They thought they would never be discovered.

Eventually, they were discovered.

Long story short, they went to jail for insurance fraud.

6-Day-Course
Theme of the week: finance certifications

Day 6 - Sunday

We’ve reached the end of this week’s course that started on Monday.

Here’s a test you should take. Get pen and paper!

Question 1:
CFA exam has how many levels?
-one
-three
-two

Question 2:
MBA programs have specializations like HR, marketing, finance, etc.

-True
-False

Question 3:
CA’s are famous for?

-Performing audits
-Filing taxes
-Advisory, compliance, consulting
-All of these

Question 4:
Which certification you should complete to become an RIA?

-CFA
-NISM
-MBA

Question 5:
Which of these is a global certification?

-CA
-CFA
-NISM

Answers:

Q1: Three
Q2: True
Q3: All of these
Q4: NISM
Q5: CFA

---------------------

There's more:

-Quick takes from the week
-How Sensex, Nifty, gold, silver, Dow Jones, and Nasdaq changed over the week

And more!

Visit our Weekly Groww Digest page to read it all:

https://groww.in/digest

-profits if the total insurance paid to customers is lower than total amount collected as premiums – this is called underwriting profit

-profits from investing the amount collected (float) – this is called investment income

You’d be surprised to know this:

In most years, many insurance companies don’t make any underwriting profits – they have underwriting losses.

Investment income becomes the main source of earnings for them.

In some bad years, the company may make overall losses instead of profits.

Underwriting profit/loss and float are only two vital metrics. There are more.

If you’re planning to invest in insurance company stocks, it is good to know more about how insurance companies actually work.

Research more.

Check before taking insurance

But what about insurance takers? What if you are taking insurance?

Yes, even in that case, knowing what is written above helps.

Insurance comes in all forms.

Life, health, car, home, travel – these, you already know about.

But there’s a lot more.

Property. Loan repayment. Electronic devices. Watches. Paintings. Sculptures. You name it.

Actors have their faces insured. Singers have their vocal cords insured. Sports persons have their arms and legs insured.

In each case, the insurance company comes up with a premium amount that they think will be the right amount.

They like giving insurance to people who are less likely to ask for the insurance amount.

This is why:

-if you are a non-smoker, you health insurance premium is lower
-if you own a sports bike (instead of a similar price car), the premium is higher
-if you work in a dangerous profession (like oil rig engineer), the life insurance premium is higher (compared to a software engineer)

The insurance industry is heavily regulated. Insurance companies can’t do whatever they wish to.

The banking system has RBI and the stock markets have SEBI, the insurance industry has IRDAI.

Insurance Regulator and Development Authority of India.

There are strict rules about where insurance companies can invest the float.

There are regulations about what information they have to reveal to the public – mandatorily.

One of the main things you should check – no matter which insurance you are buying – is the claim settlement ratio.

Claim settlement ratio: the percentage of insurance claims the company has paid (compared to total claims received).

A claim settlement ratio of 98% means the company paid the insurance amount in 98% of the total insurance requests/claims they got.

This is a valid metric for every kind of insurance – life, medical, car, etc.

Besides the claim settlement ratio, in each kind of insurance, there are different things to check. You’ll have to research that.

Why so complicated?

Insurance is almost never very simple.

Example:

You might have taken a Rs 10 lakh worth of medical insurance. Does this mean everything under Rs 10 lakh will be covered if you fall sick?

No, there are limits.

There is a limit to the amount that can be spent per day on room rent, on food, on medicines, on treatments, on tests, etc.

Many things might not even be covered at all.

The list can be long.

It takes some time. But it really is worth the effort.

Do research carefully before buying insurance – not just medical insurance or life insurance, but any insurance.

Why is it so complicated?

The answer itself is complicated.

But in short, because people try to take wrong advantage of insurance.

So to limit their chance of being scammed by insurance-takers, companies put in all sorts of clauses and terms.

Of course, that isn’t to say insurance companies are clean.

Many companies try to scam their customers too – using complicated language.

By the way, the example given above – of John Darwin?

That doesn’t end there.

His wife claimed the insurance amount.

A few years later, it was discovered that John didn’t die.

He was in fact living in the same house. He faked his death so his wife could claim insurance.

