Author: Jagoinvestor

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Bought Health Insurance ? Here are 4 things you should do after that !

Posted on by Jagoinvestor

Have you bought health insurance? If you answer is NO, then you are lagging way behind the crowd and the best thing for you to do, is to get health insurance cover immediately. But if you have already insured yourself, then you have reached an important milestone and are probably feeling relaxed about your financial burdens. After all, if you are hospitalized, someone else will have to foot the bill, and not you.

Congratulations!!, But now, the question is, are you a 100% ready? The process of buying health insurance is very easy – you research the best policies, buy them online or offline and then the policy documents arrive at your home, and you feel – “I have finally taken health insurance, now I am done!”.

things to do after taking health insurance

The Real test is at the time of Health Insurance Claim

However, the real test arises when you have to finally claim health insurance benefits (here are detailed rules and procedure explained). It’s not a great time for you. Someone from your family (or you) has been hospitalized because of an accident or some major illness and every one is tense. You are in a hurry and do not have the time to “think” – this haste is almost always a BAD thing.

While at the back of your mind, you know you have health insurance; there are lot of things to accomplish in a short time frame to make that insurance useful. You have to search for the right hospital and contact the insurance company/TPA. The worst possible outcome is if you are the person hospitalized, and your family has no knowledge of these matters!

So why not plan beforehand and be fully prepared for bad situations. You may think it to be a waste of time at present, but in the time of a crisis, you will be thankful you took these steps. So today, let’s see a few things you can do after taking health insurance to fully prepare yourself for a crisis situation.

4 things to do after taking Health Insurance

1. Visit nearby hospitals

Imagine a situation where something bad has happened. You will probably be in a rush – you will call someone close and ask for good hospitals, maybe spend a few minutes thinking which ones are better and then head towards it. There is no TIME and your priority is on getting admitted somewhere first!. Even if it’s a planned hospitalization, your time for research is limited and there might be many surprises, which crop up at the last moment.

The best time to research hospitals to visit (in event of an emergency) is right NOW. You have all the time in the world at the moment. You can read all the reviews on internet, visit the hospital, make inquires related to charges and facilities, compare hospitals with each other, and finally jot down hospital names which are more preferred to others. You might realize that for OPD, Hospital A is better than B, C and D. You might come to know that Hospital C takes care of senior patients much better than others. You might realize that Hospital D is cost effective on its final bill amount, even though others give the feeling of being cheaper.

This will take you few hours or days, but if you have already done this, at the time of an emergency you will be a 100% mentally focused on the situation without having to worry about the logistics of treatment. Click Here to read some health insurance myths which you thought were true

2. Keep Health Cards in your Wallet and scanned version in Mobile

If you ask me how much time it takes to do this step, it takes exactly 1 hour. You open your mail where you have got the e-version of health cards, load it on a pen drive, go to the market to get a color Xerox, laminate the copy, cut it to match the size of a debit card and put it back in wallet – AND You are done.

If you already have the e-version of health cards in your email, put them in your mobile in images form (so that you don’t have to search your emails at the time of emergency). If you have the actual health cards in physical card format, it is very handy to have it ready with you. You can also keep a scanned copy of health insurance cards on your Google drive or Dropbox account, so that you can access them from anywhere if needed.

3. Keep emergency contacts on phone

In times of emergency, every minute counts. Why rely on Justdial or Google at the last minute – all you need to do is to save numbers of nearby hospitals (including alternate numbers) to your contacts list. The numbers can easily be found through Justdial or from the hospital’s website. Saving the numbers in your email (as drafts) is a good idea too.

Add these numbers to the list of contacts in your family’s phones as well. And while you are at it, keep a printed copy of this data in a common area that all family members have access to.

4. Keep a “emergency folder” for health insurance

I am willing to bet, that in the event of an emergency, your family members will not be able to access your health insurance policy, health cards, emergency contact numbers of the health insurance company, phone number for hospitals nearby or your other identity documents – especially not in a 5 minute time frame.

Why not make it easy for them to do this by preparing an “emergency folder” for health insurance. Keep a folder which has your health insurance policy document copy, your health card copy, a paper which has emergency contact numbers such as the doctor’s phone number, hospital phone numbers, TPA contact numbers, Health Insurance company customer care numbers, and a “guidance sheet” which sets out, step by step, all that needs to be done in case of an emergency or even planned hospitalization. I am so happy to share with you all, that we just completed our online investors bootcamp> last week batch and they all had awesome time arranging their documents, they felt so relaxed when they reported it on our bootcamp facebook group.

Note: Even if you have health insurance from your employer and not your own policy, these steps still apply to you. Follow them.

The Biggest reason Why you will not be able to save enough for your retirement ?

Posted on by Jagoinvestor

2014 has started, and I wish you all a Happy New Year!. We are into the 4th week of our Investors Bootcamp and I recently brought up a very important point there, which was, “What is the that one thing which stops you from saving for retirement?”.

When I dove into this topic and heard the responses from some of our Plan F participants (senior participants), I came across a simple reason, which can really destroy someone’s hopes for a comfortable retired life.

worried for retirement india
I was late to realise that I was very late

When I ask someone, “Have you starting saving some money for your retirement ?”, I hear a “NO” and the justification for it is – “I still have a lot of time, so why hurry? I am just 26 right now”.

I say – “Fair Enough, makes sense”

And then I put this question to the same person 5 years later, and the answer is – “I still have lots of time, so why hurry? I am just 31 years old”.

I still say – “Makes sense, at least for now”.

But you know what? There comes a time, where you suddenly realize that “Oh my god, its a bit late now”, because all the time you were thinking – “I will do it later” and never realize that its getting late. Remember, “Someday” is code for “Never”. When you have 30-35 years in hand for a goal like retirement, that goal is so distant that you feel it is idiotic to plan for it right away.

You feel, “let the right time come”, but you do not know what the right time is going to be. Is it when only 20 years are left? Or is it when 10 years are left? Or when only 5 years are left?

This is exactly the same situation as when you have to provide tax investment proofs to your employer. When you have 20 days in hand, you feel there is a lot of time. Then 10 days pass and you feel “It’s just few hours of work, I will do it very soon”.

This procrastination continues, and you keep convincing yourself that whatever time is left is more than ENOUGH. Then suddenly, when there is “just enough time left”, something else comes up unexpectedly – some important work surfaces, or you have to go somewhere, or you catch fever and you eventually miss the deadline. Now you are thinking, “I should have started early; I lost time, thinking there is enough time ahead”.

You wait for the “Right Time”

Unsurprisingly, you repeat this behavior when planning for your long-term goals, especially ones like retirement. We put off thinking about it because the retirement event is so distant in the future that it sounds comical to even plan for it now. So, we wait for the “right time”, but never declare that “right time” to ourselves – it’s just a concept in our head that never gets real.

Ask any 25, 30, 35 or 40 year old about their retirement, and they will say – “I still have enough time ahead”, let me think about other important things right now”. Then they turn 45 years old, things get serious and they “start” considering doing something about saving enough money. This is the first time, they realize – “I think its high time now, I should make a start towards my retirement planning”. Again 2-4 years pass, they are now touching 50 years, and then the PANIC mode kicks in, because they can see very clearly that they will run out of money in their retirement.

