Tag: Beginner Level

11 Health Insurance Myths which you thought were True

Posted on by Jagoinvestor

Health Insurance sector is such a new thing in India that a lot of people have dozens of health insurance myths regarding various things and because of that they feel that this whole thing is so complicated. Today I will burst some of your long-term medical insurance myths which will help you choose right products and also build right expectations from health insurance policies.

 24 hours Hospitalization is necessary for making a Health Insurance Claim.

This clause always reminds me of an incident. A little over a year ago, we were having our weekly meetings, when a doctor friend who owns a hospital in Mumbai frantically called us. A woman was making a ruckus in this friend’s hospital, insisting doctors continue hospitalization of her son and discharge only after 24 hours, as her “advisor” had informed her that they would get the claim only if the hospitalization is over 24 hours. This incident brought to light the magnitude and the level of fallacies customers have about Health Insurance. Advisors, Representatives, Telemarketers, and even hospitals and customers have frazzled their throats out on the 24 hours clause, while explaining or even using the product.

Though, the policy does mention this as one of the clauses, the 24 number in real world of claims holds lesser importance. The clause, in spirit, requires the hospitalization to be “necessary” more than it to exceed “24 hours”. This was purely from the general understanding that most hospitalizations less than 24 hours are treated under “Out-patient” (treatment at the Doctor’s Dispensary) not covered under a Standard Mediclaim. Hospitalizations (like Cataract), though required 2-3 days earlier, which are now possible due to advancement in medical science in less than 24 hours are covered, while, hospitalization by an insured for more than 24 hours for getting his routine diagnostic tests done, while no active treatments are being carried out, would not be payable under Mediclaim.

Conclusion

The thumb rule of a whether a claim is payable is not 24 hrs hospitalization but whether the hospitalization was medically “necessary” or not?

You must compare Pre-existing waiting period, always.

This is a clause that most people looking for a Mediclaim are confused about (17 Most asked questions in Health Insurance). I speak to many customers whose requirement with mediclaim is that they do not want a waiting period for pre-existing ailments. This, in spite of their entire family being completely fit, without any ailment, whatsoever. Somehow, the clause again being so popular has brought in its own confusions for customers. In reality, the 4 year Pre-existing exclusion on ailments is applicable to ailments existing at the time of applying for the policy, and not any other ailments. If you do not have any ailments or conditions, you have no pre-existing waiting period.

Conclusion

When applying for a Mediclaim, if you are completely healthy, the Pre-existing exclusion clause is not applicable to you

Cashless is an on-call Emergency Service.

Ever since it was introduced as a value addition to Mediclaim, Cashless has remained a buzz word. To a level, that for a lot of people, Cashless became a prefix, or, even synonymous to Mediclaim. The reason for the cashless concept getting popular was obvious; it was a great value add, which helped customers tide away the burden of large payments on their bank account, documentation and of course, the stress of waiting for the claim cheque. Yes, Cashless can do all this, but expecting it to work when there are emergency funds required for Hospitalization is asking for too much.

You should understand the Cashless mechanism as a concept to know why it cannot be depended on at the time of emergencies. Cashless is an arrangement between the Health Insurance Company/TPA and the Hospital where, the Hospital agrees, under contract, to grant credit facility to the Insurance Company/TPA against authorized claims. Such an arrangement is only for authorized Claims, and not for all claims. TPAs/Insurance Companies, hence, need to assess every claim received, against the policy terms and conditions, to authorize payment. Such an authorization could require additional information as well as documents and hence can take anywhere for 4 hours to 2 days of time. In their role, the TPA or the Claims Team at the Insurance Company would have to do its job of evaluation of the claim, irrespective of how urgent the medical admission or treatment is. Cashless will help you save the burden of processing a reimbursement claim, but it cannot provide you the convenience of on-call emergency funds.

