Tag: Beginner Level

Should you buy 2nd house as an investment? (28 min video discussion)

Posted on by Jagoinvestor

I along with my teammate Sagar, recorded a 28 min video discussion related to this topic – “Should you buy 2nd house as an investment?” yesterday. We talked about various pros and cons which are often missed by those investors who are thinking of buying the second house for investment. Watch the video below

What we discussed in this video?

  1. When does it makes sense to buy a 2nd house?
  2. How does it impact your cashflows and stress level?
  3. Why are investors so attached and attracted to buying “Real Estate”?
  4. What are the real-life issues which investors face after buying the 2nd house?
  5. Is it an emotional decision or a financial decision?
  6. Why buying just 1 hour is enough for 95% of investors?
  7. Why illiquidity is a big issue with buying a 2nd house?
  8. How 2nd house can create a good second income, and in which cases?

Do let us know if you have any comments after watching the video!

How does a “Householder Insurance Policy” work? Features and benefits !

Posted on by Anuradha Singh

In this article, we will see how you can protect your home structure and belongings from natural and man-made disasters. We are talking about “Home Insurance” Policies.

We all invest our hard-earned money in buying our dream home and our lives revolve around it. Unwanted natural disasters and man-made threats can threaten the security of our home and its belongings and can cause surprise monitory losses.

what is home insurance policy and what are its benefits?

We have all heard about all kinds of insurance policies like term plan, health insurance, car insurance etc, but very few people have knowledge about “Home Insurance Policy” or also called “Householder insurance policy” . Before I explain more on that, let’s see what are some of the real-life threats and real-life incidents where people have lost their homes and belongings

Example #1 – Burglary

As per this times of India report, burglars broke into 4 houses in Ghaziabad on February 27,2019 and took valuables worth Rs 20 Lacs. Among the 4 houses, one of the houses was just 500 m away from the police chowky and burglars took jewelry and cash worth Rs 500000.

burglary in India

Example #2 : Fire

As per this report, on January 4, 2018, Four people died after a fire broke out in Maimoon Building that housed residential complexes in the suburban part of Marol in Mumbai. Besides the four dead, five people were injured in the accident.

Fire destroyed lives of people in Mumbai

Example #3 : Floods

To give you a recent example of a flood disaster which took place in Kerala in August 2018. Around more than 400 people lost their lives and almost everyone lost their homes and belongings.

August 2018 flood in Kerala

Example 4 Earthquake :

Nepal Earthquake which happened in April 2015 killed almost 9000 people and injured 22000 people. Total damage of Rs 1000 crores USD (which was 50% of Nepal’s Nominal GDP).

Nepal Earthquake April 2015

Can you see from the above examples, that these threats are real and it can possible happen to anyone in real life (even though the probabilities are quite small).

What is Householder Insurance Policy?

Householder insurance policies are policies, which protects the home-owners against damage and losses that affect their property and belongings. The exact terms of coverage varies from policy to policy; however, most insurance policies cover perils like hail, thunderstorms, fire, and theft.

Many policies also offer financial assistance if a homeowner must be temporarily displaced because their home has been damaged. Look at this video below which explains it in a crisp way!

What all is covered under these policies?

The insurance for your home can be broadly divided into 2 parts :

  1. Structure Cover – This is for the structure of your home. The compensation under this cover will be paid to repair damages to the structure caused by specified natural and man-made calamities.
  2. Contents Cover – This is for the possessions you have inside your home. If these are damaged or burgled, then the insurance covers the loss you incur for the same. You can take either one of these covers individually or opt for both to make sure you are covered comprehensively.

Here are some of the companies in India, which offers these Householder Insurance Policies. (Please do not consider this as a recommendation list).

Benefits of these policies

1) Protection against earthquakes, floods.
2) Cover against terrorism.
3) Cover against fire and allied perils.
4) Protection against cyclone, storm, hurricane, etc..
5) All risk jewelry cover.
6) Additional rent for alternate accommodation.

 

What all is not covered under this policy?

  • Loss, destruction or damage caused by war, invasion, an act of foreign enemy hostilities or war like operations.
  • Loss or damage caused by the insured’s and/or insured’s domestic staff direct and/or indirect involvement in the actual or attempted burglary or theft.
  • Willful destruction of property.
  • Cash, bullion, paintings, works of art antiques, mobiles and laptops
  • Electrical/Mechanical breakdown
  • Cost of the land.
  • Co-operative societies cannot take long term policy for the entire society building.
  • Under construction property.

5 Reasons why you should buy a householder insurance policy?

Here are some of the reasons why to buy a home insurance policy.

    1. Natural Disaster can strike any-time and anywhere :
      Every year, India loses more than 9.8 billion due to various disasters. Though you can’t control natural disasters, through home insurance you can really protect your house against natural disasters or ” Act of God”, such as cyclone, earthquake and flood.
    2. Man-made risks cause a lot of damage :
      Despite the latest safety equipment’s, man-made threats like burglary, riots, terrorism, etc… are still prevalent. While not all insurers cover these losses, you can get extra protection in the form of riders.
    3. Lots of valuable items :
      Apart from its structure, this policy will cover the contents of the house such as domestic appliances, furniture, audio & visual appliances etc….
    4. You may require relocating to an alternate place :
      Relocating to an alternate house happens in case of a total loss of the property. Till the time your home is being reconstructed, your home insurer will cover your additional rent.
    5. Buying the policy for a longer period of time :
      Every year renewing your home insurance policy can become a very tedious task for you since you may be very busy with other responsibilities in life. Many insurers offer longer duration policy for 5 to 10 years straight in one go. It is a cost-effective and hassle-free way of staying insured.

Can I buy this policy If I stay in a rented house?

Both the Owner of the house and renter can buy this policy. There is just a basic difference between both. Let’s see what it is?

OWN HOME INSURANCE RENTED HOME INSURANCE
In this type of insurance, the home owner either insures the structure or contents (belongings of his home) or both. In this type of insurance the renter insures only his contents or belongings in this rented house.

The structure of the house is insured by the owner of this house

 

Example of a real-life House holder Policy along with premium break-up

Below images shows the detailed structure of the policy with the premium break-up of one of the known Home Insurance Policy. Details of the cover are as follows :

HDFC ERGO Home Insurance policy structure

HDFC ERGO Home Insurance Policy Premium details

  • Age of the property not more than 30 years
  • Type of ownership – Owned
  • Insurance required for my Flat /independent house
  • Policy Tenure – 5 yrs.
  • Risk cover for structure & content
  • Type of plan – Fixed sum insured
  • Sum insured for Structure – 50,00,000
  • Sum insured for declared content + Burglary cover for content – 15,00,000 (detailed description below).
  • Total premium payable (including 18% GST) for 5 years is Rs 34,825.

Conclusion :

I think you will agree with me, that we have almost no control of these natural & man-made disasters. The best we can do is be alert and prepare ourselves by insuring that we secure our belongings and structure of the homes.

Also, these policies should be preferred more by people who stay in an earthquake or flood sensitive zone and who do not stay in a secured society and vicinity. I understand that the chances of these risks which these policies cover are quite small, but then it’s up to you if you want to get these risks covered or not.

Do you think buying these householder insurance policies makes sense?

Please share if you feel it makes sense to purchase these policies? share in the comments section below!