It suddenly becomes clear to them that time has flown and that the “right moment” to start saving money for their retirement was years ago. They have taken care of most goals in their life, but they have forgotten to protect their own retired living. All the time when they could have really taken risks and could have grown their wealth has passed. Now they just want their money to be safe and this is obviously a situation where you can only get sub-optimal returns.

At this point they have no choice but to live out a life of regret. Even if they do not wish to depend on their kids, they still have to.

30-30 rule to retirement

In my 2nd book – “How to be your own financial planner in 10 steps”, there is a full chapter on retirement. While writing that chapter, I was stuck at one place where I had to show the reader, the flaws in their default thinking about retirement planning and explain to them that they should start planning while they were young. After a lot of thinking, I came up with a rule called “30-30 rule of Retirement Planning”.

The rule states that an average person works for 30 years and then, after retirement, lives for another 30 years (just a benchmark number). Imagine you are 30 years old. You will work for next 30 years (till you are 60) and then you will live for another 30 years (till the age of 90). For the first 30 years, you will earn and consume the money. For the next 30 years you will not earn, but will still consume money.

Right now, I imagine you are earning, but it is still tough to run your life – there is no surplus money left, you are still not able to achieve so many things. If this is the situation right now when you are “making money”, what about those 30 years, when you will not earn a penny?

You earn for next 60 yrs, not just 30 yrs

I know all this sounds terrifying, but you have to realize that, at any cost, you have to earn for the next 60 years of your life (30 years of working life + 30 years of retirement).

So now lets look at your 60 years in two segments of 30 years each – the first 30 years is PHASE A (earning and consuming) and next 30 years is PHASE B (not earning, but still consuming).

Now Map each year of this Phase A with Phase B and what you earn in this year X (2014), some part of this money has to be saved for the respective X + 30 year (2014 + 30 = 2044). What you earn in year 2015 has to feed you in 2015 and 2045 (+30 years). Only if you save each year, will you be able to fund the companion future year, which will be exactly after 30 years.

Look at things like these.

30-30 rule of retirement

(Image comes from – “How to be your own Financial Planner in 10 steps” book)

So it’s very clear that if you lose the next 10 years, then the pressure of retirement saving will build up on the next 20 years of your life. If you lose 20 years of your working life and do not save anything for retirement, then the last 10 years have to shoulder that burden and you will have a punishing time ahead.

Benjamin Franklin once said – “You may delay, but time will not”. You are probably heading for disaster if you are living in this myth that you will save a lot later when the time comes. It never happens.

So sow some seeds right now for your retirement. Buy a piece of land, start planning for a second home which you will use to get rental income, start transferring at least 10% of your income each month solely for the goal of retirement, build an additional skill so that you can earn more in the future, marry a working spouse and don’t blow your money each weekend on that movie which you knew was not worth it! Start taking small steps

You have to ensure that by the time you turn 40, you should have at least a small retirement corpus – this should be your first milestone.

Are you all set to save enough for your retirement corpus? Are you sure you will not get trapped in this “right time” thing ?

How Wrong CIBIL report’s have harassed & destroyed many investors life?

Posted on by Jagoinvestor

A few years back, India was introduced to the world of “Credit Bureaus” and “Credit Scores”. Credit Bureaus track an individual’s credit history and create a report from that data. So all your financial history including credit cards, loans, the timeliness and regularity of your repayments and the number of times you have sought credit, is captured in this single report, and based on all this information a score is generated. This data is shared with lenders on request and subsequently used by them to make a lending decision.

CIBIL report Errors

On paper, this idea looks great because the system ensures that there is extensive record keeping for all individuals and the data can help lenders and banks make effective lending decisions. So far, the intention was good and admittedly with our huge population and fragile systems, there were bound to be a few hiccups along the way.

But it would seem that the amount of confusion created by the Credit Bureaus has reached unreasonable proportions.

Wrong Credit reports and how they are messing up financial lives of many

From the last 3-4 years, I have been hearing horror stories about how various financial lives have been destroyed as a result of wrong credit reports and mismatches in data. Banks are now mostly reliant on CIBIL reports for processing loan requests – they look at the CIBIL report and take the decision. But how does one guarantee that each and every bit of data recorded in the credit report is a 100% CORRECT?

There have been tons of instances where the report was wrong or had incorrect information and ultimately the consumer had to suffer a lot because of it.

  • Imagine a student who is looking for education loan and his father has applied for education loan, but bank is not ready to give loan because there is no Credit history ?
  • Imagine a family has made the down payment for their dream home and have applied for home loan , but it gets rejected because their CIBIL report has an entry for a credit card due which they have closed 8 yrs back and now neither they are getting loan , nor the builder is co-operating with them
  • Imagine a guy who is in need of personal loan, and if fully eligible for it, but could not get it just because his report has data of some one else whose name is close enough and the system has made the error ?
  • Imagine a guy following up with banks to update his data with CIBIL, then going back to CIBIL to know the status, asking 100 times about it, still not getting any clue on what is the status and finally he feels helpless and sorry for the whole system

Wrong Data in Reports

One of the biggest issues with present credit reports is the inaccuracy of data. Mostly this happens because the report is pulling data from multiple sources that might have incorrect data themselves or because of name mismatches. Even though this is a system fault but the end result is that the investor suffers.

I want to share Prabhat’s story on how his life was impacted due to wrong data in his CIBIL report.

Hi Manish,

Am a real victim of this “CIBIL”. Two years back i requested for a report. The report was full or errors- be it my name, identity, address, accounts etc. I raised a dispute form then. Since then, in that report, my name has changed thrice, my addresses have changed, my contact nos have changed. They apologised and said that corrections have been made. Recently i applied for a loan and again got rejected. When inquired and got the CIR, my data was merging with some other “Prabhat”. To confirm my doubts, i even called that person and highlighted all this in my next mail to cibil. But to no avail. You would always get a prototype reply- “We cant change data on your own and pls contact credit institution for modification”.

Ridiculous, is’nt it? First of all you sweat to get your issues registered (if only you get a great guy who happens to read your mail/ talk to you over phone by luck). Then follow the same to make them understand what is apparent to even a layman. in my case the other “Prabhat’s” pan no is different, dob is different, address and other things are also different but even then the data got merged and when i raised this, they are passing the buck onto credit institutions.

This is clearly not any fault of credit ins but of this cibil only. To be more precise- in their system of extracting data which they are not accepting. Sometimes, after negotiating so many mails and conversation with their executives, i really feel that this is being run by a bunch of nerds who would not listen or not understand your concerns. I have not taken a single penny as a loan in my whole life and now not getting loan just because of this cibil.

I want to knock the doors of law, to claim a heavy compensation- can you suggest me how and where can i lodge my complaint. I have all the evidences in black n white.

Prabhat

Here is another case of spelling mismatch

I got my CIBIL report recently. My Name is CHANDRA SEKHAR SHARMA but the name that I have found on the report is CHANDRA SEKHAR S V. It is not a spelling mistake as CHANDRA SEKHAR S V is a different person at all. But all my credit cards are listed against this name and one loan which is taken by MR CHANDRA SEKHAR S V is also showing here. So it is overall one report mixed up with two person’s information. In other word CIBIL is selling one report to 2 person.