They both lived together for a few years and then moved to another country.

📊 Weekly Groww Digest

10 Sept 2023

Sensex: 66,598.91 ▲ 1.85%
Nifty: 19,819.95 ▲ 1.98%
John Darwin paddled out into the sea.

And never returned.

In the first half of the day. 21 March, 2022. In the seaside town of Seaton Carew (UK).

He had taken loans for it – and he was struggling to pay back.

Later on the same day – 21st March – John did not report for duty.

John Darwin was reported as ‘missing’.

A search began for him.

When he did not return in a few hours, they assumed the worst.

A search operation was launched to look for John Darwin.

They could not find John Darwin.

A day after he went missing, they found a kayak and a paddle – it was Darwin’s.

But there was no sign of John Darwin anywhere.

Some time passed.

John Darwin was presumed to be dead.

A death certificate was issued. The date of death was mentioned as 21 March 2002 – the date he went kayaking.

His wife applied to get the insurance amount – since John was dead.

Unat Direct Insurance Management Ltd was their insurer. They paid her 250,000 pounds.

The life insurance taken by John Darwin helped Anne after his presumed death.

Business Model

The insurance company paid a big amount to Anne Darwin.

But this is an insurance ‘company’. And companies exist to make profits.

How can paying out big amounts be beneficial for companies?

Insurance companies don’t provide insurance for free. They charge an amount to give you insurance.

If you pay Rs 10,000 per year for medical insurance, you get medical insurance of up to Rs 10 lakh for 1 year (example).

The company makes an assumption: a few people will need to be paid. The rest is earnings.

Let’s say an insurance company has 1,000 customers. Each has paid Rs 10,000. And the insurance amount is Rs 10 lakh.

(This Rs 10,000 is called the premium).

So the insurance company has collected a total of Rs 1,00,00,000 (Rs 1 cr).

This amount – the Rs 1 cr – is called float.

Remember this term – float. We’ll come back to this later.

Now, if 2 people go to the hospital in that year, the insurance company has to pay:

-So, Rs 10 lakh to each
-Or, Rs 20 lakh total
-So, Rs 80 lakh is left

This Rs 80 lakh is the insurance company’s earnings!

If 10 people go to the hospital in that year, the insurance company has to pay:

-Rs 10 lakh to each
-Rs 1 cr total
-Rs 0 is left

The insurance company made no earnings.

What happens if even more people claim the insurance in that year?

The insurance company suffers a loss but still pays the amount – because that’s the agreement. The insurance company has to pay.

So what does the company do to deal with this?

It increases the insurance amount. Maybe instead of charging Rs 10,000, it calculates it needs to charge its customers a higher premium.

The art of running an insurance business is pretty much this:

-charge customers high enough to make profits
-but keep it affordable for customers at the same time

This is an extremely simplified version.

Of course, it is far more complicated.

Keeping the insurance amount at that right level – affordable for customers yet profitable for the company – is extremely hard.

There’s always the concept of supply and demand.

There are many competing insurance companies. They are all fighting each other – to the benefit of insurance takers.

There is actually intense competition in the insurance space. This keeps the insurance premiums low – good for customers.

So, insurance companies make profits by aiming to pay less out to its customers than it has gotten.

There’s another big source of income.

Remember float? The total amount of money the insurance company has collected from customers?

Insurance companies can invest this amount.

They can make money by investing the float too!

In fact, many companies don’t make money using the money they collect as premiums.

They end up paying nearly the entire amount back to their customers as insurance.

But they’re able to generate earnings by investing that amount – the float.

So two kinds of earnings:

📊 Daily Groww Digest

5 Sept 2023
---------------------
Sensex 65,780.26 ▲ 0.23%
Nifty 19,574.90 ▲ 0.24%
---------------------
Media and healthcare stocks rose the most.

Financial services and bank stocks fell.

Asian markets: China and Hong Kong fell while Japan and Taiwan rose.

US markets were closed on 4 Sept on account of Labor Day.
---------------------

More...

+India's auto sales rose 9% year-on-year in August: FADA. 3-wheeler sales jumped 66% to a record high of 99,907 units.

