Author: Jagoinvestor

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How you will save more Income Tax compared to last year due to Budget 2014 (Download Calculator)

Posted on by Jagoinvestor

Budget 2014 was a big event this year as the expectations from BJP govt was very high. Here are some of the income tax rules which were changed int his budget and impact a common man directly.

1. Income Tax Exemption Increased from 2 lacs to 2.5 lacs

The basic exemption limit was raised by Rs 50,000 in this budget and now the new limit is Rs 2.5 lacs . So there is no tax to be paid upto income of Rs 2.5 lacs. For senior citizens, the new limit will be Rs 3 lacs. So the new tax slabs looks something like this

new income tax slab 2014 2015

3% education cess is extra on income tax
2. 80C limit raised from 1 lacs to 1.5 lacs

This was a big relief for most of the people, as the old limit of Rs 1 lac in 80C was not enough for most of the people. There are too many things like EPF, PPF, Home Loan Principle amount, tuition fees, Life Insurance Premium, Tax Saving Mutual Funds and Tax saving FD and many more things, which gets 80C exemption.

Now with this exemption increase to 1.5 lacs, more motivation will be there for people to utilize this 80C limit. So if a person earns Rs 4 lacs, he/she can invest upto Rs 1.5 lacs in 80C, which lowers the taxable income to 2.5 lacs , which does not attract any income tax. So in best case, a person do not have to pay income tax upto Rs 4 lacs income with help of 80C investments done.

3. PPF limit raised from 1 lacs to 1.5 lacs

The limit for PPF investments was increase from 1 lacs to 1.5 lacs. This is going to be a great news for PPF fans and especially those who are investing in PPF in their children names, as the overall limit would increase for their family.

4. Home Loan Interest exemption raised from 1.5 lacs to 2 lacs

This was again a big relief for salaried class, as a lot of people who have taken home loan pay much more than 1.5 lacs of interest per year. With the increase of limit from 1.5 lacs to 2 lacs, the extra saving is of tax on Rs 50,000 , which turns out to be around Rs 15,000 for those who are in 30% tax slab. Note that this is only applicable for self occupied house taken on home loan.

5. Capital Gains Tax on Debt funds raised from 10% to 20%

The capital gains tax on debt funds has been raised from 10% to 20% and the minimum holding period to get benefit has been raised from 12 months to 36 months. So what happened was that earlier, people in 20%-30% tax slab rate used to invest in debt fund for 12 months and got it taxed at 10%, which was a great alternative to fixed deposits (where you pay 30% tax , if you are in higher tax slab) . But now this cant be done . Those who are interest to understand this part, please read this analysis on Deepak Shenoy Blog.

Then vs Now – An example calculation of a person earning Rs 10 lacs

Below I have given an example of a person who earns Rs 10 lacs, and takes full benefit under 80C , Home loan Interest and other basic exemptions like HRA, Medical Bills, Medical Insurance premium etc and compared his situation from past year rules vs the new rules which came in new budget. It has been seen that he can save approximmately Rs 30,000 additional tax. Have a look below

income tax calculation example

Download the Income Tax Calculator

I have created an excel calculator which you can use for calculating your new income tax and also compare with past year and see how much saving you will make with new rules.

Click Here to Download the Income Tax Calculator

Some Other Changes and Points from Budget

  • There is a proposal for introducing a single demat account for all the financial products
  • The EPFO will launch a unified EPF account, which will be a single account and there wont be headache to transfer or merge them every-time you change the job.
  • There will be uniform KYC across all financial institutions so that you don’t have to update your KYC at all the places

Please share how do you see this budget and the benefits ? Do you think its really going to help bring the “acche din” or not ? Please share your thoughts in comments section below.

What happens when Bank locker keys are lost?

Posted on by Jagoinvestor

Have you ever pondered the consequences of losing the bank locker keys? In this article, I will share what to do when you lose your locker keys? What are the rules and charges involved in setting things right again?

what happens if you lose your bank locker key? How much fine you will have to pay to get your new locker keys?

What happens when you go to open the Bank Locker?

When you open a Bank locker, you are billed in advance for breaking charges and 3 years of rent (the former is to cover emergencies when the locker might have to be broken). RBI guidelines state that banks can charge this extra fee if they wish, but some banks might charge it later, only if the situation arises.

You get 1 single locker key only

When you open a bank locker, there are a total 2 keys to the locker; out of these, one key is given to you and the other is with the bank. The absence of duplicate keys means that it is very important to keep your keys carefully and not lose them. However, it is very natural that some people lose their keys or misplace them.

What happens when your locker keys are Lost?

When you lose your locker keys, the first thing you need to do is write to the branch manager informing them about the loss. They can then ensure that the locker cannot be accessed by anyone (for example, by someone who stole your keys).

Once you intimate the bank about the lost keys, your locker has to be replaced by a new one (and keys) OR the duplicate keys have to be created and given to you. In either case, they will be contacting the company that supplied the locker to them (mostly Godrej).

A trained technician will travel to the bank office and cut open the locker in the presence of a bank official and the person who rented the locker. This is to avoid any dispute over the loss of items from the locker. If the person renting the locker is not available, the bank will go ahead and break the locker and move the locker contents to a sealed box, which can be passed to the customer later.

Do I need to pay high penalty If I lose my locker key? Here is a reason below

Bankers do provide a replacement of duplicate key of lockers in case the same is misplaced or lost. There is no duplicate key of a bank locker as such. The bank has to call the supplier of the locker (i.e. the company that has supplied the lockers to the banker) and the supplier provides the duplicate key.

