🛍 Fed bond shopping, Poor ratings & How To Buy Direct Mutual Funds.

Orowealth Weekend Reads: June 15, 2020

LAST WEEK MARKET MOVES

HEALTH INSURANCE

As we face unprecedented circumstances and devastation due to the COVID 19 virus, it has become vital to plan for a Health Insurance Policy. As the word insurance suggests, Health Insurance provides financial coverage for the medical expenses incurred by an individual and their family members. With rising medical expenses, it has become ever so important to avail a Health Insurance plan in order to ensure your lifetime savings are intact.

As we continue in our journey to provide alternate products to our clients, we are excited to announce our partnership with Future Generali to provide a Health Insurance Policy with the following details:

1. Plans for Individuals with base premium as low as Rs 394 per month*
2. Plans for Families with base premium as low as Rs 757 per month*

Additional Benefits
a. Cashless Claim Benefits
b. Easy Installment Facility
c. Plans customized to cover for Covid – 19
d. Additional Cover beyond the Employer Cover
e. Tax Benefits under Section 80D, Income Tax Act, 1961

*Premiums to be paid are subject to the coverage being opted for and are exclusive of taxes.

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NEWS WE HAVE BEEN FOLLOWING

#BondShopping
The central bank of the US – Federal Reserve – has announced that it will continue to buy bonds in order to keep borrowing rates low in the country. It added that almost all of its members see no rate hike until the end of 2022. The central bank observed that the coronavirus pandemic has been detrimental to the country as it has severely dulled economic activity and pushed up job losses. It estimates that economic growth will decline by 6.5% in 2020 before rising by 5% in 2021. It also estimates the unemployment rate, which currently stands at 13.3%, to be around the 9.3% mark by the end of this year. On the bond-buying front, the Federal Reserve has announced buying bonds worth $2.1 trillion and launched nine lending programs to keep credit markets liquid. In order to help corporations, the central bank has also decided to buy corporate bonds thus stirring up the market for these instruments. Apart from corporate bonds, the Fed is also buying state and local government bonds.

Takeaway-
The key rate of the Fed is already at around zero. By keeping interest rates low through 2022, it will allow individuals and businesses to borrow cheaply which, in turn, will help them spend more, thus helping reinvigorate the economy.

#PoorRatings
Rating agency Standard & Poor’s (S&P) has maintained India’s long-term foreign and local currency sovereign credit rating at BBB– with a stable outlook. This represents the lowest investment grade rating for a nation according to the firm’s rating scale. Its rationale for maintaining the ratings was that India’s economy seemed to it like a long-term outperformer in its peer group. It, however, noted that the coronavirus outbreak would be a significant challenge for the country’s economy to overcome. It projected a decline of economic growth by 5% in the current fiscal year followed by a growth of 8.5% in 2021-22. It expected the country’s fiscal deficit to surge to 11% of GDP in the current fiscal before declining to 8.5% in the next one. The firm hoped that an improvement in economic growth and fiscal deficit in the next fiscal coupled with government reforms would benefit India in the long term.

Takeaway-
S&P’s decision to maintain India’s credit rating comes days after Moody’s Investors Service had slashed the country’s rating. After this action, all three rating majors, including Fitch, now have the lowest investment-grade rating on India. While Moody’s has a negative outlook, the other two have a stable outlook.

FROM OUR BLOG SECTION

How And Where To Buy Direct Mutual Funds

Saving is the new investing! Why let your money lie idle in the bank when you can have it working to enhance your wealth! You can invest in gold, real estate; however, we recommend you invest in Mutual funds!

QUOTE OF THE WEEK
“Believing in progress does not mean believing that any progress has yet been made.” – Franz Kafka (a German-speaking novelist)
Chosen by Neel – Orowealth.