How to unlink Aadhaar from Bank, Digital Wallet & Other Service Providers?

Posted on by Jagoinvestor

Good News!!

The Supreme Court has ruled that citizens of India do not have to link their aadhar number to a range of services such as bank account, mobile sim, digital wallet (paytm), passport, etc. However, the Supreme Court has said that biometric ID is mandatory for accessing social welfare schemes and subsidies such as, LPG subsidy, Jan Dhan Yojana, etc.

aadhar card linking

Last year a lot of stress was there for having an Aadhar card and urgently linking the aadhar to avail public and private sector services. That panic state in the country made us link our aadhar with a bank account, sim card, investments (KYC updation) and whatnot.

After all, there so many questions were raised on the basis of the Right to Privacy and Right to avail the basic services which should not be stopped on the question of not having aadhar card number.

There were so many news such as,

After all these, the verdict of Aadhar not mandatory has been passed.

So, now it is a good news for those you never had an aadhar and never got it linked with anything. However, for those who have linked the aadhar with their private accounts and are concern about their private information getting hacked, may delink the aadhar.

Process of Un-linking

Now, the question arises is it so easy to delink? Do I again need to stand in the queues at post office and banks for hours for delinking my aadhar? The answer is NO. Because, Aadhar delinking is optional and not mandatory. If you feel insure that your private information may get leaked than you should delink your aadhar number.

Below given are the processes of delinking aadhar from Post Offices, Bank, Digital Wallet, and Mobile operator.

1. How to unlink aadhar from Bank Account

Before proceeding to unlink Aadhaar from Bank, first, make sure that your Bank Account is not linked for any DBT (Direct Benefit Transfer). If you unlink the Aadhaar with the bank which is linked for DBT (like Gas subsidy), then you may not receive the DBT money in your account. Hence, try to unlink Aadhaar from bank cautiously. Following are the steps for delinking aadhar from bank.

  1. Visit your branch
  2. Ask customer service to give you Aadhaar De-Link Form.
  3. Submit the de-link form
  4. Within 48 hours your Aadhaar details will be de-linked from your bank account.
  5. Cross-check after 48 hours whether it has been de-linked or not.

2. How to unlink aadhar from Post Office Account

For delinking aadhar card number from post office accounts, you just need to submit a form of delinking of Aadhar Number. This is how Indian post office payment bank de-link form looks like.

how to delink aadhar from post office schemes

3. How to unlink aadhar from digital wallets such as Paytm, Mobikwik, Freecharge

  1. Call the customer care and ask for the procedure to de-link.
  2. You will receive an e-mail to attach a soft copy of your Aadhaar.
  3. After sending the e-mail, you will receive a reply stating that within 72 hours (depends from company to company) your Aadhaar will be de-linked.
  4. Cross check again after 72 hours with the customer care.

4.How to unlink aadhar from sim card companies such as jio, Vodafone, idea, etc.

  1. Call the customer care and request for unlinking aadhar.
  2. You may be asked to send an e-mail with a request to de-link your Aadhaar details.
  3. Once you send it, then they will send you the confirmed message of unlinking Aadhaar.

There might be some difference in the process of delinking for every service provider. Because as of now there are no standard rules set up for delinking. So, you may directly contact the customer care of the service provider and they will guide you on the exact process.

Please feel free to comment on how fruitful this article was.

How to earn 25,000 as an extra-income (while keeping your day-job) in 3 simple steps

Posted on by Team Jagoinvestor

Here is a guest post from Zubin Ajmera from Progress & Win (detailed bio at the end) .. He would like to share his insights on creating extra income while you are at job.. Over to him.

–

If I have to tell you the latest trends and fantasies of Indians these days, it would be 4 things :-

  1. Going on dating apps (“Forget Tinder, did you check out this new app?”)
  2. Trying a new restaurant (“We should really go to this new cafe opened last month, they serve the most delicious desserts”)
  3. Watching the latest movie (Robot 2.0?), or the new series on Netflix (“Did you watch Sacred Games, or Narcos?”). I mean, look at this craziness
  4. Starting a business (“Sometimes, I feel my manager doesn’t understand it! I just want to quit my job and start something of my own!”)

Today, I want to talk about the 4th — starting a side business. And it’s funny because the moment I tell this, the instant choleric reaction is:-

  • “Uhh, I’m already occupied with so many things. I don’t have enough time”
  • “Business?? I don’t even know where to start from”
  • “Why will anyone pay me? I’m not an expert”
  • “I’ve an idea in mind, but not sure if it will work!”

I call these Mental Scripts, these are some of the barriers you have in your head when starting anything new.

I don’t necessarily blame anyone for this. The fact is, we live in this “startup ecosystem” where you’ll come across hundreds of sites talking about technology, ecommerce, and mostly hear words like — “funding, investors, seed round A, renting office space, hiring”, etc.

I want to tell you that all of that is possible, but you CAN take a different route. A different route might mean –

  • Starting a tiny business while still working at your day job (so eventually you’ve an option to quit your job)
  • Working on something you’re interested in or deeply care about. For eg: I love to research and spend on perfumes. My weird dream is to start a business on it someday. Not kidding, just look at my enrapturing expression when I buy a new one online –

The expression after you order your favorite thing on Amazon

  • Creating a second income stream
  • Finding your first paying customer (Apple sold its first iPhone on 29th June, 2007 Flipkart got its first customer in October 2007. Moral for you — It all starts with ONE)

In fact, imagine how life looks like if you have 2 paychecks deposited in your bank account every month. A second income rolling in.

For most of us, the bulk of our fixed income comes from our salary. What if you added one more stream to your income? That one stream might not be equivalent to your salary, but even an extra, say 25,000 — what do you think you can do with that?

  • Pay for petrol or other bills
  • Cover up for rent
  • Buy that extra pair of clothes or shoes
  • Take someone out for a lavish dinner
  • Maybe take a short weekend trip to some new place?

 
Here, I’ll show you what that second stream of income looks for me –

This was from November itself. Each customer worth $50

And let me show you what a business where you’re your own boss looks like for other ordinary people, who are just like you and me –

  • Deepak Kanakaraju teaches digital marketing through his online courses and workshops
  • Sandeep Singh sips a chocolate milkshake at a coffee shop, while he finds/reports online security loopholes for tech and ecommerce companies
  • Karan Batra is a finance expert who provides various tax and finance saving services
  • Ritika Tiwari is a writer, who provides content writing services for many websites and companies

Google all of them, and there are plenty of others who were working professionals and started as beginners. See more examples here.

Is this a dream “not possible”?

No! With a few simple steps, this is achievable. It’s not even a distant dream, you can start earning more in as little as 6 weeks and build a sustainable income — for life.

Let me show you how.

The simple framework to start a side business (in 6 weeks or less)

It boils down to 3 simple steps:-

Step 1: Find an idea

Step 2: Niche it down

Step 3: Get your first 1-3 paying clients

That’s it. I’m not going to throw 100 different things at you (“start a website, buy a domain, get the xyz discount”) to confuse you further.

I’m not even going to use complicated jargons you’ve never heard of, you really don’t need to when you start off.

It’s kind of like when you start working out at the gym. Your goal initially is not to lose 20 kgs, but maybe a tiny goal to lose 5 kgs first.

That’s the goal here as well. To find an idea, test it, and get your initial clients. Do these 3 steps, and boom — you’ve a functioning business.