This may entail a cost of about Rs.3000 per key. This heavy cost is due to travelling cost and other administrative costs that are involved.

Any expenses incurred will have to be borne by the person owning the locker – a sum that can run into the thousands. Just because it is  “loss of keys”, one should not treat it as a trivial matter and assume that duplicate keys will be provided for free.

Penalty charges may vary from the size of the locker?

Note that expenses can vary as per the size of the locker. For small lockers, the replacement charges will be less and will increase to large amounts for bigger lockers. I think the high expenses act as a deterrent to ensure that locker owners do not treat the safeguarding of their keys as a trivial matter.

For complete clarity, I have set out below excerpts from bank T&C’s regarding this issue.

From ICICI bank website

The Hirer(s) is/ are permitted to operate the locker with the key provided by the Bank and no operation of the locker shall be permitted with a key other than the key provided by the Bank at the time of executing the Agreement.

If the key of the locker, supplied by the Bank be lost by the hirer(s), the Branch should be noticed without delay. All charges for opening the locker, replacing the lost key and of changing the lock, shall be payable by the Hirer.

From SBI Bank website

In case of loss of key of the lockers, a service charge of Rs.509/- has to be recovered from hirer in addition to the actual expenditure incurred in breaking open the locker and changing of key by manufacturer of lockers.**

From City Union Bank website

In the case of locker keys reported lost by the hirer, a written declaration shall be obtained from him/her. The bank shall obtain from the manufacturing company a fresh set of lock and key. It shall be delivered by the company in a sealed box through its technical representative.

The technical representative shall open the box in the presence of the Branch Manager and the Hirer and then in their presence the locker shall be broken open.

The contents shall be removed safely and a new lock shall be fitted thereon. Then the NEW key shall be handed over to the hirer after collecting the charges for fitting the new lock and key.

Why do we need to keep the Bank locker keys Safe?

We may face 2 major consequences if we lose bank locker keys. They are as follows –

  1. If the keys get into the wrong hands, then you fear to lose your locker contents. After all, you must be well aware how lousy bank officials are in checking the authenticity of the person opening the locker – all they do, is fill an entry in their register and that’s the end of it.
  2. Another issue is you will have to pay hefty fines if the locker keys are lost. The amount of hassle and financial loss you need to absorb to rectify matters is huge compared to the size of mistake. It is therefore suggested to be careful from the onset.

Let me know your views on this article. Were you aware of these rules or not?

Design your financial life 2.0 Registration Opens  – Mumbai , Bangalore, Pune

Posted on by Jagoinvestor

Day before yesterday we released video of our Design your financial life 2.0 and we had influx of mails from all over asking for more details about the program. We are so touched by the excitement level that some of you hold in your heart. Below is the video which explains what this program is all about

Why we conduct Design your financial life Program?

We did our first Design your financial life 1.0 workshop in Pune. It took a lot of effort for us to design the overall design of the program as we were doing it for the first time. I wanted my wife to participate and so I asked her to participate in the program and Manish did the same at his end. I still remember the first reaction I got from my wife, she said, “What will I do in your boring personal finance program?”.

I told my wife I promise the program will be fun and I extended my heartfelt invitation to her. Finally my wife said yes to me. I told her be a good participant and asked her to really work on her financial life. On the other end, Manish was struggling to enroll his wife into the program and somehow he also managed to convince his wife. This was MOMENT of joy for us, we still feel it is the best thing we ever did.

Finally we got both of them into the program and they enjoyed each and every part of the event. They were happy to see how much our readers love us and how fun personal finance can be. I can never forget my wife taking notes during her participation and after we returned back she got a lot more committed with her money. Same was with Manish, his wife made a commitment to start her own venture and her vision is still alive and she is working on it.

We really want investor to dedicate some committed time for their financial life so that they can work on their financial life. We want individuals and couples to get on same page when it comes to money management, we really want to make personal finance interesting and fun and there are very few who give dedicated time to their financial life.

Why this transition from Design your financial life 1.0 to 2.0

We started with one day workshop but now after working with a few hundred investors we realized that the one day event needs something more to it. Our intention is not to get fee from investors, we want their full commitment and we want them to produce some amazing results in their financial life. To produce tangible results we are moving from 1.0 to 2.0. It is no more a workshop, it is now a 12 weeks program that will help all kind of investors in designing their financial life.

Some Special Criteria to join this program

(Put your hand on your heart and get honest with yourself)

  • If you find personal finance boring (like my wife)
  • If you convince others and yourself that personal finance is not your cup of tea
  • You hate numbers and are a big time avoider when it comes to money management
  • You are PhD when it comes to procrastination
  • You want to get into action but you don’t know from where to start
  • You are confused with what to do and what not to do because of the overall bombardment of information on you on the name of investor education
  • You really want to move beyond planning and want to learn how to design your financial life.
  • You want to make 2014 your BEST FINANCIAL YEAR

If you fit into above criteria we would love to have you in our new avatar of design your financial life program. The program is happening in 3 cities, which are

  • Mumbai
  • Bangalore
  • Pune

Invitation to Join Design your financial life 2.0

From the bottom of our heart we would love to invite you to be a part of this program. Your financial life is right now going in some direction; it will take some shape after 5, 10 or 15 years from now. Now, you can allow your reasons/circumstances to lead your financial life or you can design your financial future. This program is a wonderful structure for action takers. Looking at our schedule we will only be able to do such event once in a year and so make sure you don’t miss it. Also, it is always fun to get away from the computer screen and meeting offline at deeper level.

