10 steps to ensure safety of your ATM/Debit/Credit Card usage

Posted on August 10, 2016November 14, 2019 by Jagoinvestor

In the last 10-15 yrs, card usage has replaced cash transactions to a big level at least in urban India. We no longer go to banks to withdraw cash. Almost everyone prefers to pay by cards when we visit malls, grocery shops or when we fill petrol in our cars.

Increase in Card Frauds

While the ATM/Debit/Credit card usage has increased, so has the frauds related to the cards. Most of the time, card fraud happens due to negligence of the cardholder. In this post, I will talk about several things you should keep in mind which will safeguard you against fraud or any crime which can potentially happen. The things we talk about in this article will be for ATM cards, debit cards, credit cards, and even internet banking transactions.

atm safety tips

1. Destroy the CVV number on the back of the card

Once you have used your ATM card several times, it’s suggested to scratch the CVV number on the back of the card. Almost everyone will memorize the 3 digit CVV number once they have used it 5-10 times. You can also write down the CVV number in your mailbox and email it to yourself if you want to record it in someplace.

While this will not make you fully protected from fraud, but it will surely reduce the chances.

2. Change the PIN as soon as you receive the card

Once you receive your card for the first time, it’s suggested that you activate it asap and then change the PIN. Try to avoid keeping the PINs that resemble your birthday, Pincode or phone numbers. Make it a random number or some combination which you can relate to.

If you do not change your default PIN which the letter contains, it might happen that someone looks at it and misuses your card, given they have access to it. That’s the reason you should also destroy the old password document.

3. Activate SMS Alerts for any amount above ZERO

It’s suggested to activate the SMS and mail alerts for all transactions.

If you do not want any SMS for a specific amount like Rs 500 or Rs 1000, then you can set up the alerts above that amount, but make sure you do it. A lot of people who come from the old generation like our parents, uncles etc are new to these card payments and do not activate these features. Please do it for them

4. Keep the customer care number saved on the phone

It’s always a good idea to store your bank/card customer care numbers on your phone so that you can inform them about any fraud or issues as soon as they happen.

Imagine you lost your card and you are thinking – “Once I am back home, I will call customer care and share about this incident so that they can block my card”. This is not a great situation, because, within a few minutes, the who has the card can swipe it and use it (given he knows other details)

Better avoid being late in informing about the incident, because once the money gets debited from your account, then matter becomes complicated and you will spend lot of times in fixing the issue and following up

Prevention is better than cure …

5. Avoid using the ATM in night or places which are not safe

There have been instances where I wanted to withdraw cash from ATM around night-time, and my wife always tells me that we can always do it the next day in the morning because it’s better to avoid ATMs at night especially when it’s not an emergency.

I think that makes sense.

While, out of 100 times, 99 times nothing will happen. But then that one bad incident is what you want to avoid..

RIGHT?

I am not saying that never use the ATM in the night, but as far as possible, try to refrain using your cards at night at lonely places, because you never know who is keeping an eye on you.

Here is a video from Bangalore, where a 38 yrs old lady was attacked by a guy inside the ATM. Something like this is very much possible to happen if you take things lightly at night when it’s lonely.

Hence, if are going back home in midnight and thinking of withdrawing cash from an ATM which is located on a lonely road, I suggest that you avoid it unless it’s emergency. It’s always safer to come back in the morning and withdraw the money from ATM.

6. Don’t let any once enter the ATM while you are using it

If there is only one single ATM machine inside the room, then don’t allow anyone to enter the ATM when you are using it. You can directly tell the person to enter the room once you have used it.

At times, People are not civilized enough to understand that ATM usage is a very private activity and they should not enter or look at your screen.

stop atm fraud

(Image Source)

7. Never leave an incomplete transaction

There are many ATM frauds which have happened because the person left without completing their transaction. You should never leave the ATM screen unless the “welcome screen” appears back.

There are cases, where the computer hangs in between the transaction either because of a technical issue or because someone had done some trick to it. Always press the cancel button once you are finished or sense that there is some issue.

Below is an excerpt from a report from Indian express which shares more details about keypad jamming fraud in ATMs.

Keypad jamming fraud

The risk department of the banks have termed it so because the modus operandi of defrauder involves jamming both the ‘Enter’ and ‘Cancel’ buttons on the ATM machine by applying glue or by inserting a pin or blade at the edge of the button. So when the customer tries to press the ‘Enter/OK’ button after entering his ATM PIN, the key does not function and the customer can’t proceed with his transaction. At this juncture the customer thinks that the machine is not working and tries to cancel the transaction, which also does not go through as that button is also jammed. Thinking that the transaction is cancelled, he leaves the ATM machine.

As soon as the customer leaves or is prompted to visit the nearby ATM machine, the fraudster takes over the machine and since the transaction is active for around 30 seconds in most cases (some banks have reduced it to 20 seconds), he keeps the transaction active by pressing some functional buttons and in the meantime removes the glue or pin from the ‘Enter’ button to go ahead with the transaction. The fraudster then withdraws the cash from the customer’s account, leaving the customer unaware of the fraud till he checks the message from the bank.

If your ATM screen is hanged or incase of any issues, make sure you contact the security guard or at least call the customer care while you are inside the ATM.

All ATMs have a CCTV machine and it will record your activity which will help you later in case of any problem or dispute. Here is a real-life case of how ATM fraud can happen from a fellow blogger BasuNivesh.

8. Never share your debit card PIN when you shop

When you go to Petrol Pumps to fill your car or while you are dining at restaurants, try to avoid sharing the ATM PIN while making the payments. A lot of people let others enter their PIN because they don’t want to walk all the way to the swipe machine.

I prefer to walk down and enter the PIN myself or ask them to bring the swipe machine near me.

While it surely adds to convenience by sharing the PIN, but it also exposes you to the risk of debit/credit card fraud. No one is stopping the person who has your card to note down your card number, expiry date, CVV number (most of the people don’t scratch it) and write down the PIN you shared with them. In some extreme cases, your card can be swiped to the skimming machine to steal the information and duplicate the card.

how debit and credit card skimming work

A lot of people think that just because someone has their card details, they are still secured because the OTP comes to their mobile or the 6 digits extra password is asked while doing a transaction online. However, they are mistaken.

While one will surely fail while doing the transactions in Indian websites, they will succeed while using the card on international websites, because OTP is not sent there. Also, that extra layer of 6 digit password is not asked while doing transactions at many websites outside India.

9. Never share your PIN, OTP, CVV and other sensitive details

My father in law is a senior citizen and despite being a bank employee for many years – I can clearly tell you that even he might fall prey to many online frauds related to banks because he is very new to these card payments and internet banking. He belongs to that old era and his banking is very different than today’s banking.

Like him, your parents, and grandparents and in-laws will surely be from the generation who does not understand very well how these online things work.

When they get a call from someone who says – “I am calling from Bank and …”, for them it’s a genuine call and they can’t tell a difference between fake call and a genuine one. And they are always on the list of fraudsters.

