Category: General

Best Credit Card In India – Review of top 6 cards

Posted on by Jagoinvestor

Most of the people who apply for a credit card in India, do not pay much attention at the time of taking the card, but later get frustrated by the card itself for various reasons high bad customer service, hidden charges, and several other factors. The obvious question then is, which is the best credit card in India? We did a survey on credit cards and tried to do a review of credit cards based on participants experiences. We will see how these cards rate in 6 important parameters. There were 654 participants who took the survey, hence you can safely assume that the collective responses will give a near reality results.

Best Credit card in India

If you see the chart above you will know that the 6 top credit cards in India are –

  • HDFC Bank Credit Card
  • ICICI Bank Credit Card
  • CitiBank Credit Card
  • SBI Bank Credit Card
  • Standard Chartered Credit Card
  • HSBC Credit Card

6 factors to look at before you apply for Credit Card In India

Let’s see those 6 parameters which you should look at before you apply for a credit card in India. At the end of this article, we will see the detailed results of the credit card survey and find out how different credit cards performed on each parameter so that if some particular parameter is more important for you, you can just pick a card based on that parameter.

1. The interest rate charged on credit cards

The first parameter to look at while choosing a credit card can be the interest rate charged by the credit card company. It can range from 1.99% on the cheapest credit card to as high as 3.5% per month on the most expensive credit card. For most of the people who pay their bills on time, this parameter will not matter much, but you never know when you might get into a debt trap kind of situation where you start using your credit card to the maximum limit and pay the interest per month, at that point of time this factor will really matter. Note that interest rate charged is mentioned on a per month basis, but a small difference of 1% can be very big, considering it on a yearly basis.

For example, a 1.99% monthly interest rate actually means 27% Yearly and 3.5% monthly means 51% yearly CAGR.

51% yearly CAGR ! … means your Rs 1 lac of credit card debt can actually increase to 7.9 lacs in just 5 yrs if you don’t do something about it and obviously you will run around to improve your CIBIL score later!

2. Annual Fees & Other charges

A lot of credit cards charge yearly fees and renewal fees (at the time of renewal). Now a lot of people hold a Free credit card for lifetime, but that’s just bunch of people who were given the credit card on a telemarketing call, mostly because they are working in some big company and chances are higher that their usage of credit card will be much higher than an average customer, hence the free credit card.

But, a lot of people apply for the credit card themselves and for them, there are yearly charges (annual fees) and another kind of charges which is applicable to everyone. For example, the penalty charges if you don’t pay your dues any due date. There are tons of customers who do not pay their dues on last time and just pay the minimum payment. If this happens a lot with you, then there is a great chance that you also live with the myth of minimum payments on credit cards. So apart from annual charges, there can be charges like

  • Charges when you pay your credit card bill by cash in any bank branch
  • If you make a demand draft from your credit card
  • If you request for a duplicate statement
  • And many other credit card charges .. the list is not a small one 🙂

Note that if your credit card is FREE as of now, it might carry annual charges when it expires and you apply for renewal – and credit card company says – “Sir, we gave it 100% free only till the card is valid, now its renewed! “

3. Rewards and Offers on Credit Card

There are a lot of advantages of using a credit card in the form of benefits and reward points. For example – You get PAYBACK points which you can use to redeem at various places like www.bookmyshow.com, and book movie tickets by redeeming those points. You also get cashback benefits if you use the card at selected HPCL petrol pumps and you don’t pay the fuel surcharge too.

There are many other kinds of benefits that many credit cards in India offer and those can be different from one credit card to another. This is one very important factor before you choose a credit card because a big number of people just take credit cards for these benefits and even if you are not looking for these, you might want it in the future at some point in time.

4. Customer Service and Transparency

Once I called my credit card company (which is ICICI Credit card) because I wanted to know if there will be any annual charges on my credit card as the expiry date is over and I wanted to renew the credit card. They gave me a very clear and satisfactory step by step answer which made me feel – “Great” .

There was no renewal charges and no annual charges even after renewal. So I was happy. Now it was not the FREE thing here which made me happy alone, It was the way customer care talked to me and treated me like a human:).

While there are instances when I was not that happy, but overall on average, I would still rate the customer service of my ICICI credit card as “good” . Well, that’s my experience only and others can have a bad or worse experience with the credit card company. Before you apply for a credit card, you need to look at this very critical aspect of customer service and how transparent are they overall.

5. Convenience to pay the bills

Something which you will deal with each month is the payment of your credit card bill. Now almost all the credit card companies allow paying by net-banking, cheque, cash and other ways. But still, some banks can be really torturing and not that supportive. It can be cumbersome at times. There have been instances when people paid by cheque before time and it was not processed on time and the person had to suffer because of that and had to run around to get back those charges reversed.

Here is the example

I got the CIR and there is absolutely no big hiccups except one in ICICI bank credit card (I had lot of issues with this bank and some late payments od 1-7 days in some credit cards in very few months. Never listens customer and pathetic customer care executives) of which the DPD is consistently not (000) good for last 5 months. But hey it wasn’t my fault. I dropped the cheque of overall due (about 12000/-) and they never bothered to inform me that my payment was not credited (god knows what they did with cheque). After 5 months when they made a balloon of charges and the whole amount jumped to 19000/- they called me and threatened me of CIBIL. I was never in the mood to not pay the due hence paid the whole amount 19000/- notified by them. Could this lead to this much low score?? – Link

Not to mention the unfair update on CIBIL report which affects you for years. So it’s a critical factor to look at before you apply for a credit card in India.

