How to successfully prepare for your CFP Examination

The Certified Financial Planner examination is undertaken for people aiming to become finance professions and investors. This examination will ensure that a student is professionally competent for these designations while also ensuring an increase in business. So if you wish to pursue a career in stock broking, insurance agency, to become a tax professional, a loan officer, a banker, etc. this examination should be on your priority list.

There are certain things to keep in mind while preparing for these certified financial planner examinations.

They are:

• Preparation techniques

Well if you have passed our school and college by simply taking tests in order to display one's retention skills, and then think again. This examination demands much more than retention of the material studied, it requires you to merge your syllabus and your reasoning skills in planning department of finance. So memorizing the syllabus only is not an option for those who wish to score in this examination.

• Special kind of reasoning

The CPF board has special methods for its reasoning questions and one may find difficulty in deciphering their methods and how they came to a conclusion for a particular question. Hence you need to solve the previous years' question papers in order to broaden your horizons and pass the examination.

• Minimum passing marks

You do not receive a percentage such as a 50% or a 60% for the examination undertaken. You only receive a ‘pass’ or ‘fail’ response for the test/examination.

• Do not leave out any question

You should ensure that you attempt every question since there is no negative marking. Even if it means that you guess a few answers that you aren't sure of, but it is highly advised that you should attempt every question.

• Ensure you provide more weightage to studying tax

According to most, the tax section is the most difficult to learn, memorize and apply. Hence you need to spend more time on that subject.

• Try enrolling into a class for courses related to the examination

These courses are ways and means to ensure you avail help in order to avail and assimilate all possible information about the course work through the help of an instructor.

FDI (Foreign Direct Investment) in the Indian Insurance Sector

FDI or Foreign Direct Investment in the insurance sector has been a political hot topic for almost six years now. So, what does FDI in insurance mean? To answer this, we first need to understand what FDI is and what happens when a country like ours accepts direct investments from another country.

FDI, simply put, is a direct investment, by an individual or a company of another country, into business or production services of a country. This could be done in two ways viz. by either expanding the business in or by possibly buying a company in India.

Let's examine the condition of India's insurance sector. The Indian insurance sector has been in a state of constant unrest. It is facing a lot of problems due to reasons like rising costs, political reforms being stopped, etc. Thus, even though the insurance industry in India grew significantly in past decade, the Indian market still remains largely untapped. The Indian insurance industry needs to revived, and hence, the Indian government proposed to hike the foreign holding in joint insurance ventures from the 26% to 49%.

So, what are the benefits of increasing FDI in the insurance sector? There are plenty, but let’s take a look the four important ones:

1.  More money coming in will help new insurance companies to enter the market
2. Companies will be able to offer better and wide range of insurance products at extremely competitive prices
3. Companies will get product and technological expertise from their foreign counterparts
4. Companies will have to improve their infrastructure and better their operations to tap into the uninsured markets, which will lead to an increase in jobs

The good news is that, after going back and forth for almost six year, the government has finally given a go ahead to increase the FDI limit. With this happening, the insurance sector is looking at a capital inflow of nearly Rs. 60, 000 Crore in 2015.

Top Three Ways to Assess Your Funds Performance

Mutual funds are collective investment vehicles that offer substantial capital gains over investments. They are professionally managed by experts, or group of experts who are well-versed with the working of financial markets. They tap lucrative opportunities to earn profits over the underlying investments, and thus guarantee capital appreciation for the amount invested.

Mutual fund's performance plays a key role in determining the return rate of any scheme. It is a crucial factor that investors assess and verify before shortlisting a scheme. So, emphasis is laid on the funds' performance while selecting a scheme.

There are several factors that are known to affect the performance of a scheme.

The top three factors that directly influence the performance include :-

• NAV Rates

NAV stands for Net Asset Value. It is defined as the per unit value of mutual fund scheme. It is calculated by dividing the total asset value of the scheme to the total number of units. Latest Mutual Funds NAV are computed on daily basis. The closing price of the underlying securities is utilized to calculate the NAV of a scheme. Thus, higher the NAV, better is the performance of the fund.

• Yield

This is defined as the income generated by any mutual fund. It is independent of the capital value of the underlying assets. This makes it almost independent off the NAV rates of any scheme. The yield of a scheme is directly dependent on the dividend payments of the underlying securities. Thus, if some of the underlying stocks provide heavy dividend, then the Yield of the scheme will increase significantly.

• Total Gain

This is determined by assessing the performance of a fund for a particular period of time. Generally, investors consider a time frame of 1 month, 3 months, 6 months, 1 year, and 3 years. This gives investors a better picture on the performance of fund.