I am going to report this dispute to CIBIL. But it is raising lot of question on CIBIL.
This CREDIT score concept hold good and easy to maintain in country like USA. They are having SSN concept where they are uniquely identifying each individual. But in our country we still to have such concept until UIN /adhar effective completely. Till then we have to face such situation .

Gap in Communication from Banks

The other problem is gap in communication with banks . The whole system is not efficient enough for speedy updates. Given huge banking system and widespread network, its bound to have communication gap. Here is one instance where Subhajit was marked as Defaulter by CIBIL , just because SBI didnt update some data from their side on a loan closed years back

I took a loan from SBI in 2004 and closed it in dec 2012. Now at present when i applied for another loan to some other bank, CIBIL marked me as a defaulter as they did not get any updates from SBI on the closure details. I contacted Chief Manager of the SBI branch from where I took the loan and asked her to send out an email to CIBIL ([email protected]), mentioning all my details and report that the loan account is closed now. Even after this was done, CIBIL is still saying that they might take 30 days untill the credit institution reverts back with their response. I dont understand whether CIBIL has a huge miscommunication between their call center folks and the email department. what do i do now?? i wanted to escalate this to the highest authority in CIBIL but i dont have any contact information for the same.

Regards,
Subhajit

Here is another case of Vijay

Hi Manish

In my report, the SBI card which I used to have was mentioned as “WRITTEN-OFF” and the Days Past Due section also had a number 120 put for the last several months ending in Sep-2006. This was definitely wrong info since I had checked with SBI in 2006 and they had informed me that there was no due from me at the time of closing the card. So I contacted SBI and they informed me that it was a mistake from their end and that they have corrected it in the latest update to CIBIL.

Then I informed CIBIL about the mail from SBI and asked them to confirm if the erroneous entries have been removed. CIBIL gives me a very vague answer stating the SBI card account is closed as per instruction. But I want to know if the word “WRITTEN OFF” has been removed from my report and if the Days Past Due section have been set to 0. I have sent them at least 3 mails asking for precise info on the above two queries. But they continue to give me very generic and vague answer.
Please let me know if there is any escalation mechanism when CIBIL gives vague responses.

Also in the score section, there is a line which states “*One or More Trades with Suit Filed Status in the Past 24 Months*”. I asked them for an explanation on what the above line meant. But they have not given any explanation. It sounds like some company has filed a suit against me in the last 2 years. I am not aware of any such suit. I am not able to get CIBIL to explain the line or tell me which company has filed the suit. I am at my wits end to get a proper response from CIBIL. Any help is appreciated.

Regards

Vijay

Using CIBIL report as a weapon

Some banks have also started using CIBIL report and its impact as a weapon against investors. They have started talking in the language of – “Do this, else your credit history will … ” (here is the proof).

Here is a what happened with Ravi

I was using a credit card from ICICI bank and I used it for about 6 months, in between I forgot to pay the due amount for one month and in the next month statement I found additional 6000+ Rs to be paid as late fees + interest + taxes that I refused to pay and deposited the amount that I was expected to pay. And after this I traveled abroad for 1.3 years and on my return from there I was called up by bank and asked to deposit 31 000 Rs against that, here again I refused to pay initially and asked them since I have not used this amount why should I pay this much. But later one gentle man from the same bank called me and said that if I will not deposit the same amount it will affect my credit history and I will not be able to get any loan in future. Hence I deposited all the stated outstanding amount at once.

But now when I applied for car loan , my loan request got rejected by the AXIS bank due to that credit card credit-history. I also approached ICICI bank for same and they immediately issued me the NOC with 0 Rs outstanding for me.and also requested them to get my name cleared from CIBIL, for this they told me that your name is already updated in CIBIL for 0 balance. I forwarded the same email to AXIS bank but still they are not ready to issue me the loan saying that I have paid the money lately after 1 year. Hence I am very anxious about it now that without doing any fault from my side I am becoming a victim here.

Your rights incase you are suffering because of Credit Beureu mistakes ?

A lot of investors who are affected by this CIBIL menace and mistakes from the banks side just feel angry, but they let things go and do not force a resolution. But you need to know that no one has any right to play with your financial life and if someone has, then they need to pay for it. If you have been facing an issue because of CIBIL or the bank and it has impacted you financially or mentally, you should always reach out to the consumer court or banking ombudsman. There have been many cases where customers have got some compensation. The only catch is that you need to be committed to pursue the case and have patience.

Here is one instance where a person was awarded compensation because was mistekenly marked as “defaulter” by the bank and suffered due to this

City residents continue to be hassled by the ‘CIBIL defaulter’ tag over minor disputes with banks. Now, a Sector-39 resident received justice from the UT Consumer Disputes Redressal Forum after a private sector bank had labelled him a defaulter and sent his name to Credit Information Bureau India Limited (CIBIL), an all-India data bank which carries credit history of all commercial and consumer borrowers.

The Chandigarh Consumer Disputes Redressal Forum has directed the bank to pay Rs 10,000 to the harried complainant, and Rs 5,000 as cost of litigation.

The order was issued by the Forum following a complaint filed by Bhajan Palm who told the forum that in 2003, he took a personal loan of Rs 66,000 from the bank, and repaid it in equal monthly installments.

Here is another instance where HSBC was fined for adding the name of a person to defaulter list without strong reason

Hongkong and Shanghai Banking Corporation (HSBC) has been ordered by a consumer forum here to pay Rs 20,000 as compensation to one of its credit card holders for adding his name in CIBIL’s defaulters list even though he had paid all his dues.

While awarding the amount to the HSBC credit card holder, the New Delhi District Consumer Disputes Redressal Forum said the Bank should have “gracefully” accepted its fault instead of adopting an “obstructionist attitude” by seeking rejection of his complaint.

You can read some more cases here or here .

Below is a 2 part video series from MoneyLife Foundation on “How to file effective complaints and win your battles in Consumer Courts”

Can you share any experience of yours on CIBIL mistakes or any struggle you faced ?

Also let me remind you of the ‘Oh my God’ offer coming on 7th Jan 2014, which you will not like to miss at any cost. Its one of its kind of offer coming soon !

5 awesome ideas which can transform your financial life

Posted on by Jagoinvestor

2014 has already started and you must be feeling reinvigorated – just as you were when 2013 started :). How then do you expect 2014 to be different from 2013? Let me explain a bit. When we get on call with some of our clients, we ask them –

“Do you want your next 5 yrs of financial life, like your past 5 yrs ?”.

Naturally, We get an emphatic “NO” and horrified looks (though we cant see them). Now ask yourself the same question and I am confident, for most people the answer would be the same. If your financial life is all messed up, I am sure you must have thought to correct it in this New Year. Let me help you a bit and give you 5 suggestions that you can implement and improve your financial life by leaps and bounds. It will start small, but things will improve steadily.