6. How easy was it to apply for credit card

Have you gone through a frustrating time applying for credit card, really had to run around to get a credit card even when you were totally eligible to get one. While this criterion is not that big, as its a one-time event still you can consider it before you apply for one. I recently had a hard time opening a saving account for my brother with ICICI bank because they had no way to accommodate people living on rent with friends, however, Kotak bank did it for me, at that point of time, the “ease of opening the account” was really a big thing for me. In the same way ease of applying for a credit card can be one important factor at times.

Best & Worst Credit Card in India as per Survey

Below are the results of the survey which we conducted on credit cards. Have a look at it.

Best Credit card in India

If you look at the above chart you will see that the best credit card in India turns out to be Citibank Credit Card and the second best is the HDFC Bank Credit card overall. However, this does not mean that other credit cards are not good at all the parameters. ICICI Bank credit card is very close to all the other cards in several parameters.

While the SBI Bank credit card and HDFC Bank credit card top the list when it comes to interest rates charged (means they have lower interest rates compared to others), but HSBC Bank credit card comes last. HBSC bank credit card has not done well in any parameter as per the survey and has the lowest ranking in all of them.

Average Credit Card bill for the last 6 months

86% of people are paying less than Rs 20,000 per month as there credit card bills, that’s last 6 months average. Whereas only 2% of people had more than Rs 50,000 bills per month. I suspect that these people must be using their credit card for various mandatory expenses which are required anyways. Lots of reward points and benefits to them:).

Best Credit card in India

Credit Card Reviews from participants

Ramakrishna says on his Citi IOC Card – I am using credit cards from past 9yrs. If u use the credit card in the right manner, u get the most out of it. And make sure you pay your outstanding amount before the due date. Most of the times, by end of month I am barely left with the liquid and credit cards used to save during that bad times and used to pay the outstanding by the due date. I never ended up paying any interest until now. The best credit card to date to my knowledge is Citi IOC card. I had made use of the rewards and offers at the extreme.

Kriprabha on Axis Gold Card – Very, very bad – due to careless service. 1) Not pointing out auto-debit facility – I missed one annual fee, so from 300/- bill went up to 1000+. 2) Not applying their own rules about marking a lien on my FD Receipt — my card was blocked for weeks and no one seemed to know this requirement, and they kept assuring me the card would be activated soon. As of now, the card is inactive – reason unknown. I am snipping up a card today – want to avoid AMC which they will apply happily! These bankers live and work in air-conditioned comfort which is possible due to high ABQ. I will soon terminate my “relationship” with them. I am a senior, living on savings, so these visits to the bank cost a lot in auto fares.

Raghavendra on HDFC Credit Card – Experience with HDFC Cards has been good. I have never looked at the interest option since I’ve always paid the outstanding amount by the due date. Was charged a penalty a couple of times when I paid the outstanding a couple of days after the due date ( had not even paid the minimum amount by the due date, owing to travel), but the same was reversed after a detailed email to HDFC Cards requesting for the same, in light of good payment track record except for the 2 instances. On the rewards front, HDFC Bank does not have a very good rewards scheme as compared to others. But customer service is excellent. They also have two billing cycles, one of the 25th and the other on the 5th and allow customers to choose any one of them. This is useful for those who already have a card and choose a second to make optimum usage and take advantage of the alternate billing cycles

Atri on HSBC Credit Cards – I am using HSBC gold credit card for more than the last 7 years. I always submitted payments in time and even insured the card purchases. It was as good at their services and also at the part of mine but I do not know why in their review they decided to cancel my card and stop their services to me. I even asked HSBC CUSTOMER representative but they could nor reply satisfactorily. I now feel I should have to get a credit card from the Public Sector Bank only and wasted my time and money. My message to all public is to use Bank Account / Credit Card only of Public Sector Banks like SBI, Canara Bank, Central Bank of India, etc. for a good governance in the nation. Thanks and Regards.

Some more data out of credit card survey

  • Only 10% of people had 4 or more credit cards
  • Around 42% of people had exactly 1 credit card with them
  • The average number of credit cards held by one person was 2.03

Other Credit Cards

Note that this survey is focusing on top 6 credit cards and their comparison with each other only, which came out as the result of the survey, but there are several other banks credit cards in market which can be considered, but due to small amount of feedback in the survey, it was not sufficient to conclude anything about them nor do any kind of review about these credit cards. Here is the list of those other credit cards

  • Axis Bank Credit Card
  • Amex Credit Card
  • Kotak Credit Card
  • Bank of India Credit Card
  • Indian-Bank Credit Card
  • Bank of Baroda Credit Card
  • IndusInd Credit Card
  • RBS Credit Card
  • Syndicate Credit Card
  • Andhra Credit Card
  • Canara Credit Card
  • Corporation Credit Card
  • PNB Credit Card
  • ABN Credit Card

Did this article help you in choosing the best credit card in India? Is there any other parameter to look at before you will apply for a credit card? Do you think this survey helped you in choosing a good credit card in India?

Financial Literacy in School – very soon

Posted on by Jagoinvestor

Soon your children will start getting financial literacy in their school itself. A lot of developed countries like the UK, Netherlands, Spain etc have their national strategy for Financial education in place and a lot of other countries like India have been thinking and formulating this for a long time. Recently a draft for the financial literacy program was published on the RBI website.

You must have seen and experienced that our country average financial literacy is at pathetic levels and so many financial lives are destroyed just because they do not have minimum basic knowledge on personal finance to protect themselves. If your name is in CIBIL, its because you never knew the importance of right credit behavior, If you were missold (misbought) any financial product by an agent or financial planner (why not) – You probably always concentrated on numbers and not the hidden language and never were able to conclude the the returns from that financial product. In short you were not that financially literate.

