issue xxxvii         
   
   
Eight mistakes to avoid while investing
From overconfidence, to over-enthusiasm to panic selling, there are some mistakes an investor should avoid while playing in the stock market. Investing is not just about picking winners, but also about avoiding mistakes. Retail investors can be better off if they avoid making the following mistakes.
   
   
    • Overconfidence — Don’t be unrealistically optimistic    
    A bull market makes retail investors believe that they are geniuses — after all, anything they put money into goes up. This overconfidence in their own abilities leads to a complete disregard of the risks involved. Every new generation that invests in the market ignores past experience. These new investors wrongly believe that stock prices only go up.
Don’t be overconfident and don’t start believing that you have superior skills compared to the market. Recognize that in a bull market you are benefiting because the whole market is going up. If those around you are getting unrealistically optimistic, start managing your risk accordingly. Remember that sometimes markets do come crashing down.
   
         
         
    • Over enthusiasm to trade – Not every ball should be hit    
    Good batsmen realize that some balls outside the off-stump should be left alone. Similarly, professional investors realize that sometimes it’s better to just stand still than to rush into a stock. Retail investors often make the mistake of “flashing outside the off stump” because they cannot resist the temptation to trade in every opportunity. And, like an inexperienced batsman, they suffer the same fate. Some of the world’s best investors follow a buy and hold strategy — you should too.    
         
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    Mediclaim vs. Health covers    
    Protection and savings    
    Mediclaim is usually a cashless policy, in which you can undergo treatment at any of the hospitals listed with the insurer without paying cash at the time of treatment. On submitting hospital bills, the designated third party administrators (TPAs) pay off the dues directly to the hospital. Newly launched health products of life insurers extend the same cashless facility. But the structuring is different. The latter, for instance, have a health cover along with the savings option. In other words, the premium you pay for health cover also has an investment element to it. The idea is to meet the growing health requirement at an older age. Premiums on health policies increase with age. At that point, savings come into play to meet their medical requirements. This could be particularly helpful for retired people as health expenses will not eat into their retirement corpus.    
         
    Life of the policy    
    The general insurance covers would be valid for a year requiring renewals each year, while the policies issued by life insurance companies do not require renewals till the term expires. Health policies are of a longer tenure starting up to 20 years. In case of mediclaim, the right to decline the policy renewal is in the hands of the insurer. In case of health insurance, the insurer is obligated to offer the cover till the policy expires.    
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    Taxes can be paid in electronic rupee, too    
    Why stand in a queue when you can pay taxes online?    
   

Both individuals and companies are always worried about payment of taxes, when the financial year approaches its close. If you are a salaried employee, your company debits taxes from your salary. But if the tax liability still exists, you have to get a challan for your tax payments.

Hitherto, a taxpayer had to go to a bank, fill up a challan and pay his taxes at the bank branch. Now, he has an option to home or office and avoid that hot summer visit to a bank branch. Taxes can now be paid online.

   
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    Money for a short while? Go for secured loans    
    Credit cards and personal loans can be easy, but they come with a huge interest burden. If you need money for a short time, the best option is to borrow against collateral.
Consider this scenario: You need to discharge certain payments immediately, but are faced with a liquidity crunch. It’s a temporary mini-crisis and you are confident of tiding over it sooner than later, as an inflow of funds is expected in the near future. What would you do?
   
         
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    Do you know how your insurance premiums are calculated?    
    Insurance is all about managing risks. And insurance companies don't take any risks when they are setting the rates you will pay for a policy. They want to take precautions to ensure that you won't die prematurely, causing them to pay out a lot more than you paid in.
What sort of risks are they interested in? Pretty much the same health risks doctors, medical researchers and health-conscious people are concerned about -- the same subjects you hear about over and over again if you listen to medical reports on TV or radio: tobacco use, cholesterol, being overweight, diabetes, and other conditions linked to poor health and early death.
   
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