Category: General

5 major changes in life insurance policies from Jan 1, 2014 – How it affects you ?

Posted on by Jagoinvestor

Some major changes are going to happen in life insurance industry from Jan 1, 2014, especially in traditional policies like Endowment Plans, money-back plans and even ULIP’s. You will surely have a LIC policy or any other private sector traditional plans or might buy them in coming times. Here are 5 major changes which you should be aware about and they will come  into effect from Jan 1, 2014.

1. Service Tax introduced in LIC Policy Premium

Till now LIC was not charging the service tax of 3% from the customers and paying it to govt from the pool of money collected itself, but now the service tax will have to be charged separately from policy holders. Which means that if your LIC premium was Rs 50,000 per annum, now it will be 3.09% higher in first year, which is Rs 51,500  and after 1st year, it will be 1.545% as per moneylife article.

While customers see it as additional burden, note that its not the case exactly, Earlier – LIC was paying the service tax from the pool of money collected from investors only, which reduced the bonus amount given back to them. But now because it will not be taken out from the funds, that means the bonus declared each year will go up by that much margin and will come back to investors only. Note that Pvt companies were charging the service tax already, so nothing changes on their side. Only LIC was not charging it separately, which they will have to do from Jan 1, 2014 deadline.

2. Increase in Surrender Value

One of the major changes which has happened, is the change in surrender value for policy holders. The rules of surrender value depends on the premium paying term of the policy. If the premium paying term for policy is less than 10 yrs. Then the policy will acquire the surrender value after paying premium for 2 yrs (earliar it was 3 yrs), however if the premium paying tenure is more than 10 yrs , then the surrender value will be acquired only after paying 3 yrs premium.

In both the cases, the minimum surrender value would be 30% of the premiums paid without excluding the first year premium. Note that earlier, if you used to surrender after paying 3 premiums, you got 30% of premiums paid MINUS first year premium, but now as per new rules, the first year premium will not be deducted. Learn everything about LIC policies working before Oct 1

Another good change is that, from 4th-7th year, the minimum surrender value would be 50% of the premiums paid, and has to reach 90% of premiums paid in last 2 yrs of policy paying tenure.

3. Possible Decrease in Premium on LIC Policies

There is a great possibility that the premiums on LIC policies will come down by some margin, because the mortality rates will now be revised by LIC in calculating the premiums.

Mortality rates are the rates at which the insurance company deducts the fees for insuring you based on your age. LIC had been using old mortality rates till now, but now they will have to use new mortality rates . Just to give you an idea on reduction of premium, when I check the mortality rate for a 40 yrs old person in old table, its 0.001803 . But in new rates its 0.002053 . Which is approx 10% better. Lets not go into detailed calculation at the moment, but your risk premium part should go down by 10% (not the full premium, because only some part of whole premium in traditional policies are risk premium and rest is investment part) .

4. Higher Death Benefit

If the policy holder is above 45 yrs of age, then the Sum Assured has to be more than 10 times the annual premium, and for those who are less than 45 yrs old, it can be minimum 7 times the premiums. Note that for claiming the tax exemptions, your sum assured has to be 10 times the base yearly premium. So when you buy the policy in-case, you need to keep it in mind. BasuNivesh has done a great point by point notes on each aspect of regulation, in-case you want to go into details.

5. Agents’ incentives have now been linked to the premium paying term

Now agents commissions is linked to the premium paying tenure. Earlier a lot of agents used to sell the policies which had higher maturity tenure, but limited premium paying tenure (like 30 yrs policy with 10 yrs premium payment) . Here is the new commission structure taken from Moneylife article 

In case of regular premium insurance policies, a policy with a premium paying term (PPT) of five years will not pay more than 15% in the first year. Products with PPT of 12 years or more will have first year commissions up to 35% in case the company has completed 10 years of existence and 40% for the company in business for less than 10 years.

The funny aspect is that a lot of LIC agents tried to mislead many new investors by projecting date Jan 1, as the deadline when a lot of LIC products will stop giving good features using the official notification. LiveMint has even captured it in this image.

misleading ads by LIC agents

What should you do ?

The insurers have to refile all their products to IRDA and already lots of products have been approved and many are still waiting for approvals. So if you have a insurance policy, then you will get the communication from your insurer about any changes if any. Right now, for sure the traditional plans have got better, compared to their past avatars.

If you are adamant on buying endowment plan, better wait for some time and let things get more clear. Let me know about your thoughts on this change ?

Merchants can’t charge 2% extra on Debit Card Payments – Says RBI

Posted on by Jagoinvestor

Have you ever faced this situation, when you were making payment through your debit card or credit card?

“Sir How are you making payment ?

Debit Card or Cash ?”