If you have any questions or queries feel free to either ask in comments section or mail us.

How can you add an “extra” Godrej lock in your bank locker and make it 10 times more secure?

Posted on by Jagoinvestor

Today you are going to learn how you can add an “extra” 3rd lock in your bank locker and make it really more secure compared to what it is now at this moment. This information is really hidden one and almost no one is aware about this really interesting and useful thing.

I would like to thank Jay Sheth, a reader of this blog to share this information with me in one of his comments. Let’s acknowledge him fully for his openness for sharing this amazing information with all of us and appreciate him to take out time to send me all the pictures and information which you are going to read below. The author of this article is Jay Sheth, so from now on the article language will be as if he is sharing his experience.

Why there is 3rd Key Hole in the bank locker ?

One day when I was operating my Bank locker I realized that there is a third hole in the bank locker apart from the two key holes where I and the bank person put our respective keys to open the locker. This made me wonder as to why it has a third key hole when it’s not being used?

third hole in bank locker

With these thoughts, I further researched on this. There is hardly any information on the internet. I met several authorities, contacted Godrej (who are manufacturing locker cabinets) and found something very useful. There is something called as “Renter’s Personal Lock” which is available directly from Godrej, and we could fit it ourselves easily with just a screw driver.

So if you open your bank locker, and see the exact back side of this 3rd keyhole, you will see that there is a specific fixed place along with already drilled screw holes , where this “Renters Personal lock” from Godrej can be installed. Let me show you how the back side looks like

backside of bank locker

How to Install this lock in Bank Locker ?

There two ways you can install this extra lock in your bank locker.

Method #1 – Install it yourself – This method is recommended, to install the lock yourself. It is very straight forward. When you buy this Lock from Godrej, It comes into a sealed pack, with the lock, one single key, and 2 screws. All you need is a screw driver at your end to install this. Visit your bank locker, once the bank person opens the locker for you, and leaves from there, you can then close the door first (so that no one disturbs you). And then you can put the lock in the bank of the locker and install it with screws there.

Here are the easy steps to put up the lock yourself:

  1. Insert the key in the “extra” (bottom left) keyhole.
  2. From the back side of the door, place the new lock in such a way that the key inserted above gets in its keyhole. This will give you the correct positioning quickly.
  3. Tighten the two given screws with a screw driver (top left and bottom right side respectively).

Let me show you a sample picture of how it has to be installed, it will give you a fair idea.

–

install godrej lock into bank locker

Here is an important point if you are installing it on your own. Just get your locker opened and wait for the officer to walk out. Then install it at your pace and leisure. Next time when you want to open it, you will have to put both keys (the key cannot be taken out while the lock is open, which is for our safety only. But the officers will know). But that’s perfectly fine, as it is absolutely legal and allowed – just that many officers do not know the rules, so to avoid arguments with them just put it up silently for the first time. Read this incident where one guy struggled to get back his locker content back after it was closed by bank.

Method #2 – Installation by Godrej – Contact the Godrej Dealer in your city and they will send a person who will take around Rs. 250-300 as installation charges and will do it for you. This is a simple way, but cost a bit to you. There could be the following issues in this approach:

a)  You might not be able to find the right person in your city, as this whole thing is not well known and even some Godrej guys are not aware about it. Manish called a guy in Pune who said that you can get this done in Pune. You might want to search a bit in your own city.

b) For confidentiality reasons, you might not want them to know the bank, location and locker number of the locker in which you intend to put this lock. Naturally, all of this is compromised if they install it for you.

c) You might have a hard time convincing the bank officials that this is indeed a person from Godrej, as many banks are pretty strict about only allowing the actual renters to enter the locker room.

Once you are done installing the extra lock, from there on, your locker will open only when all the 3 keys are applied, where those 3 keys are

  • Your Main Locker Key
  • Bank Locker Key
  • Your EXTRA Godrej Locker Key

Here is how it looks from the front when you have installed the extra lock.

bank locker front with godrej lock

Should I really add this “extra lock” to my locker ?

Bank lockers are very safe compared to your home locks. But then it is only comparatively safe. You must have read about a lot of incidents where there were robberies in bank and lockers were looted, you might also have read about stories of how someone’s locker belongings were missing when they checked it after many years. There is always this thought which crosses one’s mind that what if there is some security loophole, or if someone misuses your bank locker main key, what if it’s lost and goes into a wrong hand? In that case, if you are too concerned about your bank locker and want to add a 3rd layer of security (which is just one time work and costs a bit) , then you can install this 3rd lock.

There have been incidents where bank lockers have been compromised and looted . So now its your choice, if you want to add this extra lock in your bank lockers or not.

How to Buy the Personal Renter’s Lock ?

Now let’s come to the main topic of from where you can buy this extra lock called “Renters Personal Lock”. You will get this only and only from Godrej company. You can contact a Godrej dealer in your city and ask him about this lock. It costs approximately Rs. 800-1000. If you are interested in getting it installed by the Godrej person, then you should ask about this from the same dealer itself.

renters personal lock from godrej

You can buy the lock and get it via Courier

You might face some issue finding it, but don’t worry. Keep trying to find it from many vendors, try to search Godrej dealers from justdial or internet and will surely be successful.

If you are in Pune – then you can buy it from this place mentioned below.