And the interesting part is all of this is possible while sitting in your office desk….doing your work…on the laptop…..or on a weekend….or coming home after work….or after dinner….just by spending 5-7 hours per week

Let’s go through the details of each.

Step 1: Find an Idea

Tool required: A pen and a paper (do not ask “what fancy tool should I use?” There isn’t)

Time required:  15-20 minutes

You’d be surprised when I tell you this —  80% of my readers face this challenge, which is coming up with an idea.

  • “I don’t have any ideas”
  • “Where should I start from?”
  • “Zubin, I have an idea, but I am not sure if it will work”

It’s kind of like an “excuse” you make to cover up on not taking action. But you also make it sound “correct” in your head, so you think what you’re doing is right.

For eg: “I don’t have enough time” is the most common one you’ll find. Here’s an interesting comment on one of my articles for YourStory – (You can check my full response here btw.)

A big part of starting a side business is internalizing your inner psychology and mindset. (And it’s never about “which domain to pick”, or “what the name of your company should be”)

Let me show you 2 simple techniques to come up with atleast 10 different ideas in under 15 minutes. I’ve used them and I still do, many of my readers have, and it continues to work.

One quick caveat is to stop censoring yourself as you go through this process. No telling yourself “I can’t do this”, “I’ll do this some other day maybe”

Much of this is about creativity, testing, taking action, and eventually having fun with it.

Technique #1: The YUS Technique

I call it Your Unbeatable Superpowers (YUS). Each one of us is different. Our story is different — where we come from, experiences we’ve had, people we meet, places we travel, stories we know, food we eat, clothes we wear, etc. This is what makes you unique.

So, how can you monetize these experiences? How do you turn your unique experiences into profit viable ideas?

Answer the key elements below:-

  • Experiences you’ve gained — like learning algebra or studying architecture, finance or consulting, traveling by spending less, doing interior designing
  • Skills you’ve developed — like playing a guitar, working on excel, taking better photos, coding in java
  • Challenges you’ve faced and overcome — like treating foot pain, getting the perfect muscular body, losing weight, learnt to write better
  • Achievements you’ve been awarded for — maybe you got a promotion, or a high MBA score, or bought a car from your own pocket, or stood first in a swimming competition

Write down as many you can think of.

Technique #2: The Detective Hat Technique

I want you to answer these questions –

What would you do on a Sunday morning after your morning breakfast?

You wake up at 10 am (hey, it’s SUNDAY!), spend another 10 minutes on your bed. Brush your teeth. Take a bath. Have your breakfast.

Now after all this, what do you usually do?

Will you go to the gym? Read business websites? Watch cooking videos? Go to a networking event? Arrange your next travel trip?

Write it all down!

What do your friends/family struggle with and ask your help for?

Do they come to you for design advice? Or ask you about finances? Or they need help with planning an event? Learning how to create excel spreadsheets? Advise on what phone/laptop to buy?

Remember, no idea is a bad idea at this stage. I want you to list down EVERYTHING you can think of when using the techniques. You’re not allowed to

  • Chalk out any idea
  • Think “this idea isn’t possible” (How do you know?)
  • Critic yourself (“I am not an expert”)

We’ll remove some of these ideas, don’t worry. I’ll show you how to identify and eliminate the bad ones. But, we’ll address all of these concerns later.

Right now, just put everything on the page.

Great! With using just these 2 techniques, you now have a list of 10-15 potential ideas. (If you also want to see the Book Shelf and The Flight technique to come up with more ideas, check below here.)

Here’s how your list might look like –

This is from one of my readers. A simple exercise, and you already have so many ideas

Awesome! Pat yourself.

Now, I want you to pick one idea. Do not obsess over this. Pick one idea. Do inky-pinky, or something that interests you, or what idea catches your eye when you look at the list, or just ask your mom (she gives the best advice sometimes trust me) — that’s not the point.

The point is to pick 1 idea to test and validate, and move to the next step. A lot of people get stuck at this step alone. Treat this as a system. You simply follow the steps, trust the process — and you will see results.

Step 2: Niche it Down

Tool required: Just your creativity

So, you’ve an idea. Now, let’s determine who can be your potential customer/client.

In marketing, there is a golden rule penned by author Tim Ferris in his book, which goes — “if everyone is your market, then nobody is your market”

Once you have a rough idea, the next step is to identify the person who will pay you. Don’t go after each and every individual you can think of.

Ask yourself – Who is my ideal client?

Bad answer: My ideal client is 18-35 year-old men

Really? An 18-year old college “dude” has almost nothing in common with a 35-year old professional. They are at different stages in their lives, have different goals, their lifestyle is different, and they have completely different mindsets.

GET REALLY SPECIFIC! I cannot emphasize the power of getting super-specific.

Good answer: 30-35 year-old men who are working professionals

Amazing answer: 27-35 year-old men who are working professionals, in the IT industry, living in Mumbai. They typically work in IT, Banking, Finance companies. They are either middle or senior level professionals in their career. They work largely on these xyz softwares, excel spreadsheets, and emails. Most of them are married. They commute either by train or a bus. They spend most of their time on social media (Facebook and LinkedIn.)

I mean, look at that amazing answer above. I love you already!

The more specific you get, better your chances of early success. When thinking of your ideal client, you want to deeply understand :-

  • Age
  • Location
  • Demographics
  • Where do they hang out often?
  • What do they read, watch, listen?
  • Where do they go to solve their problems?
  • Type of industry they are in
  • etc.

Let me walk you through an actual example. Say our idea is — “content writing”

Who is my ideal client? Maybe we come up with –

  • Marketing agencies who require content writers on a part-time basis
  • Authors or bloggers who require for their website or a new book
  • Small scale companies who need for regularly putting out new content for their blog and social media channels

Say we pick the first one — marketing agencies, since the demand for content writers might be more there. Agencies need content writers everyday!

Again, the point I want to emphasize is do not obsess over and over again. Pick one and move to the next step. With a little testing and refinement, you will learn a lot more, than to simply sit and daydream on it.

So, where are we? You’ve an idea — you’ve narrowed it down for a specific market, you know EXACTLY who would be a good target audience for your idea.

Alright, great then, this is a good start!

Step 3: Getting Your First 1-3 Paying Clients

Back in the day, getting a client meant doing some grilling work — months and months of waiting, no response, following up repeatedly, all a dreadful process. Oh, and by the way, how can we forget there was less internet access and penetration!

Today, finding your first paying customers is pretty quick, cheap and easy. Let me show you the cheapest and a free way of getting a client.

Go Direct!

Yes, just go direct — send an email, or meet in-person, or do a direct cold call.

My recommendation: Start with 5-10 emails a week. Can you do that? Don’t answer that, since the answer to that question is “Yes, you can!” So, you better not give me the “I don’t have time excuse!”

With about 30 minutes per day, you should be able to send 10-12 emails (even while watching Netflix on your laptop, OK?).

Let me go one step further and show you an exact word-for-word script to send.

The 5-Point Formula Email Script to Get your First Paying Client

Few things which make this deceptively simple email work like magic –

  • It’s simple and casual (you feel you’re talking to this person friendly. No “sir”, nothing formal)
  • It’s not too short, and not too long, yet it covers all important points —
    • a quick intro
    • services you can offer
    • problems he has
    • benefits to him
    • a call to action
  • Not all of your recipients will respond, but a few will, and that is your road to turning those into paying customers

Once you set the foundation of getting your first client correct (i.e. you know your idea is validated, there is demand for it, you’re getting responses to your emails, etc.) — you can then scale. You can get your next 10 or even 100 clients pretty easily.