There are various online frauds going on these days, where a person poses as a bank employee and then scares the person on other end saying things like

“This is a verification call from the bank, please share the OTP which has just come on your mobile”
“You will now get a new card because the old one is canceled, please share the 3 digits on the back of the card to approve this”
“We notice that a 20,000 transaction has happened just now, did you do it? Please share an OTP which has come to your mobile to verify that you are the cardholder”

Listen to this YouTube conversation, where a girl is posing as SBI staff and trying to get information. Imagine if your parents or some senior citizen gets this kind of call, how will they react?

Here is a good FAQ related to fraud protection related to cards from ICICI bank

10. Don’t expose the cash withdrawn from ATM

I have done it a few times, and I now understand that it was a mistake.

When you take out cash from ATM, if it’s a big amount – many times a few people come out of ATM holding the bundle of cash without realizing that someone might be watching them.

It’s always suggested to keep a bag with you and put the cash inside it or at least keep the cash in your wallet or pocket till you reach your car or home. There might be many bad elements nearby and they will keep an eye on you. They might be behind you and later they may attack you. What they show in CRIME PETROL actually happens in real life too 🙂

Don’t Get Paranoid

While it’s suggested that you should be alert and careful while using your cards or internet banking, but I would like to also add that you should not become paranoid and start behaving like a maniac :). You should judge the situation and use your presence of mind when someone is really being helpful and when someone is trying to trick you.

Please share any other tips or suggestions which I have not added above.

Top 8 financial regrets of Indian investors (Survey with 11k participants)

Posted on August 1, 2016November 14, 2019 by Jagoinvestor

We all make various kinds of financial mistakes, and then regret it later.

Don’t we?

I wanted to find out, what kind of regrets are widespread among Indians, so I ran a survey for many weeks & got an amazing 11,324 participants for the survey. The survey had many questions and various insights can be drawn out of the data, but today – I am just going to share one of those insights with you (more to come later in other articles)

Most common regrets investors have

When I created the survey, I was able to think of 8 mistakes & asked the participants to chose among those only (It was possible to chose more than one mistake) and here were the results

financial regrets India

Now we will look at each of these regrets and discuss them in detail

Regret #1 – Not working seriously on increasing the income

When I listed down 8 mistakes as the part of the survey, I was quite excited to know which mistake will be on the top and after I looked at these 11,324 results, it was clear that the biggest regret was – “Not working on increasing the income”

Think about it for some time…

The “income” one earns is one of the tops most important things in financial life. You will be able to build wealth over time, only if you invest the money.

The investment can only happen if you are saving a decent amount of money after your expenses happen. Which becomes possible only if you are earning good enough income.

Why earning good income is important

So if one has low income, then it’s not a great situation to be in, especially in today’s times. Because then your expenses itself will eat up all your income and you will not be left with enough surplus each month. You will not be able to save enough for your financial goals, for buying a house, and other necessities in life. If this continues for many years, you will be stressed most of the time thinking about the future and handling the short term demands which life keep throwing at you.

As per the Pew Research Center study, India primarily has poor or low-income families and even by world standard, we are not doing well. Not everyone in India works in Big IT parks or sophisticated jobs like you and me.

low income India

(Image source)

When most of people start earning money, they go into the comfort zone of life and don’t take enough measures to increase their income. Whatever pay-raise they get from their employer is taken silently for many many years assuming that they are getting what they deserve, only to realize years later, that they are underpaid.

As an investor, you should spend a lot of quality time on building your skills, and finding the right environment which values you and pays you good enough. You should find out various ways through which you can increase your income.

This article gives you some background on how to change your habits and mindset around money, in case you want to do something about it.

Regret #2 – Not making any investments till date

Even after many years of earning money, a lot of investors still don’t make any real investments. By real investments, I mean a considerable wealth. I am not talking about a few small Recurring deposits you did or your LIC investments which you did for tax saving. No!

Answer this …

“How much of your earnings to date, have you saved?”

There are many people who have been working for the last 10 yrs, but their savings/investments are just equal to their yearly income!.

1 in 3 investors wait for 5 yrs before they make the first investment

Here is a survey I did last year where I asked investors how late they were for making their investments. 29% of people said that they waited for 5 yrs before making their first investment and 8% of people had not invested even after working for 10 yrs.

If you add both the numbers, seems like 1 out of every 3 investor wait for at least 5 yrs before making any investment. That’s a scary number.

Here are the topmost reasons why people do not make investments for many years

They don’t save enough after their expenses
The amount of saving they do is very small and they feel it’s not worth saving that much
They are spendthrifts by heart and just spend the money
They just keep thinking – “I will invest once I have enough money”
They tried saving some money, but eventually used it for some purpose
They faced a bad experience and then decides to not invest
They just avoid investing because they feel it’s complicated and confusing

If you are a young investor and waiting for the right time to invest, trust me – it’s never going to come!

Start with whatever small amount you can, so that you at least teach yourself the habit of investing, see how it feels to see a few thousand in your bank account which was saved by you. That feeling will be great and the chances of that habit of saving getting stronger are high.

Regret #3 – Not focusing on a career or choosing the wrong career

Your career is a very important part of your life.

Your career will decide how much you will earn, which in turn will decide the quality of your financial life to a great extent. Your career will decide how will be your mood for 8-10 hours each day. It will decide your stress level and your health too.

Your career is like the center of your life if I am correct.

If you don’t love what you do to earn money, there will be issues in your life and many things will get affected due to that. I want you to read a few answers from quora where people have shared their views on the career mistakes people make.

career mistakes people make in India

I have often seen that a bad financial life is a result of a bad career or wrong career. Many a time, people get into a job which they don’t hate, but then they never work on making themselves skilled enough to reach the top positions.

Take an example of a software engineer, there are many people who don’t hate their job, but then they are stuck with a profile or skills which they have not upgraded and hence they are not fully satisfied with themselves.

Don’t be that person!

If I have to share from my personal life, My first and only job was at Yahoo as a systems engineer. I was recruited from the campus. I was an algorithm and problem-solving guy who was chosen for the server related work which involved everything I never enjoyed, nor I was confident enough.

Within a week of joining the job, I realized that I am in a mess.

I knew that I am stuck into something which I am going to hate like anything for the next coming years. I just survived for many years and side by side worked on this website and with a few thousand in my bank account, I told my manager that I am quitting my job.

Current Situation

I changed my career path totally. I am now satisfied with what I do for a living and to earn money. I have increased my skill levels in a totally new domain.

I know it’s not easy, but see what all actions you can do and improve things on your side.

Regret #4 – Spent too much mindlessly without thinking about future

This regret is somewhere closely related to #2 point – “Not investing anything till date”

After the first paycheck comes to one’s bank account, it’s a very special phase of life. Most of the people get into the spending spree. We all have done that and there is nothing wrong with it. After all, for so many years you wait for that day when you will have control over money and take decisions of spending without any restrictions from parents.

After all, there are so many unfulfilled wishes and desires we all have.

However, there is one problem

Many investors never stop their spending spree and continue it for many years, without looking back on how it’s affecting their financial life.