Godrej & Boyce Manufacturing Co Ltd

4, Shop 517,Dyananda Society,

Dyananda Society Sadashiv Peth,

Pune, Maharashtra ( West ) – 411030

Phone – 020-24471453

Price mentioned by them over phone to us – Rs 880

If you are outside Pune, you can still buy it and get it delivered via courier

Manish called them and confirmed that they will be able to deliver the lock via courier to all over India, however the courier charges will apply apart from the lock price of Rs 880.

Just call 020-24471453 and the contact person is Mr. Gafur Shaikh . Hope you get it 🙂

(Please understand that we are just connecting you to them, and nothing else. If you face any issues with them, it will be between you and them, dont blame us for that)

Let us know if you are going to install this extra lock in your locker or not. Also tell us what you feel about this information.

Finally thanks Jay for sharing this useful information with all of us.

LIC Online Term Plan Launched – 37% cheaper than Offline version

Posted on by Jagoinvestor

Good News! . Finally LIC Online Term plan is launched. The name of its online term policy is LIC e-Term and can be bought via LIC Direct initiative. Investors community was waiting for this online term insurance from LIC from very long time and finally many will buy the term plan to cover their family. In this article I want to give you a crisp review of LIC Online Term plan.

LIC online term plan launched

Let me share some of the features of LIC Online

1. Completely online buying – without agent help

Like any other online term plan, LIC e-Term is completely online term plan. You just need to calculate your premium, give your details online and then buy the policy by paying the premium. Incase you need to appear for medical examination, that will be done offline.

2. Different premium for smokers and non-smokers

There are two categories of premiums which will apply. The first one is called Aggregate category which will apply for all those who will choose the sum assured between 25 lacs and 49 lacs (it does not matter if you are smoker or non-smoker) . This category has to be chosen if you are smoker anyways (incase you take more than 50 lacs of sum assured)

The next category is non-smoker is called Non-smoker if are choosing sum assured more than 50 lacs and if you are a non-smoker.

choose category in lic eterm online term plan

3. Eligibility Conditions and Other Restriction

  • Minimum Sum Assured : Rs. 25 lacs for Aggregate category and Rs 50 lacs for Non-smoker category
  • Maximum Sum Assured : No limit
  • Minimum age at entry : 18 years (completed)
  • Maximum age at entry : 60 years (nearest birthday)
  • Maximum cover ceasing age : 75 years (nearest birthday)
  • Minimum policy term : 10 years
  • Maximum policy term : 35 years

4. Cooling-off period

If the Policyholder is not satisfied with the “Terms and Conditions” of the policy, the policy may be returned to us within 30 days from the date of receipt of the policy bond stating the reason of objections. On receipt of the same the Corporation shall cancel the policy and return the amount of premium deposited after deducting the proportionate risk premium for the period on cover, stamp duty charges, expenses for medical examination and special reports, if any.

Cheaper Premiums of LIC Online Term Plan

The great news is that LIC Online term plan premium is much cheaper than the offline version of its term plan. If you see the premium rate charts, you will see the premiums for LIC e-term is around 20-30% cheaper then the offline version.

For example – The Yearly premium for LIC online term plan for 50 lacs sum assured was Rs 7,300 (for 30 yrs old male and for 30 yrs term), compared to Rs 11,600 for the offline version (LIC Jeevan Amulya II) . For the same profile HDFC Click2Protect charges Rs 6,000 , so LIC online term plan is around 20% costlier to HDFC Click2Protect plan.

Here is the graphical comparison for the premium difference between 3 policies

LIC online term plan premium difference

Details you have to provide for taking LIC online term insurance ?

When you buy the online term policy from LIC, here will be few things required. Those are as follows

  • Details about your occupation/ Educational qualification
  • PAN number
  • Your Income Details ( Form 16 / ITR for last three Years or P&L Account)
  • Details of all your previous life insurance policies (like policy number, sum assured, plan etc) taken in last 3 years.
  • Details of family members like age, state of health, age and cause of death (if applicable)
  • Details of your medical history including illnesses, injuries and any medication.
  • Bank details like Account number, MICR code etc.

Can NRI take the online term plan from LIC ?

Yes, NRI’s can also buy the term plan from LIC, but it clearly mentions that they will have to be present in India for medical examinations.

Step by Step process of buying LIC Term plan online – VIDEO

You can just go to this LIC eTerm Page and start the process of buying the plan. Below you can watch a 10 min video on how to buy LIC online term insurance policy in step by step manner. I have explained more of the things in the video itself.

Comments on LIC Platorm and overall experience

I have gone through the overall form filling experience and I find it well researched and thorough. LIC has taken a lot of time to come up with platform. Given the popularity of LIC and the trust of its customers, LIC will surely be going miles and will gain millions of new customers. Investors now are well aware of the importance of term plan and its popularity will only grow overtime.

Are you buying the LIC Term plan ? How did you find the review ?

Last Bootcamp Batch of this season from 19th May (Free Wealthclub membership worth Rs 4,999)

Posted on by Jagoinvestor

It is said that all the good things come to an end; with this article we are announcing the last batch of our online Boot camp. Initially we planned to conduct such boot camps on regular basis but looking at our current schedule and projects on hand we won’t be able to conduct boot camps on regular basis.( It is not like we will never do them but yes it will take some time for them to re-start)

bootcamp environment

Last batch comes with a SPECIAL GIFT

Here is your LAST Chance to be a part of our BOOT CAMP

Kindly see this blog post as personal invitation from our team to participate in our upcoming boot camp. If you are someone who wants to be a part of committed investors mastermind group, you will create a lot of value for yourself. You will get a chance to work on your financial life and will be able to gain valuable insights.

