Tag: Beginner Level

The Journey of 10 part Plan F show (and youtube links)

Posted on by Jagoinvestor

In this post we want to share our great experience till now working with CNBC 18 and DSP BlackRock Mutual Funds team on the show Plan F. We have been involved with the whole process from start. Me and Nandish keep going to CNBC Office every alternate week to shoot for our part which comes at end of each episode.

Shooting of CNBC show plan F

What you can learn from Each Episode ?

All the 10 episodes have been aired and we have got all kind of reviews about them, what was good, what could be improved, which part audience are liking and what they are not liking. I tell all of them that no one episode can fit someone’s expectations, but it surely has deep learnings for everyone. In one way or other one can surely learn from each episode’s. I am not talking about the numbers discussed or their portfolio, but from each episode’s case study financial life journey.

For example – in 5th episode, Mr Subodh Khare shares how he wants to make his daughter financially wise and wants to give them around Rs 50 lacs so that they can shape their life from there in a more powerful way.

In 2nd episode Sreekumari shared how she is operating from Financial Freedom and how she has already taken so many right decisions.

In 3rd episode Ramakumar shares, how all his life, he used 2nd income in family (his spouse income) only and only for saving and now he is almost financially free.

If you look at each episode, write down what is that one learning you can draw from the episode and you can take some actions to improve it. If you listen to IFA’s, they analyse the portfolio and give some 2-3 core insights they can think about. Either Me or Nandish give 3 tips of the week for all investors which you can apply to your financial life.

Episode 1 – Ramesh Jalan

Watch the first episode, where Mr. Ramesh Jalan talks about his investment journey with financial experts Sumeet Vaid (MD, Freedom Wealth Solutions) and Vijay Bhushan (Partner, Bharat Bhushan & Co.)

Episode 2 – Shreekumari Dholakia

Watch the second episode, where Ms. Shreekumari Dholakia talks about her investment journey with financial experts Lovaii Navlakhi (CEO, International Money Matters) and Surya Bhatia (Managing Partner, Assets Managers)

Episode 3 – Ramakumar Poothrikovil

Watch the third episode, where Mr. Ramakumar Poothrikovil talks about his investment journey with financial experts Ramkumar Barchha (Premium Partner, Ramkumar H Barchha) and Ashish Shah (MD, Wealth First Portfolio Managers)

Episode 4 – Himanshu Jain

Watch the fourth episode, where Mr. Himanshu Jain talks about his investment journey with financial experts Suresh Sadagopan (Founder, Ladder 7 Financial Advisories) and Brijesh Dalmia (Director, Dalmia Advisory Services)

Episode 5 – Subodh Khare

Watch the fifth episode, where Dr. Subodh Khare talks about his investment journey with financial experts Ashish Chadha (CEO,Chadha Investment Consultant) and Pallav Bagaria (Proprietor, Brand New Day)

Episode 6 – Sanjeev Singh

Watch the sixth episode, where Mr. Sanjeev Singh talks about his investment journey with financial experts Hari Kamat (Proprietor, Investment Avenue) and Ullas Shah (CEO, Madhuvan Securities)

Episode 7 – Kavita Sharma

Watch the seventh episode, where Ms. Kavita Sharma talks about her investment journey with financial experts Ranjit Dani (Co Founder, Think Consultants) and Krishnakumar Desai (Chief Investment Advisor, Sri Kotyark Investments)

Episode 8 – M Subrahmanyeswara Rao

Watch the eighth episode, where Mr. M Subrahmanyeswara Rao talks about his investment journey with financial experts Gajendra Kothari (MD & CEO, Etica Wealth Management) and N Krishnan (Director, Value Invest Wealth Management)

Episode 9 – Shefali Doshi

Watch the ninth episode, where Ms. Shefali Doshi talks about her investment journey with financial experts Mrin Agarwal (Founder, Mr investment) and Deepak Chhabria (CEO & Director, Axiom Financial Services)

Episode 10 – Cyrus Broacha & Ramesh Damani

In the Plan F finale (10th Episode), watch the key principles of investing that regular investors can implement in their investing strategy, summarized by the renowned market analyst and member of BSE, Ramesh Damani. These principles have been extracted from the many case studies that were featured over the course of the Plan F season. Also, watch the tables turn as Jagoinvestor takes on the role of the inquisitor, interviewing Cyrus Broacha on his personal finance journey.

Share about your views on Plan
Can you share your learnings from various episodes of Plan F ? Which were the points you learned and have started applied in your financial life ?

Forget IQ – Have you ever thought about your Security Quotient (SQ) ?

Posted on by Jagoinvestor

Today, on Jagoinvestor, I will coin a new term – Security Quotient. Just as I.Q. (Intelligence Quotient) is a score that measures your overall intelligence, Security Quotient (S.Q.) measures how well you have managed the security of different areas of your financial life. By security I am taking about insurance against external factors.

Imagine a warrior – heading to battle and donning various pieces of armor to protect his body. He covers himself from top to bottom and ensures there are no chinks in his armor. A warrior can concentrate on fighting against the opponent only when he is assured that he is secured from all sides. If he leaves himself exposed, he risks getting severely injured every time he is attacked.

How secured is your financial life overall

Now imagine yourself as a soldier too. You head out of your home everyday and brave the perils of your daily job to earn money. You strive to ensure you have enough funds to meet your financial goals and to have a good lifestyle including buying a home, car and other assets. But you are always exposed to various kinds of external risks in life. If you do not take measures to handle them, you can come under attack from them some day and your financial life may be severely crippled or may even collapse. It is therefore imperative that you protect yourself well from all sides and have the resilience to deal with any kind of risk. This should take the form of preemptive action, which ensures that should an adverse situation arise, you already have put things in place to eliminate or minimize the risk.

Now lets look at few areas, both big and small, and how you can take actions to protect yourself from risks in these areas.

1. Protection against Life Risk (35%)

What if you die before you expect to? A few days back I heard the news that 40 people had died in a mishap while travelling from Bangalore to Hyderabad in a Volvo bus. Do you think any of the passengers had expected such a situation to arise while boarding the bus the night before? Similarly, you have no way of predicting when the truck behind you on the road might lose its balance and run you over. So while you can control your actions, you have little to no control over the actions of others and the incidents arising from those actions.

So have you taken sufficient life insurance through a term plan or are you still deluding yourself by having those 3 or 4 traditional life insurance policies, which would not even feed your family for 2-3 years in the unfortunate event of your demise!