Moreover, one should also note, unlike the hospital cashier, Insurance Desks in hospitals (which coordinate for cashless claims) have fixed work-hours from 10.00 AM to 7.00 PM. Cashless process and approvals after 07.00 PM are processed by the Hospital the next day. Hence, though the TPA provides 24/7 service, the cashless process may not move, once the Hospital stops working on it.

Conclusion

Expecting Cashless to work as an on-call Emergency Service is foolish. You should plan your emergency medical fund, as well as ensure you have good unutilized credit card limits, always.

You must compare no. of Day Care Procedures covered

Most Insurance Companies (specially the Private ones) flaunt a large list of more than 100 Day Care Procedures being covered under their policy. In fact, it is a highlight of their product pitch. The truth is comparison of such numbers can be very misleading. One company could list every procedure, while another could list macro-level treatments, including the listed procedures of the former. For instance, a person who compares Apollo Munich’s Easy Health Insurance which covers 140 Day Care procedures, with an Oriental Happy Family Floater which covers only 26 procedures would feel that Apollo has wider cover on Day Care Procedures. Believe me, but it could actually be the reverse. How? Oriental promises to cover Eye Surgery (a broader definition) in its daycare list, compared to say an Apollo which lists 15 specific eye treatments, which results in a larger number. Now, if the treatment being carried out is an eye surgery, which is day care but not a part of the 15 specific treatments, Apollo or many other Private players may not pay, whereas, in the case of Oriental it would get paid in the broad definition of eye surgery. By providing a specific list of surgeries instead of a macro area of treatment, the coverage under Apollo may actually be more restrictive in the long run than Oriental’s wide area of treatment wise list.

Conclusion

A short list of procedures could be wider than a long one. Do not compare the no. of Day Care Procedures.

You should check the list of Network Hospitals.

Many customers, we have interacted with demand Hospital network lists. They select the mediclaim product depending on whether their preferred hospitals are part of that Insurance Company’s list. What they fail to realize is that a Hospital Network is ever-changing. Insurance Companies regularly blacklist defaulting Hospitals. Hospitals blacklist or refuse cashless of certain Insurance Companies/TPAs for delayed payments. What is clear from this is that there is no fixed or contracted list of hospitals between your Insurance Company and you – which means there is no assurance that the hospital name in the list, which you are depending when you buy the policy, would exist in the network when you have a claim, say 4 years down time.

Conclusion

Network List of Hospitals are not fixed or contracted through policy terms. Do not depend on the network hospital list to decide a suitable product for your family. The list could change even tomorrow, in fact it could change any moment.

Capping on Room Rent is bad:

Public Sector (PSU) Mediclaim products and their current terms and conditions are evolved from experiencing and analysing millions of claims spread over more than 20-25 years. Hospital Rooms are classified into various categories like General, Shared, Private and Deluxe Rooms. Earlier without the room rent limits, for the same treatment, a person with a sum insured of 1 Lakh paying a measly premium of say Rs. 2000, would have access to the same category of room, as a person who pays 5 times the premium, and takes a Rs. 5 Lakhs cover for himself. The 1% and 2% Room Rent Limits in Mediclaim brought a clear sync between the kind of premium one pays and the eligibility of room. With such cappings, an individual who pays a high premium gets a better room, than one who pays a smaller premium, for the same treatment, which is fair. It’s like any other product with categories, like Indian Railways, providing you better facilities/services, as you move from 2nd Class to 3rd AC to 2nd AC and so on. In my opinion, sooner or later, Insurance Companies would either have to hike premium for lower sum insured or bring in a capping of some kind. For instance, the newest health insurance company – Max Bupa, has a restriction on the type of room according to the sum insured selected, instead of a “no capping on room rent” feature.

Conclusion

Cappings are good for Health Insurance as a community fund. Cappings could actually be helpful to customers in the long run.