The mission of the intiative is like this

To undertake massive Financial Education campaign to help people manage money more effectively to achieve financial well being by accessing appropriate financial products and services through regulated entities with fair and transparent machinery for consumer protection and grievance redressal.

You must probably be fantasicing that your kids will not be like you in terms of financial literacy and they will have a better level of information and understanding about personal finance compared to you. Thats where this national level initiative on financial literacy will help. It’s expected to be implemented in next 5 yrs period and you can be sure that it will arrive sooner or later, that will be a big day ! .

So what all your kids will learn about money in their Schools ?

There are 15 sections and sub sections defined and I can bet that even we all must grab the school level books on personal finance when it comes, because the list of topics to be taught is pretty good and deep. It will really help in shaping up the financial lives of those kids who study it. The best part is that as this will be school subject, they cant escape it. With their raw minds, they will be more open to learn it, unlike people today “who do not have time” . Once they learn about personal finance in school level, they will have a better chances of managing their financial lives when they start earning or well before it. Here are the topics (mostly spread across the full year) – Imagine something like “Hey I am bored in Maths Class, which is the next one” – “Personal finance Class!”

1. Money

  • History of Money

  • Barter System

  • Importance and Concept of money

  • Coins

  • Paper money

  • Plastic Money

  • E –Money

2. Household Economics

  • Earnings

  • Nature of Earnings

  • Needs and Wants

  • List your expenses

  • Find Simple ways to save money

  • Expenditure, Cost and Prices, Inflation

  • Savings & Thrift

  • What you save is what you earn

  • Borrowing – Mild Definition

  • Investment – Mild Definition

  • Interest — Mild Definition

  • Interest rate — Mild Definition

3. Banking

  • Definition

  • Role of a Bank – in growth of saving and Investment

  • Types of banks

  • Services offered by banks

  • Deposits and Loans

  • Types of A/c

  • Opening a bank A/c

  • How to Transact with banks

  • KYC norms – (A/c opening form, Address Proof)

  • How to read bank statement

  • Banking products and services

  • Net Banking

  • Calculating Interest –Saving, FD, Simple and Compound Interest

  • Power of compounding

  • Loans

  • Types of loans

  • Definition of EMI

  • Calculation of EMI

  • Difference between Banks and Money lenders

  • Micro Finance

  • How to make a complaint -Banking complaints

  • Ombudsman

  • Basic of Foreign Exchange

  • Importance and Use of Foreign Exchange

  • Check Counterfeit Currency

  • CIBIL

  • Regulator – Role of RBI

4. Investment

  • Piggy bank

  • Principles of Investment- Safety, liquidity and return

  • Bank saving

  • FD, RD, Post Office Savings

  • POMIS, NSC

  • PPF

  • NPS

  • Bonds and debentures

  • Shares

  • Mutual funds

  • Gold and Silver

  • Real estate

  • Arts and other investments

  • Commodities

  • Asset allocation

  • Risk and Return

  • Basics of Investment- liquidity, credit

  • Compounding and Time value of money

  • Nominal and Real Return(Inflation)

  • Effect of taxes

  • Long term v/s Short term

5. Behaviour Aspects

  • Concept of Needs and wants

  • Helping the needy

  • Spend wisely v/s waste spending

  • Conspicuous Consumption-lavish

  • Impulsive spending

  • What you save is what you earn

  • Using money responsibly

  • Avoiding cash payments

  • Insisting on bills

  • Dangers of excessive borrowing

  • Repayment of loans

  • Make informed choices

  • Ownership of your financial decision

  • Take care of your old ones

  • Tax payment

  • Insider Trading

  • Up Keep your Financial records

  • Free advise may be injurious

6. Financial Planning

  • Meaning

  • Household financial health check up

  • Important life stages

  • Education

  • Medical and other Emergencies

  • Social obligations

  • Goal setting

  • Budgeting

  • Marriage

  • Buying a house

  • Buying a vehicle

  • Plan a vacation

  • Retirement planning

  • Price of procrastination

7. Insurance

  • Meaning

  • Need and Purpose

  • Loss protection

  • Life ,non life and health

  • Benefits of Insurance

  • Term plans

  • Investment plans

  • Hybrid plans -Ulip etc

  • Agents, advisors

  • Role of Insurance companies

  • Regulator – IRDA

  • Ombudsman

  • How to take a new policy

  • How to revive old policy

  • Transaction cycle

  • Nomination

  • Assignment

  • Claims settlement
  • Exclusions
  • Difference between Insurance and Investment

8. Retirement and Estate planning

  • Concept

  • PPF, EPF, Gratuity, NPS, SCSS

  • Financial need after retirement

  • Three Stages -Saving, Accumulating and Dis-saving

  • Calculation of Corpus required after retirement

  • Protection from Inflation

  • Reverse Mortgage

  • Definition of will

  • Making a will

9. Securities markets

  • Entrepreneurship

  • Forms of Business enterprises

  • Company definition

  • Shares

  • Primary market – Reading a prospectus, what to read

  • Secondary market

  • Issuers, Investor and Intermediaries

  • Regulator – Role of SEBI

  • Dealing in Securities market

  • Demat account and Depository

  • ASBA

  • Broker

  • Stock exchange

  • Grievance and Redressal

  • Financial Advisor, CA, CFP, CPFA

  • Basic terms and processes in Securities Market

  • Market rumors and tips

  • Sources of reliable information

  • What are indices ( Sensex and Nifty)