2. Protection against Hospitalization Risk (25%)

The wife of a relative of mine was suddenly hospitalized a few months back after having lived a healthy 55 years without any major illness. Her husband had felt that paying premiums for a product that ‘might’ not be needed was a waste of money. Unfortunately, as a result of the unexpected hospital bills, a good part of his retirement corpus is now eroded and he is making enquiries with me for a good health insurance policy. I had to inform him that it would be tough now to get a policy at a reasonable premium. The best time for him to take health insurance had long since passed.

How about you? Are you sitting on a pile of cash to the tune of 5-10 lakhs? You had better be ready with this money it if you are not planning to take good health insurance cover.

3. Protection against illness (5%)

Now what if you catch some major illness? Are you taking care of your health properly? Are you walking, exercising, biking and eating correctly? These are some steps you should be taking today to make sure you lower your risk of illness or disease. Admittedly, this was a non-finance tip, but also consider taking critical illness cover so that in the event you are diagnosed with some thing major, you get support from health insurance companies in form of money.

4. Protection against Theft at Home or Fire (5%)

I know the probability of these things occurring is miniscule – but there is still some risk you are exposed to. The more I watch Crime Patrol on Sony TV, the more I am convinced that world is not as safe as I assumed it to be! The courier boy might not be a courier boy – He might be a burglar!. A few years back, a relative’s house almost caught fire at Diwali time as a result of children carelessly bursting crackers inside the house.

Again, though chances of something like this happening are minimal, the risk will always be there. It is therefore your choice if you want to be prudent and get insured against home damage due to theft, fire or other natural disasters. The good thing is, it does not cost a lot of money. A Few hundred rupees are all you need to pay for reasonable coverage against these risks.

5. Protection against Frauds on Credit Card and Banking (5%)

The Internet is filled with millions of complaints against credit card frauds and banking related frauds yet at the same time it is also filled with credit card numbers, PAN card numbers, bank account numbers and so many important details.

The frightening thing is that smart people have lots of tricks to exploit the fragile systems to mine this information and loot investors. The ideal way to protect yourself is to know and apply the best practices to secure your information and also study the rules about banking and credit cards. You also have the option to take insurance cover against credit card theft and frauds, if that appeals to you.

6. Protection against Job loss (10%)

The shock of job loss is high because most people are immediately concerned about two things – “Will I get another job?” and “How will I handle my expenses for next few months?”

You can actually handle the second issue by maintaining an emergency fund that is sufficient to cover your expenses for a predefined number of months in the event of job loss. Say for example your expenses amount to Rs. 50,000 per month. You should be setting aside Rs. 3 lakhs only to be used if you lose your job. You could deposit the money in a F.D. and earn good interest on it – but it has to carry the mental label of ‘for emergency use only’! . You should read this article to learn how I created a job loss insurance product hypothetically

You also need to make sure you enhance your job skills and also build a strong position in your company. The ideal situation is when your employer needs your expertise more than you need that specific job! Achieving this outcome is purely in your control.

7. Protection against your Car Accident (10%)

I recently had to get a replacement for my car’s windshield. I was not worried about the expense because I had covered it already. A stone struck the windshield and shattered it. While this was a small incident, there are bigger problems lurking on Indian roads. What if your car were to be in a major accident and get badly damaged? What if it were to get stolen? What if you were to hit someone by accident and have to foot a bill of Rs. 35,000? Who will pay for all these expenses? (A similar analogy can be applied to 2-wheelers as well)

The way you can protect yourself against these risks is by taking auto insurance. Thank god it is almost mandatory in India and no one makes a fuss about getting it (like they do about term insurance).

8. Protection against loss of key documents (5%)

There was an instance when I was convinced that I had lost my Passport, original driving license and a few other key important documents (thankfully they were not lost – just misplaced). I panicked and was cursing myself for not keeping a scanned version of the documents with me, even though I had planned on doing so a lot of times.

After some frantic searching I managed to find the documents and the first thing I did was to create duplicates, keep one copy at my wife’s home and the other in my bank locker. I now make sure, that I am more careful about handling these critical pieces of paper. While I will do my best to ensure I never lose them, I always have a backup somewhere should I misplace the originals. The same goes for the keys to my home as well my important emails and digital documents!

So whats your Security Quotient between 0% – 100% ?

Just look at all the 8 points above. If you think you have secured yourself against that risk, give yourself a score from the number written next to each point. Tally up your total points and let me know how much you scored?

How banks make money when you swipe your card and by lending your money to others !

Posted on by Jagoinvestor

During my school and college years, I often used to wonder– “How do Banks make money?”. I did not however put a lot of effort in understanding the subject and naively assumed that the government was running banks in order to provide services to its citizens and to shore up the country’s infrastructure. It was only over time, that I realized how wrong I was! .

Banking is a purely profit oriented business, Just like any other business – It has its own costs and income streams. In today’s article, I would like to give you some idea of the various ways a bank earns income and makes profits. We will also talk about expenses in the banking business and hopefully provide you with a holistic view of banking.

1. Earning money through Lending

This is the heart of banking business.

Lending to its customers is the biggest money-spinner for banks. The usual way this works is that banks accept deposits from their customers (through savings bank account, fixed/recurring deposits), providing the bank with a big pool of money. Now this pool of money is then used to lend to customers who need loans.Its very obvious that not all the money deposited will be withdrawn the next day itself. If a bank has Rs 100 as deposits, not more than Rs 10 is often needed to repay back to customers, which means Rs 90 can be lent to those who are ready to pay high interest and have repayment capability.

High Interest Charged, Low interest paid

Now, riskier the loan, higher the interest charges it carries, so that in the event of a loan going bad (called as NPA – Non Performing Asset), the huge interest charged more than makes up for the loss incurred by the bank. This also explains why home loans and education loans (which have security deposits – if you cant repay, the home is there to sell off and recover the loan) have comparatively low interest rates compared to loans that are totally unsecured (e.g. personal loans or credit card debt). That explains which why CIBIL report containing high number of unsecured loans do not get loans, because they give an impression that they are so much dependent on credit in their financial life.

Anyways, To put this concept in simple terms, banks make their money by paying interest to depositors at about 4% (saving bank account – the low interest rate is because you can take out the money anytime) or 8% p.a (in FD or RD, because of some kind of lock in there, and a kind of approval by you that you will leave that money for a long time with bank and not withdraw in short term), while they give out loans/credit and earn interest themselves about 12-13% p.a. – thus earning the 5% spread in between. When you further deduct from this, the significant overhead expenses banks have to pay (like rent for offices, salaries to employees and other costs), what you are left with is the profits of the bank.

how banks earn profits and money
This also answers a common question – how banks make money on credit cards?