Here are those 5 ideas, which you should look at. Trust me, these are proven to succeed for most people we work with and even ourselves.

improve financial life

Idea #1 – Help others in their financial life

I can proudly say today, that all my knowledge and understanding of personal finance has come from (and only from) solving other people’s queries on this blog and our Q&A forum. Of course, some part of my knowledge has also evolved by writing these articles. I write the articles and they elicit variety of questions in comments section. I then reply back to those who commented and try to solve their problem. It really takes a lot of time and effort from my side to do this, but in the process, I learn a lot. If I do not know the answer, I ensure I find it out by researching it on the Internet, or come up with an answer through disciplined thought and introspection.

This helps me learn new things and also it feels nice to be able to help someone – after all, I love bonding with people and I hunger to be able to “give” back to our community! Conversations in the comments section between me, and the person asking the question, allow both of us to come out with better knowledge of the topic. What’s more, it really feels amazing to realize that one’s help has contributed to someone’s decision-making process.

I occasionally get into face-to-face conversations with people who seek my help regarding personal finance, and I do my best in helping them. Over time, this has created a wealth of information and knowledge inside me. Heck – I wrote two books too on money just by helping others !

So if you want to learn about personal finance, I can tell you with 100% confidence, that there is no better way than helping someone else on personal finance and answering their queries. You might feel – “but I do not know much myself”. The truth is, even if you do not know the full answer, making an attempt to help someone and contributing a bit extra helps you realize that personal finance is more about common sense and less about expertise.

You can anytime go to our Jagoinvestor Q&A forum, where dozens of personal finance questions are asked each day and hundreds of investors just like you are helping out with all the knowledge they possess. So just pick a question and reply with an answer. You must have surely learnt a lot from this blog and other resources and I know you are 100% capable of giving suggestions to others. I know you might be scared at times, thinking how it would look if you do not give the right answers or best answers to someone. But do not try to give the “perfect answer” – just give an answer with a full commitment to help someone. You will find that not only is your effort genuinely appreciated, but you will also feel amazing yourself and will make a friend and learn in the process. Alternatively, you can also reply to the comments that are posted on the articles from time to time.

I strongly recommend reading this book this book called “Go-Giver”, which will truly transform your way of looking at life and help you in your professional life.

Idea #2 – Write all your financial details at one place

When someone wants to work with us on his/her financial life, One of the first things they have to do is, fill up a detailed datasheet we give to them to capture all their financial details. This is what most of the financial planners will do as initial steps. Now most people react by thinking – “Oh no, I am not filling up a lengthy excel spreadsheet” and some people ask us – “Do I really need to fill this up?”

We tell them very calmly – “Yes, in 2 days, and ONLY then do we move ahead”

4-5 days PASS and we remind them once again about it.

It is only then that we finally get a mail saying that the datasheet is filled and we also get from them something like this –

“Hi Manish & Nandish

Please find attached the datasheet in this mail. My Apologies for sending it late. But let me share with you something about filling up the datasheet. I never knew about my own financial life before I filled this datasheet (here is ZIP version). I mean, I always thought I know everything and all the things are inside my head, I know the details. But in reality, I was so much cut off from my financial life.

I had to find out so many things while filling up this datasheet. For the first time, I seriously looked at my policies, where are my mutual funds, what is their worth exactly. I have discovered how much is my EPF worth and had to discuss a lot with my spouse and few things from other family members. I discussed about my expenses with my spouse and we released so many tiny things we can change and improve. We never realize these things in daily life, because we are just not in touch with whats going on with our expenses. Money just comes in my account and goes off here and there.

We also for the first time, really talked about our long term goals, had to think about the numbers and discussed a bit about which one are more important the others. I felt a bit worried on how will I fill all this , but once I started it, me and wife got involved in it and really liked it. For the first time I feel I know where do I stand in my financial life and have some sense of what all we want from our financial life. This datasheet filling exercise was a short but amazing journey in itself. Thanks a lot Manish and Nandish”

Nandish and I often talk about this and we have now realized that just putting all your financial data in one place is a wonderful way to improve your financial life because you really get in touch with your finances and start thinking about them seriously. For almost 90% of people who do this, it’s their first time taking some time off to focus on their financial life. What was previously a fuzzy area for them suddenly becomes clear and obvious. Just noting down your financial data in one place solves so many queries you had earlier.

So next Sunday (or whenever you can take out some time), allocate 3-4 hours for your financial life and just open a blank excel sheet and put down all your income/expenses, policies details, mutual fund data, Fixed/recurring deposits data, loans details, long and short term goals and everything else you can imagine, and see the magic. You will thank us. Let me make your job easy and share with you this ready made excel datasheet (here is ZIP version) , you can download it and you can fill it up. This is the same datasheet we send to our clients.

Idea #3 – Slow down and make some strategy 

Most investors are just moving with the flow of life. They get up, go to work, they earn, they spend and if something is left, they spend it again. If after all this, if still some money remains, it stays in their saving bank account, and is usually consumed for some useless reason – which looks reasonable and important at that point of time, but makes no sense in long term.

Nandish had recorded this wonderful audio on “slowing down” which talks about why you should step back for a moment and not be hasty with your personal finances It explains why you should “Slow down” and lower your pace in financial life and ask yourself where you are headed.

Listen to the “Slow Down” Audio below

Most people do not even know which direction they are going in their financial life and where they want to be in the next 5 years. In our Investors’ boot camp (next batch starts 20th Jan), we do an awesome exercise for one week, just to make you think what you want in your financial life and to get you in touch with your financial life.

So your current task is to apply some brakes on your momentum and investigate your own financial life. Ponder over few things and find out what is important for you. It is all about getting clarity and coming out from a state of confusion!

Idea #4 – Write down your past 5 yrs history on Paper

Investors keep on doing random things in their financial life for years, sometime with a rational mind and sometimes without much thinking. It would be a good idea to capture for the last 5 years – the major decisions you took in your financial life and the reasoning behind it. For example, you may have bought some policy after meeting an agent, or bought a property, or broken a Fixed deposit, or added major expenses in your life etc. Make a list of all those decisions over the last 5 years, and write down in detail, the reasoning behind those decisions. What made you do take the steps you did?

Do you still feel you did it for the correct reason? Do you feel you were right? Looking back at it, was it the right decision?

When you do this, you will be clearer about your own thinking and how you feel about a lot of things. Maybe you realize that you did something just to look good in front of someone. Maybe you find out that you focus too much on the short term and do not look at things from a long-term perspective. Maybe you will find out that you compromise on your long-term wealth creation just to fund some short-term happiness.

To give you a flavor of how people feel after writing down their history and all they have done in their financial life in past, here is an experience of one of the members of our Investors bootcamp

“I felt many emotions while filling out these questions – pride, great joy, regret & sadness. I saw how I had grown from a child to an adult as an investor and kept coming back to document what I missed. As the picture emerged, it was so interesting to see the patterns emerge and to find blind spots that would probably be immediately evident to someone else. It took me a long time to answer the second question. I was worried, but to document exactly what was worrying me took time. Now that I have it on paper, it feels a lot less worrying! I’m excited to see what the boot camp holds and am looking forward for the next week.”

So start this exercise the moment you complete this article.