  • Investment v/s Speculation

10. Use of Technology Do and Don’ts

  • Password protection

  • NEFT and RTGS

  • ATM

  • Online trading

  • Internet banking

  • Need for keeping mobile number with banks

  • Three in one account

  • Need of protecting your online account

  • Functioning of stock exchanges

  • Depository working mechanism

  • Algorithmic trading

  • Financial functions using excel

11. Scams, Frauds and Ponzi Schemes

  • Free tips

  • Insider trading

  • Money laundering

  • Phishing mail about winning a lottery

  • Price rigging

  • Dabba trading

  • Bogus companies

  • Multi level marketing

  • Schemes not regulated by anyone

  • Real Estate frauds

  • Banking and credit card scams

  • Preventive measures from getting duped

12. Borrowings Need for borrowing

  • Need for borrowing Source of borrowing

  • Merit and demerits of borrowing

  • How much to borrow

  • Avoid life of credit

  • Comparing interest rate on loan offering

  • Importance of timely payment

  • Avoid default

  • Avoid borrowing for conspicuous consumption

  • Credit cards – Merits and Demerits

13. Consumer protection and redressal mechanism

  • Rights of Consumers

  • Applicable to Financial services

  • Filing a complaint

  • Complain to entity concerned

  • Ombudsman

  • Regulators

  • Arbitration

  • Consumer courts

  • Govt. Websites -(PG Portals)

  • Investor Associations

14. Taxes

  • Meaning

  • Need of taxes

  • Types of taxes

  • How taxes impact income

  • Income, wealth and gift tax

  • Service tax, STT, Stamp Duty

  • Tax planning v/s tax evasion

  • Tax rates

  • Tax free bonds

  • Tax saving investment

15. Importance of maintaining financial records

  • PAN and its utility

  • Aadhar card

  • Demat Account

  • Bank statements and passbooks

  • Insurance policies

  • Tax return

  • Property documents

  • Helpline numbers of service providers

Note that this curriculum is also planned to be delivered to non-school people like adults through other various means. School is just one place where it will be implemented.

What do you think about this Financial Literacy Initiative ?

What do you think about this initiative ? Do you think its going to be one of the best things in our country in the area of financial literacy ? What kind of changes do you see after this Financial Literacy Initiative comes and our next generation arrives !

Does Govt work for Financial Services?

Posted on by Jagoinvestor

This is not an allegation, but I want to understand how things are related and putting 3 points which shows how govt policies are influenced by the financial services sector.

No tax on Saving Bank interest up to Rs 10,000

Some time back, there was this craze for liquid funds. The money will earn a much better return compared to your savings bank account and the money is highly liquid. You can get it in 1 day if you want it. This started making people believe that liquid funds are as good as saving bank account and people started parking their short term money in liquid funds. At the start it was just done by few people, then through advertisements, newspapers, websites etc, most of the investors came to know about this and started using to park their money in liquid funds.

What happened due to this?

When you don’t leave a lot of cash in your savings bank account, banks do not have enough money in their pool to further lend. Less money is available for them to use it for lending, less money is there to do anything. Note that saving bank money is the cheapest source of money to banks. All they need to pay is 4% (6% is mostly given for amount above 1 lac only). There is no alternative for the bank to find this cheap money. This issue was big for banks like SBI, ICICI, HDFC, and other several banks. What could be done?

This rule came in – “No tax on interest in saving bank account up to Rs 10,000”, a nice incentive for people to keep their money in Saving bank account, hence banks are benefitted by this move! This happened in this budget 2012 – Not very sure how it happened but from where this rule came in this budget? Can someone find any links!

No Indicative returns on FMP’s (Fixed Maturity Plans)

Fixed Maturity Plans (MP’s) are just like Fixed Deposits. FMP’s were allowed to give indicative returns and they could say – “You can expect a 9.4% return in one year”, this is when bank FDs were at 7-8% . FMP’s were also “extremely safe”. So a person wanting to put his 25 lacs in FD for 1 yr , could see that extra 1-2% return without much extra risk (he thought so) and the tax advantage was higher in FMP’s compared to fixed deposit (this was bonus). I hope you know that one of the biggest share of mutual funds investments go into FMP’s (not equity funds btw).

So What happened because of this?

Banks FD’s were affected, People started looking at FMP’s as alternative of the Fixed Deposits . The “indicative” returns were the issue, those were perceived as “guaranteed return” and people started flocking to FMPs, at least the bigger ones. No, I have no idea, but suddenly there was news sometime back that FMP’s are not allowed to declare any indicative return. I truly don’t understand why this rule came into existence. Can someone also find a link here?

LIC bailing out Indian Stock market

Markets sometime go up and down, but when its down, it puts pressure on a lot of people. Govt is one of them. Markets down for years is not a strong sign of a booming economy, so govt has vested interest in markets going up and look good. In the same way there are tons of PSU companies which are doing bad and no one wants to touch them. ONGC was one of the earlier and at the moment Air India is another one.

Can anyone really connect the dots why LIC invested in ONGC ? Can anyone tell why LIC invested 60,000 crore in 2011-2012 in stock markets? LIC might have thought that markets are low, but what is the reason to put 50% of its equity investments in PSU stocks? Did someone ask it to do so?

Subra has a point to make on this:

LIC’s top management has only ONE BOSS to please – the ruling party (not the government, note). This is scary. When I see fund managers beating the Sensex and the Nifty, I realise that it is by being underweight on the PSU stocks. LiC does not have this choice. (Source)

Comments? Do you think govt is really influenced by Financial Services Sector ?