They are busy enjoying life, buying expensive gadgets, taking vacations they can’t afford, and eventually get into debt trap and keep paying a big portion of their income into EMI’s

No, we are not talking about spending money on needs and enjoyment. We are talking about people who go overboard and cross their limits. We are talking about that person, who earns Rs 5 lacs a year, but lives the lifestyle of a person who earns Rs 10 lacs/year.

If their financial status allows them to own a Maruti Wagon R, they buy Honda City.
If they can afford eating out twice a month, they do it twice a week
If they can afford to call 50 people for a family function, they call 500 so that they “look good”

And this continues for years and years … and once they get married or once they have kids, then they start wondering about the future.

That’s when they wake up and realize that they have messed up.

spending money

If you want to do mindless spending and never restrict yourself, then better earn like hell.

Make sure you take your income to a level, where “how much you spend?” does not matter. But most of the people earn a fixed income whose growth is going to be linear over time. Better control your spending beyond a level if you can’t earn enough.

Regret #5 – Lost a lot of money in bad financial product

Investors trust close relatives and friends while investing their hard-earned money and invest money based on relations, hearsay or recommendations and don’t think enough before writing that cheque.

So the family uncle becomes the insurance advisor and the tax-saving expert, and the friend in the next cubicle is your financial advisor at times.

In the name of the tax-saving rush, investors commit themselves for years of premium payment in a useless product which is packaged very well and then many years later, they realize that they invested in a dud product.

Check the poll results below were 920 investors have shared why they bought a financial product which they realized is a wrong one for them. People buy it because they trust others easily, or its pressure from family/relatives at times.

Reasons for misselling

The worst thing is the time lost and not exactly the money only.

If you invested Rs 50,000 each year for 10 yrs and finally realized that you only have Rs 4 lacs back out of 5 lacs paid, Your loss is not just 1 lac, its 5-6 lacs, because your 5 lacs could have become 10-12 lacs over these 10 yrs, think about the opportunity lost too.

Regret #6 – Trusted others too much and lost a lot of money

This is just a subpart of the point we just discussed.

A lot of people have lost a lot of money because they trusted someone. It can be a friend/relative or completely unknown person. There are various scams that happen in our country and worldwide. There are chit fund scams and get quick rich kinds of scams and people put their hard-earned money without thinking much.

Here is a recent case where a woman trusted a person and transferred 11 lacs to their account and later realized that she has been duped.

lost money phishing

I am not recommending that you become paranoid about your money security and just never trust anyone, but when you are investing your money, make sure you do the background check of the person you are dealing with, do your homework and understand what you are getting into.

Regret #7 – Didn’t buy a house even when it was possible to buy

13% of people from 11,324 people who took the survey said that they regret not buying the house when it was possible for them. I am not sure what percentage of these people don’t have a house at the moment, but I am speculating that many people had the money to commit for down payment and take a loan, but they didn’t do it and finally prices went up and they could not buy the house later due to rise in prices.

(Check this interesting article discussing software engineers and house ownership pattern)

My suggestion is that if one has the potential to make a down payment for the house and can afford to pay the EMI, then one can buy the house for consumption purposes (if not for investment purposes). Once you buy the house, a big pending task of life seems to be completed. But then this is a personal choice.

Regret #8 – Took too much loan in my life

Only 11% of people chose said that they regret taking too much loan.

It does not mean that people are not taking a lot of loans, just that they are ok with it or deal with it properly and don’t consider it as an issue. A lot of people prepay their loans before the original tenure.

My recommendation is to not take unnecessary loans for consumption purposes like vacations, alliances etc. The only two loans which to me make sense are Education loan and Home loan. At times car loan is fine, but then no other loans. Personal loans should only and only be taken in case of emergency and never otherwise.

What is your financial regret?

I would like to know from you what has been your biggest financial regret? Have you committed some mistake which you repented for years? If you had avoided that mistake, you would have a different financial life today?

Please share it in the comments section!

CIBIL to provide 1 free credit report a year – Says RBI Governor

Posted on July 20, 2016November 14, 2019 by Jagoinvestor

CIBIL will soon be providing 1 free credit report a year to every person starting Jan 1, 2017 as per RBI directions . This was said by RBI governor Raghuram rajan at a seminar on ‘Transforming Rural India through Financial Inclusion’.

This is great news for investors because right now one has to pay Rs 550 for getting a onetime credit score and report from CIBIL. While Rs 550 is not a very big amount for many people, for a majority it’s quite a good amount and most of the people are not in agreement to pay for a PDF report, as they think that it should be freely available.

free-credit-report-india

How the FREE credit report will help investors?

A lot of investors have till date not checked their credit report and hence they are not aware of any issues which might be present in their report. Not everyone is ready to pay Rs 550 for their report and even that’s the reason why many people are not aware of their credit score.

With this free credit report, I think a lot of people will start looking at their report and start working on improving their score and take measures to remove the bad remarks from their report. Investors will also be able to find out if there are any fraud loans on their name taken by others if any.

Seems like RBI has really pushed on this matter of free credit report. The reason why I say this is because around a month back in June, 2016 , there news channels had reported that RBI has suggested CIBIL and other credit bureau to provide a one free report. You can check out this youtube video.

What is Credit Report?

In case you are not aware, Credit report is a comprehensive report which is prepared by CIBIL or other credit bureau from the data they get from various banks and lending institutions. The report contains your credit history and all the details about our past loan payments (including credit card). Every lender uses this report to understand how trustworthy you are and if you should be given a loan or not.

In a lot countries consumers are entitled for one free credit report a year and now it’s going to be a reality in India too. I went to https://www.usa.gov/credit-reports to understand how it works in US and found out that Americans are entitled to get 1 free credit report from all the three credit bureau there. See the snapshot mentioning that below

In India apart from CIBIL, we have Experian and Equifax as other two credit bureau, but at this moment RBI governor has only announced that one will get a free report from CIBIL. He has not mentioned about the other two.

However, I think over time even they will start providing a free credit report to catch up with the rules.

What you think about this news? Do you think it’s fair for CIBIL to charge people for providing the credit report or it should always be FREE?

Closing your PPF after 5 yrs is possible now [NEW RULES]

Posted on July 11, 2016November 14, 2019 by Jagoinvestor

Recently the PPF closure rules got changed and now a PPF account can be closed prematurely after 5 yrs itself, but only in some conditions which we will see in this article.

Till now, as per the old rules, the PPF account had a lock-in period of 15 yrs, and in no case, it was possible to close the account other than the death of the subscriber itself.

So death was the only valid reason to close the PPF account before 15 yrs maturity period.

PPF premature closure rules

As per the recent rule change by the govt, PPF closure before 15 years is now possible. You can close a PPF account if it’s at least 5 yrs old, in following 3 cases

Case #1 – Death

If the PPF holder dies, then the account can be closed anytime (even before 5 yrs) and the nominee/legal heirs can claim the amount from Govt.

Case #2 – Life-Threatening illness

The PPF account can also be closed in case, the money is required for curing the serious ailment or life-threatening disease of the following people

PPF subscriber himself/herself
Spouse
Dependent Children
Dependent Parents

Note that one has to provide the documentary evidence from a competent medical authority. So you will need to share the proof that you need to undergo some big treatment/surgery etc and you will need money for that.