+Vishnu Prakash R Punglia IPO listed on NSE at Rs 165, a premium of 66.67%. On BSE, it listed at Rs 163.3, up 64.95%.

+Ratnaveer IPO has been subscribed 21.82 times. Retail investors have subscribed 23.12 times. It is open till 6 Sept.

+SAMHI Hotels Ltd and Motisons Jewellers Ltd have received SEBI approval to launch IPOs.
---------------------

Stocks in the news
Hero Moto: to invest Rs 550 cr in Ather Energy.

RVNL: was the lowest bidder for a railway project worth Rs 174 cr.

Cipla: planning to acquire South Africa-based Actor Pharma.

Shree Cement: set up a new Rs 550 cr grinding unit in West Bengal.

Tata Steel: will pay Rs 314.70 cr as annual bonus to employees.

---------------------

Word of the Day

Bull Market
When stock prices are rising due to investor confidence and expectations of growth, it is called a bull market.

Opposite of this is a bear market.

In a bear market, investor confidence is down and Nifty 50 and Sensex generally fall.

---------------------

6 Day Course
Theme: finance certifications

Day 2: Tuesday

NISM

National Institute of Securities Markets.

This is an educational arm of the SEBI that conducts the NISM exams.

NISM certification is not one certification. There are many levels of NISM certifications.

NISM certification is useful in many fields.

It is most popular for becoming a registered investment advisor (RIA) — to give finance advice to people.

To become an RIA, a person would have to clear some levels of NISM certification.

It must be added here, NISM certifications can be taken by anybody, not necessarily those who want to become an advisor.

Missed last week's course? You can download the course PDF - click to download: https://bit.ly/45x3yiF

---------------------

Featured Question
“What is relation between p\e and sector p\e”

PE ratio stands for price-to-earnings ratio.

To get the PE ratio, you

-take the price of the share
-divide it by the earnings (per share)

What this tells you is how high the price of a stock is when compared to the money it is earning.

PE ratio is used by many investors to determine if a stock is overvalued or undervalued.

But there is no 'right' level. It varies from investor to investor.

The PE ratio of companies in same industries are usually similar.

For example, companies from the infra sector will likely have similar PE ratios. Banking sector companies' PE will be similar. And so on.

This is where the concept of sector PE ratio comes in.

They calculate the PE ratio of an entire industry or sector (infra, pharma, banking, etc).

Based on that, they can look at individual stocks and decide if the PE ratio is too high or too low.

Example:

The sector PE ratio of IT stocks is 25.

So, when an investor sees an IT company stock’s PE ratio being 20, he/she might say that the stock is undervalued in comparison to the sector.

The sector PE ratio of energy stocks is 15.

So, when an investor sees an energy stock’s PE being 20, he/she might say that the stock is overvalued.

---------------------

That's it for now. See you tomorrow! 😁

📊 Daily Groww Digest

4 Sept 2023
---------------------
Sensex 65,628.14 ▲ 0.37%
Nifty 19,528.80 ▲ 0.48%
---------------------
Metal, PSU bank, and IT stocks rose the most today.

Consumer durables and FMCG stocks fell.

All Asian markets closed in the green. Hong Kong and China’s markets were the top gainers.
---------------------

More...

+Ratnaveer Precision IPO has been subscribed 5.77 times so far. Retail investors have subscribed 7.65 times. It is open till 6 Sept.

+India’s electricity usage rose 16% year-on-year in August to 151.66 billion units.

+Diesel usage fell 2.9% and petrol usage rose 0.4% in August. Aviation fuel: usage up 9.5%, LPG: up 4.4%.

+EMS Limited IPO will be open between 8-12 Sept.

+Jupiter Life Line IPO will be open between 6-8 Sept.
---------------------

Stocks in the news
Kotak Mahindra: Uday Kotak resigned as MD and CEO.

IndiGo: IndiGo and Air India will set up their leasing business at GIFT City, Gujarat.

Coal India: 13% year-on-year growth in production at 52.3 million tonnes in August.

Oil India: approved equity contribution of Rs 1,738 cr in North East Gas Distribution Company (its Joint Venture with Assam Gas Company).

GMR Power: subsidiary, GMR Smart Electricity Distribution, got a Rs 5,123.37 cr order from the UP government.