Financial Planning Survey in India

Posted on by Jagoinvestor

Jagoinvestor recently conducted a online Financial Planning Survey in India and what a common man expects out of the financial plan and a financial planner. I will list down some key observations, some learning based on survey results and finally compilation of the survey in a decent pictorial graph. Note that the survey was also published by Mint Newspaper. Here are the survey results:

Key Observations

  • Total 869 people participated in Survey
  • 93% respondents were Male, 7% female
  • Trust Factor and Honest/Integrity was highest on rating. 92% said that the trust factor is extremely important, 93% said honesty and Integrity is extremely important.
  • Mumbai and Bangalore had highest number of respondents with 17% each Chennai and Hyderabad was lowest in Metro category, NRIs were 2% of overall survey
  • 21% respondents were having income of more than 10 lacs
  • Top 3 professions were Software (30%) and Finance (13%) and Govt (8%) . The smallest was BPO
  • Only 15% people said that Size of the Financial Planning firm is “very much important” to them
  • Only 9% people said that “appearing on TV/newspaper” matters to them , 62% clearly said that its “Not much Important” .
  • 83% people said that they expect or look for Sample Financial Plans before hiring a financial planner.
  • 85% people said that they expect clean financial plan with tables/graphs into it.
  • 91% people said that Discounts of Fees does not work if they dont see any value in them .
  • 75% people said they will not go for any financial planning with corporates like ICICI Direct, Edelweiss or such firms.
  • 90% people said that they will buy products from their financial planner only – if its a CHOICE, only 10% said they will not.
  • About 58% people know less than 2 planners in India by their name, 21% know no one!
  • 68% people feel that Financial Planning would have improved their financial life if they had taken it 5 yrs ago
  • 74% people are very clear that they will hire a planner sometime in future if they get a RIGHT one .
  • 73% people expect less than 20 pages in their financial plan , Only 12% said they would be happy to see more than 30 pages
  • Most of the people do not want the welcome message and those stories in their financial plans
  • In More than 10+ lacs income category , 42% people were from Software jobs
  • In more than 10+ lacs income category from Bangalore , 74% were from Software  and from Mumbai it was just 14% in Software , 48% Others
  • 68% of Govt jobs holders were from Non-metro cities and 60% among them had less than 5 lacs income per year

Financial Planning survey in India

Learnings for Financial Planners/Advisors out of Survey

1. Different Cities have their target markets

Each city is different from other. A Planner in Bangalore should mostly be targeting Software professionals (62%) rather than Doctors (1%), compared to some one in Delhi which had only 20% in software

2. Have a Dummy Sample Financial Plan for prospects , but make it beautiful

There is no doubt that prospects wants to know what they can expect from planners when it comes to that PDF which has things written to it, I know that one PDF is not Financial plan and it does not matter, still thats one tool to impress the prospect and show them what value one will get out of it .

3. Make your plans more attractive , clean and with tables/graphs

Its a clear indication that clients are not looking for 100% pure wordings in the plan, they expect some kind of tables or graphical representation in the plan. But make sure its only at places where it adds value or is required.

4. Don’t worry if you are not on TV or Newspaper

Being on TV/Newspaper is really a great way of increase a financial planner visibility, but only a handful of prospects will prefer a planner coming on TV than some one who is not . Coming on TV is good, but its not the business secret or the top most thing you should be looking for. 56% of survey takers said Appearning on TV/Newspaper is Not much important factor and only 37% said it was complementary , just 9% said that they would like to have some one who appears on TV shows or writes in Newspapers . However its very much clear that these factors increase visibility and helps a planner to increase trust .

5. Trim your Financial Plans to the point and short

A very big number said that they would like it to be less than 20 pages . Hardly few clients will read each and every page in great detail , for most of them what matters is the “solution” and how things look like . The maximum a plan should be of 25-30 page . More than 30 pages is some not expected from most of the clients.

6. Investors are afraid of Big Corporates companies For Financial Planning

Thanks to all the bad treatment all these years , big corporates firms (banking etc) , people are really not very much keen to go to them for financial planning . People seem to be more interested in pure financial planning firms or individuals .

7. Dont push for products – Clients will anyways buy it from you

I know most of the planners have experienced it already. 90% of the survey takers said that they are almost sure that they will buy the financial products from the planner/advisor only and will not go anywhere else . However a planner has to keep 2 things in mind. a) This point is true only if a client is satisfied with your work and is a happy client . b) At no point you should be pushing products to them or give them any feel that you are there just to sell them products (Too much product push is one of the biggest turn off) , hence just do what you should be doing and almost all the clients will buy the products from you, unless there is some other strong reason not to buy

What do investors think about this Financial Planning Survey in India ? 

As a reader of this blog and someone who might be one of the investor, what do you think about this survey and the results ! . Do you agree with it . Do you want to point out something and talk about it ? Jagoinvestor also provides financial planning , you can look at our services page here

Free Tax Filing for Women in India by Cleartax.in

Posted on by Jagoinvestor

Cleartax.in – a tax filing portal has made tax filing for women totally free. Women all over India can now file their tax returns for free, sitting at home at www.cleartax.in . Women will have free access to its very user friendly tax filing website till July 26, 2012. The ClearTax platform is an easy to use to file one’s tax returns. The offer is an initiative by the company to invite women to take ownership of their finances.