Case #3 – Higher Education

If money is required for the higher education for the PPF subscriber or the minor on whose name the account is opened, then one can pre-close the PPF account. However one has to produce the fee bills and the proof of admission or any other documentary evidence.

Here are the exact notification wordings

PPF pre-closure notification

Penalty of 1% when you close PPF account before maturity

This pre-close feature comes with a penalty of 1% of interest for each year. What it means is that for all the years since your PPF account is opened, you will get 1% less interest for each year. So if you earned 8.7% for a particular year, your calculation will be done @7.7% and this way for each period 1% will be reduced.

Govt has issued an example calculation for penalty of 1% . But the question now is does 1% penalty mean 1% less amount in final corpus after pre-closure?

No, the answer is 4.88 %!

Yes, You get 4.88% less corpus due to this pre-closure penalty of 1 %. But this is true for that example only which is given by govt in their notification. I went deeper and did the exact calculation and here are the results.

ppf pre-closure example

The reason why there is a good amount of difference is that there is the compounding of penalty in this example. If you check the balances in 3rd year, you will see there is difference of 2.1 %. And it keeps on increasing as the number of years increases.

Which means, Older the PPF account, the higher is the final penalty for you.

It does not make a lot of sense to close the PPF account before maturity once 10 yrs is passed, as the penalty will be higher than 4-5% if most of the cases.

PPF pre-closure rule will help investors

PPF is one of the widely popular financial products in India. Majority of families have at least one PPF account and given it’s a long term product, there is a good amount of money lying in it. Now with this new pre-closure rule, an investor gets the benefit of closing the PPF account if they want to do it.

But the only issue is that it’s not an emergency solution to the problem as the documentation requirement is there and being a govt product, you can expect a slow response while closing down the PPF account and using the money.

Please share what do you feel about this new change in PPF closure rules?

Register for Mega Jagoinvestor Workshop in Mumbai – 7th Aug (Sunday)

Posted on June 29, 2016November 20, 2019 by Jagoinvestor

Hello Mumbai Investors,

You have experienced your first rain and the weather is beautiful out there. It’s time to go on a date with YOUR financial life and to do so; we have an opportunity wrapped in this article for you.

Mark and block 7th of August (Sunday) on your calendar, our entire team will remain present in Mumbai to lead/organize an extraordinary one day workshop on personal finance. This time we are playing for a bigger event and for that we will need your support and full participation. (Watch Pune workshop Video & Testimonials from Participants)

If you are from Mumbai, Navi Mumbai, Thane, or other nearby areas (even Pune), then book your seat and then share quickly about this event with your loved ones.

Our PROMISE – It is going to be a GAME CHANGER

The workshop will be a game changer for YOU because it will add a lot of value to your financial life. So far we have seen and observed that our workshop helps investors to add new and different dimensions to their financial world.

In the whole process you learn to slow down so that you can examine what’s going on in your INNER financial world. With our help and support, YOU will also define and adopt a new set of actions and strategies to create an amazing financial life.

Why we conduct workshops?

We do offline workshops so that we can connect with some of our readers at a deeper level, round the year we write articles, reply to thousands of comments and work with a few hundred investors one-on-one and in that process we learn, grow and expand as professionals.

Our Workshop gives us an opportunity to share outrageously all the knowledge and experiences that we acquire round the year. The program is an opportunity to get our readers more and more action-oriented.

Why you should come for this workshop?

You will learn how to improve your financial life with your current set of resources and income.
You will learn how to plan for your financial life goals
You will interact and learn from other’s people’s financial life
You will dedicate one full day to get better with money management
You will learn to add new dimensions to your financial life
To understand that personal finance can also be fun
To give a whole new direction to your financial life

It’s time at add jagoinvestor workshop to your financial journey:

It has been a few years now conducting “Design your financial life” workshop and the experience has been amazing. It is a wonderful space to be in, in which the group learns and starts to fall in love with the process of wealth creation.

We do not teach tricks and tips to build wealth in fact we help you to discover your own personal process of creating wealth.

This time we want more couples to participate so that they can get on same page when it comes to personal finance. It is extremely important that husband and wife both take equal interest when it comes to money management.

We are offering special discounts to those who want to come with their partner. (You can even come with your parents, siblings or friends and can claim the discount)

The workshop we conduct is highly interactive, it has lots of activities and fun exercises that help you to discover your relationship with money. The sessions are interactive and very easy to grasp for any kind of, beginner or advanced investor. In short, there is something for everyone in this workshop.

What will you get as a participant?

You get a FREE Financial Health check-up Report worth Rs 499 on sign-up
One day workshop with some personal finance tools like a budget sheet, Mutual fund tracker, etc
Invitation to join our inner circle

Register for Mumbai workshop on 7th Aug, 2016 (SUNDAY)

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Valid for 1 person
Ideal for Bachelors

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Valid for 2 People
Ideal for Couples, Siblings, Friends

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Other Details

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Program Name – Design Your Financial Life (Check Program Flow)

Program Presenters – Manish Chauhan & Nandish Desai

Timings & Date – 8:30 am – 6:00 pm, 7th Aug, 2016

Venue – Motilal Oswal Tower, Gokhale Road North, Prabhadevi, Mumbai – 400025 (Maps)

Contact Person – Abhi Kumar (09979922535)

Important Information

The venue is 2 km from Dadar/Lower Parel Station
Lunch and Tea/Coffee is included in the program fees
Please don’t bring kids to the program
We reserve the right to admission in this program
This program is not for financial advisors/agents/CFP

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Invitation to join and participate

From the bottom of our heart, we invite you to join and participate in our Mumbai workshop. Come alone or with your spouse or parents, siblings or friends but see that you do not miss this opportunity. Do not let time and money to get in your way and book your seat at the earliest because we will be taking 70 participants this time and registration will close after some days.

This workshop is strictly for investors and not for advisors or finance professionals. This workshop is strictly for investors and not for advisors or finance professionals. In case we find some financial advisor/planner or anyone from personal finance background registering for the program, we will refund the fees. We hold the right to admission to this program

If you have never participated in any personal finance workshop let this be your first workshop. If you have any questions you can write in the comments section.

You can also visit our Workshop Page to Register and Get more details.

We would like to extend special thanks for Motilal Oswal Mutual Funds for allowing us to use their venue for this workshop and helping with the logistics.

5 Asset Classes Explained – A simple guide for beginner Investors

Posted on June 17, 2016November 20, 2019 by Jagoinvestor

Today I am going to teach you about “asset classes”, which is the most primary lesson every investor should go through. Understanding asset classes is very important for an investor because when you invest your money in any financial product, then in the background, it goes to a certain asset class only.

The world of personal finance has hundreds of financial products, which makes everything confusing for an investor, but if you understand which asset class it belongs to, then this whole world of personal finance will sound easy to you.

So if you are confused about whether to invest your money in a fixed deposit or a mutual fund? Or into gold ETF’s or PPF? How do you decide?

Just ask – “Which asset class does it belong to?”

Is a fixed deposit in the bank better or a PPF would be the right thing for you, this all questions might seem to be confusing to you if you do not understand which asset class they come from? So in this article, we will go deeper into the basics of investing and help you to get stronger into the primary level information.