In case of credit cards, a few bad customers who do not pay on time, pay huge interest charges (3.5% monthly or more than 40% years) and late payment fees, which are good enough to make up for the services given to a good customer who is paying on time and availing the benefits of the card. That should answer those who ask – “How can banks afford to give me a credit for 40 days?” – Its not the bank , but those bad customers who are helping you to get that free credit ! – they pay the BIG charges.

2. Earning money through Services and Products

The other way banks earn money is by providing lots of services in addition to their core banking products. For example, when you open an account, you do not pay for basic services such as banking, transactions on an ATM machine and getting a chequebook.

However, if you need more than these basic features, you will have to pay for them. Such “extra” things are

  • Extra cheque book in a quarter
  • Feature rich credit cards with yearly fees
  • More account statements other than the default you get
  • NEFT/ RTGS charges
  • Charges for SMS notification
  • Processing charges for giving loans

There are all some examples of these paid services.

Why banks keep distributing credit cards ?

I was also curious about the eagerness displayed by banks in providing consumers with credit cards – what made them do so and how were they benefiting from it. I came to the realization later that the greater the frequency of a customer’s credit card use, the more money banks make. This is because every time you swipe your card at a shop,the bank which owns the swipe machine pockets a cool transaction fee of up to 1-2% of the transaction amount. That explains why these days banks are tying up with e-commerce companies to provide “Swipe on Delivery” service to customers other than “Cash on Delivery”

So imagine if you swipe your card for Rs. 10,000 in a month.The shopkeeper has to pay 1-2% of the transaction amount to the credit card company which owns the swipe machine (Break your 4 big myths about credit cards here). So 1-2% of Rs 10,000 is Rs 100-200. Now imagine millions of people swiping their debit/credit card each month over the years, and you can clearly visualize how much money banks make (Of course these banking services have their attendant expenses including the cost of the swiping terminals, employee salaries, rental/ purchase charges for the bank premises and other general administrative costs). So it make sense for banks to keep giving credit cards and debit cards to anyone who has potential for spending and repaying it back 🙂 . So your SPENDING creates INCOME for bank 🙂 .

Here is a detailed note of how banks money when you swipe your debit or credit cards on terminals – Thanks Vivek for the explanation

Do you know why Banks market Credit cards aggressively and give to all and sundry. It is because its one of the highest revenue generating asset for the bank. The interest rates on Credit cards are as high as 3.4% per month (APR 41%), plus service tax of 12.36% on the interest portion, effectively taking it to 3.8% pm (APR 46%). But did you know, that credit card companies have another income stream. It is INTERCHANGE FEE.

For every Credit card transaction done by you, the bank gets fixed 1.1% of the transaction amount as Interchange fee (APR 132.2%). Who actually pays this fee.

The merchant installs a POS terminal called EDC Machine at his place. Customers charge bill to their credit cards on the merchants EDC machine. The merchant in turn submits the charges to his bank called “Acquiring Bank” who acquires the charges. The Acquiring banks pays the merchant the transaction amount, less commission called Merchant Service Fee or Discount rate which is in the range of 1.6 to 4%. Typically, it is 2%. The Acquiring bank presents these charges to the Issuer bank through clearing mechanism, and gets the transaction amount, less Interchange fee. All in all, Credit card is an important folio for banks. The Customer should use to card to his advantage.

It is not free money and if one misuses it, he will have to pay through his nose. I would suggest one to have a Credit limit of not more than Rs.35,000/- or at best Rs.50,000/-. The maximum cards should be restricted to 2. Remember, Credit card debt is a TOXIC Debt. One is better off using Debit card. Interest free Grace period should not be a criterion to have a credit card.

Were you aware about these points? Lets discuss more about this in comments section. Please share your views on this topic!

2nd Batch of Investor’s Boot Camp starts on 25th Nov 2013

Posted on by Jagoinvestor

Let us remind you again that – Personal finance is not about knowing things, it is about getting things done in your financial life. In other words, It’s all about taking required actions and steps to be in control of your financial life. Now, we know that life throws several responsibilities at you and TIME is the BIGGEST constraint/problem/challenge to complete personal finance pending actions.

To make things doable, we experimented something called Investor’s bootcamp some weeks ago and 33 investors joined our first batch. The boot camp really took all of us with a surprise, we integrated personal finance with social media (yes it happens on your favorite place facebook).

While you hangout on facebook, you will be able to gain key personal finance insights and you will be equipped to complete important personal finance actions in your financial life. Some of the participants had the best personal finance actions days, while they were in the Investors boot camp. It is amazing experience learning from other’s financial life while you are in boot camp. We (Nandish and Manish) will be there throughout the journey guiding you to take actions in each week.

6 weeks investors bootcamp by Jagoinvestor

2nd Batch of Investors Bootcamp from Nov 25, 2013

Today, we are launching 2nd batch of our investor boot camp and we invite those who wants to GIFT a NEW financial future to one self, to those who think it’s high time they get in ACTION, to those who want to expand their actions domain along with knowledge domain when it comes to personal finance.

What is Investors Bootcamp ?

Jagoinvestor Bootcamps is a life changing experience for investors. For 6 weeks, investors who are waiting for doing something concrete in their financial life come together and work on their financial life with help of Jagoinvestor Team on facebook group. Each Week – one area of their financial life is taken and whole group work for the whole week investors work on that area of their financial life. A group structure helps them to learn from each other’s financial life, get accountable to their promises made on bootcamp group. The interactions are rich in nature and deeply meaningful for everyone. If you have been waiting for long time to improve your financial life, its a great way to work on your financial life. Its much powerful than a financial plan because of group structure.

Listen to the audio below to understand what is Bootcamp.

[button link=”#register” color=”#38CFCF” size=”3″ style=”1″ dark=”1″ square=”1″] Register for Bootcamp[/button]

What happens inside Investors Bootcamp ? Here are some Snapshots!

Inside Bootcamp

What Bootcamp Graduate’s Have to Say

“Its going to be a million dollar worth asset for You”

I heard all the 10 audios .Really am speechless when i want to thank you guys for those wonderful audios.If i say your audios are excellent,amazing,marvellous then those words would be the least meant for admiring your words in those audios.I dont think simply you guys are doing your work since we paid.Your words are something beyond that.It shows the real meaning of humanity.It makes me to realise your bond towards the society.