If we (I and Manish) had to choose between financial planning and boot camp we would opt for boot camp because here you get a chance to learn from other investors, here you learn to get on driver’s seat and because boot camp is all about TAKING ACTION and moving forward.

Some of the highlights of Bootcamp

  • Bootcamp happens online on facebook group (closed)
  • Bootcamp is flexible in timings, so there is no fixed timings when you have to be available
  • Bootcamp is a group program which helps everyone to learn from group and move ahead each week collectively
  • Bootcamp is 6 weeks program
  • Every week bootcamp focuses on one area of your financial life
  • Bootcamp is an action oriented program, not knowledge oriented

Are you Overestimating your future income and getting into debt trap ?

Posted on by Jagoinvestor

Today I want to discuss a problem which is part of almost everyone’s life and creates some really big issues. I am talking about the problem of “Over Estimating your Future Income” . Yes – A lot of people take their current life decisions, based on what they feel about their future career and future income.

over estimation of future income

My Salary Hike

When I was working in Yahoo, Bangalore around 2008, I saw all the newcomers around me “expecting” their salary hike to be around 20% and 25%, and guess what – It actually happened.

Then in 2nd year, the same people “estimated” that they deserve a minimum 15-20% salary hike at any cost, because they have given their best. It happened again ! .

Then in the 3rd year, they got into the same – “I think my salary hike this year will be .. ” game and by then these people were using maxing out their credit card limits, had bought all the financial products for tax saving and committed to pay huge premium, at times as high as 80,000 per annum. They were all living a life which they deserved after 7-8 yrs of their career.

Then there was a layoff in Yahoo and some people got FIRED (some were my friends)

One guy had almost finalized a home loan, obviously based on his “future income”. Another guy could not pay his credit card bills for next 3 months, because there was no money (he eventually got another job in few months) . And most of them wished if they had saved a bit more, it would have been a better situation.

We focus on positive side, but not on negative’s

The incident I explained above looks fine at the start of career, there is less to loose. But just imagine the depth of this problem. This shapes our financial life.

If you have been working for many years now, you probably have lots of things to achieve in life and due to peer pressure, you can go overboard on your expenses, just by assuming that your future is too bright. The issue is not that we look at the brighter side, the issue is that we look “only” on the brighter side – the salary hike, the promotion, the better salary if we switch companies, the extra bonus which we will get, and then the side income which we can generate along with job .. etc

We do not look at the negative side seriously or just under rate them. We feel job loss is something which happens to others, not us! . The accidents can never happen to us. We cant loose our wealth due to some reason. What about a sudden medical emergency which can wipe out your wealth, what about “No Salary hike” this year , what about “bonus below the expectation” , what about a Fraud which creates a big hole in your pocket?

When we see our future from current situation, it looks like a straight line without any issue or problems, we extrapolate our smooth past into future and every thing looks promising. However the reality is full of surprises, and problems. Things can go terribly wrong and it can really damage your plans in life. How serious it will be depends on how much over estimation you have done for your future income. The image below clearly explains what I want to say here.

your plan in life vs reality

I posted this same point about “overestimation of future income” on my facebook wall, and I got a very good reply from Vishnu Prasath, which I feel everyone should read, below is that reply

Vishnu Prasath reply for overestimation of future income

In our 6 weeks online Investors Bootcamp, one of the weeks is about getting clarity of your current situation and where you stand in your financial life. With the help of an amazing excel sheet, participants are able to find out 12 insights which are related to their financial life, it tells them key hidden points about their financial life.

Yeah .. I am starting my business !

Let me also touch upon the point – “starting my own business”. When you do calculations and plan for your business potential, MS Excel makes you millionaire on paper and shows you all the rosy picture. However things are so different in real life. Assume a person, who is going to leave his job and going to start a business/startup . He forcasts the cashflows and profits and declares that in next 1 yr itself he will break even and start making money. Life will be on track again, but in reality – it can take 4-5 yrs. There can be losses, things can go totally wrong ..

In that case, imagine the situation, the stress the family will go through , the “I told you so … ” the person has to be hear every month. This is one real life example almost all the not-yet-successful entrepreneurs can relate to .

How we spend more and more Today

So because we over-estimate our future income, we buy bigger car, bigger Home, we go on more longer and premium vacations, and commit to higher EMI’s which looks possible considering our future income and cash flows. I do not want to sound like a pessimist here, I am not saying don’t be confident in life or career, one always have to do a calculative move and take decisions based on some assumptions, but some people go over board and damage their future at the cost of today. On that point I want to focus on two main points – which are

We are Consuming more today and not leaving much for future

The biggest problem I see today in most of the people financial life is that they are consuming a lot on the name of “Life is here to Enjoy” .. Yes – its a crime if you dont enjoy your life despite earning so much, but there is a limit to it. There is a always a cieling to your spending. If your yearly salary package is Rs 8 lacs, then you should NOT be spending all 8 lacs , because you “feel” , next year your package will rise to 10 lacs and “at that time” you will save more. If your salary is 8 lacs per year, you should start with Rs 5 lac car, and not Rs 16 lacs car, because your future looks bright. It just does not work that way in most of the cases.

