All about property transfer, insurance ULIPs: Top personal finance stories

This week we explain the difference between a will and gift deed; next we analyse index funds of life insurers

A movie legend gifted a Rs 50-crore bungalow in Mumbai to his daughter last month. The ownership was transferred through two separate gift deeds. Almost a decade ago, a billionaire industrialist gifted his stake in business, a share worth almost Rs 1,041 crore, to his son. The older man was allegedly driven out of his house in Mumbai some years later. The two stories highlight the importance of families planning transfer of property. Should one use a gift deed or write a will? Bindisha Sarang explains the two options.

The second article by Deepesh Raghaw offers insights into the recent trend of life insurance companies launching small cap index funds within their Unit-Linked Insurance Plans (ULIPs). Read it to understand how ULIPs operate and the specificities of investing in index funds through them. It suggests that while this is a positive development, investors should be aware of the nuances and costs associated with investing in ULIP-based index funds compared to the traditional route of investing in them via mutual funds.

If you want the dual benefits of high returns over the long term along with tax savings, go for an equity linked savings scheme (also called tax saver fund). Remember that these funds come with a three-year lock-in. If you are looking for a fund from this category, check out Morningstar’s review of Axis Long-Term Equity Fund.

Do you worry about the financial security of your family? One way you can secure it is by purchasing adequate term cover. If you are 35-year-old, you can get a Rs 1 crore cover for around Rs 17000-21,000. Check out Policybazaar.com’s table of term insurance premiums.

NUMBER OF THE WEEK

69,654, record high Sensex closing on December 6

The Sensex hit a record high of 69,654 on December 6. Several factors have contributed to this surge. 

India’s gross domestic product (GDP) grew 7.6 per cent in the July-September quarter, exceeding expectations. The ruling party won the elections in Madhya Pradesh, Rajasthan, and Chhattisgarh, which points to the likelihood of a stable government being formed after the General Election of 2024.

Interest rates have peaked in the US and rate cuts could begin in May-June 2024. This shift in expectations has led to foreign portfolio investors (FPIs) once again investing in the Indian market.

When markets touch a new high, investors make two types of mistakes. One, they allocate more to equities to make a quick buck. This backfires if the market corrects.

Some investors exit the market, with the aim of returning whenever the market corrects. This move can also be futile as markets can remain high for a very long time. If and when they correct, the news flow could be so negative that investors may not have the guts to re-enter. A sensible approach during a bull run is to rebalance the portfolio while avoiding drastic changes to asset allocation.