As u said in your audios,you are SERVING us by making ourselves to realise the importance of SLOWNNESS,to be OUTCOME centric,to focus on NETWORTH,to concentrate on what MATTERS,how to CREATE,necessity of COMMITMENT,the vision of BIG game,mindset of playing to WIN,the need of ZERO tolerance I don know how many times am going to hear your audios again and again.I wont stop till i get the complete fruit out of it.Surely i could say these audios are going to be a game changer in my life.I like to thank Nandish and Manish for the quality of their work which helps for the persons like me to grow in their lives.

Friends ,those who got access to these audios ,please dont miss it.Its going to be a million dollar worth asset for u. Thank you.

Sriram Chennaswami

“Not only improve financial life, but also the whole way of your life”

Today I heard all 10 audios! Speachless…. Its not because that all these are superb, yes – it is! , but inspite of all these, these words not only improve financial life but also the whole way of your life. ZINDGI JEENE KA NAZRIYA HI BADAL DETE HAI. I want to start a business after 1 year. For that I wanted use this year to gain more and more knowledge information. Today I learned my first chapter from your audios – ‘PLAY TO WIN ‘ .

Yss – I’ll try my best to follow this principle . ‘Amazing things to realise’ – Thanx to Nandish & Manish..

Dr Minakshi

“It made me look deep into the earnings from the seven years of work life”

Hi Everyone,

First of all, a remembrance to the father of our nation Mr. M. K. Gandhi and to our second prime minister Mr. L. B. Shastri. Whatever their lives and times were, what stands out is that they put the nation in front of their own self. May the message of unity spread by them continue to remind the masses that true happiness lies is helping others grow with us with no boundaries of race, caste, creed, religion, nation or species.

Now to the Week 7 task, Experience till now:

First, I did like to give a look back on how I landed in this forum and then proceed towards the experience of being a member of it. My first encounter with JI was through an email sent by a friend, an article written by Manish on the JI website. One article led to another and before I knew it, I had gained a lot of financial know how on topics I always shyed away from, more like Darsheel Safary in Taree Zameen Par. It truly felt like Aamir Khan teaching the kid in the movie. The simplicity of the language used and the non financial analogies to the concepts made it fun to read and understand. Before long, I had subscribed for email updates on their website and was also following them on the Facebook page. Articles kept coming, I kept reading them and I was beginning to look at Personal Finance in a whole different way. But I must confess, I did not always act upon these articles and most of the time, bookmarked them for later read. By now, I had also hit upon the books written by Manish and Nandish, flipping page after page of immense experience being shared, working through the exercises and relating them to the position I was in and wanted to be at. So, when the mail for registration to this unique Facebook based Bootcamp came up, I knew, this was surely going to help. I did not obviously know the content or the methodology, but I had the confidence. So, I signed up. What followed is explained below.

Wee k0 was thought provoking to say the least. It made me look deep into the earnings from the seven years of work life and arrive at the pros and cons of every financial choice done during those years. If I was a movie producer, I would never accept the script. However, like most things in life, I took the full responsibility to the situation I was in and made a commitment to rework and improve my situation.

Week1 was an eye opener. Thinking is good, especially with past experiences being factual. But if you haven’t written it down, you haven’t done anything. So, if I did not know where my money was flowing, I wouldn’t know which control valve to adjust. So, with all numbers on the excel, I could see why the script of Week0 was so flawed. I knew I had to cut corners, but more importantly I had to make some important lifestyle changes. So, another commitment to look at financial life as an important part of physical life and not as an offshoot.

Week2 was like faith restored. When we start with something new, before even the first step is taken, we are hit by the single most dangerous question of all ‘What if I fail?’. So, security or fall back or whatever we term it can be the only answer. The importance of Life Insurance was well established. But is the investment cost per lakh of insurance justified? Term Insurance was the answer. I went back to correct the traditional policies in-force and then invest in the term policies. Though life was the key asset in focus, importance of personal health insurance policies, over and above the coverage provided through companies we work at and the importance of emergency funds were very well explained. I have since worked on these two aspects as well. Biggest learning which I have never seen highlighted in any other forum was that having insurance is not a license to play with your life. Health is still the biggest wealth. Another commitment, this time to work on health and fitness.

Week3 was Dream Big Week. Dreams, dreams and more dreams, but at a price. So, we had to set targets and work on investing regularly towards these targets. The pit falls of saving up without investing was an eye opener. And the idea of one investment per dream made so much sense. This is when, I felt that current earnings is not enough and I was no where close to making the money work for me. Like any sport, when in doubt, ask the coach and the coach did restore faith. ‘Start small and stay at it’ and ‘You can only try, win or lose is always a chance’. It was also assuring to see that most of us had similar thoughts and were assuring each other with positive feedback. Commitment this time, work on investments as a habit and not when forced to.

Week4 gave another threat. Reminded me of Yuvraj Singh’s ad ( http://www.campaignindia.in/… ), and to quote: ‘Jab tak balla chal raha hai, tab tak thath hai. Jis din balla nahi chalega, us din….’. Although his come back to the game is inspirational, his struggle through cancer is a big warning. Anyways, the point being, money does not grow in trees and most definitely, does not pour with the rain. You got to earn it, and what when you can no longer earn it, among other reasons, for you no longer are capable of competitive work? Retirement Planning should definitely be the most important aspect of anybody’s financial life. But yeah, I could see more investments coming, but could also see that less money is available to invest. What do to? Stick to commitment made in Week2, trying to ensure longer work life while investing whatever was feasible towards this goal. Also, a new commitment to never take a job for granted. Stay competitive in whatever you do, lest everything breaks loose.

Week5 was frankly a breather. With some good habits inculcated at home (like being organised with things under your possession), most documents were in order, neatly filed and stored in an easily accessible, but important place. But wait, like other things, storage has also evolved. So, why not use the Internet to make it ‘access-anywhere’ and also, confide the details in a confidant so that, god forbid, if you cannot access it, somebody else can. Like common sense, simple things, but highly uncommon. No new commitment, but to continually review and update this section.

Week6, I could sense this coming. It had to be something to simplify things further. Technology to the rescue again. Automating the banking tasks was never this easy and in this era where businesses run out of a single laptop or even a tablet/mobile, we had to get smarter too. So, some tasks to work on and I was able to automate most aspects of the financial plan.

