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In a landmark judgement, the Supreme Court on Friday recognized that a terminally-ill patient or a person in persistent vegetative state can execute an “advance medical directive” or a “living will” to refuse medical treatment, saying the right to live with dignity also includes “smoothening” the process of dying.

What is a Living Will?

It is essentially a document that sets out a patient’s wishes regarding how they want to be treated if they are seriously ill or in a permanently vegetative state. With this judgment, the right to die with dignity has been recognized as a fundamental right.

As regards personal finances, perhaps a big critical function that a living will performs is that it allows the maker of the will to prevent their family from financially overburdening themselves, sometimes to the extent of bankruptcy. Usually family members are spurred on out of love, guilt or a sense of duty to keep the patient alive, often at any cost. This results in the family’s financials going into disarray and jeopardizing their financial future and important life goals.

Who qualifies to write down a Living Will?

  • An adult who is of a sound and healthy mind and in a position to communicate, relate and comprehend the purpose and consequences of executing the document.
  • An adult must make such a will voluntarily 

What are the important items to cover in the document?

The judiciary has laid down guidelines on how such a document can be formed. They are as follows:

  • It should clearly indicate the decision relating to the circumstances in which medical treatment can be withdrawn.
  • Instructions must be absolutely clear and unambiguous.
  • It should mention whether the patient would like torevoke the instructions/authority at any time.
  • It should specifythat the patient has understood the consequences of executing such a document.
  • It should specify the name of a guardian or close relative who, in the event of the patient becoming incapable of taking decision at the relevant time, will be authorized to give consent to refuse or withdraw medical treatment
  • It should be in writing and should clearly state as to when medical treatment may be withdrawn or if specific medical treatment that will have the effect of delaying the process of death should be given.
  • If there is more than one valid Advance Directive, the most recently signed Advance Directive will be considered as the last expression of the patient‘s wishes and will be implemented.

How should this document be stored? 

The Supreme court has further laid down a road map on how the Living Will needs to be stored safely:

  • The living will should be signed by the maker in the presence of two witnesses. It should be countersigned by the judicial magistrate of first class (JMFC), confirming that the will has been drawn up voluntarily.
  • The JMFC will maintain a copy of the will and forward a copy to the registry of the district court of that jurisdiction.

Implementation of a Living Will 

The Supreme Court has described various checks on how a living will may be implemented:

  • Execution of the will can only be done if the medical board approves it. The medical board will consist of the head of the treating department and at least three experts from various specialized medical fields with at least 20 years of experience. The board can only give their certification (or not) in presence of the closest relatives. Furthermore, the board’s certification is only preliminary.
  • Once the board approves, the hospital has to inform the jurisdictional collector of the same. The collector will then appoint a separate board consisting of the Chief District Medical Office and three other experts from specialized medical fields. If this board approves the same, the chief medical officer will relay the decision to the jurisdictional magistrate who will then have to visit the patient at the earliest and authorize the implementation.

Any advantages of a Living Will?

  • Providesrespect towards a human being’s fundamental right to live and die smoothly
  • Doctors are likely to suggest appropriate procedures and medication knowing what the patient wantsas per his living will
  • A living willspares both the doctor and immediate relatives from taking difficult decisions
  • A living will could also spare the immediate family from the financial burden that comes up in cases of unnecessarilyprolonged medical procedures for a terminally ill family member

While Living Wills are common in the west, it is a very new concept in India. Although the general verdict, by and large is that this is a positive step in the right direction the complexity is still something that needs to be addressed.

 

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India is currently among the most watched Emerging Market nations. To top that, the Indian Equity Markets have witnessed unprecedented growth in the recent months. The YTD returns for Sensex alone has been 26% (data from BSE India). The euphoria and high confidence on the Indian Equities has continued to remain, especially from the institutional investors both foreign and domestic.

This is also leading to make many individual investors question whether they should invest in equities or sit on the sidelines. While individual risk appetite and time horizon would be some of the basic factors to understand before investing, there are many other fundamental factors to track. While the debate has been raging on as to which indicators should be looked at or ignored to make sense of the valuations of the Indian equity markets, the following factors can help bring some sense of clarity to the overall picture. Factors such as:

Current Price to Earnings Ratio (P/E Numbers): One of the most traditional tools used globally at gauging the valuations of an equity market of a country. In the last one year alone (based on data from Oct 16 to Oct 17), the P/E Ratio for S&P BSE Sensex has averaged close to 22 times in comparison to its historical average of approximately 17 on a trailing basis. For the BSE Mid Cap and Small Cap of the same period, the P/E valuations are at an average of 33.8 and 81.13 times.

Corporate Earnings: P/E Ratios are directly linked to the corporate earnings of the country. As per Kotak Institutional Equities Estimates, the Expected Earnings for companies representing the Nifty 50 Index are approximately 2% in FY 2018. A variety of reasons are attributed to these low earnings expectations, most famously discussed are the implementations and effects of Demonetization and Goods and Service Tax (GST).

Crude Oil Prices: Nearly 80% of India’s energy needs are import dependent. A direct consequence of this is the risk to the country’s inflation rate if the prices of crude oil are to rise. A rise in oil prices results in lower cashflows/profits for companies and higher prices for consumers. Brent crude oil prices are currently firming up at prices upwards of 60$ per barrel. This is a definite concern from an Indian economy perspective.

Exchange Rates: The Rupee is currently considered overvalued basis its 10 year average (Source: Kotak Research). This has a dual impact on the economy i.e. (A) it increases attractiveness of imported products, resulting in increased competition for domestic companies and lower profits; (B) it decreases the value of exported products and therefore hurts the margins of export based industries such as the IT sector. Both have resulted in muted growth prospects for these respective industries.

Bond Yields: In an growing economy like India, both equities and bonds compete for capital. In a equity bull rally, money is taken out from bond markets and pumped into equities, forgoing risk to capital for riskier investments. Currently bond yields are inching up to the mid 2017 high of 6.987% yield for the 10yr G-Sec. However there has only been net inflows into fixed income. Foreign Portfolio Investments into Government Securities have already reached 83.94% of their allotted limit (data dated as per 6th Nov NSDL)

Inflation Rate: Inflation brings about it own risks to the stock markets. In the last Monetary Policy Committee meeting, the RBI revised the inflation projections for the rest of FY 2018 upwards to 4% – 4.5%. This may indicate a stop to future rate cuts, freezing any possibilities of reduction in lending rates. Medium term consequences for companies could possibly mean dearer than expected debt to  service, resulting in subdued profits and revenue.

Role of FIIs: The way that Foreign Institutional Investors park monies in the market can give an indication to the current picture of that market. While FIIs were very bullish on Indian Equities for most part of the calendar year, starting June they slowly but surely tapered inflows in equity, finally resulting in net outflows in the month of September and October. (Source: moneycontrol)

Global Scenario: On a global scale, economies are starting to look up, with further growth expected. According to IMF Economic Outlook, average expected GDP growth for FY 2017 is 2.5%. Globally, equity markets have participated in this growth including India. What probably may need to be put in perspective is that the rally in Indian Equities may be partly due to the global rallies taking place. Therefore the Indian equities are associated with risks in terms of foreign external factors like outbreak of war in the Korean Peninsula. Such events are likely to have negative impacts on the domestic markets.

Keeping in mind the above mentioned factors, Plan Ahead Wealth Advisors has a definite view that current equity markets are over valued and investors should exercise caution. The not so positive indicators from these mentioned factors should mean a significant correction cannot be discounted, keeping us wary of diving too much into equities without first educating investors of the potential risks in the short to medium term horizon.

 

 

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