“Card”

“Sir, There will be 2% extra charges if you pay by Debit Card ? ”

“Why extra charges ? I use it at every place and no one charges any thing extra ? ”

“Sorry Sir, this is our Policy. You can take out the CASH from the nearby ATM if you want to save that extra charges”

“Huh ! .. &^#$^&*J#^&&#%$&*N”

You often face the above situation, when you buy things like jewelry, Laptops, Mobile phones etc. I faced this 2-3 times myself, but could argue well with the shopkeeper, because I knew this is just a tactic used by shopkeepers to save on the charges they need to pay from their own pocket. Hence I never paid that extra 2% or just left the shop.

Merchants Cant charge extra on debit card payments

Merchants cant charge any extra charges on Debit Card Payment – say RBI

Now yesterday, RBI has openly cracked down on this unfair trade practice and issued a notification saying that Shop Merchants can not charge any extra charges from customers, if payment is done through Debit Card. Below is the exact wordings from RBI Notification

4. Levying fees on debit card transactions by merchants – There are instances where merchant establishments levy fee as a percentage of the transaction value as charges on customers who are making payments for purchase of goods and services through debit cards. Such fee are not justifiable and are not permissible as per the bilateral agreement between the acquiring bank and the merchants and therefore calls for termination of the relationship of the bank with such establishments.

Why Shopkeepers Charge extra 2% on Debit Card payments ?

When you swipe your debit/credit card  for purchasing some item, the merchant has to pay some fees (1%-2%) to the Bank or the rental fees for the swipe machine. The charges goes out of their own pocket, as the cost of running the business and convenience of taking the payments (more customers will come, if card payment is there). If its a small payment like Rs 500 or Rs 1000, then its a charge of Rs 10 or Rs 20, which is fine. But when it becomes a payment of lets say Rs 30,000 (imagine buying laptop or iPad), then its around Rs 300-600 and to save that big charges, they discourage debit/credit card payment.

They often ask customers to pay by CASH and point them to nearby ATM. Almost always, customers could not refuse, because they have already made the buying decision, and dont want to argue for the small charge, and a lot of times, they finally believe that may be its not illegal, and finally give the CASH even if they do not want, or just allow the merchants to charge additional 2% charges.

But, as per RBI, its not a fair practice, because merchants already have agreed in the agreement with the card swiping machine bank that they will not charge anything extra from the customers. Here is one example of asking for 2% extra fees by some Geeta Ramani on rediff website

My worst experience was when I intended to purchase a Tata Sky card worth Rs 1000. The shopkeeper said 2.5% = 25 rupees extra. I told him — you give 10, I will give 15 rupees. He spoke quite roughly — hum kyon den? I told him it was because he was supposed to pay the bank, not I, and that I was doing him a favour and not the other way round. He said he did not earn anything from the transaction. Anyway, I did not give in. I didn’t purchase from him and purchased the same from Indiaplaza instead online without any transaction fee

What you should do, if Shopkeeper does not agree ?

RBI has clearly asked all the banks to break their relationship with those merchants who are practicing this. So, when any merchant asks you for extra 2% charges and even after the debate they do not agree, you can complain to the RBI about this and also complain to the bank. Each Bank has a “Merchant Services” section on their website and when you mail them or complain in personal to their branch, mention that you want to complain about Merchant Services. Example for ICICI bank is here and Axis Bank is here. But

When you take this step, at-least some merchants might fear the consequences and oblige!, but now the problem is how many people will go to this extra mile . It would require some time and effort from your end.

So next time you are asked to pay extra 2% on debit card payment, you can clearly tell them about this RBI notification. If required better take the print out of the notification and keep it with you in your wallet or as an image in your smartphone.

Have you ever faced a situation where you were asked to pay extra 2% charges on debit card payments and were pointed to a near by ATM, and what did you do in that situation, please share !

How Identity Theft can leave your financial life paralyzed !

Posted on by Jagoinvestor

I do not want to sound like a scaremonger, but it is possible that there is a personal loan or a credit card taken under your name by someone else and you are completely unaware about it. I know you must be thinking that I wrote that just to pique your interest in this article and give a good start to this post, but trust me – I am not kidding, I ACTUALLY mean that it might be the case. There is a huge possibility that someone has taken a loan by using your documents and KYC Documents and you will come to know about it only years from now.

This is called – Identity Theft

identity theft documents cibil

4 Measures to Avoid Identity Theft

  • Do not handover your documents to anyone without strong reason. There are many cases where someone trustworthy has used the documents for wrong usage.
  • Always Write the purpose on the Documents itself. If you are giving your document for Home loan purpose , write down “ID PROOF – FOR HOME LOAN at HDFC BANK – Should not be used for some other purpose” .
  • if you have given your documents to some one for some reason and they are not used, take them back.
  • Whenever you are getting xerox or giving your originals to someone, dont just be very casual and better be a little careful about whats going on

Two real life incidents on Identity Theft

Praveen shares how his cousin got a credit card using his documents

There is a credit card on my name which was taken on my name without my knowledge by one of my cousin who used to work with Barclays Credit Card Company at that time& was also a freelancer for some other banks. So at that time (2008) I signed few personal loan forms with him & which I took it for my personal purpose, but I was not aware that I also signed a form which was for Barclays Credit card and which was used by my cousin.