Week7, did I see a ‘break’ in the title? But wait, how is it a break if we still have to play competitive and win a book? Feels like school holidays!! No school, but you still have home work

That’s the experience so far and looking back, it’s been a wonderful six weeks. It would be injustice to end this note without thanking our wonderful coaches Manish Chauhan and Nandish Desai! Thank you sirs! None of this would have been possible without your efforts!

Anyways, it is the ‘Joy of Giving Week’ and I hope that along with the tasks in our financial program, we also take some time off and do our bit for the under-privileged and the not-so-privileged.

Nanaiah Bayavanda

“This Bootcamp has made me acutely aware of the pitfalls that I had”

I too started with a lot of apprehensions on this bootcamp. My major question was this – I have already taken personal Financial Coaching/Advice from Nandish and Manish just last year and have gotten significant benefits from that. How will this be better? How will this be any different than what they have done earlier? etc. Eventually, I entered this game for one purpose only and that was to improve the RIGOUR and DISCIPLINE into my Financial life.
I also felt that I can take back the learning that I get here into other areas of my life.

So far, this Bootcamp has made me acutely aware of the pitfalls that I had. The single biggest issue that I have struggled with is to have a proper budget in place, and keeping track of my expenses. All this time, my excuse was “anyway I have a lot of disposable income, so, why should I track where I’m spending”?

This whole thing dramatically shifted after I bought an apartment in Dec 2012, and I had to start paying an EMI of 88k per month! Suddenly, all the values of budgeting came up and hit me pretty hard as I was struggling to meet my expenses for the past 8 months. So, since the past 2 months, I have been tracking expenses on a daily basis. I also convinced my wife to manage the Household expenses, and keep track of all the stuff that we spend. To my horror and shock, I see huge gaping holes that I did not even know existed, and this is something that I’m realizing how TOTALLY BLIND I was!

Another takeaway for me has been the whole experience of Automating… Will share more about this in another post soon.

Venkatesh Kumar

 

Get FREE BONUS Worth Rs 4,000 with Bootcamp

Bonus #1 – 100 moneyactions Program

100 money actions Program is our flagship program for taking lots of actions in financial life. We given this Rs 1,999 worth of program complementary to all bootcampers!. Listen to the Welcome Message for 100 moneyactions Program below

Bonus #2 – 10 part Audio Program

We also give a 10 part audio program worth Rs 1,999 with this bootcamp which is a life time experience for investors. In these audio’s you will learn how RICH people think and what makes poor investors always poor. Listen to one sample Audio here

Missed 2nd Episode of Plan F – Watch it here !

Posted on by Jagoinvestor

Did you miss 2nd and 1st episode of the show Plan F – Your Financial Fitness Plan. We have been working from last few months with DSP Blackrock team, to create this personal finance show. Each week one of Jagoinvestor reader features in the show, where Cyrus Broacha talks to them about their financial life to add some fun element and then 2 IFA’s from industry give their expert comments on the case study and finally at the end someone from Jagoinvestor Team (Either Me or Nandish) give 3 insights which others can learn from the case study financial life.

It is the first time some known figure like Cyrus has been introduced to the world of personal finance and it has created quite a stir in the world of mutual funds on what Cyrus is doing in these kind of shows. Personal finance is generally perceived as Boring thing and introducing Cyrus would bring in some fun element to the show. He talks to the participants of the show in his own style and also digs out more about their financial life in his own style.

Shooing for the show in Mumbai

All the IFA’s, Jagoinvestor Team and the case studies travel to Mumbai and we are enjoying a lot together. We have fun talking and it is one of its kind to see how these kind of shows become a reality. We are also happy to meet our readers and have their contributions in making this show a reality.

Two episodes are already aired and we have got some praises and appreciations from readers and other viewers . If you were not able to watch them on CNBC TV 18 due to some issue, not a problem , here are those episodes on youtube. Watch them below

Episode 2 – Case study of Shreekumari Dholakia from Mumbai

You should watch the full episode and look at the views of Shreekumari on how “expenses” are so much part of life from birth to death and her passion towards financial freedom.


Watch on Youtube directly

Episode 1 – Case study of Mr. Ramesh Jalan from Kolkata

If you missed the 1st episode too .. you can watch it here below


Watch on Youtube directly

Watch 3rd Episode 9th Nov (Sat 7 pm)

You should watch the 3rd episode coming on next Sat 7 pm (repeat telecast Sun 8 pm). The 3rd episode is going to feature Mr. Ramkumar who is from Mumbai , a self employed personal. You can watch the promo of 3rd episode below

Download Some Bonus Material

We have created a mutual fund guide which is given as downloadable PDF to everyone, along with 12 financial literacy content in form of PDF’s (created by Jagoinvestor). You can download them by registering at below links

Download Mutual Fund Guide – Click Here
Download 12 investment lessons – Click Here

Register at these links and you can get the PDF’s . Let us know what you think about the show overall.

Plan F – Personal finance TV show on CNBC TV 18 powered by Jagoinvestor

Posted on by Jagoinvestor

This Diwali is going to be special for us, for our readers and for all investors. It is special because for the next few weeks we will get a chance to step into investor’s living room (with their kind permission of course). From the last couple of months we have been working on a personal finance television show which is all set to roll out from this weekend (Saturday 7 pm and repeat Sunday 8 pm).

We are totally thrilled and excited to share about this new initiative, which we are sure, will light-up lives of many investors. The name of the show is “Plan F” which is an initiative by DSP Blackrock Mutual fund.

Why this show is SPECIAL? (Some highlights)

Here are some of the points we want to highlight.

1. Jagoinvestor Reader gets a chance to make a difference

All the people who are going to feature on the show are going to be readers of jagoinvestor.com. Some weeks back you send a mail to all the jagoinvestor readers (who are on our email list) to apply for appearing on show and fill up a form. We picked some readers who were truly leaders and they wanted to do some real sharing on the show and also met the criteria and profiles required for the show. We are extremely happy with the commitment and enthusiasm of all those who are going to feature.

The case studies are 100% real and from each episode you will find something that you will be able to relate to your financial life. If invite you to little bit rewind or fast forward your financial life so that you can relate to each episode and can draw some key learning’s.

2. This TV Show is powered by Jagoinvestor

We have been involved in the overall design of the show since its inception and the program has a wonderful structure;  It has fun element, powerful advice (from best 20 industry experts) and some jagoinvestor guidelines/insights at the end of each show. You will see either of us (Nandish or Manish) at the end of each show giving some powerful learnings from the episode.