Cleartax observed that  more men than women e-filed online with them and their team learnt that in aggregate, women spent significantly less time paying attention to tax planning and personal finance compared with men. Jagoinvestor had done an article on Women & Personal Finance which revealed how 88% or more of urban women (who are well educated and live in big cities) have Zero or very less personal finance knowledge. Most of the tax filing work is handled by their father or husband and they generally refrain from any taxation related work.

What you can do ?

You can spread a word about this into your office and share it with all the women employees, you can also use this opportunity to file taxes online for your wife, sister, mother or any female relative.

Best Mutual Funds House [Graph]

Posted on by Jagoinvestor

Which is the best mutual fund House ? Is HDFC better than DSP Black Rock or Reliance ? A very good way of looking at it is to see all the equity oriented mutual fund schemes of a fund house and check how many of them have outperformed its benchmarks in different time frames like 3 yr, 5 yr and 7 yrs?

For instance, Birla Sun life which has 16 equity funds with more than 5 yrs of history, but out of those 16 funds almost 8 of them have not outperformed its benchmarks, which is not very encouraging. The same kind of scenario is with SBI & UTI mutual fund houses.

On the other hand if you see HDFC , Franklin templeton, Reliance & ICICI Prudential Fund house, they have done much better, a higher percentage of their schemes has outperformed their respective benchmarks. Its a very clear indicator of a AMC overall performance . So its very important to understand which AMC’s are doing better over their whole basket of mutual funds and which are not. Below is an info graphic which I have re-aligned using a PDF document published at Livemint article here . Credit goes to Kayezad E. Adajania from Livemint who has done this research. Good show !

Best Mutual Funds AMC

100% of HDFC Funds outperformed their benchmark

You can see in the above graph that only HDFC is one fund house which has all its equity schemes outperform its benchmarks in 3 yr, 5yr and 7 yr category. Which Mutual funds are you invested in? Do you feel you should move to the fund houses which have shown better performances ?

Which mutual fund AMC is your favorite and why ? What do you have to say about this study ?

Changes are required in Indian Taxation laws – Everything you want to know about income tax in India

Posted on by Jagoinvestor

A lot of people are trying to change our country. The way elections happen, the way schools run, the way govt. uses CBI for its own use, the way the judicial system works, etc. – the whole system needs to be changed!

In the same way, Taxation is one aspect of personal finance which needs some changes too. This is one sensitive topic I want to raise today – “Expenses allowed for Tax Deductions before paying tax”

Taxation rules in India

We all are aware that some deductions are allowed for saving tax – like up to Rs 1 lac through section 80C and many more. However, the taxation law has not considered some of the things which are very relevant in today’s world and should be considered as per logic, but the law does not recognize it.

There is only one parameter for taxation today and that’s “Income”. What about “Expenses“?

Each person is different and the number of family members compared to others is different. Each person’s living expenses are different and their liabilities are different too. Hence, there should be some consideration for this while taxing that person.

Imagine this situation:

There are two people Robert and Ajay. Robert lives in Mumbai earns Rs.12 lac per year in hand, whereas Ajay works in Indore and earns Rs.6 lacs a year. Robert and Ajay both put Rs.1 lac in 80C investments and then have to pay the taxes. Ajay pays tax on 11 lacs, which comes around 1.8 lacs, where as Ajay gives a tax of Rs.30,000. So Roberts pays higher taxes than Ajay.

Now, what about a number of family members in Robert’s House? What about the burden of children education on Robert which is very high in Mumbai- which Ajay might not have?

What about the expensiveness of the city like Mumbai where Robert has to spend a lot of money on fruits for his elder parents- which might not be the case with Ajay? If Robert has 6 family members including parents, 2 children and 1 sister- total of 7 members, then what will happen?

All them need food, clothes, basic necessities which one can’t escape! Should govt not consider these points before applying the tax. Should there be a minimum limit of deduction for all these points? Read these 7 Income tax-saving tips you might now know

Some Deductions allowed but are they realistic?

1. Conveyance Allowance-

Till date its just Rs.800 per month, which I feel is way too low for many people. A lot of people spend on an average 3,000 – 4,000 in commuting and that makes a 30k-40k valid deduction on travel to work.

2. Tuition Fees for Children Education –

Why only tuition fees is allowed for deductions, what about school dress, books, coaching classes, school bus fees, computer for study purpose. Are these not justified these days?

3. Health Expenses –

Only Rs.15,000 worth of medical bills are reimbursed, but are they realistic today? What if I have both parents who are not well and I spend Rs.50,000? What is the basis of limiting to medical expenses which are not in my control.

4. Rent –

Why rent paid is not considered as a valid deduction? What if I don’t have HRA component? What if I am not a salaried class? Why do I pay price for high rentals in our country? What if my rent is high because I live in Bangalore or Mumbai?

5. Grocery –

Food bills are a necessity and I don’t think one should be paying any tax on the amount spent on grocery. If a family has 5 people and their grocery bills are around Rs.8,000, that’s around 1 lac a year, then should this amount be not allowed as a valid deduction?

That’s a necessity of life, I can’t do anything about it.

Watch this video to learn more about Indian Tax System:

Single vs Married?

There should also be a consideration for married people who have just one source of earning. Why families should not be seen as one entity. If there is a family where husband and wife both are earning, but the consumption level is almost what a family with an earning husband and a housewife is there.

There can be a single earning point and multiple consumption points. That should also be accommodated in some manner.

These are all the points which just come to my mind, some of these might be making sense and some might not. Not sure how others think about it?

Can you share your comments on this?