Conclusion, and Your Next Step

Unlike other “digital marketing” gurus, who preach overwhelming stuff –

  • “You NEED a website. Here is the 50% discount on the hosting provider”
  • “Just do affiliate marketing” (Blunt truth: you will not see any results for the first 6 months alteast!)
  • “You must have a Facebook page!”

These are the same advises I got, and which you will get too.

Instead, without setting up a website or a facebook page or any fancy bells and whistles, which is all for later, start with this simple 3-step system. I’ve used it, many have, and the best thing about it? IT WORKS!

Forget Black Friday, here’s my “give-me-a-slap-if-it-doesn’t-work” guarantee offer: Apply this proven system, and you WILL see results. If you don’t, I’m open to get slapped (just don’t hit me hard, please!)

About the Author: Zubin Ajmera

After his 5-year stint in USA, Zubin returned back to India. He’s a Content Marketer, Founder of 2 online businesses, and started Progress and Win, a site where he helps working professionals and beginner bloggers start an online side business from scratch, using tested techniques and strategies.

He believes in a strict “no-B.S” approach, has been covered on Entrepreneur India, YourStory, directly worked with 2 authors, 4 CEOs, and featured on multiple other brands.

Investing in Mutual Funds vs Direct Stocks – Which is better option?

Posted on by Jagoinvestor

Should you invest directly in stocks of companies or rather buy mutual funds? Which option is more “suitable” for you?

A lot of investors feel that they should invest directly in shares, because that’s what mutual fund do at the end of the day, however stock investing is a very different game altogether and the dynamics are very different there. Let’s see them one by one.

which is the best option to invest your hard earned money? Direct stocks or mutual funds?

 

#1 – Knowledge Required

Most of the people think that investing in stocks is as simple as buying some stocks using hot tips and then waiting for the stock to become multibagger in next few months / years.

Experienced investors know that nothing is far from truth. They know that it requires great amount of knowledge and expertise to study the company’s balance sheets and choose the right stocks for future. There are investors who have spent their life time in studying how to do stock investing and still they make big mistakes.

So coming to the point, stock investing is not a child’s play. It takes years of hard work and a lot of knowledge to pick the correct stocks, where as you do not need much knowledge when it comes to mutual funds investing.

Infact, mutual funds as a product is created for those investors who can’t spend much time themselves to study stock investing. You can just pick a “reasonably good” mutual fund on your own using some basic rules or hire a financial advisor who can do that for you.

#2 – No control on stocks chosen

When you invest in mutual funds, you can not control which stocks go in and go out from time to time. That is the job of the fund manager. You only invest in the mutual fund and give your money to the professional management. So you have ZERO control on the stocks which are chosen by the fund manager.

However when you do direct stock investing, you are the fund manager and you have full control over it. So based on your study, gut feeling, logic, hearsay, hot tips, you can buy and sell the stocks, but that’s not the case with mutual funds.

The person who is taking the decision of buying and selling of stocks is a professional who knows the game.

#3 – Professional Manager

There is a different between a pilot controlling the airplane and the doctor doing the same. There is a great chance that the airplane will crash if it’s handled by a doctor (unless he an additional qualification of flying planes).

The same happens when it comes to equities. A mutual fund is managed by a very high quality and professional fund manager who has years of knowledge of various things like economy, credit cycle, interest rates cycle, economy, fundamental analysis, taxation, businesses and has years of experience of equity markets across various countries. They have completed professional studies related to wealth management.

Structure of Mutual funds

 

When they manage and take decisions on which stock to buy or sell, they have very deep understanding the sectors and that business. They visit the companies, their factories and meet their top management. They have hidden knowledge sometimes on what is going on within the companies and can predict the future of companies in a better way compared to a normal person.

However, most of the equity investors feel they can successfully invest in direct stocks with great expertise for long term and generate great returns just like a professional manager.

An IT engineer sitting in a cubical at TCS or Infosys can surely buy some stocks based on hot tips, but can’t match the expertise of a professional fund manager who earns crores of salaries in fund houses (and if they can match, it then why not leave your job and shift to Mumbai)

#4 – Volatility & Return

This is very important point, hence read very carefully.

When you buy a mutual fund, you are investing a very large portfolio of different stocks which can range from 30-100 companies.

So your profits and losses are dependent on a large number of stocks, hence the risk is distributed among those stocks and in the same way the returns you get is the average of all. In short there is lower risk and lower return potential compared to a small 4-10 stock portfolio.

When you are a direct stock investor, how many stocks will you buy will decide how volatile is the returns from your portfolio. Most of the direct equity investors bet on very few stocks, they buy 5-10 stocks only (some times only 2-3). So each stock size is quite large in the portfolio and any change (up or down) impacts the overall portfolio return.

Most of the investors are not equipped to handle very high return or very high loss. If there is very huge return, investors sell their stocks and want to lock in the profits and in the same way if there is a steep loss, they want to sell it off and get out of the “risky” game.

In both the cases, investors feel the urge to get out and wait on the sideline, rather than stay in the game – because it’s emotionally very over whelming to handle it.

This is exactly the reason why you will find investors who have a mutual fund for last 10 yrs, but very rarely you will find an investor holding the same stock for 10 yrs.

#5 – Automatic Investments (SIP)

When you invest in mutual funds, there is a standard facility of automatic investing called SIP . This is a great way to automate your investing and create a habit of regular investing. This suits an investor who wants to systematically invest a fixed amount each month on a given date.

However when you buy stocks, you have to manually invest in each stock every month if you want to regularly invest in them. This becomes practically challenging and inefficient because human mind is lazy as per design. No matter how many reminders you set and how “committed” you are, after few months of “success” , it all falls apart for 99% of the investors.

Some portals like HDFC securities have now started the SIP in equities also, so what I am saying does not apply to each and every platform.

#6 – 80C Benefits

Direct stock investing has no 80C tax benefits, however if you invest in ELSS (tax saving mutual funds), you can avail the taxation benefits.

This is one small reason why you can prefer mutual funds over direct stocks

#7 – Active vs. Passive Involvement

Mutual funds are made for those investors who have no knowledge and no time on their side. Once you invest in mutual funds, your involvement is very limited in reviewing the funds over time. The important decisions of which stock to buy, when to buy, how much to buy is taken care by the fund manager and his specialized team of 5-20 research analysts.

How mutual fund works?

However, if you decide to directly invest in shares, all this has to be done by you. Even though it’s not exhausting like day trading, but still you have to study companies, keep a track of what’s happening with each companies in your portfolio, control your emotions (true for mutual funds also) and what not.

In short, you have to be quite active in direct stock investing. It gets tough to focus on stock investing because of so many things in life.

#8 – Fees and Cost

When you buy stocks directly, you only have to incur the demat account charges along with STT and transaction charges if any.

However when you invest in mutual funds, you have to pay something called as Expense Ratio. This is the fees which is charged on daily basis out of the funds, however you never see it yourself and all the NAV’s which are published are post-expense ratio.