All this matter came to lime light recently only when I re applied for credit card & home loan, both got rejected because of poor credit score (573), we had a big fight in our family, finally he agreed to return the actual amount of the credit card which was Rs.23000 at that time, but now in my cibil report it showing as Rs.44000 amount due. Now it’s my headache to clear my cibil report, so I’m ready to pay remaining amount due from my pocket

Akash shares how his CA misused his identity and broke his trust

I follow CIBIL v diligently and regular take out my CIRs and score. My last score (1st August 2013) was 806 with 1 settled secured loan a/c. i have one PL running for last 8 months with only bounce (which was paid up within 15 days). I had applied to the same bank for a top up. Now the bank has come reported about the existence of a 2nd Pan Card with a score of some 400+ and also default on 1 PL and CC. The bank also informed that there were other PLs but all closed. I had received a PAN Card from my CA (who is my 1st cousin) who asked my to kindly apply me to close it was a duplicate wrong card which i duly did some 6 months back with NSDL.

On getting this report from the bank i figured out the the no was same as the cancelled card. Morever my cousin admitted to having used my PAN card and payslips to get the wrong card made and take PLs and CCs. As he was my CA he had all relevant papers like payslips and bank statements with him. However he has now committed to close all O/S within this month. My queries is how do i get the CIBIL report in the wrong PAN closed and all reporting transfered to my existing and authentic PAN card ? Any other solution

Conclusion

Always remember that prevention is better than cure. You can take the matter of identity theft casually, believing it will never happen to you. But once it does, it can severely affect your financial (and personal) life and you might find yourself stuck in a situation, which you want to get out of as soon as possible.

The Scam called “Sample Flat” – Learn how builders trap property buyers

Posted on by Jagoinvestor

One of the biggest traps for real estate buyers are “Sample Flats”. When you visit properties sites to inquire about any under construction properties or ready for possession flats, the builder or the sales person there shows you a “Sample Flat”. The moment you look at a sample flat, something happens to you. The sample flat is so beautiful and mesmerizing that, you feel like you are in love again, some kind of beautiful music starts playing in your head and for a moment, you visualize the future with your family living within that same sample flat and how you and your loved one’s are enjoying the ambiance and premiumness the sample flat offers.

You are delighted !

But – This is trap, set by Builder

Sample Flat Example

Why you get trapped ? 

Because you are human, you have emotions and you have lots of dreams for your family and yourself. Because in this competitive society, you have to grab your share of status and show to the world, that your time has come finally! .

Builders know how to exploit the human psyche and how to manipulate your aspirations. Every person wants to give himself and his family the best housing and the most spacious and premium living conditions – a fact, well known to the builder. When they create sample flat, all these things are kept in mind and the sample flat is constructed in a manner that makes you fall in love with it at the first sight. The builder’s goal is to ensure that your emotional mind is activated and prevents your rational mind from questioning things or think hard. You should be hypnotized! . Check out this guy sharing how his builder did not fulfill his promise

Lets look at 2 important points you know should be aware about the so called sample flats, which can save you from potential disappointment some time in future when you hunt for your dream home.

Trick #1 – Sample Flats are created to look more “Spacious”

Everyone wants a big house at a lower cost. Given there are 4-6 people in family on an average and lots of belongings in home, a bigger house is always preferred than a smaller one. You should have space for all the things you have at home, without making your home look cluttered. So few tricks are used to make sure that the sample flat looks more spacious artificially! . Here are they

  • There are no doors in toilets and bathrooms, and some of the walls are merely glass partitions, which creates a visual illusion of more space.
  • There are no doors between rooms in a sample flat, which makes the flat appear more spacious than it really is.
  • The ceiling is much higher than the real flat and is just increases the volume of sample flat, thus giving a feel of space.
  • The lighting using in sample flat is suggested by interior designers, who are experts in creating optical illusions.
  • The furniture used in sample flat is kept smaller, so that in comparison the rooms and kitchen looks bigger.
  • Even the other things like bed, almira’s and dining table in kitchen are placed in such a way and are of smaller size, to give a feeling of more space.
  • The walls are much thinner in sample flat, compared to the real flat, which again gives more spacing. They are known to use gypsum boards and not the real cemented wall.

What you should do ?

Once you visit a sample flat, the first thing you should do is slow down and stop yourself from getting biased by the spacious feel of it. For a moment, consciously tell yourself that you know its not reality and a kind of trap (remember 3 idiots – “All is well, All is well”) . Visualize the furniture, bed, kitchen belongings, all the almira’s you own at home. Your Sofa, your TV, your Waching machine and Refridgerator and every thing you own and ask where will you keep it ? Also consider those new things you might buy before moving to new property ?

If you are seriously considering buying a house, then actually mark places where you will keep what and check the space it will take (mentally atleast) . Seek help from ladies at home, because they have a better understanding of minor details and can tell you, if the flat will be able to accommodate everything with higher accuracy (and in most of the cases, women are anyways more bothered for those things compared to men).

