Allocation of funds to equity and debts

Allocation of funds to equity and debts

Two methods:

1) Weighted average PE Ratio of Nifty or Sensex,

At higher PE Ratio levels, Reduce your exposure to equity and at lower PE Ratio levels increase your exposure to equity.

We have more exposure to equity when the market is cheap.

2) Term of the policy.

The longer the term to maturity in years, the higher the exposure to equity.

PE is price to earnings ratio

EPS is earnings per share

PE of a company = Market price / Earnings per share

Find PE Ratio of Nifty or Sensex at bseindia.com or nseindia.com

Donot leave it to the insurance agent to identify the product that best suits your needs. I have come across many insurance agents who are more interested in thier commission than your interests. So do your home work before buying a policy.