Getting into Debt Trap

Another issue is that, When things dont turn out as per your expectations, you also feel very disappointed and frustrated and start comparing your imagination with reality. Just because you assume future is too bright, you spend on those things, which you dont really need today, but have potential to pay. You also over spend and this is also a cause at times for Debt Trap, you get into a small debt first, you assume its normal and next month you will take care of it, and then it never happens and after 3 yrs, you feel you should have controlled yourself in the start itself.

One of the guys commented his real life experience on one of the facebook groups I am part of. Here is what he said

The biggest problem with our generation is that we overestimate our future cash flows,, think ourselves entitled to expensive lifestyle due to easy credit and fall prey to EMI trap rationalizing it with our increasing incomes every year. I represent this generation and have badly suffered the consequences of overestimating my future earnings.

I took personal loan for construction of my home, then took top up loan next year when my salary increase  and put it in interior and then again took maximum personal loan that I was entitled to for my sister’s marriage next year rationalizing every time that my income will only increase every year in my job.
But then I left job to start a business with one of my friends and all hell broke loose. All my cash flows dried up, debts increased and

I was reduced to begging for money. I had to live on borrowed money for more than a year. All my aggression,confidence,self image and big talks took a bad beating. It was hell of a time. Now I hate debt and credit of any kind. It is slavery, bondage and evil.

You never know when things can go wrong for no reason or for no mistake of yours. Think a hundred times before committing yourself for high EMI, high tenure loans.

(Source : Asan Ideas for Wealth Facebook Group)

How long can you survive financially if you loose your job ?

So you must be wondering about your own case right now. Let me ask a very simple question – “If you loose your job, how many months or year can you survive without working?” . This is a powerful and disturbing question at the same time. If you have been working for many years, and your answer to this question is in months, then there is some issue.

Whats the right way ?

There is no right or wrong way here, there is only logical way. You always have to keep a balance in your spending and saving. You can surely expect the future to be good and bright, but make sure you do not over leverage to a limit which turns out to be a disaster if things go wrong. Also think about situations which are negative and then take a balanced decision.

Let me know what are your comments on this topic ? Have you ever faced any issue because you over estimated things ?

New Fraud by Agents – Changing Policy tenures from “Single Premium” to “Yearly”

Posted on by Jagoinvestor

Today, I wish to highlight a fraud, which has been going on for many years, but one that has not received enough attention. While the fraud itself is small and easy to conduct, its impact on investor wealth is significant.

What is exactly is the Fraud ?

Many investors, who wish to deposit money in some financial product as a ONE-TIME payment, opt for a ‘Single Premium’ policy. Here they are required to just pay the premium fee once, and the policy carries on for many years after that.

The mistake some investors make, is that they convey these instructions verbally to their agent and do not fill up the form themselves. Neither they do verify the tenure filled by the agent. Now what many unscrupulous agents do, is that instead of ‘Single Premium’, they specify ‘Regular Premium (or yearly) as the payment scheme – leading to a situation where the investor has to pay the same premium amount every year for many years thereafter.

beware of agents filling up form

What are the possible problems which happens ?

  • The premium amount is quite substantial at times. People can’t afford that sum each year and subsequently have to discontinue the policy
  • Investors remain unaware about the tenure of the policy and stay under the assumption that they do not have to pay any more money. However, the policy lapses after a year due to non-payment (If the investor does not have an email id, they do not even get premium reminder emails)
  • Even if investors come to know about the changed tenure, they need to run around from pillar to post just to cancel the policy – suffering the consequences of a problem which should never have been theirs to begin with
  • This whole experience shatters their faith in agents/ companies and leads them to avoid other agents in the future, even good ones.
  • There is a massive emotional impact as investors see this as a breach of trust and at times they lose their hard earned money – funds which thy might have set aside for some dream project!

3 real life examples of how investors were cheated by agents by changing the Tenure

There are several readers on this blog, who shared their real life experience in the comments section on how they were cheated and lost their money and peace of mind. I just want to make you aware of these experiences. Read on below.

Example #1 – How Mr. Syed Jibran cheated by people at HDFC Bank

Through the HDFC bank, I told the concern person to deduct the amount of Rs 200000/= from my saving account and consider as the single premum only, as i cant pay the amount of rs 200000/= every year. But later I come to know that they have consider my premium as the regular premium. Next day I sent the mail to head office, not to process my application and refund the same amount in my saving account.

I got the call from head office, that they cannot process to cancel my application, as they required in written cancellation letter . I agreed with team, but this is not at all my fault. Yesterday, I got a mail mentioning that there are free-look charges. This mail shocked me – even your agent cheats me, but you charges me. I send you many mails not to proceed my case and refund the same amount in my account. you can check that????????????????

Example #2 – How Naresh policies were Lapsed because he was cheated

One of my relative taken policy from Religare insurance broking ltd before 5-6 years ago with kotak-3 lacks, birla-8 & 5 Lacks as one time premium, now they are saying that the policy was regular premium plans and that is lapsed. sir now my relative want his money back.what should he do now.pls help.

Example #3 – How Reliance Life Insurance agents cheated Mr Ashok

We discussed with Reliance Life Insurance , Senior Sales Manager Mr Amit Khandelwal that we need single premium policy , he has taken our signature on application form and advised us not to fill the forms saying that “ form is complicated and likely to be filled wrongly by you consequently form will be rejected , better I will fill up the forms , as discussed , we are doing day in out this. “

Later on , he filled up the forms in his own handwriting, he has given his own home address and the worst thing he did he has filled up regular premium payment of 5,00,00/- for 5 years despite that we decided for single premium.

Return of policies was not possible for us as we have received policies very late , much beyond 15 days free look period , as policies were dispatched to Sr Sales Mgr address.