Note that rather than blaming builder on using these tactics and fooling you, I would suggest being self-reliant, as there is nothing illegal in what the builder has done. Yes, its kind of unethical and the tricks employed here, are just a way of exploiting human psychology and aspirations. But then, there is no law on all these points and anyways, the agreement will mention that the sample flat was just for demonstration purposes and the look and feel of the actual flat may be a little different. I want you to be prepared for this, rather than complaining about things.

Here is one real life experience I found on the net, which talks about the same thing we are discussing here

At the time of booking Builder shown a central park as well as a very huge green area (80% of the project), the same is also shown/mentioned in the Brochure given to me during the time of booking. He also showed a sample flat and did a sale agreement with me.

Now builder is constructing three new towers on the park area and also cutting down the green area as he is coming up with another project on the same green land – Source here

Trick #2 – Sample Flats gives the feeling of PREMIUM

Who does not want a premium and beautiful home? Everyone does!

We want our house to be better than others, we want to make sure we get the best. We aspire to live in premium homes (majority of them, if you dont). Builders do their homework properly and put all their efforts in making sure that the sample flat looks the way most of the people cant actually afford!.

I mean to say that every bit of work, furniture, finishing and material used are expensive and of very high quality and high standards. In many cases, the cost incurred in making the sample flat look premium is more than the cost of the flat itself (Imagine 50 lacs flat having 50 lacs of premium things inside it, just to make it look premium).

  • The fixtures and furnishing used are of world class quality and brand and is so premium that instantly a prospective buyer imagines him selves owning it.
  • The floor tiles used are of high quality and more beautiful than what you get in reality.
  • The view you get from Balcony and Windows is really great (lake view, greenery, beautiful mountains), but in reality your flat might be on the other side of the project, which has all the old buildings and has a crowded road (may be after some years) and you will not get the same view which you saw in sample flat. This is because the sample flat is created first and the location chosen for it is well planned and for the purpose 🙂
  • The furniture used in the sample flat is very expensive and promises high lifestyle. Imagine 5-6 lacs worth of Sofa set, whereas you will buy only 50k worth of sofa in your case.
  • The walls will have beautiful paintings which most of people want, but cant afford .

Tip – This startup called ArtSquare sells ART and Paintings at affordable price to common man. Boy! , they also have the feature which shows you, how it looks on the wall. check out this example.

Difference between Sample flat and real flat

What to do ?

Incase of under-construction property, you cant do much, you can only rely on the builder words and do some research on how truthful they are by talking to their old project buyers (actually go there, and talk to some flat owners about their experience). Before booking the flat, you need to get all information from builder on the materials going to be used, which brand they will be, what kind of wall paint , which fittings ? which wires ? what kind of tiles ? everything in detail ! .

Note that, you are going to get unfurnished flat, and then you have to put everything from fan, AC, bed, sofa and everything else you have at home. So its important to check out the unfurnished flat apart from sample flat, but its possible only when you are buying a ready to move in property. Check out this debate on Under construction property VS Ready for Possession Property if you are considering which is better than other.

Conclusion

As buying home is one time decision, its always better to be more present (physically and mentally) to reality and not take the decision in hurry. Sample flats are not reality and you have to get that. You also should control yourself and your family members emotions (a lot of real estate buyers complain that ladies fall for the beautiful looking flats and get excited by beautiful wall colors, premium kitchen and the wall texture giving wow-experience and then do not comeback to reality from the unreal world they reached after looking at sample flat. Slow down and take the right decision.

I want to hear your views now ! . Have you seen sample flats in past or recently ?

Now you can Buy all 3 Jagoinvestor Books in Ebook Format

Posted on by Jagoinvestor

Me and Nandish were deligted yesterday when we got an email from our publisher CNBC18, that all our 3 books published with them is now available in ebook format at flipkart. So all those who wanted to buy our books in digital format and read it on their smartphones, tablets and even PC , its now possible. Note that very soon the ebook version might also come on Amazon (kindle), Infibeam and other platforms, but it will take time and is only expected (no guarantee)

All our books are doing well good and readers are appreciating them a lot. You can read the reviews for all books on flipkart.

How to Buy the Book in Ebook Format ?

Step 1 – Buy the Book on Flipkart

Go to book page on flipkart and make the payment for the book. You will have to be Logged in while buying the book because the ebook gets stored in your account in “My Library” section. Below are the links for all the 3 books (Book 1 , Book 2, Book 3)

Here do our book readers say (Titles from the reviews from our 3 books) !