Zomato: its Czech based step-down subsidiary is filing for liquidation.

HAL: shareholders approved stock split.

Biocon: acquired Eywa Pharma Inc's manufacturing facility in the US for around Rs 63 cr.

---------------------

Word of the Day

EXIM Bank
The Export-Import Bank of India is a government institution that helps Indian businesses in their international trade.

EXIM Bank has 2 main functions:

- It provides financial support to companies that want to sell their products abroad.
- It acts like an insurance company for Indian businesses in global trade.

---------------------

6 Day Course
Theme: finance certifications

Day 1: Monday

There are many type of certified financial professionals in India.

Each of them is licensed to perform a different function.

In this week’s course, we’ll explore some of these certifications, their capabilities, and their limitations.

Let’s start with Chartered Accountant (CA).

Those who are certified CAs are famous for performing audits and filing taxes for their clients.

They are also involved in advisory, compliance, consulting, bankruptcy proceedings, and assurance of many finance-related matters.

There are a few other tasks also in which they are involved.

Sometimes, they advise their clients with regard to investing also — but that is not a part of their CA certification.

Missed last week's course? You can download the course PDF - click to download: https://bit.ly/45x3yiF

---------------------

Featured Question
“It is mentioned above that SIP is not allowed in closed ended funds. But tax saving funds are having locking period and hence are closed ended type but allows SIP. Why is it so ?”

This can be a bit confusing.

Tax saving mutual funds are open-ended mutual funds (technically speaking).

They are open-ended mutual funds — that have a lock-in period of 3 years.

That is why you are able to do an SIP into them.

In close-ended mutual funds, you have to invest by a certain date.

And you can take out money from these close-ended mutual funds only on a certain date (after the lock-in ends).

In case of tax-saving mutual funds, the money is locked-in for 3 years from the date of investment.

After those 3 years, the amount remains invested in the mutual fund.

But you can take it out any time you want (just like any other open-ended mutual fund).

Note: Tax saving mutual funds and ELSS funds are the same thing.

---------------------

That's it for now. See you tomorrow! 😁

📊 Daily Groww Digest

1 Sept 2023
---------------------
Sensex 65,387.16 ▲ 0.86%
Nifty 19,435.30 ▲ 0.94%
---------------------
Metal, PSU bank, and auto stocks rose the most today.

Healthcare and pharma stocks fell.

All Asian markets except Hong Kong rose today.

US added 1.87 lakh new jobs in August. Unemployment rate now stands at 3.8%.
---------------------

Auto Sales for August

Automakers released their sales numbers for August. Here are the highlights:

Maruti Suzuki: sales rose 14.48% to 1.89 lakh units (highest ever).

Tata Motors: sold 78,010 units, 1.06% decline year-on-year.

Mahindra: sales rose 19% to 70,350 units.

Ashok Leyland: sales increased 10.30% to 15,576 units.

Eicher Motors: sales increased 10.66% to 77,583 units.

TVS Motor: sold 3.46 lakh units, increase of 3.61%

Bajaj Auto: sales fell 15% to 3.42 lakh units.

---------------------

More...

+India's GST collection stood at Rs 1.59 lakh cr in August, 11% year-on-year increase.

+Countdown for India’s first solar mission ‘Aditya L1’ has started; launching tomorrow.

+UPI crossed 10 billion transactions in August, highest ever.

+Rishabh Instruments IPO was subscribed 31.65 times. Retail investors subscribed 8.43 times.

+The government has increased jet fuel prices by around 14% to Rs 1.12 lakh per Kl.

+Commercial LPG price has been reduced by Rs 158.

+RBI mentioned that 93% of Rs 2,000 notes have been returned to banks.

+Real estate company Arkade Developers has applied to go for an IPO.

+Jupiter Life Line Hospitals IPO will be open between 6-8 Sept. Price band is Rs 695 to 735 per share.
---------------------

Stocks in the news
Bajaj Auto: subsidiary Bajaj Auto Consumer Finance has received RBI approval to start NBFC business.

HFCL: raised Rs 353 cr through a qualified institutional placement (QIP).

BSE (company): increased its share buyback offer price to Rs 1,080 from Rs 816.