Also the show viewers will get a chance to download some useful material at the end of each show. Here is the 1st Episode Promo to watch out on this Saturday 7:00 PM (26th Oct, 2013). Mr. Ramesh Jalan, a reader of jagoinvestor, who will be appearing on the 1st episode.

If you are not able to see videos on email, please Click here to visit the article on web

3. Personal Finance turns COOL from BORING

A lot of people think personal finance is boring and they tend to avoid watching or reading about personal finance show. This show is going to be a game changer. It has a strong fun element in it. This show has a segment of Cyrus Broacha, who is a TV anchor, theater personality, political satirist, columnist and author. He is best known for his show “MTV Bakra”, he is going to add a whole new dimension to “Plan F” show. After meeting Cyrus, we realized that personal finance can be the coolest thing on this planet. Cyrus is one of the most humorous person to watch and he is going to have ice-breaking conversation with all the show participants. Below is the promo for the show with him

DSP Blackrock Team truly ROCKS

The program “Plan F” is part of visionary Asset Management Company DSP Blackrock Mutual Fund. It has been more than a year we are in touch with this Mutual Fund House and they really want to make real difference in investor’s financial life. We have many friends in DSP Blackrock, who have put in a lot of hard work to make this show a reality. We thank the top management (Someone who is an inspiration) and the entire team of DSP Blackrock for making us part of this initiative. We also thank the creative team of CNBC TV 18 for all their creative inputs and effort. Below is a short promo done by Jagoinvestor Team (Manish & Nandish). Do watch it below

We NEED your support to make this show a grand success?

This show is made with a lot of honesty and effort and we really want it to reach more and more investors. Like a small budget good performance oriented movie, this show also needs your support and love so that more and more people watch the show. You can do your bit by sharing about this show and it’s timing with your close friends and family members with the help of social media, sms or email, whom you think will benefit from this show.

For Continuous Updates about “Plan F”:

We will keep sharing about the show updates with you from time to time but for regular updates you can click here and can be a part of our Jagoinvestor facebook Page. Here we will share some behind the scene pictures and we can also hear your key take-away from each episode.

For more information on Plan F show – Visit www.dspblackrock.com/PlanF.aspx

Lastly, we thank all those who have been directly or indirectly part of this initiative. They say that at Disney even the babies who take birth during the making of any Disney movie are acknowledged at the end of the movie. We want to acknowledge all our readers and their love for making this show a reality and for sharing about the show with more and more people. You can share in the comments section how you intend to help us reach the show to more and more people, also you can be in touch with us on facebook group for regular updates.

Claiming Assets after Death ? Here are 4 Important documents you need to know about !

Posted on by Jagoinvestor

Are you sure that when you inherit your parents assets or any other bank accounts later in life, its going to be a smooth process? Will it be hassle free and without any complexities? Are you sure you will not get dragged into life long legal battles with siblings or any other relatives who will fight for the same assets and properties ? Have your parents taken care of all the succession planning like nominating you for those assets and writing a WILL and registering it with help of a lawyer ?

Important Documents to Claim assets

On an average, almost all the families are very weak in their estate planning. They are so much engrossed into their “current” life, that they are not bothered about future much. Its their children and legal heirs who have to suffer later, due to their laziness or ignorance about these matters. In this article I want to highlight few important documents and processes which you should be aware about, so that when the time comes – you are familiar with them.

After the death of the owner of assets ?

After the death of asset holder, after few weeks/months – its time to claim their assets and properties. That time, there are lots of paperwork and procedure to be followed. You have to claim their

  • Fixed deposits
  • Saving bank accounts
  • Bank lockers
  • PPF (Public Provided Funds)
  • EPF (Employee Provided fund)
  • Post Office Deposits
  • Mutual Funds
  • Stocks and Shares
  • Life Insurance Policies
  • NSC
  • Real Estate Property
  • Bonds (If any)

Can you see how long is the List ?

You will have to run around to claim all of these one by one and might also have to do few rounds because of the process and procedures to be followed. Now this verification and processes is very critical for the banks, mutual funds houses, or companies to make sure that the asset is passed to the right hand, who ever is entitled to get it legally and not just anyone making the claim.

Just saying that “I was his Brother” or “I was his wife” will not help much because its not so straight forward process, especially if things dont match on nomination or the WILL. And if the nomination is blank or not on the right person name (who is wanting to file a claim) or worst if WILL is not written at all, then its the start of that frustrating phase, which is about to come. In your world, you might be very clear, who are legal heirs and who deserves the assets, but that’s not the point here. You need proof and all the legal documents and process in place to claim the assets.

So there will be documents asked, forms to be filled and rounds to be made to court to obtain some documents – even if it means frustration and disappointment for the family member of deceased. So you can now get a sense of how important is succession planning, and if one is careful and responsible enough, they will at least do basic things in place like  putting nominations in place and writing and registering a WILL in a standard manner with help from a lawyer.

Some mistakes which most of the investors make 

Let me first list down few mistakes or incomplete things done by investors which create the problems in future. These mistakes happen due to sheer ignorance or because of casual attitude of investors. You or your parents might be doing these following mistakes.

  • They do not mention anyone in Nomination when they open a bank account, open a fixed deposit etc
  • Once they put a nominee, they do not bother to change it ever, even if nominee has died or is now not on their preferred list
  • They do not keep receipts or save important documents
  • They do not write a WILL
  • They write a WILL, but do not register it
  • They write and register a WILL, but do not inform anyone in family
  • They do not consult a lawyer while write a WILL and make mistakes in it
  • They do not do proper paperwork when they execute a buy/sale transaction (Here is a real life experience)
  • They rely too much on words of others and have feel “legal battles” happen only in movies

Can you relate to any of these above ?

Are you doing something similar in your financial life. It answer is “YES”, your family or you yourself might face lot of issues in future as explained above. You seem to be too much busy in earning money or just making investment – without realising that one day it might not even go to someone important in your family or reach very later after a lot of work to be done.

4 Important Documents required to Claim an Asset after death

Lets finally come to the main point and now I will just explain to you some documents which generally come into picture at the time of claiming assets. Here they are –

Documents required to claim assets after death in India
1. Death Certificate

The first thing in the list is Death Certificate. Its one of those documents which will surely be required no matter what. Death certificate is a document which officially certifies that a person is dead . Death certificate also records the date and time of death, which can be a crucial information for things like life insurance claim.

