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Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. www.rwd.ecrmagic.com and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. www.rwd.ecrmagic.com, its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.
Words of advice like, 'it is good to share' and 'sharing is caring' often come up in conversations, especially when we are spending time with children. Whether it is lunch, toys or sweets-sharing can bring more joy, we like to tell them. While that may be true, it is not always so when it comes to information about your finances. So, while sharing has its benefits, here are five things you should never share with anyone-even your spouse and children.

Card details: Information such as expiry date of your credit or debit card, its number, and your full name are prominently displayed on the card. Your name would be known to most people, but you should not share any other information printed on the card. It is printed there for you, not for others. These details are needed to carry out online transactions. And this information is the first level of security. Without access to it, there is no way to misuse your card. Safeguard these details and don't reveal them to any unauthorised person.

CVV: Every debit and credit card has a card verification value or CVV number on its reverse. This number is vital for completing online transactions. This too is clearly printed on your card, and you should not share it with anyone.

Passwords: If you use net banking or credit cards for online transactions, you know that the transaction cannot go through without confidential details such as your customer identification number, card details and the password. While other details, such as those on your card, may have been compromised without your knowledge; the passwords is completely under your control. Do not tell others about it. And just to be sure, change the passwords at regular intervals.

PIN: Personal identification numbers (PIN) of credit and debit cards are needed at ATMs and merchant establishments to withdraw money and complete transactions. It is a secret number and a vital security feature. Never share it and be careful while using it at ATMs and PoS machines to ensure that nobody is looking over your shoulder to steal this secret from you.

OTP: One-time passwords (OTP) are a more recent second-factor authentication tool, which make your online transactions more secure. When you purchase anything online using your card, net banking or your e-wallet; an OTP is generated and is usually sent to your registered mobile number. This is the last level of authentication, and is applicable only if you have successfully cleared the other security challenges. Should your confidential data be compromised, this is your last defence. If you share it with someone else, the OTP may be used to clean out thousands from your account, instead of the Rs 500 debit you may be expecting.

Therefore, always be suspicious if anyone asks for it. Your bank or financial service provider never will.

Source:valueresearchonline.com

Here is how you should plan for a financial emergency that may occur as a result of a job loss, pay cut, medical emergency or divorce

Life can throw lemons anytime, and getting caught off guard is not a nice feeling. It is true for money as well. Hence, one of the key financial goals for any individual is to create an emergency fund. A job loss, pay cut, medical emergency or divorce, all these can derail you financially. In such situations, an emergency fund can act as a cushion. Here is how you should plan for it:

How much do you need?
An emergency fund depends on your expenses and income. The idea is to have enough money in case you don’t have your regular income or you can fund immediately without disturbing your current lifestyle and investments. The thumb rule is to have at least three to six months of your cash flow as emergency fund. For instance, say your monthly expense, including rent, grocery, travel expense and school fees of your children, comes to Rs50,000. At any given point, you should have at least Rs1.5 lakh to Rs3 lakh as emergency fund with you. “If there is a job loss or for some reason you are not able to go to work, the emergency fund will help you tide over the bad times. It will also not disturb your other financial goals,” said Surya Bhatia, a New-Delhi based financial planner. The emergency fund will help you continue with your other long-term investments. Many people dip into investments they have set aside for their child’s education or retirement in case of an emergency, which upsets their overall financial plan.

How to save and invest?
You can start by calculating how much you need and then keep aside money on a monthly basis. For instance, if it is Rs1.5 lakh, you can start by keeping aside Rs5,000Rs10,000 every month. Another point you must remember is that you should be able to access your emergency fund easily. Hence, it should be left in a product that you can liquidate quickly. For your emergency fund, avoid putting money in products that have a lock-in period. You don’t want to be stuck with no money despite saving enough or paying a penalty for premature withdrawal. You also don’t want the money to lie around and earn no returns. When you keep aside money for emergency, make sure it earns you good returns. Many people end up leaving money in their saving account for emergency purposes. You shouldn’t simply do this. A bank saving account will give you a 3.5% return annually, which is very low and is also taxable. You can either keep it in a bank fixed deposit or in liquid mutual funds.

When to use it?
Just because you saved money doesn’t mean you use it to fulfil your impulsive needs. An expensive dress or a holiday is not an emergency. Emergency is not a desire, but a need—something you can’t delay and is urgent. You should be able to identify emergencies to avoid disturbing your financial life, despite saving money. In case you have used the money from the emergency fund kitty, start the process again and reload it. This way you will be able to tide through choppy waters.

Source:livemint.com

Even if official inflation rates have fallen to 5 per cent, factor in a 10 per cent inflation rate on your healthcare costs while topping up

Has your career graph risen vertically in the last few years? Congratulations! We are sure that your rising income has brought with it big changes in your lifestyle too. With your elevation, you and your family may have upgraded to a three-bedroom apartment, your children may have moved to international schools and you may have taken on new loans to fund a vacation or a fancy SUV that you have always dreamt of.

But all this means that your term-insurance policy badly needs an upgrade, too. The insurance cover you took five years ago may have been sufficient to cover your dependents' expenses at that time. But to make sure that your dependents don't suffer a dramatic climb-down if something happens to you, you will need a larger sum assured.

