFs and RD.

Thanks YS, I do want to cover my parents with critical illness plan. Do I have an option? How much is that gonna cost(approx.)?

 

[Yogesh Sarkar]

Sorry, no idea about costing. Best check with PSU insurance companies, they ought to be best bet in such a scenario.

 

[Prasham]

I've found that premium of insuring elderly parents is pretty high incase of PSU, better check up with policybazaar or other such sites. About 4 years back oriental insurance denied to offer any additional cover to my parents and then I went with Star Health Insurance who offered a decent policy at very reasonable charge. I've already utilized the policy once last year during my mom's Knee Replacement Surgery and I didn't had any hassles with them.

 

[Apoorv SHarma]

Thanks Prasham, will check it out.

 

[Big Daddy]

If health care premiums are high then sometimes funding your own health care expense fund may be a better option. All you have to do is setup your own health care expense fund and have you and your parents contribute towards the fund on monthly basis. The benefit of having such a fund is that you still get to keep the unspent money. With health insurance premium the money is gone for ever. The whole idea behind health care insurance is that you are covered for huge sudden expense. However, if premiums are very high and your parents are healthy then may be setting up a health care fund may be a better idea. I think there may be a point where if you have something like 25 lakhs in a low risk fund then you may not need health care insurance.

 

[citymonk]

If health care premiums are high then sometimes funding your own health care expense fund may be a better option. All you have to do is setup your own health care expense fund and have you and your parents contribute towards the fund on monthly basis. The benefit of having such a fund is that you still get to keep the unspent money. With health insurance premium the money is gone for ever. The whole idea behind health care insurance is that you are covered for huge sudden expense. However, if premiums are very high and your parents are healthy then may be setting up a health care fund may be a better idea. I think there may be a point where if you have something like 25 lakhs in a low risk fund then you may not need health care insurance.

Plus one to your thoughts.
No policy gives benefits like CGHS gives to its life long beneficeries or ESI to workers till age of 60.
All other policies have limited reach and only gives some peace of mind to those paying high EMIs and are always short of cash in hand.

 

[Big Daddy]

You can create your own private insurance if you have siblings. Of course you need legally binding assurance that every sibling will contribute certain amount to the fund on monthly basis; and only medical expenses of parents are allowed to be reimbursed from the fund. In case of death of parents, fund allocations can be liquidated to contributing members based on their percentage of contributions. Parents should also be required to contribute towards the fund on monthly basis.

One of the drawbacks of formal insurance is that doctors will charge you more or recommend more services. I have seen that happening. After every year my dentist takes x-rays of my teeth. If I say no, my dentist looks at me as if asking "what is your problem, your insurance is paying for it." In reality, he says that it is a good idea and radiation from x-ray is less than radiation you will receive by staying out in sun for one day. Stupid crap.

 

[Prasham]

One of the drawbacks of formal insurance is that doctors will charge you more or recommend more services. I have seen that happening. After every year my dentist takes x-rays of my teeth. If I say no, my dentist looks at me as if asking "what is your problem, your insurance is paying for it." In reality, he says that it is a good idea and radiation from x-ray is less than radiation you will receive by staying out in sun for one day. Stupid crap.

+ 1 to that... That's the reason why there has been massive changes in the Health Insurance in last 6-7 years. Before that everything was covered in the insured amount with any limits but now they give x percent for room charges, y percent for operation charges, z percent for anesthesia and so on. Doctors have gone exponentially greedy which is why the health insurance premiums also have gone very high now.

 

[Big Daddy]

I think there will be a US recession around March 2014. The reason is Obamacare. My monthly premium has doubled and many people across US got their health plan policies cancelled. Some people will get fired from their jobs because businesses cannot afford to pay for health care for their full time employees. The high cost of health premiums will take the bite out of the economy.

I have been preparing for all this beginning from this year. I increased my gold holdings and short term bond holdings. Next year, if market falls significantly or there is a recession then I will be buying stocks. Also, I am waiting for China real estate bubble to burst because I am also looking for buying some international real-estate REITs.