Health Insurance Plans sold by Life Insurers are the same

The highly advertised Health Plans from LIC are Defined Benefit Health Insurance Plans, sold as “hassle free” alternatives with guaranteed payments. These plans should not be considered as a substitute to Standard Health Insurance plans sold by General Insurance Companies. These plans provide fixed benefits against no. of days of hospitalization and/or surgeries. These plans do not take care of healthcare inflation. For instance, with 18-25% healthcare inflation, a fixed benefit for Angioplasty at say, Rs. 1,50,000/- would miserably fall short in 10 years. Defined Benefit products are actually supplementary plans which provide a cover over allied costs of hospitalization including loss of earnings, if any, but such products surely cannot be a substitute to the good ol’ traditional mediclaim. Read more about the difference here.

Conclusion

Beware of what you buy. A Traditional Mediclaim should be the first product you buy to cover the financial risk of healthcare expenses of the future. Defined Benefit Products are supplementary and not substitute to Traditional Health Insurance.

Health Insurance is a Tax Saving Tool:

A large Healthcare expenditure can severely affect your financial planning for the future. The goal when you buy Health Insurance should be to financially insure your family against such large scale healthcare expenditure. Buying a health insurance product blindly, for the 80D tax benefits, is a wide-spread fallacy, which has left a large no. of people underinsured or insured with products which are not suitable. The worst part is most of them are unaware of this.

Conclusion

Health Insurance at its core is not a Tax Saving Instrument. It could save you much more than your tax, if you invest wisely.

There will be no changes in the terms of the Mediclaim I bought:

Expect changes in your product, terms. Don’t be surprised. The Health Insurance companies and other stakeholders in India are going through a mindset change. Losses in Health Insurance are no longer acceptable by key stakeholders at Insurance Companies. A lot of streamlining and normalizing in premium, terms, benefits and procedures, which have already begun, is expected in the next 5 years. Group products would turn expensive, and restrictive. Parents would be out of most Sponsored Employee Mediclaim Covers. Large and small tweaks are expected in Retail/Individual products and processes, especially from new and private players who are till experimenting and understanding how to make a long term sustainable (read profitable) product for the Indian market.

For instance, last year, PSU Insurance companies tightened the procedure of intimation and submission of reimbursement claims. Customers who were not aware of such a change faced harsh action of denial of claims, and lost good money. 

Conclusion

Ensure you are updated with changes in the terms and procedures of your Mediclaim Product. Ensure you have recruited a good advisor who keeps you posted on such changes.

I can destroy Mediclaim Policies once they have expired.

Don’t know how many of you have observed at the time of renewals, but PSU companies and their divisions are infamous in the industry for changing their TPAs year over year. With TPAs being the custodian of claims, change in TPAs could result in scattered claims information amongst various TPAs across years of continuous renewals. Hence, when there is a claim, the TPA in all probability won’t have information regarding how long you are continuously covered, an essential data point to approve claims, especially, and those treatments which had a waiting period at entry into the policy. TPAs for evaluation of continuity may demand policy copies of past 3 to 4 years. Hence, destroying policy copies records have cost many customers lot of stress in proving continuity of cover. Yes, we know that it is ridiculous for the Insurance Company or its representative to ask for their own record from the customers, but then this is how it is. A good health insurance advisor knowingly would keep a repository of all policy copies, to ensure such queries do not create roadblocks in a smooth claim settlement.

Conclusion

In addition to the current one, keep copies of at least 3 previous year policy copies. Ensure your advisor also records them.

My Friend, My Health Insurance Advisor

No offence to agents, but in our interaction with Customers, we have noticed time and again, that most customers, who were found with a wrong health insurance product, bought these either from a friend, a friend’s relative, or a relative, or a relative’s friend. Most of these customers did not spend enough time in selecting an advisor, and relied on pure reference. Most of these agents selected were Life Insurance agents, who did not have a detailed understanding of mediclaim products, neither were they providing any real expert assistance (beyond picking of forms, and providing the TPA’s no.) at the time of claims. The advisor selected should have the capability and the intention to provide unbiased advice, the advisor should forever own the product they sold you, and provide services across the Health Insurance service cycle, including Purchase Assistance, Records management, Claims Assistance and Renewals. A good advisor would be able to hand hold you through the dynamic transformation that the Health Insurance industry in India, is witnessing and will continue to witness for the next 2-3 years.