These charges are in range of 2-2.5% for equity mutual funds (less charges for debt funds). So this is one point where direct stocks are better than mutual funds, but only if you are able to generate the same returns like mutual funds yourself. There is no harm to pay the fees if the fund manager is able to generate value for you in your wealth creation process.

Investing in stocks directly, just because you will save expense ratio is like not spending money on salt while preparing a dish, because you will save some money. You need to focus on the final taste.

However if you can do successful stock investing on your own, it does not make any sense to invest via mutual funds.

#9 – Emotional Bias

This one is Epic.

Your creation is always special for you and hence when you buy a stock based on whatever research and study you do, it gets very tough later to accept that you were wrong (incase you were) . You will become very biased about your buying decision and will not sell at the right time.

It gets very tough to accept that you were idiot in past for believing in a stock purchase decision and will not sell when the right time comes.

This is exactly why bad equity investors become long term investors. They stay with bad investments for many years and eventually loose. It’s your money and it’s your decision.

Decision-making-in-mutual-funds-vs-stocks

However when you invest in mutual funds, all the decisions are taken by a professional who is earning a salary for performance. They take decisions based on logic and keep the emotions out of their system. If their process says “SELL” , they sell it . If it says “BUY” , they buy it ! .

Conclusion

Finally, there are some benefits of going directly with stocks and in the same way with mutual funds. However , direct stock investing is a specialized game to play and it’s not everyone’s cup of tea. For those investors, who want to play little safe with their wealth creation, should choose equity mutual funds rather than trying to burn their fingers in direct equities.

Disclaimer – I would like to disclose that we as a company deal in mutual funds (click here if you want to invest in mutual funds), however we have tried to make sure that we are not biased when we are talking about direct stocks vs mutual funds. In some cases, direct stocks can really outperform mutual funds, but for general masses, mutual funds are better structured products when it comes to long term wealth creation.

Jagoinvestor Bangalore Workshop on 16th Sept 2018 (Sunday)

Posted on by Jagoinvestor

We are happy to announce, that our next full-day workshop in Bangalore is scheduled for 16th Sept 2018 (Sunday).

We invite you to come and participate with your friends and family. It is an opportunity for you to block one full day for your financial life where you get a chance to work on your financial life. We do not teach tricks and tips to build wealth, but in fact we help you to discover your own personal process of creating wealth.

Why we do these kinds of offline event/workshops?

We do these events because they make a positive difference in people’s financial life. The conversations we do, create an impact on people’s thinking and they are able to re-invent themselves as an investor. The event is not about financial products and numbers, it is about learning and mastering the principles of wealth creation. It is about learning realizing your past mistakes and about creating a powerful future for yourself.

Register for Bangalore workshop on 16th Sept 2018 (SUNDAY)

Ticket Type Pricing Ticket Link
Single Ticket (Early Bird)
(First 10 tickets only)		 Rs 3,200 + GST Buy Single Ticket
Couple Ticket (Early Bird)
(First 10 tickets only)		 Rs 5,000 + GST Buy Couple Ticket
Single Ticket (Regular) Rs 4,800 + GST Buy Single Ticket
Couple Ticket (Regular) Rs 7,500 + GST Buy Couple Ticket

 

Venue and Timing Details

8:30 am - 6:00 pm , 16th Sept (Sunday) , 2018
Venue is yet to be decided

 

Check our Workshop Page

Why should you come to the workshop?

  • You will learn how to improve your financial life with your current set of resources and income.
  • You will learn how to plan for your financial life goals
  • You will interact and learn from other’s people’s financial life
  • You will dedicate one full day to get better with money management
  • You will learn to add new dimensions to your financial life
  • To understand that personal finance can also be fun
  • To give a whole new direction to your financial life

Let us share our survey findings (Survey was done on 10000+ Investors)

We did a survey with more than 10,000 investors some time back and here are the results of the survey.

survey results workshop

The survey is LOUD and CLEAR – It’s time to re-invent

The theme of our workshop is going to be re-invention, you will get a chance to examine your financial life and will explore ways to re-invent your financial future.

The results from survey seem alarming and the best gift we can to the investor’s community is our workshop Your real wealth is your clear mind as once the mind is clear all the good decisions will happen on its own, the workshop will leave you with a clear mind and with new openings of action.

Our Vision to do Workshop in different cities and organizations

This year we intend to do the workshop in maximum cities and in more and more organizations. The content and design of workshop are powerful and we want the workshop conversation to touch more lives. If you want to do a workshop in your city or in your organization you can share your details in the below Google form, we will get in touch with you at the earliest.

It’s time to add Jagoinvestor workshop to your financial journey

It has been a few years now conducting “Design your financial life” workshop and each time it has been a very fulfilling experience for us. It is a wonderful space to be in, in which the group learns and starts to fall in love with the process of wealth creation.

This time we want more and more couples to participate so that they can get on the same page when it comes to personal finance. It is extremely important that the husband and wife both take an equal interest when it comes to money management. We are offering a special discount to those who want to come with their partner. (You can even come with your parents, siblings or friends and can claim the discount)

The workshop we conduct is highly interactive, it has lots of activities and fun exercises which help you to discover your relationship with money. The sessions are interactive and very easy to grasp for any kind of investor, beginner or advanced. In short, there is something for everyone in this workshop.

If you have never participated in any personal finance workshop let this one be your first experience. If you have any questions you can write in the comments section or you can email on [email protected]

Power/Speed Vs Regular Petrol – This is the biggest scam of petrol pumps!

Posted on by Jagoinvestor

When you go for fill up petrol or diesel in your car/bike, you have an option to fill the normal fuel or high-performance fuel often termed as Speed, Power, Xtra mile, Turbojet or Hi-speed etc in the Indian Petrol pumps.

Today, I will share with you a kind of fraud/scam which is going on in petrol pumps on the name of these high-performance fuels and you will also learn if it’s really useful to use this high-cost version of petrol/diesel in your vehicle or not!

high performance vs normal petrol

Because I educate you on the topic, I want to start with the cheating part first, which happens on the petrol pump!. The reason I am calling it a scam is because it is done with the intention of cheating the customer to make higher profits.

Petrol pumps give you “High-performance fuel” without asking you

Some days back I went to a petrol pump to fill petrol in my car. I kept my eyes wide open and made sure that the meter shows ZERO (read about zero meter scam on petrol pumps here), and no distraction is there and no one scams me.

As I was about to leave, I realized that the nozzle used to fill petrol was kept in the section which said “Speed”. When I enquired if they have filled the high-performance fuel in my car, the answer was YES.

When did I ask WHY? , they said that I should have mentioned that I wanted normal petrol.

So now you know the scam here..

Its common sense that by default petrol pumps should be giving us normal petrol and only if the customer wants/agrees, they should fill high performance/cost fuel. But here, they had made the costly fuel as the default choice and without even telling you they fill costly petrol/diesel in your car/bike.

A customer never pays much attention to which fuel was given to them and assumes that its normal/cheapest version of fuel.

There are many other scams which happen at petrol pumps, but I think is a much bigger scam, because this is so subtle, that almost everyone falls for it (without even knowing about it). Just think about it, even if 5% of people are scammed into buying high-performance fuels, it’s millions of litres and millions of extra revenue/profits for petrol pumps/companies.

What is High-performance fuel?

It’s very important to understand what exactly is high-performance petrol or diesel, to understand the whole game.