Even after this Reliance letter , I was keep on getting phones from local Indore office that we are discussing your case with our HO Mumbai , but off-late nothing has happened as yet. It is a clear case of mis-selling , breach of trust, fraud and forgery by Reliance Life Insurance. Reliance Life has terminated policies and Fund value is 50%.

Why is this fraud done by Agents ?

Frankly, it’s just because they earn higher commissions through this ploy. Agents earn meager commissions on “single premium” policies, but on yearly premiums they stand to reap much higher rewards.

single vs yearly premium difference

For example – For pension plans, the single premium commission is capped at 2% (that too one time only), however if it is a regular premium, the commission would be 7.5% for first year premium and 2% in subsequent years. Which means that if a person buys a pension plan with Rs 1 lac premium, for a Single premium policy, the agent will get 2,000 rupees, whereas if he cheats the customer and puts “regular” as the premium tenure, then he will get 7,500 rupees in first year and 2,000 in next year premium (provided it is paid by the investor).

Also on various other life insurance policies like endowment and moneyback plans, the first year premium is as high as 35-40%. So why would an agent settle for just 2% premium as commission, when he can take 20-40% of the premium (which is 10-20 times original commission)

How to save yourself from this fraud?

Here are some simple common sense tips which will work

  • Never ever let the agent fill up the form; you should always fill up the form yourself.
  • If you can’t fill the form for some reason, let the agent fill it in front of you, and once he is done, review each point filled by him. Take photocopies of the filled form for your reference
  • If you still sense that the agent is being dishonest, return the policy in the free-look up period which is generally 15 days from the date when you receive the policy in your hand
  • Email the management and customer care and tell them you will be complaining to banking ombudsman and grievance cell about this and also file a police complaint on fraud.

I invite suggestions from our readers on what solutions are possible if someone becomes a victim of such a fraud?

New LIC Term Insurance relaunched with low premiums

Posted on by Jagoinvestor

This is a bit old news now – but a lot of you might not know that LIC has relaunched their Term plans (offline) few weeks back. LIC has two term plan policies now called Anmol Jeevan II (below 25 lacs sum assured) and Amulya Jeevan II (Above 25 lacs sum assured) , and now both of these are relaunched (earlier one was Jeevan Anmol I and Amulya Jeevan I) to make sure that they comply with new IRDA regulations which came some months back.

LIC new Jeevan Amulya Term Plan

The main change in the new term plan and the old term plan is – that SINGLE premium option has been removed from these term insurance policies and the premiums have dropped due to change in mortality rates, which was due from long time for LIC to adopt (that was the main reason why LIC term plan premiums were very high compared to other companies)

Lower Premiums for New LIC Term plans

For the simplicity purpose, in this post we will just talk about LIC Jeevan Amulya (Sum Assured above 25 lacs) and not LIC Anmol Jeevan.

So now the premium is lower.  Consider an example where a 30 yr old person wants to buy a 25 yr policy . In this case the old LIC Amulya Jeevan premium was Rs 292 for every Rs 1 lac sum assured, however in the new Amulya Jeevan , its only Rs 196 , which is a reduction of approximate 33% .

Now with this new rates – if a person wants to buy Rs 1 crore term plan with LIC – then it can be bought at only Rs 19,600 , compared to Rs 29,200 earlier !

New LIC Term Plan premiums

Is LIC Term plan premium lower than other companies? 

No , LIC Term plan is still one of the highest even after reduction in its premium rates, but if someone is hell bound on buying a term plan from LIC only, then its a great news for them. If you consider other private companies – then the premiums are much lower for other companies like Bharti Axa, Aviva or HDFC Click2Protect . For example – A policy of 1 crore sum assured (25 yrs tenure) , most of the other companies will charge below Rs 10,000 per year, however in case of LIC its Rs 19,600 which is almost double .

Already bought old term plan from LIC long back , Will your future premiums be lower?

I dont think so, if you already have bought LIC Amulya Jeevan Term plan some time back, you will be paying higher premium which was decided at the time of buying and you will continue paying that only. So now its your choice if you want to re-purchase a new term plan or not, But better check the premiums difference in case you plan to repurchase it now , because if you re-purchase it now, your current age will be considered and it might happen that the premium difference is not much for you.

So now – if you still have not bought a term plan , and if you are only interest in LIC term plan, then its a good time to buy the term plan from LIC – go ahead !

Why you should go beyond MONEY , and connect with TRUE WEALTH – Here are 10 ways

Posted on by Jagoinvestor

If I have to write one last article before I die it would be the one that you are reading. Don’t worry I am here to stay and we as a team will continue to write more and more articles! This article is special to us and I am glad I got this opportunity to share my thoughts on true wealth with you. Before you read any further I have few requests, don’t react to the content, read the content slowly, sink into the content and see how you can figure out your own way or process to connect with your true wealth.

By true wealth – I mean something that really matters to you and something that is close to your heart.

A lot of people out in the world are striving for high returns, perfect financial products and earning more MONEY but somewhere they are losing touch with their true wealth and so today we want our readers to get in touch with their true wealth.

1. Great and loving relationships

If you are stuck in any relationship, no matter how much you try you won’t be able to live a fulfilled life. I interact with a lot of people who find themselves stuck in some or other relationship (they call it as disturbance in life). When relationships lack workability you lose half of the battle in the world. Because your bad relationships start to consume your mental energy and it takes you away from the kind of life you want to live. We invite you today to take some steps in your life to resolve relationship issues where you are stuck. There is nothing that you cannot resolve inside of a conversation and so start having dialogue with the other person where you can make that particular relationship better. Either get out of such relationship or continue but don’t remain stuck.