Idea #5 – Get accountable to someone in your financial life

In his book – “11 principles to achieve financial freedom” , Nandish talks about Level 1, Level 2 and Level 3 promises.

Level 1 promises are “professional promises”, which you fulfill and complete at any cost and ensure they are never left pending. You bring work home, stay up late, but complete those tasks. You are fully committed to your level 1 promise.

Level 2 promises are ones that are made to our families and we keep them sometimes and do not keep them sometimes. We are somewhat committed to those level 2 promises, but not fully.

Level 3 promises are those promises, which we make to ourselves.

We excel at not completing these Level 3 promises! We surpass others in forgetting those promises and on no occasion do we display the level of commitment we do with Level 1 and Level 2 promises. Waking up early to exercise falls in this level 3 promise. Starting a “SIP” also falls under level 3 promises. And, most importantly, all Personal Finance actions fall into Level 3.

 

Level One  Professional promises  You keep them always
Level Two  Promises made to family members  You keep them at times
Level Three  Promises made with self  You break them all the time

 

Ask yourself, how long has it been since you promised yourself to start that recurring deposit, write your budget, start your SIP or write a will? You will realize you are worse than you imagine :). This happens because you are not accountable to anyone. No one will complain, if you don’t do things and leave them incomplete. You can always rationalize your behavior and you will surely not “Punish” yourself – and that’s the weak point.

Your life goes on, and you give a clean-chit to yourself every time you break a promise made to yourself, citing reasons beyond your control. But this errant behavior is costing you your future. This small thing can jeopardize the happiness of your family some day, can make your retired life a nightmare and can mean your kids get a mediocre education because you were not able to accumulate enough wealth to pay their fees in the future.

This is more serious than you think, but you will realize it only later.

Be Accountable to Someone

The only way to improve it is to be accountable to someone about your promises and actions. Hire a professional Mentor who keeps track of your financial life and your promises, and to whom you report your actions.

A lot of people look at a financial planner as someone who will give “advice”, but not as someone who will help them track where they are headed, who will ask them – “Tell me, what did you achieve this month?” and someone who says things like – “Can you tell me, the reason you failed to change your bank account nomination which you promised to complete by this month? Didn’t you get 2 hours out of your schedule?”

The mentor can also be your family member or spouse if you want. Declare your actions and deadlines to your family. Do whatever it takes, but ensure you are answerable to someone, if only to some extent.

Importance of “Accountability” in your financial life

Let me also share with you, the “Accountability” feature of our Online Investors bootcamp. At the bootcamp, each week you declare your weekly action and what you are going to complete in coming 4-5 days and then you go back and do those things. You have to report things back on Friday and share with us your progress. If you do not complete it, you are asked questions and reasons for not doing your tasks.

Now someone will not shoot you or put you behind bars for not doing what you promised, but when you see others declaring proudly how they completed their tasks and see them feeling euphoric about it, you feel bad for not keeping your words and feel ‘left out’. These group dynamics work for participants and they complete things most of the times. We have seen it working in Batch 1 and Batch 2 of our bootcamp. A little work each week improves your financial life, and at the end of 6 weeks, you move to the next level and realize – “Wow! I have finally done so many things which I was only thinking about all this time”

Now it need not be only at the investors bootcamp – you can report to your spouse, your friend, your Facebook friends (if you are okay declaring your actions) or else, you can pay a professional financial planner and take his help. Anything that helps you is a “great” option. There are no rules.

So bring some accountability structure in your financial life and you will surely see the results.

Conclusion

You really need to design your financial life based on these 5 ideas . Do not just read them, but really practice them and see the effect.

List of awesome projects lined up in 2014 on Jagoinvestor

Posted on by Jagoinvestor

Hi All readers, Wishing you and your family a very Happy and Prosperous New Year! We take this opportunity to thank you for being an integral part of our community. Year 2013 was a great year for us and we will continue to serve investors community in the similar fashion. We take this opportunity to share some of the highlights of the year 2013 and also wanted to share what you can expect from us in the New Year.

Year 2013 Flashback

  • Book “How to be your own Financial Planner in 10 steps” Launched and it has simplified financial planning profession to a great extent. With the help of this book you can actually be your own financial planner – Written by Manish Chauhan (Buy)
  • Book “11 Principles to achieve financial freedom launched”, this book is a gem. It is written in story format, it talks about financial coaching and principles of financial freedom  – written by Nandish Desai (Buy)
  • We Redesigned our Q&A forum page (it has more than 6000+ members and 7000+ questions – ask your questions now. It is like a one BIG magic box which contains all kinds of personal finance questions and solutions.
  • We also had an opportunity to work with a few investors one-on-one. We work with limited number of investors in a month and In this year we have completed close to 250+ financial planning clients. We now have clients in more than 30+ countries. (look at our services page)
  • In this year we launched our most innovative project till date called 100moneyactions.com, which has helped more than 300+ investors and the number is growing every month. This program is magical, if you complete all the 100 actions it will surely help you to take your financial life to the next level. (check out)
  • We Published close to 600+ articles till date. It is always fun sharing personal finance knowledge with committed investor’s community. We are happy to make a difference in so many people’s financial lives. (here is the list)
  • We started something very interesting on facebook. Yes, we have designed a magical 6 week program that takes place on facebook closed group. And in 2013 from 2 boot camps 80+ investors graduated from our Investors Bootcamp. We really want every reader of jagoinvestor to go through boot camp participation where you get a chance to learn from other investors.
  • We could only do one workshop in 2013. 55+ members attended our Mumbai Workshop for Investors. In our workshops we generate high level of commitment in investors and it helps people to design their financial life.
  • Helped Asset Management Company, DSP Blackrock with Plan F show on personal finance from start to end (watch all 10 episodes). In this show all the case studies were from jagoinvestor community and we also got an opportunity to learn a lot of things.
  • A  book called “How to Grow Your Business as a Financial Advisor” by Nandish Desai launched for financial advisor. This is India’s book on practice building for financial advisors. Many of you may not be knowing that we have a blog called jagoadvisor.com where we share our business experiences with advisors community – (Buy the book)
  • Conducted several Online and Offline training programs for Financial Advisors & Planners in Mumbai. The workshop for financial advisors was high on value and we got great feedback from those who participated.

Our Major Projects and Offerings in 2014

  • A irresistible “Oh My God” Offer for all Investors on 7th Jan – Check your mail box on 7th of Jan at 10 am. We have designed a very special offer for all our readers who have been with us from a long time. This offer is a difference making offer as it will provide you with some powerful tools by which you can start your 2014 with a BANG. Most people have fitness on their new year resolution list but this year we want our readers to place personal finance on top most priority. See that you do not miss this opportunity as it will only be available once in a year. I think this will be the best way to start your 2014 journey as an investor.

