You must have often heard or read about the ‘power of compounding’ and if you are not conversant with matters of finance, you may not know what it actually means. Actually, it is quite simple: It just means that you get paid interest on the principal amount as well as on the accrued interest at regular intervals. The exponential effect of this power of compounding is astounding.

If you are planning to quit your job and thinking of becoming an entrepreneur having a start-up of your own, you need to take some steps to secure yourself financially before you venture into business.

The Insurance Regulatory & Development Authority of India (IRDAI) has asked general insurance companies to submit third party vehicle insurance policies offering 3-year and 5-year insurance for cars and two-wheelers, respectively, and offer these options to their customers. The IRDAI directive to the insurers comes in the wake of the recommendation made by the Committee on Road Safety of the Supreme Court.

If you are in need of money and want to have a loan at a rate cheaper than personal loan, you can consider pledging your life insurance policy as collateral for raising the loan. You may apply for the loan either through the insurance policy or directly with the bank.

The performance of a mutual fund scheme cannot be done in isolation and it has to have some reference point or yardstick for comparison. The index to which the scheme is benchmarked provides such a reference point for comparison of the performance. If the scheme gives higher returns than the benchmark’s returns, it is said to have outperformed the benchmark during a given period of time; however, if it gives lower returns than that of the benchmark, the scheme is said to have underperformed the benchmark.

In India, an average investor barely knows about money market mutual funds (MMMFs), and even if he is aware, he seldom ventures to invest in these funds. There is a tendency among Indian investors to opt for known investment avenues such as bank fixed deposits, bonds, debentures, PPF, etc. The lack of awareness amongst investors about MMMFs deprives them of a good investment opportunity.

If you are planning to invest in securities such as fixed maturity plans (FMPs), closed-ended mutual funds, tax-free bonds or non-convertible debentures, you need to know that these securities are illiquid as there are not many buyers and sellers of these securities in the market.

Mutual fund houses have been offering a free add-on feature of life insurance cover to investors who invest through SIPs of select mutual fund schemes. The amount of life insurance cover offered depends on the amount of monthly SIP investment made by the investor, so higher the SIP amount, higher the life insurance cover. 

A travel insurance policy should not only cover the risk of death and hospitalisation, but it should also provide cover for delay or cancellation in flight, baggage loss, etc arising during travel.

Need for diversification or high growth makes savvy investors dabble in illiquid securities. Some want to transact in tax-free bonds, fixed maturity plans (FMP), closed-ended funds (CEF) or even non-convertible debentures (NCD) listed on stock exchanges.