What is the meaning of Asset Classes?

Asset classes can be seen as a big basket where all the financial products belonging to that asset class share common characteristics. Things like risk, returns, liquidity, and various other parameters are similar.

For example, a Fixed Deposit and PPF are different financial instruments, but at the deeper level they both are secure products, you do not lose money in these products, their returns are also predefined and there is predictability in their returns.

Can you see that both FD’s and PPF share some common characteristics? It’s because they both belong to the asset class “Fixed Income”.

Here is a video which gives an introduction to asset classes

In the same way, an equity mutual fund or direct stocks, both are different financial instruments from high level, but inside they both are high volatility instruments and have potential to multiply your investment amount many times in short period of time, this is because they both belong to same asset class called “Equity”.

Below is a snapshot from the Karvy website which shows you the wealth distribution of Indian investors in the year 2015.

There are 5 asset classes

While there is no standard list or category of asset classes, widely it’s accepted that there are 5 types of asset classes namely

Fixed Income
Equity
Real Estate
Commodities
Cash

Every financial product you come across will fall into any of these 5 asset classes only. Each of these asset classes has their own set of behavior and they represent something unique about them. The chart below shows you financial products belonging to these asset classes and what these asset classes denote

Asset Class #1 – FIXED INCOME

Let’s start with the most famous and favorite asset class in India, which is “Fixed Income”. Fixed Income asset class refers to the class of financial products where your investment amount is more or less protected and the returns are either fixed or predictable to a great extent. There is almost no/less risk in these products which are from the fixed income asset class.

Investing in fixed income asset class is like lending your money to someone with the assurance of return with predefined returns. So when you make a fixed deposit in a bank, you are not exactly “investing”, but lending your money to the bank with a promise that they will return back your principle amount along with a pre-defined interest.

Fixed Deposits do not beat inflation

Even if you are getting an 8-9% return on your fixed deposits, many people do not realize that it’s the pre-tax return. As Fixed deposits are taxable (and every other debt instrument), once you pay the tax on the returns, the post-tax returns are only in the range of 6-7% and if you adjust the inflation of 8-10%, you are actually getting a negative return on your fixed-income investments.

Livemint has done a story on this topic in a detailed manner which you should read.

Risk is less in Fixed Income Asset class

All those who want to get a fixed return and do not want to take any risk should choose this asset class. It’s a human nature to seek assurity, and given that fact, fixed income instruments are a big hit. No wonder Fixed Deposits rule the world of investments, It’s simple and easy to understand the financial product.

Same goes for PPF, NSC, recurring Deposits and various govt bonds or debt mutual funds. However note that this asset class does not beat inflation or nearly matches it, hence over the long term, while the amount of your investment will become bigger in number, the purchasing power will remain stagnant or might drop. So this asset class is to only protect your money, not grow it.

Asset Class #2 – Equity

The equity asset class is an interesting asset class and slowly getting more and more acceptance from the last 1-2 decades.

Equity means ownership

So when you invest in equity, it means that you have bought ownership into a business. For example, when you buy stocks of Infosys or Reliance, you become a small owner of that business.

Even the RSU and ESPP which you get from your company makes you a small investor in the company and that’s “equity investment”

Now obviously when you invest in the business, you get a % ownership. And if that company becomes big someday in the future, your overall worth also goes up. But there is a problem, the business grows only over time and in between, there are ups and downs and that reflects in the stock price of the business/company.

If you look at all the rich people today (really filthy rich), it all happened with equity investors. Someone either opened their own company or invested in some company which was growing and held it over the long term.

Equity Investing works in the long run

Below is the 10 yrs return chart for various years for Sensex. You can see that most of the time sensex has given more than 12% return (much more than that actually) every 4/5 times. This is since the time Sensex has been into existence.

Because the equity returns are very volatile, most of the people refrain from mutual funds investment or investing in direct stocks, but they are the real wealth builders for any investors. There are mutual funds from various Asset management companies that have a proven track record for building wealth for its investors.

Asset Class #3 – Real Estate

Real estate, as we all know refers to physical space, or physical structure like land, residential flats, commercial spaces, etc. These spaces are either used for living purpose or for doing the business and generate income. Should one invest in real estate or not is a topic of debate and I am not getting into that right now.

Over the last 2 decades, the real estate asset class has got tremendous interest from investors. Everyone wants to now own a home and real estate is very sought after asset class. As the country develops and expands, we see many upcoming areas in all cities and a location which was considered outskirt of the city becomes a very important location in the city and we see some amazing returns.

However, the fact is that we always hear the “good” stories and never the bad stories where one got bad returns from real estate or lost their money.

Returns from Real Estate

The real estate market has cycles of ups and downs and returns from real estate can be very volatile and can depend on various factors like city future, govt policies, political situations and many more. For example, if you look at Hyderabad, the returns in real estate have not moved anywhere in the last 7-8 years and we are talking about average returns here.

Bigdecisions.com has done a study based on NHB Residex to compute the real estate returns in various Indian cities from 2007-2014 and below were the results.

I am in on way saying if real estate is good or bad. All I am trying to do is make you aware of the characteristics of real estate as an asset class. You need a high ticket size for investment, the market is not regulated at all (only recently the regulation has been made) and it’s more or less one side market with a lot of opaqueness.

Asset Class #4 – Commodities

Commodities refer to various types of physical goods or products which we all can buy and sell for various uses. Gold, Silver, Copper, Rice, and Oil etc will be counted under this asset class. The price of these products depend on demand and supply in the market.

Commodities are for “Trading” and not investing

With my limited understanding, I came to the conclusion that commodities are not for investing for the long term, but mainly for trading, where you can benefit from the market cycles and predict demand and supply moves and get a profit or loss.

Returns from the commodities can be very volatile and each commodity has its own market and dynamics.

Only a handful of commodities like Gold or Silver can be invested in for a very long time because they can be stored without losing their usage. A common man can’t store other commodities in the same way, hence trading them for short term is a feasible option.

Asset Class #5 – Cash

When I say “cash”, I don’t just mean the hard cash bundles, but also the money lying in your saving bank account, or liquid mutual funds. I will refer all of these things as “Cash”.

The best thing about cash is that it gives you the freedom to “buy” anything you want instantly. You can buy a car, a house or a phone or invest your money in other asset classes.

The freedom you get with cash is very high and that’s one reason why most of the people prefer to hold a lot of cash. Also the cash cannot be tracked (unless it’s several multi-crore rupees) and many people keep their black money in form of cash.

(Image Source)

It’s not uncommon to see many lakhs lying in a savings bank account just because the investor thinks “What if something goes wrong?”

However cash has one problem, it does not fight inflation at all or very little. The money lying in saving bank account just earns 4% and that does not help you as an investor.

Which asset class you should invest into?

Where should you invest your money? This question can only be answered if you are clear about your requirements like how much risk can you take and how much return do you expect out of your investment?

Are you ok with locking your money for several years or not? I have made a simple table that compares all asset classes on various parameters.

I hope this article gave you a high-level understanding of all asset classes and cleared your basics. Please share which is your favorite asset class and why?