  • Must read for beginners to personal finance
  • A Brilliant Book To Kick-Start Your Financial Planning
  • Excellent if you want to know how to take care of your finance
  • Great Insights for achieving Financial Freedom
  • A book written in a very simple language but its results will be humongous
  • Teach a man to fish and you feed him for a lifetime!!
  • Book that not only makes you think, but also provokes you to take action instantly!!!
  • A Must have book for anyone who earns and wants to accumulate wealth
  • Awesome, must read action book on personal finance!
  • Transforming Your Relationship With Money & Achieving Financial Independence

Step 2 – Download the Flipkart eBooks App on your Phone/Tablet

Step 3 – Login to your flipkart account on your app and download the ebook

You can then log in to your flipkart account and go to “My Library” section, where you will see all your ebooks purchased and then you can download the book on your phone and start reading (Note – you can also download the ebook on some other phone where the app is installed)

Read more FAQ here

Read the Sample of the Book

You can also read the sample of all the ebooks on your app. It will give you access to some starting pages of the book which you can read and get the feel.

Why to buy the Ebook instead of Hard Copy ?

Reading a book in hard copy format has a very different experience than reading it in ebook format, both have their own pros and cons. Here are few reasons why some one might want to buy our books in ebook format.

Reason 1 – Because it stays with you all the time on the go , you can open your tab/phone and start reading it from the point where you left it last time.

Reason 2 – If you are an NRI, staying outside India, it was really a tough job to get the book in hard copy. Now with ebook version available, you can just order it and start reading it on the fly!

Reason 3 – No waiting time or delivery charges . Books less than Rs 500 worth have delivery charges of Rs 50 on flipkart. you dont have to pay that.

Let us know if you have already read our books and learned lot of things please write the review on flipkart also. Also we would like to hear from you ! . Also let us know if any questions !

How my 5 answers to this lady was like Financial Planning for her !

Posted on by Jagoinvestor

One of our readers Sonadhi wanted to hire a financial planner, but first wanted to get clarity about her financial situation and some solutions on her financial life problem at our questions and answers forum. She posted her query and I answered her in detail. I gave her a detailed answer which you cant call “Financial Planning” , but I can say that my reply must be sufficient for her to move ahead and get a lot of clarity. Just wanted to give show you her question and my answer, because I am sure a lot of people will get some idea of what needs to be done in some situations.

financial planning example

Sonadhi question –

My baby girl is about to complete her three years.My target is min.25 alcs at her age of maturity i.e.at the age of 20 years. I am not sure on how to invest for her.Confused to go for Rd/FD or PPF.Also interested in Mutual funds,but no knowledge.Think for LIC plans for children but they have very high premiums with less benefits.Confused between what is difference between ELSS & SIP. Not able to have the financial planner at this stage.Also paying heavy EMIs. Who can guide me.

My answer to her

Lets quickly do your financial planning in few points. Based on your information till now here is what you need to do

Step 1 –  First step is to restructure your finances, Restructuring is required because cash flow is important to be planned,. Unless your cash-flow is planned properly , things will be tough . So first ask why you are paying that 5,000 per month in LIC , how old it is ? What benefits are you getting out of it . The way I see is , You are taking lot of pressure each month for a bad outcome at the end, its not going to give you returns of more than 5-6% at the end, so better make the policy paid up . This way you will release 5,000 per month .

Step  2 – Your RD of 5,000 is fine , let it go so that at one side , some money is secured. The 5,000 which is release out of LIC should be redirected to 2 good mutual funds through SIP . You said you do not understand Mutual funds, and hence not able to act . Trust me , Mutual funds are mainly for those who do not understand stocks and markets that well , there is nothing to understand there much , More than knowledge you need “discipline” here . All you need to do is start a SIP of Rs 2,500 per month in 2 funds . like HDFC prudence , DSPBR top 100 , HDFC Equity etc . Any of two will do .

Step 3 –  Better take a Term plan first for a good amount , like 50 lacs or 1 crore . Premiums will be a lot smaller compared to what you pay in LIC right now and it will be a yearly commitment which you can do .

Step 4 –  I think over next 6 months , you should also create your emergency fund, because right now your EMI is 21,000 , but because of movement in interest rates, it might go up and down , so you should factor in for that !

Step 5 –  Wealth will get created over a long term , short term focus should not be too much on what is performing in which manner , more than returns , right now just focus on your discipline and how you can increase your investments overtime .

I hope you got some good answers and value out of this thread .

Let us know if you feel more relaxed and did it serve you ?

Manish

I am sure the question and the answer must have given some hints and insights on what needs to be done in a particular situation. Can you improve on some of my suggestion ?

 

4 FAQ’s about Investors Bootcamp Answered – which might be stopping you from joining !

Posted on by Jagoinvestor

Its only 5 days left for our investors bootcamp and we got some interesting questions from some our readers regarding Investor’s Boot camp that we are starting from 12th August. It is possible that you might be having same questions in your mind and so we thought of compiling questions for all. The concept of investors boot camp is new and it is perfectly fine if you have doubts or queries.