FREE Online Tax Filing Coupons from Taxspanner & Cleartax

Posted on by Jagoinvestor

You can now enjoy FREE Online Tax Filing from taxspanner and clear tax websites. Tax filing season is on and I dont want jagoinvestor readers to wait till last moment. In all probabilities you have paid your taxes now and you are all set to file the returns now. We did Action Month last year were a lot of people completed a few important tasks in few days which were pending in their financial life. So now we are doing TAX FILING month where its an opportunity for you to file your returns online. So I have arranged for 1000+ Free tax filing coupons from 3 websites and you can file your taxes online for free. So Early action takers can file it for FREE, but later comers will have to bear there own cost.

Details of Free Online Tax Filing Coupons

 

Company Number of Coupons Coupon Code About
Cleartax.in 1000 JAGOINVESTOR

(Almost over)

 ClearTax – Income Tax filing portal for Individuals. We aim to be the easiest to use & Perfect for first-timers. You can just upload Form-16 and ClearTax reads all the relevant values. Usable from any Mobile, Tablet or a Computer.
Taxspanner.com 750 TSJAGO2012 (Almost over) Taxspanner is the largest online tax filing firm in India providing ITR1, ITR2 & ITR4 and they are the only portal which is certified for security and vulnerability by CERT-IN
Perfios.com 50 Not available now Perfios is the Leading and the most Automated Online Money Manager in India with more than 250000 registered users. Perfios is offering FREE Online Tax Filing for the jagoinvestor readers – for the first 50 Sign-Ups! If you miss it, you still get to file at a very economical rate of Rs.125″ Hurry Sign Up now !!

 

Free Online Tax Filing using the Govt Website

One can also file the taxes online using the official tax website of govt using the following steps.

  • Login to https://incometaxindiaefiling.gov.in/
  • Download the appropriate software from the website as per your case. This software is nothing but a nice detailed excel sheet (enable the macros)
  • Once you have the excel sheet on your computer, fill up all the details (if you dont have form 16, you can still fill all the details manually).
  • Once you fill up all the details, verify it once again and then export it to XML (the export button is there in the software itself)
  • Once you have the XML file with you, you need to login to the website (you will have to register for it once).
  • Once you are logged in there will be an option called “Upload Return” on the left side. Click on it
  • There will be two options called “Digital Signature” and “No Digital Signature” . As most of the people would not have a digital signature, just choose the option. Upload your XML file and just create your acknowledgment form called ITR-V, You need to download it. Once you have the acknowledge form, just verify it once again.
  • Just send this acknowledgment form using a regular or speed post (no courier allowed) to“Income Tax Department – CPC, Post Box No.1, Electronic City Post Office, Bangalore – 560100, Karnataka”
  • You will get the receipt of your ITR-V receipt by email in some weeks (takes time), you can track its status here

You can read the step by step procedure to file online taxes that are mentioned here in this article. I hope you know that tax refunds are processed faster if you file your taxes online. Ask your questions on tax filing here on this thread and I will try to bring in few experts on taxation to answer all your queries. I hope you have completed your FREE Online Tax Filing through these websites.

Should Income Tax limit be raised to 5 lacs ?

Posted on by Jagoinvestor

Do you know that 89% of tax payers in India have income of less than 5 lacs per year? Yes that’s true! Such is the case of most of the low earning people form the tax-paying population. However can you guess what is their share in total tax paid? It’s just 10%.

why doesn’t govt make income tax limit as 5 lacs ?

Yes, 10% of total income tax comes from 89% of taxpaying population. Now that brought a very interesting question in my mind, that why doesn’t govt make 5 lacs income as Tax free?  Only those who have more than 5 lacs income will be paying tax. Imagine what will be the situation!!

In one shot, 89% of the tax-payers will be free from the headache of paying tax each year and the govt will still get 90% of the taxes. What they can do is increase the taxation rate a little bit, so that they still get 100% of the taxation recovered from the rest 11% tax payers (having income of more than 5 lacs). If you look at deep down into the statistics, do you know that 1% of tax payers earn more than 20 lacs income and they account of 63% of tax payment. Imagine this – 63% tax coming from just 1% tax payers.

Tax Payer numbers in India 2012

Source

But it will not happen

Let’s come back to reality now. It was great to imagine that govt should raise the income tax limit to 5 lacs. But do you know that collecting tax from this segment is the easiest. Because these 89% tax payers are mostly salaried employees and the overall tax collected comes in the form of TDS. Companies hiring them have the responsibility of cutting the tax each month and paying it to govt. Hence Govt has almost no work to do to collect the tax from this section of 89%.

This brings us to a very important conclusion now, How should govt restructure the taxation rates and limits such that they increase their tax collection, but it impacts a small percentage of population? What about doubling the taxation rates for those having income of more than 20 lacs? What about making a marginal increase in taxation rates for those having income of more than 10 lacs?

I know I might be overlooking some important points here, but what do you think about it ? Dont you think govt should raise the income tax limit to 5 lacs or something like that ?

IRDA Fraud Calls – Beware of fake phone calls

Posted on by Jagoinvestor

There have been too many fake phone calls in the name of IRDA these days to many people. It have been noticed that these IRDA fraud calls are made by anonymous people claiming that they can help you get your money back for your Insurance policies which have become a big headache those those who invested in ULIP’s traditional policies without understanding them and are stuck in those plans now. They know that IRDA is a body which handles them (do they?). At times investors are so fed up with their policies, their life situations and are so desperate to get help that they believe anyone who claims to help them.

So some very smart people starting calling up people claiming they are from IRDA and they can help them in getting back their money back or showing some kind of hope to help them. There are several instances where some people lost more money falling for these calls and believing in them. Lets see some examples of these fraud calls and how investors again believed them without doing their study.