Applying for home loan? Here are 4 highly critical checklist you should follow

Posted on June 1, 2016November 20, 2019 by Jagoinvestor

Are you going to apply for a home loan in the near future? If Yes, then this article is written exactly for you, because I am going to share with you a checklist which you should follow to make sure that your loan application process is smooth and also to increase the chances of your loan application getting approved.

We all take various kind of loans these days, be it home loan, car loan, personal loans or even credit cards. I will show you some very important checklists which if you follow; you will save yourself from various issues faced by other loan seekers.

Note that while this article is primarily written with a home loan in mind, but the checklists discussed will also apply for any kind of loan.

Checklist one should follow before applying for home loan in India

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Checklist #1 – Check your CIBIL report/Score in advance

Don’t underestimate the role of credit reports/score in loan approval process these days. The first thing the lender looks at is your credit score/report when you apply for any kind of loan (even credit card).

The moment you enquire for a loan with a lender, they check your report from CIBIL or any other credit bureau like Equifax or Experian and based on the remarks on your report and your score, they either reject your loan application or forward your case for further checks.

There are many real-life cases, where a person applied for a loan and found out that it got rejected because of this credit report is messed up. It might be due to a credit card settlement he did a few years back or because he was not able to make timely payments on his past loans.

Imagine a person who has already paid the booking amount for a car or a house and then he is stuck because he/she can’t get the loan approved. That’s not a situation; you would like to get into!

personal loan rejected because of CIBIL

CIBIL score of 750+ is a good score

How much CIBIL score can be considered good enough to get any kind of loan? Well, there is no guarantee that you will get a loan just because your credit report is high, but as per CIBIL, out of every 100 people who got a loan approved, 79 people had a score of more than 750.

This means that if your score if more than 750 out of 900, there is a good chance that your loan will be approved, provided there are no bad remarks on your report and other things like income proofs are in place.

cibil score required for home loan approval

Apply for your CIBIL report in advance

So when should you apply for a CIBIL report?

I think it should do it much before you apply for a loan. I suggest at least 6 months in advance because if there is some issue in the report, you get enough time to rectify that mistake.

There are many cases, where a person applied for a home loan after paying the down payment money, and their home loan is not approved because of CIBIL related issues. Now they are stuck as they are not getting back their down payment money back and their application is also not getting approved.

They run around to fix their issues or try to improve their CIBIL score, but now it’s very late because it takes many months to follow up with CIBIL or Banks involved. Last-minute fixes do not work, that’s the reason this check needs to be done well in advance.

Checklist #2 – Make a simple Cash flow statement

If you are applying for a big loan like a home loan or a car loan, then it’s very important to understand where you stand financially. You should have a very clear idea about the maximum down payment you will be able to make (and you should also try for that) and what is the realistic EMI you can pay each month.

As our wealth is scattered across various financial products like saving bank account, fixed deposits, mutual funds etc, it’s important to note it down in an excel sheet to get better clarity.

You should also list down the income and expenses details so that you can get an idea about how much you save each month. Your surplus each month is a very important criterion used in calculating your loan eligibility by the lender.

Below is a sample working of cash flow in an excel sheet, which gives the good enough indication of the down payment amount and the potential EMI a person can afford.

sample cash flow calculation before applying for a loan

Download this Excel Sheet and Calculate your numbers

It should not happen that you applied for a loan much beyond your capacity and then at the last minute, you are wondering where you will arrange for extra money. It can be a very frustrating situation, where you are stuck in a deal and you are not able to figure out how to arrange for the money.

Checklist #3 – Increase your home loan eligibility

When most of the buy a house, they wonder how big a house they will be able to afford? Just because they have a high salary, they think that they will get a big loan, which most of the time is true, if you don’t have any existing loans.

But then a lot of people have several small loans running like a personal loan or a bike loan or any other consumer loans, and these small loans come in the way of your loan eligibility because they show up in your “pending loans” or “Existing EMI” list.

So one the actions you should take is to close off any small loans you have because they will increase your “surplus” as the EMI will get stopped, and also you will have one less commitment to take care of and lender likes that.

Below are some handy tips if you want to increase your home loan eligibility.

Let’s see an Example

Suppose, your per month income is Rs 1 lacs and you have a bike loan (or personal loan) currently running with Rs 8,000 EMI per month with 10 more installments to go. Now with this profile you are eligible for Rs 43 lacs of home loan.

How can you increase your home loan eligibility in this case? You can prepay your entire bike loan as it’s a small loan if you look at the outstanding amount; you can dig into your other savings and pay it off. This will surely reduce your savings a bit, but increase your loan eligibility by another 8-9 lacs because now you have another Rs 8,000 surplus each month.

See the home loan calculator snapshot below which shows you this.

Home loan eligibility calculator example

Even your CIBIL report will also show that you have successfully completed and paid off a loan provided you do this a few months in advance before you apply for a home loan.

Close you credit card outstanding also

You should also consider to pay off your entire credit card outstanding bills. May people keep rolling their credit card debt by paying the minimum dues, but that’s not a good thing if you want to get some loan in coming future.

If you are looking for a home loan, then go to this home loan eligibility calculator, enter your details and our trusted partner will help you in securing the best home loan. You also transfer your home loan by applying here

Also, decide if you want to apply for a joint home loan

One way of increasing your home loan eligibility is to add your spouse or any other earning member from your family as a co-borrower of the property. This is one factor you should consider if the spouse is already an earning member. Even if it’s not a significant amount, still mentioning that they bring in some small income helps your loan application, as it adds to the “stability” factor.

Checklist #4 – Arrange all documents required for a home loan

Some background preparations on the documentation front can help you save last-minute hassles and running around. I have often seen many people running around, for ITR proofs and other documents because they didn’t plan well in advance. Below are various documents that might be required for your home loan documentation purpose.

It’s a good idea to prepare a file and arrange all these documents well in advance. These documents are keeping in mind a salaried resident Indian.

KYC related Documents

2-3 Passport Size photos of applicant and co-applicant
Identity proof like PAN or Voter ID card, Passport, Aadhar card
Address proof like Electricity bill, Telephone bill, Employer Certificate, Aadhaar Card

Income & Employment-Related Documents

Past 3 months salary slips
3 yrs ITR (Income tax Returns)
Latest 6 months bank statement attested by the bank in original
Latest Form 16 for 2/3 yrs
Proofs of all savings like FD’s, mutual funds, gold etc (for a down payment)
All ongoing loan account statement for past 6-12 months
Relieving/Experience letter of the previous company if current employment is less than 2 yrs old

Property Related Documents

Original copy for Sale Deed or Agreement to Sale
7/12 extract
Commencement Certificate
NA certificate
Search and Title Report
Building Completion Certificate (if available)
Latest Tax receipts
Development Agreement

Below is a video from IREF, where a guy (seems to be from a bank) is explaining the home loan process and overall documentation requirement. It’s a 7-8 min video in Hindi, kindly view the full video to understand why some document is needed.