Branded high-performance fuels like SPEED and POWER are normal petrol with an extra additive/detergents added into it. These additives enhance theoOctane ratings for petrol.

The Octane rating is the petrol’s capacity to burn at higher compression ratios without knocking. Every engine has a unique compression rating and hence based on the compression rating, the manufacturers suggest the exact type of fuel to be used for the car.

99.99% cars/bikes in India have engines which only and only require normal petrol/diesel because its octane value is the same which is required by the engine of these cars.

In fact, you will be surprised to know that car manufacturer such as Maruti, Hyundai, Tata, Toyota, Ford, Skoda, Mercedes, BMW etc. strongly discourage the use of premium fuels in their cars and in fact its also written clearly in the car manual book too. This thread discusses everything about high octane and fuel performance if you want to learn about the topic.

If you also talk to qualified service engineers at the service stations, they also recommend using the normal fuel instead of these high performance versions.

Problems of using high performance fuel in normal car

Can you believe that use of high octane petrol (the costly high performance fuel) actually cause problems in the engine, instead of helping the engine?

If you use petrol which is having a higher octane level than what is recommended, then because of extra additives in the petrol, it is only going to cause unwanted settlement of these additives in the engine – no added benefits in terms of mileage/performance.

If you use petrol having lesser octane than recommended, the petrol will knock and cause damage to engine. Further, the anti-knock sensor will cause the engine to slow-down and the timing of the engine will be wrong causing decreased mileage.

The normal petrol which is available in the market is actually fit for the engines in most of the cars sold in India.

Here is an excerpt from Team-BHP regarding this topic

Some car owners have reported excessive exhaust smoke after using premium diesel. A few others have complained of damage to components in the fuel delivery system, including the fuel injection pump and fuel injectors. Modern common-rail diesel engines operate within fine tolerances.

Your motor was engineered to consume regular diesel only. In the worst case scenario, you might end up with damaged mechanicals due to premium diesel. In the best case, you won’t gain anything. With premium diesel, you have a lot to lose, and nothing to gain.

Video about High-Performance Fuel vs Normal fuel

I want to especially see this video by Mr Amit Khare of fame Ask Carguru Channel, which is an excellent source of all kind of information and knowledge about automobiles in India. A few months back, when I was watching this video, it was new learning for me and I decided that I will write an article about this soon on this blog.

The video is in Hindi and I am a fan of Mr Amit because of his simple language and engaging style of talking. Do listen to the following video for sure.

Why do petrol pumps sell high-performance fuel?

In one word – “High Profits”

Remember, that Petroleum companies and Petrol pumps both are “for-profit” businesses. They are there to make money and they will do all the things which increase their profitability. The petrol and diesel prices are regulated in India and no petroleum companies can decide the price of fuel on its own.

However, they can always decide the price of enhanced fuel because it’s their own formula and they are free to price it. Petrol pumps also get better margins when they sell high-performance fuels.

High-performance fuels can cost anywhere from 3-4% higher than normal fuels. In some cases, very high-performance fuels can be even 20% costly.

At the time of writing this article, the price of petrol/ltr in Mumbai was like this

Normal Petrol: ₹ 84.67

Speed : ₹ 87.48

Speed 97 : ₹ 105.01

Which means that by selling high-performance fuels, the profits which these companies profit margins can literally shoot up by a big percentage. No wonder why they never share the secret.

When should you fill high-performance fuels in your car?

Very simple, if you have a car/bike which has a high-performance high-compression engine such as BMW / AUDI and superbike’s, then you can use those costly fuels and they will actually perform better also, but otherwise you should just stick to normal fuel only.

Do let us know if you liked this article and if it helped you to break your myth about high-performance fuels. Also if you have anything to add into this article, do let us know in the comments section.

Basic Saving Bank Account – No minimum balance required (+ more features)

Posted on by Jagoinvestor

Do you worry about maintaining the minimum balance in your bank account? If that’s the case, then you will be happy to know that now RBI has mandated all the banks to offer something called Basic Saving Bank Deposits Accounts where there is no minimum Monthly Average Balance (MAB) to be maintained.

Let’s know more about the BSBDA account.

5 benefits of Basics savings bank deposit account

You must have heard in the news that a few days back, Banks have collected approx Rs 11,500 cr from customers for not maintaining minimum balance limit. This situation happens with a lot of people. Through this article, we will see how we can prevent ourselves from getting into this situation.

Basic Saving bank deposit account – Meaning

The basic savings bank deposit account (BSBDA) is the zero balance bank accounts. This means you don’t need to maintain any kind of minimum balance limit in this account.

RBI has made it mandatory for all the banks to offer this service to people who are unable to maintain the minimum balance. Criteria to open this account are similar to the eligibility criteria of normal savings bank account. Banks may have their own criteria based on age or income.

However, as per the guidelines of RBI, banks are advised not to impose any criteria of age or income for opening BSBDA.

Features of Basic Savings Bank Deposit Account :

  1. No minimum balance limit.
  2. No limit for a money deposit.
  3. The interest rate is similar to the regular savings account.
  4. Normally there is no upper credit limit (these criteria may vary from bank to bank).
  5. No minimum amount required for opening the account.
  6. ATM cum Debit and passbook facility is provided totally free of cost.
  7. Checkbook facility and online funds transfer facility is available.
  8. No charges are applicable to any kind of transaction (within limit).
  9. The account holder can open FD and RD.

Limitations of Basic Savings bank account

As I said earlier this is a zero balance account with no extra charges, but it has some limitations also :

  • Only 4 withdrawals per month are allowed, including branch cash withdrawal, ATM withdrawal, NEFT, RTGS, online payment, EMI, etc.
  • It depends on banks to either charge additional fees for extra withdrawal transactions or not.
  • Your BSBDA will be converted into a normal savings account automatically if the transactions limit increases.
  • Central KYC (A centralized KYC process to avoid submitting multiple KYC’s) should be done, otherwise, the account will be considered as a BDBDA-small account (explained below).

What is the Basic Savings Bank Deposit-small account?

This is an account that can be opened by a person who is above 18 years of age but does not have any official KYC document (Like Aadhaar Card, PAN or other ID proof and address proof, etc.). For this, a person needs to submit a self-attested photograph and he/she needs to sign the form and also provide thumbprints in the presence of bank officials.

The basic savings account of a person who doesn’t have a CKYC is treated as a basic savings bank deposit small account. Features of this account are as given below :

  • This account is valid only for 12 months. It can be extended for the next 12 months by providing proof of having applied for officially valid documents.
  • The balance should not exceed Rs.50,000 at any point.
  • An aggregate of all credits in a financial year should not exceed Rs.1 Lac.
  • Mobile banking facility may not be available.

Can I convert my existing savings account into a Basic Saving bank account?

There is no provision till date to convert existing savings account into BSBDA. You have to open a new BSBDA and for that, you need to close your existing savings account within 30 days of opening a BSBDA otherwise the bank will automatically close your earlier account after 30 days. A person can have only one BSBDA in a bank

Banks are restricted to offer any value-added services to the BSBDA account holders by charging any extra cost. If any extra service is given, then automatically the account will be converted to a normal saving bank account.

Documents required for opening Basic Savings Bank Deposit Account

Documents required for opening BSBDA are as follows :

  1. Account opening form.
  2. Colored passport-sized photograph.
  3. KYC documents like – ID proof, address proof, PAN, etc.