  • Investors Workshops in Different Cities – Every once in a while we get mails from different people asking for our investor workshop. We plan to tour 4-5 cities in India and want to conduct our flagship workshop for investors. We might also conduct some workshops outside of India as Indian investors are spread all across. We will need your encouragement and support to spread a word about these events – more details will come soon this year. If you are interested for this workshop , please register here
  • Something special for women investors – In the year 2013 we created one video course and some audio for women investors and it is our dream to do something special for women investors. This may be in form of some workshop or some online program but we will see that it truly helps women investors. We will need a lot of support from each one of you to make our dream a reality. Let’s get together and help more and more women in managing their money effectively.
  • A new website Advisor Hub – This is a project we have been working from last 1 year and it is now in its final stage of completion. This website will encourage quality advice and will help both advisor and investors community. All we can say right now is it will be a game changer in the world of personal finance.
  • Jagoinvestor PRO to be launched – In the year 2014 we plan to bring some new features and awesome things on Jagoinvestor which will help you more and more in your financial life. We are working on a whole new kind of model that will help investors to take their financial life to the next level.
  • Some New Books on personal finance – Looking at the great response of our books written with CNBC TV18 our publisher wants more from us. I and Nandish will be writing a few more books on personal finance in this year (some more awesome topics that will help investors to live a great financial life)
  • Business Workshop in different metros – We plan to train more and more financial advisors in India through our training programs and we would love our workshop conversation to reach more and more people. In the year 2014 we are also going to conduct leadership workshop for one Religious organization. Imagine I and Nandish leading 2 day program for 60+ Swamiji’s. This is one assignment that we are truly excited about.

Our 2014 is going to be all about service. We will stick to our commitment of serving investors and advisors community. We will continue to innovate, we will continue to make personal finance fun for people and every action that we will take will make a positive difference in society. Thank you once again for being our strength for all your love and constant encouragement. Don’t forget to benefit from OMG offer on 7th of Jan.

Review of iWish Recurring Deposit from ICICI Bank

Posted on by Jagoinvestor

Around December last year, ICICI Bank launched a flexible Recurring Deposit scheme called “iWish”. Customers with an ICICI savings account and who have access to Internet banking can use the iWish facility. Here’s how

  • Login to the iWish section in your ICICI saving bank account
  • Define a goal (like buying a laptop, vacation, down-payment on a house, etc.)
  • Define the amount and tenure
  • Make the starting contribution and the iWish goal starts

After this point, you are free to deposit additional money in your iWish account anytime you have surplus funds. Also, you can clearly see how much of goal is completed in % terms at any stage of the process. Interest rates on the iWish scheme range between 7.75% and 8.5%. Rates depend on the tenure of your goal – which can be between 6 months and 10 yrs.

ICICI iWish scheme Interest rates and Penalty rates
Source Page
Where iWish really innovates, is by bringing a social networking aspect into the picture. Users have the ability to share their goals (and the money required to achieve them) on their Facebook account and friends and family can then contribute money to the goal if they wish. By getting users to make a public declaration of their goal, the scheme hopes to prompt greater accountability in individual financial decisions.

To learn more about ICICI iWish Scheme, please watch the video below.

How its different from normal Recurring Deposit ?

Compared to a standard Recurring Deposit, the iWish scheme does not make it compulsory for users to make payments on a fixed date and also gives them the power to categorize savings into goals – which is a more human way to visualize and save your money.

Personally, I see iWish as a mechanism to define goals and save for them through Recurring Deposits. While standard Recurring Deposits just help save money for an unlabeled goal, iWish helps you define and prioritize your goals – helping you decide which goal to save for first. It also helps build a focused saving approach as once someone defines a goal, they are more likely to be serious about achieving it.

The scheme is clearly going to benefit the young generation, who are new to investing. For a generation who rely a lot on visual stimuli, the ability to see defined goals and a visual image of progress towards that goal (e.g. 34% of your ‘new car’ goal has been achieved) is a huge plus.

Fine Prints and things to know

While, on the whole, the iWish Scheme is good, there are few things one should be aware of to avoid a mismatch with expectations.

  • One can create maximum of 10 goals (wishes) and the maximum goal amount can be Rs 10 lacs
  • The minimum installment amount per month has to be Rs 500
  • If you want to withdraw the money on maturity or even before maturity, you need to open a request online for that.
  • There is no compulsion of making payments each month, so you can skip the installments if you want

Disadvantage of iWish from ICICI

By now, you must be wondering what the downsides of the iWish scheme are? Simply put, it is the problem of “manual intervention”.

I am convinced that it takes a great degree of resolve and discipline to properly manage one’s personal finance and investments. Unless the saving process is automated, people are tempted to be a little relaxed about saving in every period. While iWish touts its ‘flexibility’ as an innovative feature, in real life it might not help, as people are more likely to stop ‘voluntarily’ paying into their goals after 2-3 contributions.

With a traditional recurring deposit, the process of investing is compulsory and forced on you and in essence, you are compelled to make payments on a fixed date. Furthermore, the knowledge that there is an auto-debit leads you to ensure the monies are there in the account on the designated date. All this means that over 1-2 years, the Recurring Deposit really works and creates the money pool you need. While iWish is a fancy product, I do not see it as an improvement over the traditional Recurring Deposit.

Only in selected conditions and situations, iWish seems to work better than normal Recurring Deposit. An example would be when the investor’s income is not stable (one does not know if the bank account will really have the required balance on a certain date). For all other cases, I would prefer using traditional Recurring Deposits. Choose a goal, fix the amount, divide it by number of months and just start the RD for that amount. That should get the job done without needing my involvement every month.

What’s your verdict about iWish Feature and its utility? Do you think it’s any better than traditional Recurring Deposits?

UPDATE : Just realised later and came to know that you can have funds debited from your account automatically just like traditional RD, but it was kind of hidden and I never realised it . So mainly iWish has both, traditional RD features and innovative flexible way to accumulate your money and hence is better than what I have projected above.

 

A detailed information about Inflation Linked Bonds from RBI and investment in it

Posted on by Jagoinvestor

RBI has announced that its going to issue Inflation Indexed National Savings Securities – Cumulative (IINSS-C) for retail investors where one can invest and get returns equal to Inflation + 1.5%.

These bonds are now coming up in markets, as it was announced in the last budget that govt will bring inflation linked products very soon (RBI link here).

The minimum Investment amount for these inflation linked bonds is Rs.5,000 and the maximum can be Rs.5 lacs per applicant per annum. The inflation linked bonds are going to be available only for 9 days, starting from 23rd Dec to 31st Mar 2014 only (update – This date was earlier 31st Dec, later it was extended to 31st mar).

The best part about these bonds is the hedge against inflation, so you don’t have to worry if your investments will be able to beat inflation or not.

rbi inflation linked bonds national saving securities

Returns from Inflation Indexed Bonds

As per the RBI guidelines, the return you would get is “Base rate of 1.5% + Inflation Rate based on Consumer Price Index (CPI) , compounded half yearly”. So assume that, CPI inflation number is 10%, so your final return would be 11.5% (10% + 1.5%) .

Actually because its compounded half yearly , the returns would be a little more than 11.5% . One important point to note is that in case of negative inflation (which we are all sure will not happen), you get 1.5% guaranteed.

The best part about these bonds is that the benchmark for returns is CPI inflation and not WPI !. Because CPI is one the best measures of inflation parameters available in India. CPI is more close to reality, tracking the change in prices of end-user numbers unlike is sister WPI (Wholesale Price Index), which tracks the price changes in wholesale market. Read more about WPI vs CPI here .

