5 movies with great financial lessons & why

Have an emergency fund or it will cost you

We are always told to expect the unexpected. Money wise we can only do that if there is an available fund to tap financial emergencies. The last thing we want to happen is getting into debt because of an emergency. It’s frustrating to go into debt just to bail out from an emergency.

What is an emergency fund?

Emergency fund is a money pool which is typically about 3- 6 months of your household’s total living expenses. For example, if you are spending Rs.30,000 a month towards your living expenses, you need to have Rs.1,80,000 readily accessible fund that you can use for the emergency.

Why maintain an emergency fund?

Medical emergency, loss of job, credit card debt, property maintenance etc could easily cause financial stress. An emergency fund can come in handy during these times.

How emergency fund should be?

The framework for emergency fund should be a combination of liquid fund easily accessible in a day or two along with fixed amount of savings of 3 -6 months of expenses with zero exposure to volatility.

How to create an emergency fund?

As a thumb rule, treat savings as an expense just like a utility bill so that one would be forced to set aside an amount for emergency fund. Here is my pick to get started:-

Automate your savings – Nowadays, almost every bank gives the facility to set an auto debit date and amount to transfer to the respective account. As soon as the pay check comes in, set the date and amount for transfer to respective emergency corpus. Click here

Start small – A penny saved is a penny earned. Do not try to make all the savings for emergency fund in one go as it is likely to cause financial stress. It is not important that you save in higher amounts, but it is critical that you make the process of saving a hobby and sustain it.Click here

Use Mutual Funds – Debt mutual funds are a good option for emergency funds. They have easy liquidity and less volatility. Debt mutual funds gives better returns than savings bank account interest (7 – 8% debt funds compared to 3 – 4% savings bank account) Click here

Get your health insured – Emergencies comes in the form of medicals. A health insurance will take care of sudden medical costs like surgery, hospitalization etc. Choose a health insurance that provides cashless hospitalization benefits to ensure that your emergency fund corpus remains untouched.

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Insurance Policies to go E-Way, What does it mean for you?

Insurance Regulatory Development Authority of India (IRDAI) is all set to revolutionize digital platform in insurance. From October, 2016, most insurance policies will be issued in electronic form. It is similar to buying shares online, after which they are stored in demat form. An investor can make an electronic insurance account (eIA) through an insurance repository or insurer. It gives the benefit to store life and general insurance policies at one place.

Here are some of the benefits of holding insurance electronically :

Safety

Policies held online will have no fear of damage and loss of policy documents. One time KYC will be sufficient and insurers will be able to take KYC inputs from the insurance repository. Investors will no longer be vulnerable to being cheated by fraudsters fabricating and forging policies since digital policies will be authentic. A copy of policy can be downloaded to a remote computer via secured networks at any time by an authorized user. Clickhere

Convenience

All insurance policies, be it life, pension, health or general, can be electronically held under a single e-insurance account. Premium for all the policies can be paid online and service requests or complaints can be registered at the website of the insurance repository. Click here

Less Paperwork

An investor who wants to buy a new electronic insurance policy under and existing eIA need not have to go through KYC verification all over again, if there are no changes to your KYC details recorded earlier. All service requests can be submitted to the insurance repository online and there is no need to go to the offices of individual insurance companies for service. Click here

Smoother Claims

The biggest challenge experienced at the time of making claims is the submission of original documents to the insurer. In case of electronic insurance accounts, bank details of the policy holder are available through the e-insurance account and insurers can make payments using NEFT.

Cost Effective

All basic services provided by the insurance repository are free of charge. Policy holders need not pay extra to buy an electronic policy or to dematerialise an existing policy. Cost savings are indeed possible for insurance companies, if they can completely do away with existing system of physical maintenance of policies. Click here