Anyways, as per Registration of Births & Deaths Act, 1969, its mandatory to register death within 21 days of its occurrence and if you are late, then again you will have to do more paperwork and pay some charges. Death Certificate is issued by Municipal Corporation (Urban areas) or Gram Panchayat (in case of rural areas) after proper verification is completed by them.

Death certificate is required by all the institutions (Banks/Fund Houses/Insurance Companies) irrespective of presence of WILL or nominations. So make sure you take death certificate immediately after the demise of the concerned person. Depending on the nature of death, the process of obtaining death certificate changes. If its death at home due to some illness or high age, there not much is required, but if its a death by accident or murder etc, a copy of FIR might also be required.

So make sure you get this document after the death, it might take some good amount of time and running around , so start the process sooner you can.

TIP – You can find state wise procedure and which department to contact on this website. Visit the website and you will see a dropdown at the end of the page.

2. Claim Application Form

Claim form is the form which needs to be filled by you at the time of making the claim. Depending on the asset type, the organisation will provide you. Each bank has its own claim application form, Post Office has its own and mutual funds companies have their own forms. You have to fill in details like – relationship with the deceased and your identity details along with proofs and more.

You also have to give your bank details or other KYC details if the assets has to be transferred to your account like in case of shares in demat account or mutual funds portfolio. Just to give you a feeling of how it looks like  below is a sample claim application form for saving bank account from SBI Bank.

3. Probate of WILL 

One of the most common problems in India is unregistered WILL. Lots of people write a WILL without consulting a lawyer, and do not feel the need to register it. Just because its not registered in the registrar’s office, its bound to raise questions on its authenticity. Lots of times in families, someone claims that there was a WILL written in their favour and then the other parties challenge it saying that its fake. Sometimes two parties come up with their own version of WILL claiming that the other one is fake!.

This all happens because the WILL was not registered. In which case, a “Probate of WILL” is required from Court.

Probate is a way to certify that the WILL is authentic. So if you have to claim an asset and the WILL you have raises questions, you might be asked to get Probate from court to prove that the WILL is authentic.In that case you will have to reach to court, catch a lawyer and apply for Probate. There will be fees to be paid and lots of time might go in this process. Probate will have court seal on it and also the WILL copy will be attached to it.

Below is one comment which I had got long back on a issue which involved fake WILL. You might be able to see the role of Probate here.

My father in law has died without WILL, he left wife, 2 sons and 1 daughter. Both son prepared ZABARDASTI WILL of my mother in law , stating that both sons will get 40 % each & sister will get 20%. This flat is owned by father in law. Can widow’s (mother in laws) WILL will be considered after her death ? Now daughter wants equal share in her fathers property. Is this property is earned or ancestral for mother in law, can daughter give challenge for equal share after her mothers death, or this REGISTERED WILL prepared by mothers will be considered by cour ? plz advice in brief

You can see that the above WILL can be challenged and in that case, a Probate would be asked for to prove that the WILL is authentic or not.

4. Succession Certificate

Succession Certificate comes into picture when there is no written WILL, absense of nomination, or when your name is not on nominee list, but you want to claim the asset because you are legal heir (you know about it, but there is no legal document saying that). At that time, you will have to bring succession certificate from court, which is a proof that you are a valid legal heir. Note that just saying that you are legal heir and bringing some relationship proof will not work here, you have to actually follow the process and get succession certificate to prove that you are a legal heir as per the succession laws.

Once you get succession certificate,  you will be then seen as a valid legal heir and then the assets will be transferred in your name. At times when there is no nomination in place or more than one person comes into picture claiming for assets, then also succession certificate is demanded and the assets are passed on as per that document. Note that only one succession certificate per asset is issued and if there are more than on person claiming the assets, their names will be mentioned in that succession certificate, so its better to support each other and not fight with each other, otherwise situation will get tougher for you.

To get succession certificate, you can reach to district or high court of the jurisdiction, under which the assets fall (bank or property location) . You have to take help of a lawyer and file a petition for obtaining succession certificate and give details like your relationship with the deceased, you date of birth, your other details asked.

Then court will put a notice in newspapers inviting any objections for next few weeks, and if there are no objection, then you are granted the succession certificate. This can take time, money and some rounds to court along with anxiety especially when there is someone else who claims to be the legal heir and you do not have good terms with the other party 🙂 .

So this was all for now.

References –  http://www.bemoneyaware.com/blog/paperwork_documents/

Conclusions

The more work you do on your succession planning part. The lower will be the headache and frustration for your family members later when you leave this world as a surprise. The minimum you can do is fix your nominations for all the assets like bank accounts, life insurance policies, mutual funds, demat account, PPF / EPF and real estate etc. Sir, it takes 1 day! of your life or some hours only. Apart from that, you should write a WILL and get it registered too with help of a good lawyer, spend on it 🙂 .

Beware of Fake Email Scams asking for password & Critical information – Its a trap !

Posted on by Jagoinvestor

Some days back one of our readers forwarded an email to me, which he got in the name of SBI Bank and it was about some new scheme or feature launched. All he had to do was login to his account by clicking on the LINK given inside the email. He asked me over the email if this mail was genuine or fake ? You can see the snapshot of the email below.

Fake Email on SBI bank

I looked at the email and instantly sensed that this was some kind of fraud email, just to get hold of the login details of the mail receiver. In this article I want to cover few points which will teach you more about these kind of fake emails and some important points, so that you are not duped in future and are alert.

3 common things you will notice in Fake Emails

There are few common traits of most of the fake fruad emails you will recieve, you should notive these 3 points in those emails.

1. The email id used looks authentic, but it’s NOT

One of the most common trick used in fake emails, is that the email id used by them looks very authentic, but if you enquire a bit about it, you will find out that they are fake and just gives an impression of being authentic. For example , if you get an email from SBI Bank and the email id is “[email protected]”, at first you might get fooled that the email is really form SBI bank, but if you go to google and and search for SBI Bank website, you will come to know that its sbi.co.in or onlinesbi.com, but the email has come from a different place. You should check the website of the fake email id (in this case – sbi-bank.com) and you will come to know that either it does not exist or looking at the website, you will figure out that its Fake.

I can share a real life example of this. My brother faced this fake email some months back. He was searching for a job and he got an email from Larson & Toubro company, that his resume was shortlisted and he has to attend an interview, but he had to give a security deposit of some amount (around Rs 8,000) which he will be refunded back after the interview.