Extra documents for self-employed and business professionals

In case you are not a salaried person, then some documents will be different in that case, which is as follows

3 yrs ITR, along with profit and loss statements certified by a CA
Your bank account statement for last 1 yr
Shop Act License
Partnership deed or Company related documents
Brief write-up about your business and the nature of work/revenue

This common floor article mentions even detailed list of documents

Some Important points to remember before applying for a home loan

In case you are planning to quit your job or planning to change the job, it’s better to first apply for a home loan and then quit/change, otherwise, it will get very tough to get a home loan later.
If you are sure of getting an increment very soon or your pay rise is on the cards, then wait a bit and apply for the home loan later as it will increase your home loan eligibility

I hope this article gives a clear direction and action checklist to someone who is looking forward to a home loan or any other loan. Please share any other critical checklist which I have missed out. Also, I request other members to share their experience when they applied for a home loan.

Download Form 12BB to claim LTA, HRA and Home Loan Interest

Posted on May 25, 2016November 20, 2019 by Jagoinvestor

In a recent notification, income tax department has come up with a new form 12BB, which from now onwards has to be submitted if you want to claim your LTA, HRA and Interest on Home loan interest.

It’s a single form, which you need to fill and attach all proofs and furnish all information related to these exemptions. This form will be applicable from June 1, 2016.

What all information is asked in Form 12BB?

Following is the list of various things you need to arrange before you fill up this form 12BB form

LTA (Leave Travel Allowance) – One has to provide all the proofs of travel like tickets, invoices, boarding pass (in case of flight). More info here
HRA (House Rent Allowance) – For claiming HRA, If the rent paid is above Rs 1 lacs a year, one has to provide Name, Address and PAN of the landlord and Rent receipts.
Interest on Home Loan – To claim this, one has to furnish the name, address and the PAN of the lender organization
Deductions under 80C & Others – You will also have to furnish the details and proofs of the actual investments done under Sec 80C and others

You can download form 12BB here, It’s a PDF version (We don’t have excel format). Below I have provided a snapshot of the form 12BB format, so that you can have a look at it and see what all fields you have to fill up.

Form 12BB to claim HRA and LTA

Main reason to introduce this form 12BB?

The primary reason why this new form is being introduced is that till now there was no standard process to collect all the proofs and information regarding the various deductions.

IT department thinks that with this new change, fraud will go down. Here is what Financial Express says on this point

You may no longer be able to provide fake bills to claim income tax deductions for leave travel allowance (LTA) and house rent allowance (HRA).

Changes announced on Tuesday in reporting format for individuals claiming tax deduction on leave travel allowance (LTA), leave travel concessions (LTC), house rent allowance and interest paid on home loans is aimed at plugging leakages on account of fake bills, experts say.

So with this form, all the information will be captured in one place and even the employers will be made accountable for checking all documents and if the proofs are genuine or not.

Please share what do you think about this new form? Do you think that this will add more work and headaches for salaried employees?

55% of Software professionals in India, dont own a house [Survey Results]

Posted on May 18, 2016November 20, 2019 by Jagoinvestor

Today I am going to share with you some data related to software engineers and their home ownership pattern. But before you move ahead, I want to share with you that approx 55% of the software engineers who took our survey did not own a house.

Survey with 10,917 participants

Recently I ran a very large survey which was taken by around 10,917 participants. Out of those 4,940 people were from the IT Industry. I had asked many questions related to real estate ownership like how big houses they own If its bought with a home loan or not and if they don’t have a house, what kind of rents are they paying apart from many other questions.

As a big portion of this blog visitors is software professionals, hence I thought let’s do an article only for software professionals in India as of now. I will publish a detailed report later on the overall data, but as of now, you can look at 3 big and important information.

A survey on home ownership among Indian software professionals

[su_animate type=”flipInY” delay=”0″] [su_button icon=”icon: facebook” url=”https://www.facebook.com/sharer/sharer.php?u=http%3A//www.jagoinvestor.com/2016/05/software-industry-real-estate.html” icon_size=”48″ size=”6″] Click Here to Share this on your Facebook profile[/su_button][/su_animate]So what did I find in this survey? I found out that out of 4940 software professionals who took the survey, 2706 of them said that they don’t own any house or real estate property. That around 55%.

Majority of software professionals in India bought house with home loan

I know this is not a finding. Almost everyone buys a house on loan only because very few people can pay the full amount on their own and this gets confirmed by this survey. Around 81% IT professionals said that they took home loan for buying the house, however 10% people got the house in inheritance and only 9% people paid the full money out of their pocket, which I think is a good number.

90% of the house owners (IT professionals only) own either 1 house or maximum two house. Only 10% house-owners have more than 2 properties.

Out of 100 software engineers who dont own a house, 36 work in Bangalore

If we look at the top 6 cities which are into software jobs creation, we found out that the higher the cities reputation into IT Industry, higher is the number of non-home owners % wise.

I mean out of 4940 software engineers, 1533 work in Bangalore and out of those 886 said that they dont own a house, which is 36% of the total IT population which took the survey. So 36% of software engineers who dont own a house, live in Bangalore, compared to only 10% in Mumbai or 11% in Chennai. Here is the full data

citywise data of software engineers realestate ownership

Who is responsible for the high real estate prices in big cities?

In this article, I want to understand what you all think about high real estate prices? What is the reason behind it? Can we say that to some extent (if not fully), the IT professionals contribute to the real estate prices increase?

I know not all software professional earn very high salaries, but in all the big cities, there is a section of IT class which earns a very handsome salary and they suddenly use it to take home loan and buy a house either for consumption or for investment purpose.

This is true for many other Industries as well, but do you think IT sector contributes much more than other industries? I do not want to make any judgment here, but I want to hear from IT professionals who read this blog about what they think about this?

software and real estate price rise

Some people told me that we can’t blame software professionals for high prices in real estate, which I agree. No one can blame anyone, but I wanted to know what thousands of people from IT background and non-IT background think? What is the perception?

So I separated non-IT and IT people from the survey and I asked them the same question and looks like people from IT industry are of stronger opinion that real estate prices are high because of IT industry. While 39% people from non-IT background said clear “NO”, only 28% people from IT background denied that IT industry has contributed to rise in property prices. Below are the results of survey by around 10,917 participants out of which 45% are IT professionals themselves.

IT industry and real estate prices

What people have to say about this?

Let’s hear some people who have shared their views about this topic and how they feel that IT industry is somewhat responsible for high real estate prices.

real estate high prices in India

Snapshots taken from Asan Ideas of Wealth Facebook group

But 55% of Software professionals still don’t own a home

At the same time, we have a big number of software professionals who cannot afford a house because they don’t belong to that very high earning class. Software industry like every other Industry has its own issues. A big percentage does not earn very high salaries and that is confirmed by the survey also.

Salaries in IT industry is highly skewed

Only 12% of IT professionals who were surveyed, are earning more than 20 lacs per annum where as 57% of the participants are earning below 10 lacs. Now that’s just 80,000 per month and I am sure, if one is living in a city like Bangalore, Pune or Hyderabad, it will not be considered as a very high income because given the expenses these days, people at that salaries would hardly be saving anything significant.