4 FAQ’s about Investors Bootcamp (Only 5 days LEFT)

Question 1 – I am a procrastinator by nature. If only I wasn’t a procrastinator, I know I could be a STAR Investor. I’m on jagoinvestor  from many months and I also follow other blogs on personal finance, I know I should be buying adequate life cover and health cover and be more goal driven but I am failing at taking actions. Can this boot camp be of help to me as an investor. I trust you guys fully and paying 4k is not an issue for me.

Answer:  “This boot camp is designed for procrastinator and for those investors who are struggling to take actions in their financial life. As a boot camp participant we will assign you simple actions every week and you will be reporting directly to us and we wont tolerate any kind of casualness from any participants. We are going to be extremely demanding and direct with all participants and will make sure you get strong on the action part. This boot camp is an opportunity for you and so don’t miss it.”

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Question 2 – I am kind of person who will do a lot of research and always find myself in “Crossroad situation”. I am always confused as I have more than one option in front of me. I want to get out of my research mode and want to take many actions. Will this group be of help to me. Please send me details

Answer: The problem you are facing is faced by many investors. Investors are getting drunk on information on the name of investor education which is dangerous from wealth creation point of view. As boot camp participant we won’t dwell into intense intelligent discussions. We won’t over load you with more information. We will simply ask you to do X every week and you will complete X actions in your financial life. Let’s make things simple and do what is required to live a good financial life

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Question 3 – I am very new as an investor and I have no personal finance knowledge. I have bought one of your books but still have not completed reading it. I am into job from last 1 year and want to start investing. Can this boot camp help me?

Answer: This boot camp has to be seen as a strong starting point. It does not matter whether you are new or an experienced investor. The content of each week will be generic and something that will be useful to all kind of investors. We will provide you with a structure and an environment where you will start to think and act in your financial life. We will help you to plant right seeds in your financial life that will be of help to you. We look forward to serve you.

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Question 4 – I am still not clear how a boot camp can happen on a facebook group. I mean how will you guys help so many people in taking actions. The group will have people from different backgrounds and age level. I want to join and I know when you guys come-up with something it will be high on value but can you throw some light on how will you manage this boot camp. Thanks in advance

Answer: This is a very good question. The beauty of this structure is it’s simplicity. Anyone from any location can be a part of this boot camp. We have chosen facebook as most of the people have facebook account. This is new and first of it’s kind bootcamp but we will make sure that participants will create immense value. Every Monday we will upload one action sheet (Excel based) and will post weekly actions for all group members and on Saturday people will report their results.

The actions and material provided will make action taking extremely simple. We do not intend to create great investors in this boot camp but we want make better investors. Investors who are busy and want and extra helping hand in their financial life. In past we have done such groups for advisors community and we know the dynamics of how to help people move forward as a group

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Even after reading these questions you have any further doubts or questions feel free to write us. We will be more than happy to answer your queries. And if you are clear this boot camp will be of help you click here and complete your registration. We invite all the readers to be a part of this Investor’s Boot camp

Are you getting fooled and paying extra money on your restaurant Bills ?

Posted on by Jagoinvestor

Do you know that you might have lost thousands of rupees in paying extra money on restaurants bills over last few years, just because you do not understand what does service charge, service tax and VAT actually means and how are they calculated. Most of the times customers take it for granted assuming that hotel must charged it in right manner and as per rules laid down. Lets learn about these 3 concepts today so that next time you pay a hotel or restaurant bill, you exactly know what you are paying for and raise your voice if something is wrong.

When the Bill Arrives

Just before the bill arrives, I have this habit of running “guessing competition”. Whoever is with me, I ask him/her – “Guess, what would be the bill amount be around ? Give the range , whoever is close wins !” .

Almost all the time I am very close to the actual amount, but then I am not close to the final amount to pay, because I always forget to consider various tax and charges applicable, which always inflates the bill by 20-30% . Imagine you eat worth Rs 1,000 and pay Rs 1,260 finally ! . You know that feeling :).

So if you look at your bills when you eat at hotels and restaurants, you will see 3 kind of charges namely “service charge” , “service tax” and “VAT” . Lets decode them one by one and see what exactly they are

Service Tax and VAT on Restaurant Food bills

1. Service Charge

Service Charge is a charge levied by restaurant for the service provided to customers. This is generally 5%-10% of the bill and restaurant owner is free to charge whatever amount he/she wants as service charge. Its up-to you to decide if you want to eat there or not. The service charge has to be displayed in Menu, only then it can appear in the final bill. If you do not see it on Menu, it means it was not communicated to you and you cant not be charged service charge.

Service Charge at Barbeque NationActually service charges are to be distributed among waiters and staff and its kind of compulsory “tip” to be paid. So if there is service charge on the bill, you are not suppose to tip officially to any one. So don’t feel awkward not paying the tip, because you have already paid it in form of service charge, however most of the hotels and restaurants never tell you this explicitly. However one of the exceptions I know is restaurant called “Barbeque Nation”, I could clearly see it was written in their menu that “We will levy 4% service charge on the final bill, and you are not suppose to tip any one (strictly prohibited), because service charge will be shared among the staff” . The ethics quality was as high as their food quality 🙂

So if your food bill is Rs 1,000 and service charge is 10% , then your final bill will be Rs 1,100 .