Below is the last 3 yrs history of CPI inflation for you to get an idea about what was CPI in last some years ! .

CPI Inflation India 2013

Taxation Angle ?

This can be disappointing for many, but there is no tax benefit when you invest in these RBI bonds. You do not get any income tax exemption at the time of investing under Section 80C or anything else, nor they are tax friendly at the time of maturity.

You will have to pay income tax on your returns as per your slab rates at the time of maturity. Now that’s the price you need to pay to get the guarantee that your investments will be hedged against inflation.

Can you get Loan by Pledging the Bonds ?

Yes, you will be able to pledge these bonds and get the loan against it. Given that the bonds comes from RBI and govt guarantee’s the returns part, the lenders would not mind lending you against the inflation linked bonds. However you wont be able to sell the bonds in secondary markets, like you can do some of the other bonds which came few years back.

Can NRI’s Invest in These bonds ?

NO. NRI’s are not allowed to invest in these inflation linked bonds from RBI. As per the guidelines from RBI declaration about bonds, only Individuals , HUF’s and Charitable Institutions and Universities are allowed to invest.

Premature Withdrawal

The bonds tenure is 10 yrs, however its possible to withdraw prematurely after 3 yrs of investments (with penalty charges) , however a senior citizen (65+ yrs) would be able to do premature withdrawal after just 1 yr. Note that premature withdrawal rates are high enough to discourage you to do so ! .

How to Invest ? 

One can invest in these bonds at branches of SBI bank , all other nationalized banks (Vijaya Bank, Bank of Baroda, Maharashtra Bank, Bank of India etc etc … all of them) and 3 private banks which are ICICI bank, HDFC bank and Axis Bank.

Subscription to the Bonds will be in the form of Cash/Drafts/Cheque/online through internet banking. Cheque or drafts should be drawn in favor of the bank (those mentioned above), specified in paragraph 10 and payable at the place where the applications are tendered. I think its better to visit the bank for exact procedure incase you are interested.

Full Brochure about these bonds from RBI is below:

Who should Invest ?

At first glance the bonds look very good option to make long term investments who are too scared with inflation and it worries them to core.

Those investors who are approaching retirement and want some kind of security against inflation can surely look at these bonds, but then be ready to pay income tax on the returns part. Truly speaking your final return depends on various things like CPI inflation in future and the Taxation laws at the time of maturity.

I contacted some of the other bloggers and experts to know their opinion about these bonds and their comments and here they are !!

Karan Batra, A Chartered Accountant who writes on Income tax on his blog was not very excited about these bonds and says

These Bonds are only Inflation protected and not Tax protected but sadly the Tax Rates in India are much higher than the Inflation Rates in India. Therefore, it is always advisable that the investor should prefer to invest in tax-free instruments like PPF as they yield a better return.

Moreover, the computation of interest and principal readjustment is complex which leads to an even highly complex tax structure. These Bonds may give slightly higher returns but the complexities are so much that it I’m advising my clients to stay away from this issue and rather invest in PPF/Fixed Deposits

However when I contacted Deepak Shenoy to comment on these bonds from long term perspective, He was positive about these bonds and says

The product makes sense for anyone in income brackets that are less than 30%, but you have to buy the idea that inflation will remain fairly high over the next few years. If the CPI inflation falls, your return comes down appropriately. (In which case the fixed coupon tax-free bonds or PPF is a way better idea).

You can read the detailed posts from Deepak on these inflation linked bonds here and here.

Are you worried about inflation in future? Are your investments hedged against inflation? Please share your thoughts about it in comments section below !

Also be ready for the “Oh My God” Offer coming on 7th Jan, which will be a great one in a year offer from Jagoinvestor you can’t afford to miss. More information about it soon !

Review of book – “Easy Money – Evolution of Money from Robinson Crusoe to the First World War”

Posted on by Jagoinvestor

Do you want to learn how money evolved in this world ? How did the concept of money took birth ? Today it might look very easy and intuitive to see and manage money, but it has long history and a very interesting one! . I always used to wonder about these topics, but got to read anything in detail untill some months back when Vivek Kaul sent me his book – “Easy Money – Evolution of Money from Robinson Crusoe to the First world war” (buy the book)

In this book, Vivek has shared how this world was first on the barter system and then slowly and steadily the concept of money was born. He mentions various events in history and examples which will how you how money was not just invented in a day, but it slowly took its shape because it was the need of the hour.

easy money book by vivek kaul

Click Here to Buy the Book

Kaul starts with the history of money from time immemorial and traces the development of money and the financial system till around the time of the end of the First World War. He tells us about the various commodities that have been used as money at various points of time. Other than gold and silver, a whole lot of other metals like copper, iron, platinum, lead, nickel, and tin, have been used as money by various civilizations at various points of time.

Other than metals, agricultural commodities like almonds, cacao beans, rice, wheat, and tobacco have also been used as money. In fact, tobacco was used as money in the United States longer than gold and silver were. Salt has been used as money in large parts of Sahara which are dry.

Here is one example sharing from the book

In the prisoner of war camps during the Second World War cigarettes were used as money. Dog teeth and dolphin teeth have been used as money. And in the island of Yap in the Pacific Ocean even large thick stone wheels called fei have also been used as money.

Gold is valueable because its “Useless”

One of the best things I learned from the book is that Gold is valuable in this world, because its Useless. Yes – you heard it right. From the start of my life, I used to wonder that why people love gold and why its so expensive when it cant be used for anything useful, and in the book I learnt that – its the exact reason why its so valuable . The book shares the reason for this and Here is an excerpt from the book

What also helped gold survive as money is its uselessness. “Despite the fact that it is highly malleable (can be beaten into sheets easily), ductile (can be easily drawn into wires), and the best conductor of electricity, gold does not have many industrial uses like other metals have. This is primarily because there is very little of it go¬ing around. Also, what does not help is the fact that gold is as soft as putty. This softness makes it practically useless for all purposes that need metal,” writes Kaul. “When commodities are used as money they are taken away from their primary use.

So, if rice or wheat is used as money for daily transactions and to preserve wealth, it means a lesser amount of rice and wheat in the market for people to buy and eat. This, in turn, would mean higher prices of grains, which are staple food in large parts of the world. Gold does not have many practical uses. So if people hoard gold, it does not hurt anyone,” he adds. Hence, gold survived as money largely till the start of the First World War. Then paper money took over as various European governments had to print money in order to finance the First World War.

Rise of Paper Money and Banking System

One of the most interesting points of Easy Money is the part where Kaul explains the close link between the rise of paper money and the banking system as it has evolved to this day. In fact, the paper money system was at the heart of the profitability of banks. As Kaul writes “The moral of the story is that the lesser the capital the bank had, the greater money it made, but greater was its chance of going bust as well. As Walter Bagehot, the great editor of The Economist once put it, “the main source of profitableness of established banking is the smallness of requisite capital.”

This is a very fundamental point on how the banks as well as other financial institutions have evolved over the years and is at the heart of things as they are currently. Banks as well as financial institutions over the years have figured out that the lesser the amount of capital they have on their books, the more money they make. But this increases the riskiness of the overall financial system as well.”