As per a website payscale, which has an extensive database of various jobs related information like the skills needed, salaries etc. The average Salary of an experienced Software Engineer in India is close to 13 lacs (with experience of more than 10 yrs) . Note that this is an average number

Average salary of software engineer in India

Hence, while there are many IT engineers who earn big amount (many a times double income family), and who can afford to buy a house easily. At the same thing, there are many software engineers who do not earn a big amount and are struggling to manage their expenses. Here is one perspective

real estate high prices in India

I analyzed the results of 10,917 people who took the survey and found out that if you look at the percentage home ownership industry wise, then software industry is not at all at the top. Infact, it’s quite below average. But then we are talking of only big cities (top 10 cities of India). On top of it, IT Industry has somewhat slowed down in last 5 yrs and its not at its peak now. You can read this long thread on IndianRealEstateForum where people discuss about the impact of IT slowdown on the real estate market.

So basically we are trying to see that out of 100 people who belong to XYZ Domain, what percentage of them owns a house. Domain here means Software, Medical, Govt Job, Business, Marketing, Sales, Engineering * Finance. There are many other domains, but we are not considering them, because there was not enough data. For each of the above domains, we had at least 200 data points each and at times more than 500 or 1000. Here are the results.

industry wise home ownership India

I had kept Retired also as one of the categories, because that would be a big number. So we found that the those who are retired have the highest home ownership which is kind of obvious, but after that business class has the highest home ownership ratio of 52% , followed by Manufacturing and Medical, but they are not having very big margin.

IT Industry ownership stands at 45% and we can be kind of very assured of that because that comes form 4940 people data, which is quite huge.

Also, note that the lowest home ownership is among Sales and Marketing Professionals & Even Pharma, I don’t have much interpretation for that, but may be it’s because they might have a big variable component in their salary and that might be a deterrent in their home buying. If you have insight on this, please put them in comments section.

Question for you ?

We want to know from you, what is your views on increasing real estate prices in most of the Indian cities and do you see IT industry contribution to it? Please share what you think in comments section.

6 smart ways to PAY OFF your credit card debt trap in India

Posted on May 11, 2016November 20, 2019 by Jagoinvestor

1,90,000 crore was spent using credit cards in India in the year 2015. Over the last decade, the usage of cards has increased many folds and while that’s great for the economy, it also means more and more people getting into credit card debt as many people are now dealing with credit cards.

In the graph below which was published by Livemint, it shows the growth in the card usage in our country

credit card transactions in India

How investors get into Credit Card Debt Trap?

Credit cards if not used properly can get you into debt trap very easily. We get several emails and comments regarding how to handle credit card debt. Below is one of the comments

“I have a SBI card in which I have an outstanding balance of Rs 100000 so I went for settlement and they offered me a settlement amount of Rs.78000. Can it get it still reduced? Because I am not in a position to pay this amount”.

A lot of investors who do not use credit card in a wise manner end with a large outstanding on their cards and finally have to go for credit card debt settlement which lowers their credit score and puts a black mark on their credit report and this inturns hampers their chances of getting loans in future.

In this article, I am going to share some of the options which one can explore. If you want to quickly look over those 6 points, you can just watch the video below

Note that these points to be looked in order. I mean first, you see if option 1 is applicable to you or not. If not, then you move to option 2, if it still does not help you then you move to another option.

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Option #1

Break your investments and pay the bill

Option #2

Pay off the credit card debt in 5-6 payments

Option #3

Take a loan from friends/family and pay off the credit card outstanding amount

Option #4

Take a personal loan to pay off credit card debt

Option #5

Convert your credit card loan to EMI

Option #6

Use a Credit Card Balance transfer facility

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So here you go

Option #1 – Break your investments and pay the bill

There are many people who keep rolling their credit card debt, and at the same time have money in their bank account or a fixed deposit. It does not just strike them that they can just pay off the full outstanding by breaking their FD or cash into the account.

This happens out of ignorance most of the time.

So if you can restructure your money here and there and can pay off the credit card debt, it’s the best option.

Option #2 – Pay off the credit card debt in 5-6 payments

If option #1 is not feasible for you, then the next best option is to pay off the debt in 5-6 parts. Most of the people get too attached to the minimum balance amount and then they just stick to it because that’s the minimum required to be paid to save the penalty.

But then the interest is anyways to be paid, which makes sure you never get out of the debt.

So go beyond the minimum balance amount and pay 3-4X of the minimum balance each month. For example, if your credit card debt is Rs 2 lacs and the minimum due amount which can be paid is Rs 10,000.

Then try to pay 2-3X of that amount, which is Rs 30,000 or Rs 40,000 per month. If not that much, then at least 20,000. That way at least you will pay off the entire debt in next 1 yr if you are disciplined enough.

minimum due payment credit card debt

Option #3 – Take a loan from friends/family and pay off the credit card outstanding amount

The 3rd option is to try to get some loan from friends or family members and pay off the credit card debt in one go and then pay back the person later as per what you agreed with him/her. One can often get free loans without any interest from a close friend or a sibling if you communicate your problem well.

Make sure you pay them back exactly within the time frame mentioned.

Most of the people have burned their fingers by giving money to their friends and relatives because it gets very tough to ask back the money and it can bring sourness in the relations due to money matters.

So you can also choose to pay some interest because the person can anyways earn some money from FD, so better offer to pay 10% interest per year. It’s a win-win situation if it works out!

Option #4 – Take personal loan to pay off credit card debt

If you don’t get loan from someone close in family/friends, then you can go for a personal loan and use that money to pay off the card outstanding. Interest will be in the range of 14-18%, but still, it’s better than paying 40% on a yearly basis.

This does not clear your debt, but just shifts your debt from credit card to a personal loan. Much better option. For those who already have a home loan going on, they can also look at the top-up loan facility which will be much cheaper to a personal loan.

Option #5 – Convert your credit card loan to EMI

If you are not getting a personal loan, then you can convert your debt to an EMI option from the same lender. Almost all the big banks give an option to convert the credit card debt to EMI for tenures like 3/6/9/12/24 months. The interest can range between 13-18% depending on the lender.

convert to EMI credit card

Option #6 – Use a Credit Card Balance transfer facility

There is a facility called Balance Transfer provided by many credit card companies, where you can switch your current credit card outstanding to a totally new credit card. In this case, the new credit card will pay off your old credit card and will also offer you some benefits like an interest-free period of 3 months or low interest for the first few months.

credit card balance transfer facility

Almost all the major credit card companies like SBI credit card, ICICI credit card, and HSBC have this credit card balance transfer facility service with them. SBI credit cards even provide 0% interest for the next 60 days.

However, before opting for this option, please check if there is any processing charge or not? It might happen that the lender is providing free interest period, but then high processing fees will nullify the advantage 🙂

However, note that this is a temporary solution for the next 2-3 months and by that time you should look for further solutions.

Use your credit card wisely

Below are some high-level points which will save you from getting to credit card debt

Pay your Credit Card 3 days before the due date, keep a reminder on the phone if it helps
Don’t spend much more than you can afford.
Carry debit card instead of credit card, You will pay only what you have
Don’t keep very high credit limit, if you can’t control yourself when it comes to spending

Please share if you have any more solutions?