2. Service Tax

The important thing, you should be aware about is how service tax is calculated! . Do you know that, Service tax is only applicable on 40% of the bill amount, not the total amount. As the service tax is around 12.36% at the moment, the final tax you need to pay is only 4.944% (12.5% X 40%) on the bill (inclusive of service charge).

The next important thing you should know is that, only AC restaurant can charge service tax. If there is no AC in restaurant (fully or partially) , they cant charge service tax at all. This service tax goes to Govt of India. The service tax is payable on the bill amount + service charge. So if Bill amount is Rs 1,000 , and service charge was Rs 100 (10%), then your sub total would be Rs 1,100 . And your service tax will be computed on Rs 1,100 (not Rs 1,000).  4.944% of Rs 1,100 will be Rs 54.38 and your total bill after service tax would be Rs 1154.38 . A lot of unprofessional and small restaurants are found to charge service tax on the full bill and most of the customer pay because they have no idea what is wrong and what is right. Here is official Note on service tax

Note – On 3rd Nov 2012 , Bar Council by mistake interpreted that service tax is to be paid only on service charge, and it starting circulating over facebook and emails. But note that it was a mistake and later clarified that service tax is to be charged on 40% of the bill amount also. So dont fall for wrong information . Even some one posted it on our jagoinvestor forum and I myself believed it to be true !, but later decided to investigate it.

3. VAT – Value Added Tax

VAT is Value added Tax collected by State Govt. VAT is only applicable to the food items which are prepared inside the restaurant, because they “added some value” and then hand it over to you. So make sure you do not pay it on packaged items which are not prepared by Restaurant like Packaged food items, water bottles etc. A lot of times you eat at restaurant and also take a lot of packaged items, in which case VAT should be applicable not on final bill, but only sub total of the food items you consumed.

VAT Charges vary from state to state, but generally lie in the range of 10% – 15% . Like in Maharashtra its 12.5% , and in Karnataka its 14.5% . VAT is to be charged only on the main bill + service charges. It CANT be charged on the amount after service tax. So in the same example we looked about, the final bill after service charge was Rs 1,100 , so VAT at 12.5% will be Rs 137.5. Now total bill amount would be

  • Food Bill – Rs 1,000
  • Service Charge – Rs 100
  • Service tax (4.944% of 1,100) – Rs 54.38
  • VAT (12.5% of 1,100) – Rs 137.5
  • Total – Rs 1,291

29% higher Bills compared to Cost

You can see how various charges and tax can increase your final bills by 25-30% . So next time you pay your bills, just make sure your check, if all the taxes and charges are computed properly and as per rules.

Any personal experiences ?

Investors Bootcamp for 8 weeks – Report to Manish and Nandish Directly

Posted on by Jagoinvestor

Do you want to change your financial life in next 8 weeks and want to work with Manish and Nandish in a group oriented program online ? Read on ! .

People get on our blog, buy our books, select our services and purchase our products because they want to live a “Good Financial life”. Our mission as a team is to help every investor to live a Good FINANCIAL LIFE. We love what we do and it has been a sheer pleasure sharing personal finance insights with investor’s community every week on our blog. A smile on an investors face is our greatest reward; we want everyone to be prosperous. We see every reader as our extended family and we will always come-up with something new that you can engage with to grow as an investor.Today, we would love to share our internal commitment with you (This is what we STAND for as a team)

We as a team will always be of service to every investor. We as a team will design products and services that will help people to grow wealth. We will author books that will touch people’s heart. We will measure our life not with how much money we make in life but how many people’s financial lives we influenced with our work and thought process. We want to engage with projects and work which helps us to share our GIFTS with the world. We will always be surrounded and associated with powerful and empowering people in our life. We will set-up GAMES that helps us grow personally and professionally.

We thank every reader for always being with us and for helping us to stick to our internal commitment all the time. Your encouragement and love truly matters!

We have two BIG ANNOUNCEMENTS for YOU!

Announcement #1 – 8 Weeks Boot Camp for investors

The word boot camp comes from the realm of military. It is where all the tough training takes place. In a boot camp ordinary people dust their casualness and are trained to produce extraordinary results. We want to create such boot camp for investors who need assistance in living a good financial life. We are absolutely committed in helping those who want to actions in their financial life. We will be with you, guide you and will help you to design project called “Good Financial Life”. Listen to the audio below to understand more about this bootcamp (direct link)

With the help of this project you will get a chance to be with many other investors who will be taking actions with you every week. You will get an opportunity to learn from other’s financial life and experiences. Inside this project we will be with you for full 8 weeks and will assist you to take your financial life to the next level. As program participant we will provide you with the material, tools and support. Every participant will be assigned a buddy to work with during the project and you will report your weekly results to us directly on a closed facebook group. Your weekly results will be tracked and the structure of this boot camp will be extremely simple and effective. The mission of this boot camp is to “Live a good financial life” and nothing else. The only thing we will sell you for all 8 weeks or rather remind you constantly is the possibility of living a good financial life.