While estimating your new life cover, don't go by simplistic thumb rules such as 'ten times your annual income'. Instead, use online life-insurance calculators that scientifically calculate life cover based on your family's living expenses, inflation, the likely number of years for which you would like to support your dependents, outstanding loans and any other critical goals you may like to take care of. Believe us, a Rs 1 crore cover isn't over-the-top any longer!

With lifestyle ailments on the rise, don't forget to top up the health cover for yourself and your family, too. Even if official inflation rates have fallen to 5 per cent, factor in a 10 per cent inflation rate on your healthcare costs while topping up.

Health insurance is one financial product where skimping on costs (premium) can prove injurious to your wealth. As a rule, give a greater weightage to the quantum of sum assured and the breadth of health conditions covered when choosing a plan. Apart from this, screen the product for a low waiting period on pre-existing diseases, a wide network of hospitals where cashless treatment is offered and liberal sub-limits on room rent. Skipping the medical test isn't necessarily a good thing as it can lead to disputed claims later.

Source: valueresearchonline.com
There are times when insurance is useful though the need isn't obvious

Insurance is an expense that you are likely to ignore even when there is a demonstrated need for it. It is possible then that you may overlook circumstances where the need for protection is not immediately apparent, but the financial consequences of not taking adequate cover is likely to be severe. Here are a few common situations where some people may believe that they do not need insurance. However, they would see the need for buying insurance if they think it through.

I don't have dependents
The purpose of life insurance is to provide protection against the loss of income, in the event of your death, to those dependent on it. This would make it seem that life insurance is an avoidable expense if you do not have any dependents. However, consider a few of these situations before you decide that your death may not have any financial consequences for others.

For example, if you have outstanding debt, then on your death it may become the responsibility of the co-signatory or guarantor of the loan. To take care of such a situation, buying a term insurance policy, to the extent of the outstanding debt, will provide protection to those who would be liable for the repayment of the debt. Even if you do not have dependents now, it may be prudent to take a life insurance while you are healthy to lock in better rates in preparation for the future when you may have dependents, particularly if there is a predisposition to certain illnesses in your family.

I am retired
Life insurance is typically seen as redundant in retirement because there is no income being earned. However, insurance may have a place in your retirement strategy in certain situations. One, if the pension during retirement is primarily linked to your life, then your spouse or dependents will lose their source of income in the event of your death. Similarly, if the pension on retirement is being supplemented by income from employment or a second career, then it becomes necessary to protect your dependents from the loss of that income. In these situations, life insurance at least to the extent of income replacement required should be part of the retirement plan. Similarly, continuing a life insurance taken earlier in life-at low premiums-may be a good way to leave a lump sum behind to compensate for the costs related to health and old age care in the later years of a person's life. Insurance policies can also be used to leave a legacy for family members and others. The premium on insurance and the time available will be the primary considerations in deciding between insurance and building an investment corpus to meet the need.

I am a stay-at-home spouse
Consider the financial consequences on the household if the stay-at-home spouse were not there to take care of the many tangible and intangible services that they provide, before deciding that life insurance is not required for them. In their absence, services such as taking care of minor children, managing the household and others could become expenses that will have to be paid out of the pocket. Often, a person's income may not be able to cover the costs of buying these services at market price. An insurance payout, in the event of an unfortunate passing away of a stay at home spouse, can help in meeting these expenses. The insurance payout can also compensate for any fall in income that an income earning spouse may face if they have to cut back on their career plans to now step into a nurturing role. While it may be difficult to set a monetary value for these services, all the financial implications need to be considered before deciding the extent of insurance cover to be taken. The intent should be to provide, at least, financial stability to a family seeking emotional stability in such situations.

I have employer-sponsored cover for health
The health insurance provided by an employer may be limited in scope and coverage. This includes the types of illnesses and the number of dependents covered. It is important to evaluate the protection provided to identify what more is required to provide complete health protection for yourself and your dependents. The insurance provided by employers is unlikely to keep pace with changes in individual employees' needs and inflation in health costs. This makes it important to add an individual cover to the employer-provided protection. Apart from an inadequate cover, the risk with depending only on employer-sponsored plans is that the cover ends when the employment is terminated. It may leave you unprotected when you are unemployed. The other big risk is that once you are no longer employed, you may find it difficult to get individual cover at reasonable premiums, given that you are older and likely to have more health issues. A better strategy would be to take individual cover early on, when in good health, to supplement employer-provided health cover and to keep it in force without default. This will ensure health insurance later on in life too at reasonable rates without the risk of being refused cover for pre-existing conditions or having to pay a much higher premium for the same. Also, features of an employer-provided cover may change year to year without you being aware of these. It is important to see insurance as protection and not merely as an expense. There will then be motivation to seek gaps in your financial security and see how best they can be protected by leveraging existing cover or with new insurance, as required.

Source: valueresearchonline.com
Please do not reply back to this mail. This is sent from an unattended mail box. Please mark all your queries / responses to webmaster@ecrmagic.com.
Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. www.rwd.ecrmagic.com and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. www.rwd.ecrmagic.com, its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.