---------------------

Word of the Day

Lien
The legal claim on an asset in the settlement of a debt is known as a lien.

Consider taking a loan from a friend.

To make sure you repay them, they can request something (like gold, real estate, etc) that is valuable to you. This item is called a collateral.

Lien is the power to claim this collateral in case the loan is not repaid on time.

---------------------

6 Day Course
Theme: mutual fund companies

Day 5: Friday

Many mutual fund companies were started by existing banks.

Example: HDFC, SBI, ICICI, etc.

One important detail investors must know is that these are separate companies. They are not operated as the same company.

Many times, these are jointly run with another asset management company.

Example: ICICI Prudential — here ‘Prudential’ is the partner company and the mutual fund company is called ICICI Prudential Mutual Fund

Note: there are mutual fund companies started by non-bank companies.

Example: Tata Asset Management, Motilal Oswal Asset Management, etc.

Missed last week's course? You can download the course PDF - click to download: https://bit.ly/3YOLJsU

---------------------

Featured Question
“What are the open ended and fixed ended funds? When we invest an SIP is it mandatory to decide for how many years that we need to invest? Or we can invest for the period based on the need and can be withdrawn?”

Open-ended mutual funds do no have any lock-in period.

Most investors stick to open-ended mutual funds.

Close-ended mutual funds have a lock-in period.

SIPs are not allowed in close-ended mutual funds.

In case of SIPs in open-ended mutual funds, you need not decide the time period.

Once you invest via SIP, the amount will remain invested — until you withdraw it.

---------------------

That's it for now. See you tomorrow! 😁

Daily Groww Digest

29 August 2023
---------------------
Sensex 65,075.82 ▲ 0.12%
Nifty 19,342.65 ▲ 0.19%
---------------------
Realty and metal stocks rose the most today.

PSU bank and FMCG stocks fell the most.

All Asian markets closed in the green. Hong Kong and China markets rose the most.

---------------------

More...

+The government approved a subsidy of Rs 200 per domestic LPG cylinder. Subsidy for Ujjwala scheme increased to Rs 400.

+Union Minister Nitin Gadkari launched a 100% ethanol-fueled (E100) variant of Toyota Innova — world's first BS-VI (Stage-II) electrified flex-fuel vehicle.

+Rishabh Instruments IPO will be open between 30 Aug - 1 Sept. Price band is Rs 418 to Rs 441 per share.

+Pyramid Technoplast IPO listed on NSE at Rs 187, a 12.65% premium. On BSE, it listed at Rs 185, a 11.44% premium.

+NSE’s exchange-traded currency derivatives has seen around 2,000 cr contracts worth Rs 609 lakh cr in the last 15 years.

+Delhi Metro recorded the highest-ever daily passenger journeys (68.16 lakh) on 28 Aug: DMRC.

+PepsiCo India has joined Open Network for Digital Commerce (ONDC).
---------------------

Stocks in the news
Airtel: Airtel Uganda is planning to raise up to $216 million through an IPO.

Gillette India: announced a dividend of Rs 50 per share.

Rashtriya Chemicals and Fertilisers: is now a ‘Navratna’ company.

Schaeffler India: received board approval for acquisition of Koovers for around Rs 142 cr.

SJVN: SJVN Green Energy received an order from the Assam Power Development for 3 solar projects.

Zomato: Tiger Global sold its remaining 1.44% stake in the company.

---------------------

Word of the Day

Insurance
Insurance is like a safety for unforeseen events that cost money.

You pay a little money regularly (called the premium) to an insurance company.

If something unexpected happens, they help by paying to fix or make the situation better.

For example:

With mobile insurance, if your phone's screen breaks, the insurance company would help cover the expense partially or fully.

It is important to be aware of what the insurance covers as it does not cover everything.

---------------------

6 Day Course
Theme: mutual fund companies

Day 2: Tuesday

Now, we come to the part which confuses many new investors.

Mutual fund companies launch many mutual funds. They are allowed to launch only one mutual fund in each category.

For example, take the category of large cap mutual fund. A mutual fund company will launch only one large cap mutual fund.

But, there are many mutual fund companies. Each one of them can launch their own large cap fund.

This is how you get so many large cap mutual funds. They are all competing with each other.