Conclusion on Health Insurance Myths

Select an advisor on merits and the services he demonstrated, and just not merely on reference.

 

What was the biggest and most valuable learning for you out of this article ? How many of your health insurance myths were really broken ? Please share it on comments section .

What is CIBIL report ?

Posted on by Jagoinvestor

What is CIBIL report ? Are you looking to check your credit score and want to know why your loan application was rejected ? Yes, if you are misusing your credit taking capacity, you are being watched at like never before in this country. I am talking about CIBIL here and in this article let me show you how your current behaviour related to credit card, personal loan, home loans are going to affect you in future in a good and bad way. Also see 2 real life cases where a person’s loan application got rejected because of Bad CIBIL report and how they didnt even knew about it ! .

CIBIL Report

What is CIBIL and why you should be concerned ?

CIBIL is Credit Information Bureau of India Limited, which acts like a central repository of credit information in India. As many as 500 different banks and financial institutions are CIBIL’s clients and they report each of their customers (like me and you) actions to them.

So if you take a credit card from ICICI Bank, then ICICI bank reports to CIBIL about it. If you enquire about car loan to HDFC Bank, hold your breath! as even that enquiry is reported to CIBIL, if you can’t pay your EMI for home loan with SBI Bank for a particular month, that also gets reported to CIBIL.

Not just your bad actions, but even your good actions like paying EMI’s on time, paying credit card with punctuality also gets reported with CIBIL. You can see that this way, a history is maintained at CIBIL for each person, which can be good history or bad history depending on the case and this information is very useful for banks to decide if they want to give loan to you in future or not. All the banks are now looking at CIBIL report before taking the decision.

Good and Bad credit Report

CIBIL report is not always bad. It’s an extremely good concept which is now taking shape in India recently. If there are two people A and B and A is a good guy and B is a bad guy, obviously A should get better rates of interest, faster processing, first right to loan. Whereas, guy B should get loan at higher rate of interest (because he is risky) and may be banks can even deny entertaining him at all.

CIBIL gives us the power to build our credit report. So if you become responsible and use your credit effectively and with planning, you can build a good credit history with CIBIL, which will help you in long run. Also note that taking a lot of loans without having the capacity is also a negative thing and that can affect your credit report.

CIBIL Report

I would like to warn you that you have to be super sensitive and careful with credit card and loan repayment, because one small mistake or being lazy in this area can cost you a lot. I would like to share some instances of readers who faced a lot of issues in area of getting loans and finally they checked their CIBIL report and found that they were having bad history

Some bad experiences from readers

Rajaram mentions on our forum how his home loan payment was rejected because of his credit card late payment issues

I had two credit cards one from HDFC and other one from ABN AMRO.

In case of ABN AMRO, salesman told me that if I do purchasing of Rs.1000 within 1.5 month then the annual fees will be waved off. As per his instructions I did purchasing of Rs.1000 within that stipulated time frame. But still I got a bill with annual fees after a month. Hence I complained to the Call center executive gave the brief about my complaint. I also told him that I will be paying the amount which was spent by me and according I paid it through cheque. No further transactions done through the card and subsequently told them that I am returning it to them. But later on bills started coming with annual fees with charges. I again informed the call center executive and told him that I am not going to pay the annual fees which wasn\’t there. Later on bills stopped coming.

In HDFC case I had used this credit card for one year and in one month while paying the dues I dropped my cheque in their drop box 3 days prior to due date. When next month\’s bill received it came with late fee charges. I contacted to call center executive and told him that I had dropped my cheque 3 days in advance then how come this charges. He said it received 2 days later than my due date as was not having any proof I could not prove it. I paid the amount due to me excluding the charges. 2-3 month they sent the later but later on they stopped sending bills.

Above two instance happened to me and had forgotten also. But this year when I applied for Home loan from one of the housing bank then suddenly they put down one condition to give clarification about Credit card issues. They got this information from CIBIL which I was unaware of.