Note that the book also talks about some of the heavy topics like financial crisis, financial innovations like securitization, collateralized debt obligations, and credit default swaps, how banks evolved etc

The last chapter of the book tries to link the history to way things are happening currently. This chapter could have been little longer and ends a bit too quickly. Another thing that the author could have done is have had takeaways at the end of each chapter, linking them to the current financial crisis.

My personal take on the book

While I enjoyed the book, and its an an excellent read for anyone looking to understand the current financial crisis from a historical view point in simple jargon free English. Be clear that its not a regular personal finance book teaching you about concepts. Also be ready to read few things which you might not be able to digest in a single read. You should read the book only if you love the topic of money evolution and the whole idea which the book wants to present.

Buy the Book by Clicking Here

About Vivek Kaul

Vivek Kaul has worked at senior positions with the Daily News and Analysis (DNA) and The Economic Times. His writings have appeared across various other publications in India. These include The Times of India, The Times of India (Crest edition), The Hindu, The Hindu Business Line, The Pioneer, Indian Management, Asian Age, Deccan Chronicle, Forbes India, and Wealth Insight. He has also written regularly for www.rediff.com. Currently, he is a regu­lar columnist for www.firstpost.com and a regular contributor to DNA.

Share with us how Jagoinvestor has helped you succeed in your financial life – Click Here

The Shocking story of – How LIC policy was surrendered using Forged Signature

Posted on by Jagoinvestor

Can someone else surrender your LIC policy and take the money ? I know you have never ever thought this can happen, because this looks so impossible, but I want to share an incident with you all which happened with Muthu (name changed), who is one of our jagoinvestor reader.

insurance fraud surrender

One day, Muthu came to know that 3 of his LIC policies were surrendered by someone else and the money was utilized. He came to know about this only when he got pre-closure letter from LIC for his 3rd policy. Below is the full sharing from Muthu –

Hello All,

I was shocked to know that someone has used my identity (signature) to surrender my LIC policies and utilized that money for their benefits.

  • Firstly, my policy # 363934899 was forged and surrendered on 29.01.2013, for which LIC has issued cheque # 926895 dtd 29.01.2013 amounted Rs. 49795/- without my knowledge or consent.
  • Secondly, my policy # 363934900 was forged and surrendered on 29.01.2013, for which LIC has issued cheque # 926894 dtd 29.01.2013 amounted Rs 49795/- without my knowledge or consent.
  • Thirdly, my policy # 364340197 was forged and surrendered on 07.10.2013, for which LIC has issued cheque 959220 amounted to Rs 35645/- without my knowledge or consent.

I came to know about this when I received pre-closure letter from LIC after surrender of my third policy # 364340197. Immediately I raised written complaint to LIC about policies forgery on October 29, 2013. Further to my complaint, LIC recovered forged amount from the concern person and sent a covering letter along with the 4 cheques to me for the forged valve but not specifying the forged person name on the covering letter.

This incident raises some questions which are –

  • When the initial cheques was issued in my name, how the money has been utilized by someone else.
  • Even though requesting, LIC not mentioning forged person name in the covering letter after recovery of the forged amount.
  • Did LIC filed FIR against forged person? If not why?

Who did this Fraud ?

When I came to know about this incident, the first thing which came to my mind was that it was some “insider” from LIC who did this, because its almost impossible to surrender the policy without producing the original policy document, forging the signatures and then redeeming the cheque in your own account. But the truth is that the fraud was not done by anyone from LIC office. Then Who ?

It was his Mother and Younger Brother !

Shocked ! ?

Let me now share in Muthu’s words how his mother and younger brother did this fraud.

The Fraud was done using “re-cycle” procedure

Here is exactly what Muthu shared about the fraud procedure

Dear Manish,

Since the bond was in my mother custody they surrendered that policy with the forged signature (read more about Identity Theft)

When the cheque was issued in my name, LIC agent by name Yeshoda has given a cunning idea to re-submit the cheque received in my name to LIC and another policy to issue for the same value for different name ( This process is called re-cycle procedure).

Finally once the policy has been issued in their name. They can easily surrender that policy and utilized the policy amount.

This is worst ever experience that money can change “ANY ONE”.

Do you have LIC policy ? Are you sure this same fraud can not happen with you ? How will you prevent it ?

Entering ATM PIN is now compulsory when you use Debit Cards

Posted on by Jagoinvestor

RBI has made it mandatory to punch your PIN number, when you use your debit card on shopping outlets (Big bazaar, Petrol Pumps, Shops) from Dec 1 2013. I realised just few days back that this has already started. I was shopping for household things at a mall nearby and was asked to punch in my Debit card PIN after it was swiped. It was the first time I had to do that in last so may years of my using debit card for shopping. I covered the machine with my hands and entered my PIN and the transaction went through.

mandatory pin on debit card swipe

There are close to 350 million debit card in India right now and you can imagine the quantum of frauds which is possible with so many debit cards in India. Before this rule came into effect, if your debit card was lost – Someone could just take your debit card, go for the shopping and swipe your debit card and would never get caught because the shopkeepers never checked signatures, identity of person etc.

But now with this new rule in place, an additional check of entering PIN number is required and the chances of fraud is lowered to some level

But – there are some Problems due to this

Now from one angle, surely frauds will come down, but then at the same time, this new rule exposes you to some new risks and potential frauds. Like – If you punch your PIN without much thought and others surrounding you are looking at the machine, others can look at the 4 digit PIN number you punched and memorize it.

Forget strangers, but imagine you are with some friend/relative and you punch your PIN, he/she looks at it, memories it and now he can use it later for some online transaction (he still has to find out your Card number and Expiry date, which is clearly mentioned on your card).

Also at some outlets dishonest shopkeepers have skimmers machine which record your data when you swipe the card and they can duplicate your card and use it later to withdraw cash from ATM or do transactions with duplicate cards.

An article from Firstpost also mentions that there is also a possibility of PIN being stored on the Machine after you have punched it.

The next question to ask is can the PIN be stored (knowingly/ unknowingly) on the card reader machine by the retailer? According to this report in the USA, instances have been known where many merchants have incorrectly stored PIN information they should be destroying after customers enter the secret code. While we agree this is a western world report, Indian fraudsters have always been inspired to copy those tricks in the domestic markets. What would stop our fraudsters? And even if your merchant would have stored the PIN inadvertently on his card machine, a hacker can easily access the retailer’s machine to get data about several card holders along with their PINs.

Implementation from Dec 1

The above rule was to be followed by all the terminals from Dec 1, 2013. Anyone not complying is just not following RBI guidelines and breaking the law.

While all the places I have seen has started implementing it, still at some places its not being not followed. Here is one instance which comes from the same first post article comments section, where someone is sharing his experience.

yesterday on 4 Dec, I went to another restaurant and wanted to pay via debit card. While, the merchant was punching into machine, I was waiting for him to hand over the machine. But this is not what happened, I was not asked for the PIN for this restaurant even after the new RBI rule is in effect.

This clearly violates the fact that the new RBI rule is not completely applied for all merchants/banks.

What do you think about this new change ? Are you happy with it, or have some reasons against this change ?