2. Relationship with Parents

Your parents are your source relationship. You may have a lot of money, huge bank balance and everything with you but if you are incomplete with your parents you will never ever be fulfilled. If you want your life to work, see that you maintain good relationship with your parents. I was once interacting with one of our clients whose father is bedridden from last few years and his father now occurs to him as burden ( he is frustrated with his situation). He is willing to take care of his father but as a duty and not lovingly. I could clearly see in his life that he earns fantastic, has everything in life but this was an area where he was stuck and so was not able to experience life at its fullest. If possible write a letter to your parents (even if they are not alive) and make sure your relationship with your parent’s works. You just can’t afford to have non-workability in this relationship.

3. Building Great Home Environment

Your home environment really matters. I and my wife always feel that as parents our only job is to provide good environment to kids and nothing else. Environment which is positive, alive and creative. Sharing from my childhood, I had very normal childhood but I witnessed a lot of family quarrels and disputes which had negative impact on me as a child. Your home environment is the greatest gift you can give to your family and kids and so pause for a while and see what best you can do to enhance your home environment. This is the greatest wealth you can ever gift to your kids and family members.

4. Do what you love

true-wealth-4

I and Manish love what we do and we see that as our success. I left my family business and he left his high paying job so that we could follow our bliss. According to us, it is a complete waste of life if you have to wake-up every day and have to do work which you don’t like doing. I am not asking you to quit your job or immediately start your own business. But be clear that your work (your daily creation) is your true wealth and so see that you love and enjoy your work. See that you nurture your work and your work nurtures you. At the end when you reach 60 or 65 you will not see work as an opportunity to earn money, but it will be about something else. (And I am sure of that). You can read how Manish had quit his job for his passion

5. Take good care of your body parts

A lot of people get so busy with their routine life, somewhere they stop taking care of their own body. If I have to put the same in a harsh way I would say “People abuse their own body”. Jim Rohn said, “Your body is the only house in which you are going to live”. A few days back one of my close relative had some hearing problem and when they approached doctor they were told, the patient will not be able to hear by left ear. They were adviced to buy hearing machine at the earliest. This person now takes great care of his second ear. Your each and every body part is important and you have to care for yourself. Here is a great thread on Quora about some misconceptions about health and wellness.

Do you go for regular dental check-up? Do you go for regular eye check-up? Or regular health check-up? Or exercise regularly? – We are not saying anything new but we know that a lot of you need to bring attention to your body. This article will teach you 10 mind-blowing things “Health” can teach you about “Wealth”

6. Loving circle of clients and colleagues

Majority of you spend a lot of time in your office with your colleagues or having interaction with your clients. Most people have loving family and loving friends in their life but it is important to have loving circle of clients and colleagues. I was once having conversation with one of our clients who had some major issue with his boss and so he was not able to focus on other areas of his life. Stop blaming people, take all the politics and professional insecurities out of your work life, stop judging people you work with because when you judge people you are not able to form loving circle of colleagues and clients. People you surround with are part of your true wealth because that is from where all the support, information and leverage is going to enter your life.

7. Stay connected with your hobby

When we lead our workshop we ask people to raise their hands if they have any hobby in life. A few hands raise as majority of them do not have any hobby in life. Hobby is something that you love doing without any compulsion or pressure. This is something you do for your own self and not for someone else. It helps you to rejuvenate, it gives you a chance to connect with your own self-expression and so I always urge our clients to stay connected with their hobby. Your hobby is your true wealth; your hobby is your companion who will be with you all your life.

8. Give quality time to your kids

My son is now 1 year and 2 months old (young) and I love playing with him and his little friends who visit our home. As parents a lot of people set children education goal and marriage goal but more importantly you have to spend quality time with your kids. In the first 5-8 years of kids upbringing it is important that you spend more and more quality time with your kids. It is my dream to write a book on how to teach kids about money ( I see it as my duty to do something for kids). After you return home instead of watching soap operas, see that you spend quality time with your kids. Here it is not about quantity it is always about quality.

9. Build a small library at home

A lot of people have home theater at their home but they do not have library. I am not against owning a home theater because I have one at my home. I always tell my wife that the only wealth I am going to pass on to my next generation is my collection of books and nothing else. I would not like to pass on money to next generation but I will pass on books through which they can build their own capacity to produce and create wealth. Make sure you build your small library at home with some quality and inspiring books (And don’t forget to add our 3 books to your library)

10. Spend time with Nature

Being with Mother Nature is your greatest wealth. Where I live we have peacock and peahens visiting our house every day. Every day evening I spend some time sitting in my garden doing nothing and I just BE with Mother Nature. I invite you to spend 10 to 15 minutes every day with Mother Nature, it has tremendous power in it and it will leave you with a lot of energy and peace of mind. Wherever you live see that you stay connected with nature by some way or the other.

Some Final words

In life always stay grounded and connected with your true wealth. You are free to make list of what you consider as your true wealth and take steps to give yourself fully to what matters to you. We want our readers to grow, we want each one of you to always stay connected with your true wealth. We also want you to help others in connecting with their true wealth.

This is how we can spread jago effect; this is how we can create a world that works for everyone. Do share your key insights with us in the comment section. If you have any better idea do share the same with us.

Note – This article is written by Nandish Desai