Queries

Nishant Risbud

My friends are advising me to buy insurance policies, both for saving taxes as well as for investment. But social media talks of stocks, which are risky. What should I do?

It is wise for an investor to first ensure that they have sufficient health insurance cover to protect themselves from the high cost of healthcare. However, the need for a life insurance policy arises only when you have someone financially dependent on you and your income. But don’t buy an insurance policy with the primary objective of saving taxes. Tax saving should be incidental, the need of an insurance policy is a must, otherwise.

There are many influencers on TV and social media, such as on Facebook, Twitter and YouTube. It is very important to get an idea about their credibility, background, and understand their incentives in suggesting a certain product to the world. An important aspect to check is whether these influencers are registered with the Securities and Exchange Board of India (Sebi), and what type of registration they have in place. The reason that this is important is that they can be held accountable for any advice they give. Even after considering this, a person’s recommendations on TV or YouTube should not be taken into account blindly, as it may not match your specific risk profile, investment goals and time horizon. Therefore, it is better to approach these recommendations with a healthy dose of scepticism and do your own research on what is the right approach for you.

Rishad Manekia, Founder and MD, Kairos Capital.

Christina Awmi

I am 22 years old and have recently started working. I want to save for my wedding and was advised by my brother to invest in sovereign gold bonds (SGBs) rather than jewellery. That way, I can earn interest and use the proceeds to buy jewellery of my choice closer to my wedding 8-10 years later. How do I invest in SGBs?

SGBs can be taken as a substitute for physical gold. They are easy to store, government-backed, have a yield component, and offer tax-free returns if held till maturity, i.e., eight years. The Reserve Bank of India (RBI) keeps coming up with new tranches of SGBs, which can be invested through the issuing banks, SHCIL offices, and post offices.

But do note that if you want to exit early, your options are limited. Also, from a portfolio management standpoint, ask yourself whether you want to diversify into multiple asset classes for a more diversified risk-return profile for your investments.

Rishad Manekia, Founder and MD, Kairos Capital.

Aniket Goyal

I am 27 years old. I recently quit my job as an IT developer and started my own venture. Previously, I had a company-provided health cover. Now that I am on my own, how should I go about choosing a health policy?

While buying a health insurance policy, first consider key features, such as premium, claim settlement rates and product features (number of years of pre-existing health conditions, caps on room rent, and so on). Shortlist insurers who have over 85 per cent claims settlement rates, then consider those that have not more than three years waiting period for pre-existing conditions and have no room rent restrictions. Then consider the premium.

Kapil Mehta, Co-founder, SecureNow.