Difference between a normal savings account and BSBDA

Normal savings account Basic savings account Small savings account
Minimum balance limit 10000 No limit No limit
Penalty if minimum balance is not maintained Applicable Not applicable Not applicable
Withdrawal limit Not applicable Applicable Applicable
Mobile banking facility Available May not be available Not available
Credit limit No limit No limit 50000

Who should open this “Basic Savings Bank Deposit Account”?

Now you must be thinking “What is the use of this account for me? I have my regular account with unlimited transactions then why should I open a basic savings bank deposit account?

Let me tell you, there are lots of people around us who don’t have a bank account because they can’t maintain the minimum balance limit. Like some students, employees who have just entered into their profession, small-scale workers, maid, driver, and so many other people.

There are also some people who have more than one or two bank accounts other than their regular accounts. For these people, the money seems to be stuck in their bank accounts where they have to maintain the minimum balance limit.

Some senior citizens don’t require more bank transactions as they are either dependent on their children financially or they keep cash to avoid visiting banks or ATM’s every time for withdrawals when they need money. For such people, the basic savings bank deposit account is a good option to avoid the penalty and other extra charges for maintaining their bank account.

I hope this information was useful for you. If you have any query then write in the comment section.

My 24 min talk on Radio 94.3 FM – “Upgrading your family vacation”

Posted on by Jagoinvestor

Last month, I was invited by 94.3 FM Radio one in Pune to talk on the topic “Upgrading your Family Vacation” as part of an investor education initiative by UTI called “Swatantra”

Below you can listen to the whole episode in a single audio file (24 min).

 

I had a great time with MJ Tarun, where he asked me a few questions related to Vacations and How to plan for it and I gave my answers to each question.

The whole episode was recorded and in total there were 10-11 questions that were broadcasted for 5 days in a week (2 questions each day).

jagoinvestor with radio one

In case you want to read those questions

For those of you, who want to read the answers given by me and not listen to them, we have re-written them in text format along with each question.

Question #1 – Do you see any similarity in Planning vacations and managing finances?

Yes, there are similarities. But to all the people who are hearing this talk, they will first think that managing finances and planning for vacations how they are the same things? But if you see both of them at a deeper level, you will realize that both of them need strong planning to get the best output.

Just like a person messes up their financial life by not planning for it, in the same way, if you do not plan your vacations, they will either not get the best experience or pay too much for output.

Just like there are good practices for living a good financial life, in the same way, there are some good practices to follow you are planning your vacations.

Question #2 – What are some important things we should do before leaving for a vacation?

I suggest a few things

Suggestion #1 – One of the things, I personally do and will recommend everyone is that whenever you are going for the vacation, it’s a good idea to always call the hotel and confirm the booking incase you have booked it from 3rd party websites like Makemytrip or Yatra. There have been cases where due to some miscommunication, people have been denied check-ins by hotels.

Suggestion #2 – The second thing is you should ideally buy a travel insurance if you are going for a longer trip (especially when you are going out of country).

Suggestion #3 – One more recommendation is to always check if the places you want to see are open on you day you will be in town or not. Many places are closed on some particular day and I have seen many tourists frustrated by the fact that they did not check the details.

Suggestion #4 – Another good idea to to check what all payments are going to happen from your account like your EMI’s, your SIP’s or any of your investments, and make sure that the money is available in your bank account, because a lot of times it happens that you don’t have balance in your account, you are not there, the bank is calling you and you know that is something you should take care of. That’s very important.

Suggestion #5 – You should also make sure you have some extra balance in your bank account like always have 20-30k extra amount because you don’t know when you will need some extra money on your vacation.

Suggestion #6 – And finally just make sure you have the Xerox copies of all you documents like passport, your hotel bookings proof, ID proofs with you and one copy at home also, so that if you lose them you can call someone back at home and use them.

Question #3 – Some financial tips for those, who are planning for a low budget vacation

It’s a very interesting topic. When we plan for a low budget trip we want to minimize our expenses wherever we can. However, my take on this is to not minimize the core attraction of the trip. Let me explain

Generally, we have 4 important expenses

  • Travel
  • Food
  • Stay
  • Experiences

On any trip, there is one thing which is the best thing about that trip. Some places, you get amazing food, while some places offer awesome experiences, some places give you a nice stay experience.

Whatever the best thing about your destination, you should spend on that and mercilessly reduce or cut down on other things, this is a good way to reduce your expenses and at the same time get the best out of your vacation when you are low on the budget.

Let me give you an example,

  • If I am going on a Goa trip with my male friends, then I will not spend much on stay and experiences, because I know I will mostly be hanging out on the beach with my friends, enjoying local food and relaxing. So I will not restrict my expenses on food but cut down on everything else. I will stay on cheap beach shacks but enjoy the food at great places.
  • If I am going with my family mainly to relax and spend quality time, then I will spend a lot on quality stay which has good facilities but would cut down on other things if I am low on budget.

And a few other things which you can do is go in the offseason if it is possible and try to book your tickets in advance, that is one way that you can save on the travel part. And obviously, you can search for some online deals there are many websites which give you very good deals. So these are a few more things that you can do.

Question #4 – Why do we even need to save for trips? We can use a credit card for that and it’s easily available these days.

That’s a Good point!. It’s a very important thing to understand for the younger generation who start their financial journey with credit cards these days.

One should understand that, If you are using a credit card or any type of credit to fund your vacation for once in a while (like once in 10 times) then it is fine. But what we have seen is now a day’s people are just living on credit without planning on how to pay back.

When you use credit, you consume first and pay later in the future.

So you don’t feel the pain of paying and this makes you spend more. This makes the expenses look small or you get a false impression that there is not much impact on your financial life due to that one transaction. People get into the pressure of spending because they see their friends and others enjoying and partying and if they do not have money in a bank account, it feels like they still have to pay capacity because of the credit card in their pocket.

There are various researches that have shown that this is how people get into a debt trap. This is how people start their financial life and then later after 5-10 years they get into a deep mess. people don’t realize this.

If you see most of the people who are deep into debt whose financial life is bad, If you track down their financial histories this is how they have started spending.

So don’t make it a habit. If you are using a credit card or loan, you also tend to overshoot your budget because swiping a card does not feel like paying. You don’t see money going out of your bank account like you feel when you pay by cash.

So yes, I would not recommend credit card in general, but if it is once in a while it is fine. Also, if you use too much of credit card or too much of credit, your CIBIL score also gets impacted and that is the very important thing nowadays for getting loans.

My comment does not apply to those who are super disciplined to make the credit card dues payment every month on time.

Question #5 – If I need my partners to help in saving for a trip, what are your thoughts about it?

We have mostly grown up in families where there was a single breadwinner (Father). But things are slowly changing. Now men and women both are earning equally and they both have their own bank balances and assets.

If one partner feels that the money for the trip should be spent from both accounts (husband and wife), then both the partners should share the expenses.

And if you are not married and you are going with your Girlfriend or Boyfriend, then obviously it depends on your equation with your partner, how comfortable you are and what you think about financial matters. And it depends on how much money do you need for going to that particular place. If it is a lot of money then I think both of you should contribute, it will be great.

Question #6 – What are the mistakes that we can avoid while making our investments?