Think of sports shoes. Nike, Puma, Adidas, Power — these are all brands making sports shoes.

Each of those shoes is competing against other sports shoes in the market.

Missed last week's course? You can download the course PDF - click to download: https://bit.ly/3YOLJsU

---------------------

Featured Question
“Why people are affried of mutual funds and insurance”

One of the biggest reasons why people are afraid of mutual funds and insurance is complexity.

People need to pay attention to a few things for better understanding.

There are many people who are trying to simplify this learning. Unfortunately, many of them make mistakes and mislead other people which makes people even more scared.

Ideally, people should put in the effort to at least understand the basics.

---------------------

That's it for now. See you tomorrow! 😁

📊 Daily Groww Digest

28 August 2023
---------------------
Sensex 64,996.60 ▲ 0.17%
Nifty 19,306.05 ▲ 0.21%
---------------------
Realty and pharma stocks rose the most. IT and FMCG stocks fell the most.

All Asian markets closed in the green.

---------------------

More...

+Vishnu Prakash R Punglia IPO was subscribed 87.82 times. Retail investors subscribed 32.01 times.

+ISRO is planning to launch the Aditya-L1 solar mission on 2 Sept.

+India's auto industry is expected to rank 3rd in the world by 2030.

+Solar capacity addition in India fell 58% year-on-year to 1.7 gigawatt in the April-June quarter: Mercom India.
---------------------

Stocks in the news
Reliance: appointed Isha, Akash, and Anant Ambani as board directors.

L&T: fixed 12 Sept as the record date for its Rs 10,000 cr buyback.

BPCL: will spend around Rs 1.5 lakh cr on its initiative, 'Project Aspire'.

Bharat Forge: Bharat Forge company Kalyani Rafael Advanced Systems Pvt., won an order from the Ministry of Defence worth Rs 287.5 cr.

Patel Engineering: got an order for the Dibang multi-purpose project in Arunachal Pradesh.

Vedanta: won a $1.1-bn cost-disallowance arbitration case.

---------------------

Word of the Day

Bond
A kind of debt.

When you purchase a bond, you are giving a loan to the issuer, which may include a corporate, government, or municipality.

The issuer pays interest for the duration of the bond and also pays back the principal amount at the end.

---------------------

6 Day Course
Theme: mutual fund companies

Day 1: Monday

Many people invest in mutual funds.

But not many know how the companies running the mutual funds work. In this week, we’ll explore mutual fund companies.

Mutual fund companies come under a certain type of company called an ‘asset management company’ or AMC.

All mutual fund companies are AMCs. But there are AMCs that are not mutual fund companies.

Think of AMCs like how you think of an electronics company.

Samsung makes fridges. They also make washing machines, TVs, and speakers. LG also does all of those.

So, Samsung and LG are two different companies offering different products that compete with each other.

Something similar happens with AMCs and their mutual funds.

Missed last week's course? You can download the course PDF - click to download: https://bit.ly/3YOLJsU

---------------------

Featured Question
“As a beginner in SIP, how many funds should I be investing in? I have found atleast 20 to 25 good mutual funds based on my research.”

Each investor’s capacity to manage mutual funds is different.

You should ideally invest based on the number you can manage and monitor.

Investing in too many mutual funds can be difficult for an individual investor.

So, how many mutual funds should you narrow down to? That is something you have to decide for yourself.

---------------------

That's it for now. See you tomorrow! 😁

📊 Daily Groww Digest

25 August 2023
---------------------
Sensex 64,886.51 ▼ 0.56%
Nifty 19,265.80 ▼ 0.62%
---------------------
All sectors closed in the red today. PSU bank and realty stocks fell the most.

All other Asian markets closed in the red as well.

Japan and Taiwan markets fell the most.

---------------------

More...

+Vishnu Prakash R Punglia IPO has been subscribed 10.63 times so far. Retail investors have subscribed 12.88 times. The IPO is open till 28th Aug.

+Zepto has raised $200 million and is now a unicorn (over $1 billion valuation).

+Rishabh Instruments IPO will be open between 30 August to 1 Sept. Price band is Rs 418-441 per share.

