Another Recession on the Cards?

5th August 2011: According to recent economic situation in US, the probability of recession has been doubled. The chances are that there will be recession is 10% and it may come in the next year has 35% chances. According to latest reports, US economy is not growing. Global stock markets tumbled on Friday due to fear that US is heading towards another recession. Already European debt crisis is worsening. No matter how much bailout packages has been announced, the economy is not recovering at all.

What caused these reports is the latest findings of some key economic indicators like consumer spending, manufacturing, job cuts and GDP. If US economy continues to perform like this, we are not far from a 2008 situation.

The effect of fears of US recession also impacted Indian stock market as the sensex closed 387 points lower than the last day. Lets hope we all survive these tough times.

Switching option

There are many insurance companies in India providing insurance to individuals. They have both simple insurance plans and ULIPs (Unit link Insurance Policy). Many people holds the insurance ULIP policies these days.

How ULIPs works?

The premium which we pay for our insurance also gets invested in stock market and other investments. Almost all insurance companies have various investment plans under ULIP. There are all equity plans (all the money invested in share market), all debt plans (money invested in govt. bonds and securities) or the combination of both these plans. These companies also give one option where we can switch these plans based on the market conditions.

People are either not too educated about it or they dont know how to use this option and at what time. The policy which I have, has 3 switch options free in one year. Earlier my money was invested in combination of all equity and debt plan. But as we all see now that markets are improving, I switched my plan to all debt. And now when I check the NAV of this plan it is increasing at very fast rate. It means if I would have not used this option, my fund value would be increasing slowly.

Therefore, I suggest all those people who are having such policies to make use of this option.

Thanks for encouraging!!

The last post of mine was about my life which is so dull these days. But thanks to the people who commented on it and encouraged me to write more and more even if I do not have anything new happening in life.

Therefore, I will start writing about things which I like to do. I am interested towards share market trends, like how it is going, what are the companies to invest in for better returns. Though I never invested in share market in real but I play a share market game, where I invest Rs. 100000 virtually in different companies and then see how they are performing in the stock market.

Yesterday, Indian stock market opened like anything. Can you believe it, the market was +1300 in the first 16 seconds. All because, India has voted for a stable government after a very long time. And the investors are confident about it that no 3rd front or other allies will block the reforms in India now. There is a rule that if market moves more than 10% in a day up or down, it will shut down for 1 hour, if for 15% then for 2 hours and if more than that, it will be closed for entire day. And yesterday market was up by 17% and it was closed for entire day. So that was something like once in a life time experience. Many people would have become 'crorepatis' from 'lakhpatis' from yesterday.

This is the kind of push that Indian market needed and now the confidence has again build up. Now I should seriously start thinking about investing in market.