Fraud Case 1 : Deepak lost Rs 25,000

I also Received a call from a number 01206470443 saying that he is from IRDA and I will get a bonus of atleast Rs. 20000- for the insurance policy that I had taken few years back from hdfcsl. However, I had to make an investment of Rs. 25000/- for birla sun life insurance company. but i have no recieved documents of birla sun life insurance company. Any one can tell what I do for my payment back. (link)

Comment

It was very obvious that their was a fraud done with him and he had either signed some cheque or given DD to someone without understanding what he was doing. He must be very excited to get back some bonus (which didnt exist). He

Fraud Case 2 : How S Dash lost 51,000

I received a call from a lady named Riya Malhotra who said she was from IRDA. She said that IRDA is helping out investors in getting back their long stuck up policy funds. I had one Bajaj Allianz policy which I wanted to close. She said she will help me do it if I take a new policy from Kotak Mahindra or Birla Sunlife

She said that this is a five year term, we pay one-time 51000 now (no more premium payment till 5 years) and we will get 50% of the 51000 in 45 days and after 5 years we will receive approx 76000. However we will get a life cover till I attain age of 100. Moreover we can also recover any insurance amount which we are unsatisfied with within 45 days also. It’s already more than 50 days since I made the payment of 51000 by cheque but I have not received any communications from her. I try calling her @ her mobile. No answer.
Please suggest what should I do? (link)

Comment

Note sure whom did she write the cheque for ? There was no rational on choosing a new policy just to get back the money from old policy, there is no relation between both policies.

Fraud Case 3 : How Vikas Lost Rs 3 lacs

Mere pass call aya ki birla sun life me policy one time karane par ek verna car gift ki ja rhi hai , lekin rupees cash dene hoge maine three lakh rupees de diye lekin aaj ek mhina ho gya na to koi bond paper aaya h na hi mere paise sir plz me kya kru (link)

Comments 

I have no idea how a person can believe that if you if you buy a policy , you will be gifted a car ! . Thats too guaranteed ! , That too by giving cash ! .. While this was a fraud call , there was some common sense expected too !

Fraud Case 4 : How Sumit lost his money

In last December 2011 I got a call from IRDA (from number 0120-3050600 saying they are from IRDA) saying that your last policy premium will be recovered as we are from IRDA and we will give one regulatory to Birla Sun Life to return your money back but I’ll not get this amount directly to my account. What I need to do is to take a policy from Aegon Religare for the same amount Rs 36000. This policy will be actually for 16 years with 10 years locking period. But Due to IRDA intervention your policy will be for only 3 months locking period. Your first year premium will be paid by amount from Birla Sun Life policy and I need to pay another Rs 36000 as current year premium and I need to pay next year premium and then 4th year I can withdraw the amount which will be around 1.6L due to some calculation. Over and above that they committed that company will pay agent commission to my account which will be 25% of yearly premium. They will bypass agent from my policy.

They were continuously in contact with me till 18th Jan that I’ll get a separate statement. They know that I can cancel the policy within 15 days of receiving the documents so they were contacting me so that I’ll be convinced and cannot cancel the policy. But after 20th Jan they are neither picking my call nor calling me. So they have found a new way by picking weak vain of customer by giving promise that old lapsed policy amount will be recovered as well you will get agent commission. I had taken this policy bcaz of tenure will be 3 years as well as I’ll get agent commission with last policy lapsed amount.

The person whom I was in continuous contact was Anjali Oberai. Her mobile number is OXXXXXXXX and direct landline number is 0120-4396848. I have called many times on these two numbers to her. Before 20th Jan she entertained all my calls but now she is not picking my call. Also same policy benefits were explained to me by Neha Chaturvedi one of senior person of IRDA from Hyderabad. Anjali Oberai represented Neha Chaturvedias senior person from IRDA from Hyderabad and she came to NCR for some time. Many times I had doubt on them but due to greed of recovery of my loosed last policy amount and getting agent commission I was cheated by them. I know it’s completely my fault. But I would like to take in focus of all so that nobody can be cheated. (link)

Comment

I can see a clear gap in understanding of how life insurance industry works and too much faith in stranger who called up on the name of IRDA . If the policy was really taken from Aegon religare , it should be checked who was the agent in this whole process and nab him/her.

IRDA has clearly issued a notice saying that there is no initiative from IRDA like this 

Insurance Regulatory and Development Authority (IRDA) is a regulatory body established by an Act of Parliament to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.

Some instances have been observed by the Authority that general public are receiving calls from individuals who claim to be representatives of IRDA and offering insurance policies of different insurance companies with various benefits (such as offering of scholarship along with policy etc.).

The general public is hereby informed that Insurance Regulatory and Development Authority is a regulatory body which does not involve directly or through any representative in sale of any kind of insurance or financial products. Any person making any kind of ‘transaction with such individuals/agents will be doing the same at their own risk. If any member of the public notices such instances he/she may lodge a police complaint in the local police station.

Sd/-
(Kunnel Prem)
Consultant and Special Officer (Life)

Don’t fall for IRDA Fraud Calls

IRDA is just a regulator for Insurance sector. They do not make any calls acting as mediator between you and company. All they can do is direct a company for some matter or ask them to follow a guideline. But they never work on individual cases and send people to collect money from you. Even if it did , it will never ask for Cash or any kind of cheque on personal names. These kind of calls are purely fraud done by those who know which policies you have (known somehow) and then they just try to see if you can fall for their false promises. Use common sense because making payment to anyone like this, do not pay any attention to these IRDA Fraud Calls.