+Forex reserves fell by $7.28 billion to $594.90 billion in the week that ended on 18 Aug.
---------------------

Stocks in the news
Sapphire Foods: Sapphire Foods Mauritius sold 16.25 lakh shares of the company at an average price of Rs 1,355 per share.

Bharat Electronics: Ministry of Defence approved buying of electronic warfare suite from Bharat Electronics.

Jio Financial: removal from BSE indices has been postponed by another 3 days to 1st Sept.

Power Finance: will provide a Rs 4,527.68 cr loan to set up a 1,320 MW project in Raghunathpur (West Bengal).

---------------------

Word of the Day

Litigation Financing
Litigation financing is when a third party (usually a company) provides you with money to cover your legal costs.

The company receives a share of the potential winnings if your case is successful.

Example: Let's say you were in a car accident and believe it wasn't your fault.

You want to sue the other driver for compensation, but you don't have the funds to hire a lawyer, pay court fees, and other related expenses.

A litigation financing company reviews your case and believes you have a strong chance of winning.

They offer you Rs 1 lakh to cover all the legal costs, and in return, they'll take a portion (let's say 20%) of any compensation you receive if you win the case.

It is important to carefully read and understand the terms of the financing agreement, as the company's share can sometimes be quite significant.

---------------------

6 Day Course
Theme: term insurance

Day 5: Friday

Many insurance takers are attracted towards insurance that also serve as investments.

ULIP is one such example.

In this, a part of the premium amount is invested in a scheme and offered as returns.

In most cases, investments and insurance should not be mixed.

Insurance is meant to cover you in case of a negative outcome. It is better to take insurance that serves that purpose properly.

Investments should ideally be done separately and purely for investing.

Mixing these two often leads to poor insurance as well as poor investment.

Missed last week's course? You can download the course PDF - click to download: https://bit.ly/3qAoLcx

---------------------

Featured Question
“How is dividend reinvested into mutual fund. Generally, I never see additional units getting added to my folio in my email in addition to my SIP. So, how exactly is dividend amount added to my mutual fund and where can I check how much dividend is reinvested?”

Investors do not get additional units.

The value of the exiting units goes up. Which means, the NAV value goes up whenever dividend is added.

---------------------

That's it for now. See you tomorrow! 😁

Luckin Coffee got a new CEO, and the company was delisted from NASDAQ.

By Dec 2020, it was determined that Luckin would have to pay a $180 million fine.

And that was it.

Once something like this happens, there is usually not much left. Usually.

Unexpected

But Luckin’s case is a bit different.

After fraud and scandals, near bankruptcy, lockdowns in China, fines, and other giant challenges, Luckin reported its first profit in Dec 2022.

The company not only survived under the new CEO, it was financially doing better than ever.

It now has over 6,500 stores in China. That is more than Starbucks’ 5,600.

In 2022, Luckin Coffee had a new competitor. CottiCoffee.

This is a new brand that has emerged in China.

It is rapidly expanding and challenging Starbucks. It is also challenging Luckin Coffee, of course.

And CottiCoffee has been started by Charles Lu.

Yes, the same Charles Lu who started Luckin Coffee and was fired after the scandal.

It’s a mad world out there.

6-Day-Course
Theme of the week: reading balance sheets

Day 6 - Sunday

We’ve reached the end of this week’s course that started on Monday.

Here’s a test you should take. Get pen and paper!

Question 1:
Balanced sheets are written like this:

-Assets = liabilities + debt
-Assets = liabilities + shareholders' equity
-Debt = liabilities + shareholders' equity

Question 2:
Taxes and fines are a part of liabilities.

-True
-False

Question 3:
Any asset that can be converted to cash in a short period of time. How long is the period of time?

-1 day
-1 month
-1 year

Question 4:
All companies’ balance sheets must be read in the same way.

-True
-False

Question 5:
In case of IT company stocks, you have to ignore the revenue, earnings, and debt.

-True
-False

Answers:

Q1: Assets = liabilities + shareholders' equity
Q2: True
Q3: 1 year
Q4: False
Q5: False

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There's more:

-Quick takes from the week
-How Sensex, Nifty, gold, silver, Dow Jones, and Nasdaq changed over the week

And more!

Visit our Weekly Groww Digest page to read it all:

https://groww.in/digest