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Apply for the Investors Bootcamp

Choose 1 ticket and click on Register Button below for making the payment. You will get a payment confirmation email after you register. First 10 members can use BOOTCAMP2013 for 1,000 discount

Announcement #2 : 8 weeks – Women Investors Empowerment Program

We feel a lot of work needs to be done for women investors and we don’t want to wait any more. We are starting a special small group for women investors. This program is designed to empower women investors. The program will help women investors in understanding personal finance in a better way.

If you a man and want your wife to learn about personal finance, this is a program you should gift to your wife. This group is for those who hate numbers, it is for those who are really bad with personal finance, it is for those who are afraid of personal finance jargons, and it is for those who think “personal finance is not my cup of tea”. Listen to the audio below to understand more about this bootcamp (direct link)

Once you complete this program you won’t become an expert but you will surely get comfortable and more confident in the world of personal finance. You need to see this program as your first baby step that will help you to become an empowered women investor. As program participants you will have to engage with short weekly assignments which will help you to improve yourself as an investor, you will learn to know your rights better and you will learn to get in control of your own finances.( At least some key areas for sure). Every week we will have FREEDOM DAY where you get a chance to ask the world’s most stupid question and we will be of full assistance to you. It is going to be a safe and fun zone for women to participate fully and an opportunity to kick start their journey as an investor.

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Apply for the Women Empowerment Program

Choose 1 ticket and click on Register Button below for making the payment. You will get a payment confirmation email after you register.

Let’s look at what it takes to be a part of this PROJECT

To participate you need a small financial commitment, an open mind, a facebook account and lots of commitment to live a good financial life. So, if you want to be with us, you want us to assist you, guide you just be a part of our project “Live a good financial life”. You can click here and find out more about our new initiative and if you have more questions feel free to leave your comments in the comments section.

Only 18% of single working women make their own investment decisions

Posted on by Jagoinvestor

I thought of sharing an interesting survey done by DSP BlackRock along with a research Agency. An overwhelming 77% of working women depend on spouse and / or parents for their investment decisions, says the new DSP BlackRock study conducted by global research agency Nielsen.

Only a minuscule 23% of the surveyed working women claim to be sole decision makers, when it comes to their own investments. This figure is even lower (18% and 13% respectively) when it comes to the proportion of single working women and married working women who take their own investment decisions.

Women and Money decisions - survey

The study, ‘Understanding Women – Usage and attitude towards financial products’, is based on a pan-India survey of more than 4,750 women spread across 14 cities (6 metro cities and 8 non-metro cities) to understand the women usage and attitudes towards financial products.

The study also examined factors that facilitate or impede their investment decisions, besides their attitude & expectations from financial products. The survey covered working and non-working women between 21 – 60 years of age, and included divorcees and widows.

According to the survey, while 92% of working women claim to be involved in the investment decision-making process, 70% of these women are actually joint decision makers and a majority of these, at 52%, are only informed about the investment decisions which have already been made.

Women are reluctant to Take Risk

The main reason why women don’t take investment decisions is that they are safety oriented and reluctant to take risk, the survey notes. Husbands also seem to dominate the investment decision making among working as well as non-working women.

While the proportion of Sole Decision Makers among working women is similar in metros at 24% and non-metros at 20%, in case of non-working women, sole decision makers are confined mostly to metros. The survey also observes that the proportion of sole decision makers among working as well as non-working women is significantly higher among the divorced and widowed.

While analyzing women’s main reasons to invest, the survey notes that future security and child’s education form the key reasons for investments, especially amongst women in non-metros. Although the desire to invest with an objective to become rich is lower compared to the other reasons, it is observed to be higher among women in metros.

Tax does not feature as a primary reason for investments among women surveyed.

Women feel controlled and disciplined about their spending

The survey also highlighted the safety aspect when it comes to women and investments. Women are inclined towards safety while investing and hence put more money in instruments that yield fixed returns. Most of the surveyed women also feel that they are controlled and disciplined about their spending.

When it comes to trusting various financial institutions, it was observed that women trust nationalized banks (88%) almost twice as much as they trust Indian private banks (43%) and foreign banks (24%).

Aditi Kothari, Executive Vice President and Co- Head Marketing, DSP BlackRock Investment Managers Pvt Ltd said, “This research was part of our Winvestor initiative to gather crucial data that can be used to spread awareness regarding financial independence amongst women.

We hope that this study is an eye opener to the alarming lack of women’s involvement in making their own investment decisions; and motivates them to take more interest in managing their own money.”

‘Winvestor’ is an Investor Education Initiative by DSP BlackRock Mutual Fund that aims to encourage women to start taking well informed financial decisions on their own by encouraging them to meet an advisor and to get interested in their personal finances.

What do you think about this survey and study done ?