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links for 2010-06-07

07 Jun
  • Why should pension products have insurance? Insurance is risk protection if you die. Pensions are risk protections if you survive. Very different concepts. But the reason is simple – SEBI and IRDA are defining their regulatory turf. If there is no insurance, SEBI will demand the right to regulate the product, which IRDA doesn’t want…
    This basically means there will be MORE mis-selling on pension products. With an insurance edge, a pension product becomes INFERIOR to a Ulip, because of the draconian exit rules. It is therefore better to buy a Ulip than a stupid pension policy from July 1 – in the sense that it is better to get punched in the face compared to getting shot.
    If you prefer not to get hit at all, you should simply buy a decent mutual fund or an ETF and sit with it till your retirement. No annuity crap, and if you work with products that pay out dividend, you could have a chunk of money that gives a great yield, and has ample liquidity in case you ever need sudden money.
  • When companies make money, we assume they are well-managed. That perception is reinforced by the CEOs of those companies who are happy to tell you all the clever things they did to make it happen. The problem with relying on this source of information is that CEOs are highly skilled in a special form of lying called leadership. Leadership involves convincing employees and investors that the CEO has something called a vision, a type of optimistic hallucination that can come true only in an environment in which the CEO is massively overcompensated and the employees have learned to be less selfish…
    two truths about investing: 1) Past performance is no indication of future performance. 2) You need to consider a company's track record…An investment professional can argue for any sort of investment decision by selectively ignoring either point 1 or 2. And for that you will pay the investment professional 1% to 2% of your portfolio value annually, no matter the performance…
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Posted by on June 7, 2010 in Uncategorized

 

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