If you see the goal of vacation it is generally a short-term goal in most of the cases.

It is not like a retirement goal or kids education which will come after many many years. So one of the most important things here is the liquidity of the money, whenever you need the money, money should be available.

So you should save your vacation money mostly in a debt fund or recurring deposit which is simple and gives you some basic return, but do not invest in products which are highly volatile or have a lock-in of few years, otherwise if you break that investment there will be a penalty.

Question #7 – If we think to go for a good, lavish vacation which investments do you think are ideal?

So, if this lavish vacation you are planning to go for is going to happen in the next few months or maybe after a year, you don’t have much time actually.

You need a lot of money for that. Either you have it already, you need to accumulate it every month. There is no conversation of getting good returns on that investment because you have no time.

So let’s say if you want Rs.1 Lac after a year, the best option for you is to save Rs.10K or Rs.8-9K every month and you should do it ideally in a debt mutual fund.

You can go for a debt mutual fund which is a great alternative to FD, tax-efficient and you will get a little bit more return than your FD. Or if you are not comfortable you can go with normal FD also, that is also fine.

I want to make another comment here.

Nowadays, vacations have become a very integral part of life and people are going on vacations every year or alternate years. One should have a dedicated fund only for the goal of “vacations”. I suggest that one can start a SIP only for this particular goal and use the money for vacations.

Question #8 – Can we invest a fixed amount every month and make it a habit for vacation?

Yes, you can invest a fixed amount every month in mutual funds, It’s called “SIP” or Systematic investment plan. Everyone must have seen the advertisement these days on TV.

The best part of SIP is that on a fixed date of a particular amount gets debited from your bank account and the best part is that it happens automatically. You don’t see that money and hence you don’t spend that money.

The biggest problem now a day is that because the money is available in your bank account all the time, you can see it and you can access it and naturally, it will find its way for some expenses in your life. So a good idea is to make sure that it gets deducted automatically and you don’t access it. So this is a very good way of saving for your future.

Question #9 – What are the things that we should keep in mind before investing in Mutual funds?

I will talk about three things mainly. First thing is that you should not come into mutual funds with the mindset of getting rich quick. Most people see mutual funds as a stock market and want to just double their money with least effort.

The mutual fund industry is 20-25 years old, already very matured and you should come in mutual funds with the mindset of wealth creation.

The other thing is whenever you are choosing your product or whenever you are choosing a fund you should choose it as per your goal and as per your risk appetite. You can’t just pick a random mutual fund and invest in that. It’s not like Fixed deposits, where every FD will work great.

If you can’t take a risk then don’t invest in a fund which is very very volatile and risky. And if you want high return then don’t invest in a fund which is going to be a very stable return product. So choose it as per your risk appetite.

Finally, I would say that if you can’t do a lot of analysis, and you feel that all this is not your cup of tea, then hire an advisor, pay the fees and take his help in selecting the fund. Don’t think that you can do it all by yourself.

Not hiring an adviser sometimes can cost you more. Bur at the same time, there are some investors who are smart enough and can do these things themselves, but I would say that hardly 1% of Indians are like that. People get overconfident in financial matters and mess up their own financial life.

Question #10 – Is travel insurance a good investment?

First of all, insurance is not the same as an investment. An insurance policy is only to protect from uncertain situations.

Whenever you are going on a vacation there are a lot of things which can go wrong.

  • You can miss your flight
  • Your luggage may get lost
  • Some accidents can happen
  • You may get sick while traveling

All these have financial implications and if you have good travel insurance, then it will cover all these things and they will pay for all these expenses.

So if you want to transfer this risk to a 3rd party, you can go for travel insurance by paying a small premium for it. Whereas, if you are ready to face all these problems and risks you can choose not to take travel insurance. It’s all about choice I would say.

I personally feel that when you are going on a long vacation, especially out of India, then a good travel insurance policy is a must.

Hope you enjoyed the audio show

Do you have any comments on the talk? Do let us know in the comments section.

Jagoinvestor Mumbai Workshop on July 22nd – 2018 (Sunday)

Posted on by Jagoinvestor

We are happy to announce, our next full-day workshop in Mumbai is scheduled on 22nd July 2018 (Sunday). Generally, we give 30-35 days for people to register but this time the gap is less and so check your schedule at the earliest and book your seat.

The workshop is an opportunity for investors to work on their financial life. We will share all that we have learned about personal finance with all participants. The workshop is only for the action takers and it will start the moment you will register.

Register for Mumbai workshop on 22nd May 2018 (SUNDAY)

Ticket Type Pricing Ticket Link
Single Ticket (Early Bird)
(First 10 tickets only)		 Rs 2,400 + GST Buy Single Ticket
Couple Ticket (Early Bird)
(First 10 tickets only)		 Rs 4,200 + GST Buy Couple Ticket
Single Ticket (Regular) Rs 4,000 + GST Buy Single Ticket
Couple Ticket (Regular) Rs 7,000 + GST Buy Couple Ticket

 

Venue and Timing Details

8:30 am - 6:00 pm , 20th May (Sunday) , 2018
Motilal Oswal Tower, Gokhale Road North, 
Prabhadevi, Mumbai,

 

Check our Workshop Page for Schedule

 

Special Criteria to join the workshop

How do you know if the workshop is meant for people like you? Put your hand on your heart and get honest with yourself. Read the following points and see if these points are true for you.

  • If you find personal finance boring (like my wife)
  • If you convince others and yourself that personal finance is not your cup of tea
  • You hate numbers and are a big-time avoider when it comes to money management
  • You are PhD when it comes to procrastination
  • You want to get into action but you don’t know from where to start
  • You are confused with what to do and what not to do because of the overall bombardment of information on the name of investor education
  • You really want to move beyond planning and want to learn how to design your financial life.
  • You want to make 2018 your BEST FINANCIAL YEAR

The New Structure of the workshop

Step 1 : Book your Seat  – The first step is to book your seat by paying the fees

Step 2: Financial Health checkup – Once you register, a certified planner will give you a welcome call and start the detailed financial health checkup with you

Step 3: Participate in Full Day workshop – After the financial health checkup you will be more clear on where you stand in your financial life. Its time to attend our full day workshop

Step 4: Get 2 Financial counseling calls – Finally after the workshop, you get personalized attention from us and you get 2 financial counselling calls to make sure you complete your pending important financial life actions.

Last Pune workshop experience

We had a total of 93 participants in our last Pune workshop (it was held on 20th May 2018) and the experience was amazing. We got an opportunity to learn and share with investors and clients from Pune. Our entire team travelled from Ahmedabad to be a part of the event.

We all had one intention, helping participants in creating an awesome financial life forwarding them in taking actions in their financial life. All the participants were able to identify 5 core actions in their financial life and we as a team helped them in completing those actions.

Why the workshop is now more action-oriented?

It is because the only ACTION produces wealth. We started with a day workshop but now after working with a
few hundred investors we realized that the one-day event needs something more to it. Our intention is not to get a fee from investors, we want their full commitment and we want them to produce some amazing results in their financial life.

The workshop is strictly for investors and not for advisors or finance professionals. If any advisor/IFA/CFP is found to be registering for the workshop, he/she will not be allowed to participate.

If you have never participated in any personal finance workshop let this one be your first experience. If you have any questions you can write in the comments section or you can email on [email protected]