The moment I heard this, I knew this is some fake email, because no company asks anything like that. I asked him to search for larson & toubro website and  it we landed on www.larsentoubro.com/‎ . However the email came from profile@larsentoubroltd.com/‎ (extra ltd word in email), when we went to that website (the fake one) it did’nt exist. When we searched on internet about it, we got so many threads about about it and how they lost money.

Given our country has so much of unemployment, and so many people are looking for jobs, its easy to dupe them and run this kind of rackets. Infact people make millions through these kind of fake emails. Below is the email which my brother got for interview, you can notice how unprofessional the email sounds.

Fake email for Job Offer india

Note – Many times, you will also receive emails coming from the original sites and web-address, but even there is a trick for that, if you use 3rd party email sending software’s, you can fake your email id. You will notive in your email that the mail came “via” another server.

2. The target website link inside the email does not look authentic

A lot of times, inside the fake email you have a link to click, it takes you to some target website and you have to fill some personal details. In reality, the website is a fake one, which looks real visually, but on the backend its a fake one. This is called as PHISHING Trick, which steals your important login details and misuse later. So always make sure that you have all the important links written down or saved as bookmarks in your browsers.

3. The mail asks for PASSWORD or some critical information

If you see all the fake emails, one common thing you will notice is that these emails scare on some point and create some kind of emergency. It can be regarding some new change, new scheme, last date for something, It might say that the server was compromised and they are just asking for proof and things like those.

Always remember that banks or institutions do not ask for these kind of things over email. Passwords are never asked by anyone over email for sure. At times fake emails use name of RBI and Income Tax department so that people take it seriously because there is some kind of fear attached with it (ohh …. its email from Tax department, better I take it seriously). Checkout the Video below which explains about the RBI Email Scam !

Common Traits of the Fake Emails and the Websites

If you look at the fake emails and their websites (the link inside the email). You will notice that they have very bad grammar, no professional look and they ask for some stupid thing to be done which does not look natural. Like some of your friend in Hawaii, who is robbed and now needs $400 to come back to India and will give back your money later, such kind of emails come from hacked emails of some of your friends.

Also check – FAKE Calls on name of IRDA

When do Fake Emails Arrive ?

These fake emails can come anytime to you, but note that the frequency of mails increases, when some important event is nearby like income tax season, or income tax filing season or when some major law has changed, so that people can relate to fake emails.

What’s your thought on this matter and have you ever got an email asking you to click on a link and provide some critical information? And what did you do in that case ? Can you share ?

6 dumb mistakes which you make while writing Cheque’s – Dont do it !

Posted on by Jagoinvestor

One of the most common ways to pay money to someone is through cheque’s. Cheque’s give you the flexibility to make payments to someone at some later date (post dated cheque) by writing it now at this moment. Writing a cheque seems to be such a simple task, but do you know that there are many weak links in writing cheques which can create a big problem for you.

If you are not careful while writing a cheque, it can be misused by someone else and potential of monitory loss to you along with unwanted headache. Today’s generation is very causal when it comes to writing  the cheques. In this article, I will cover 6 must know points which you should always practice writing the cheque’s . You can see these 6 points as a step by step recipe to write cheques. Lets see them one by one

1. Do not leave spaces between words or numbers

Its a no-brainier. When you write numbers and words in the cheque, be it Name or amount, never leave a space or gaps between them, because that gives a chance to add some alphabet or number and change the whole cheque.

Imagine you issue a cheque to “ANKIT SHARMA” , but put sufficient space between “ANKIT” and “SHARMA” and it looks like “ANKIT    SHARMA” . One can add an additional “A” after “ANKIT” and the name can become “ANKITA SHARMA” . However if you just leave exact one small space between “ANKIT” and “SHARMA” , its going to be tough to add another alphabet in between.

Dont leave space or gap while writing cheque

2. Make sure you cross the cheque saying “A/C Payee” 

If you are going to pay to some person and want to force that the payment should go to the same person bank account, in that case, you should be putting a double cross line on the left-top corner of cheque and write “A/C Payee” or “Account Payee“, which ensures that the money will get credited only to a bank account and not be handed over to someone as CASH over the counter.

Add AC/Payee on top left corner while writing cheque

A lot of people forget to do this, and if the cheque is misplaced or lost, someone can pose himself as the target person and take the money from bank, I hope you know how easy it is to steal someone’s identity and misuse the documents.

3. Add a line after the name and amount till the end 

I recently learned this point, where you add a running line like —————————- after the name and the amount in the cheque, which ensures that one cant add anything after the name and amount and misuse it .

add running line after name amount in cheque

4. Cancel the word “Bearer”

If you look at your cheque closely, in the “Pay” section, there is space for the name and then on the right corner it ends with “Or Bearer” , which means that either the person whose name is written in the cheque or anyone else who is bearing the cheque can encash it , provided the “A/C Payee” is added to cheque as mentioned in 2nd point above. So you should always cancel the word “Bearer” from the cheque, unless you really want it. This ensures additional safety of the cheque.

5. Add a sign of “/-” after the amount”

Now this might sound so small, but this has lots of wisdom inside this simple trick . There is huge difference between Rs 37,000 and Rs 37,000/- . In first option of Rs 37,000 , you can add more numbers at the end and can make it Rs 37,00000 if there is enough space ahead of it, but in case of Rs 37,000/- , You cant do anything . Below is a simple example of how it can be misused.

Corrent way of writing amounts on cheque

6. Keep the details of Cheque’s issued, even if it sounds boring !

And finally, when you give a cheque to someone, write down the cheque number, account name, amount and the date when it was issued or dated, because you might need this information incase you want to cancel the cheque. A lot of times, it happens that you need to cancel the payment, but do not remember the details. Having recorded this information would be handy at times and will help you to act faster.

ICICI Bank also has a small tutorial on correct way of writing cheque’s, which I have added below, just have a look at it and you should understand most of the things.

Some more tips (From Readers Inputs in Comments section)

  • Rishi Bhatia says – “Generally, while giving a cheque, i also make a point to use a cello tape on the name and amount, so that no one can change these”
  • Jitendra says – “In the present era of mobile phones, when most of us have camera enabled cell phone, it is better idea to get a snapshot of Cheque before handing over. This way all your details will be maintained.”

Use these 6 things everytime you issue a cheque

Next time you write a cheque, just make sure you have done all these 6 things, and the chances of misuse of your cheque will be close to ZERO because each and every step add a security layer. Let me know if you have any tips on writing cheque  in correct manner or any real life experience on this issue.

 

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 ?