Now I need help to come out of this issue so that my housing loan clearance will be faster.

How Nihal credit report got messed up because he gave his pan card to his friend

One of my friends took a car loan from a nbfc 3 years back and he wanted a reference for this loan (i now realize there is no such thing as a reference for a loan) i obliged and gave him a duplicate copy of my pan card.

For atleast 2 years i have been applying for credit cards and getting rejection letters from all the banks. I finally was fed up with this and decided to get my cibil report and was shocked to see that i was the co-applicant for the car loan my friend had taken 3 years back. He had defaulted on this loan which was reflecting on my cibil report and that being the main reason for me not getting any credit card.

Like i mentioned earlier i had given my friend a copy of my pan card but i had never signed any loan application form, so i followed up with my friend (who still claims that i was supposed to a reference for this loan) and also with the customer care at the NBFC (who i must say were extremely rude). I managed to get the loan application form from the NBFC and i’m a cent percent sure that my signature has been forged on the form. Now my friend (would not want to call him a friend anymore) claims that the person who gave him this loan never told him about me being a co-applicant and he always thought i was only a reference.

How Ganesh faced issue with CIBIL report because of his credit card outstaning bill

Yes, I checked my cibil report last month because i had a suspicion and it was proved right.i had a c/card from icici which for a meagre sum of rs.2000 which i lost track because i was transferred to different city and didnt notice the bill. i also didnt use the c/card at the new place, as i had another card with c/limit of rs.45,000 which i started to use(sbi).

after 7 months, when i tried using the card again, it was getting rejected. when i checked with icici, they said the card is blocked. then only i came to know of the card outstanding, which by this time due to interest, and fine/charges etc had come to about rs.4000. Immediately, it was settled in full and closed the c/card a/c.

Now my cibil report shows “810″ with “history of more than 6 months outstanding 7-12 months back”

i feel cibil should consider the fact that the outstanding was settled in full – including fine/interest/etc…. and give a good score….

so i feel the system is flawed and i am paying a price for it.

my other loans – 2 wheeler loans and other sbi c/card a/cs – was showing prompt payment, either payments finished or under regular payments.

i dont know why i am still given a defaulter score when i have settled in full.

is there any way to reset my score with cibil.. pls advise…

How to get your CIBIL Report Offline

There are two kind of reports which you can get from CIBIL . The basic one is called CIR Report which is nothing but a basic information on how is your credit history and what kind of information is there with CIBIL . This is called CIR report and it costs Rs 142 . This is good enough if you just want to check your status with CIBIL .

Update : Now you can also apply for your CIBIL Report Online

The second thing which you can get from CIBIL is your Credit Score which is called as CIBIL TransUnion Score and ranges from 300 – 900. This is number which scores your credit ranking . A lower number means your credit score is bad and you will be considered as Risky ! . If its 900, you are doing great, Higher the better . The cost of CIBIL TransUnion Score along with your CIR report would be Rs 450 . I would say this is not at all expensive if you can get this vital information at such a cost . If you are facing any rejection for loans or if you fear that your past history can haunt you , then its a good idea to check the CIBIL report each year and find out how does it look like. I have created a step by step procedure for you on how to apply for CIBIL report . Have a look

CIBIL Report

Can you fix the CIBIL report have wrong Information?

A lot of times Banks makes mistakes in Cibil Report and it is mostly manual mistakes or lot of times delay in communicating the details . If you check your CIBIL report and find out any problems , please ask your bank to communicate it to CIBIL as soon as possible . Also if based on your CIBIL report, if you clear some loans , make sure you ask your bank to communicate to CIBIL that you have cleared the liabilities , so that it can get updated in CIBIL report. CIBIL report is your lifeline for future , don’t do anything which makes its dirty, else that will affect you in long run .

Personal Finance Workshop for IAS batch 2009

Posted on by Jagoinvestor

JagoInvestor did the first workshop on Personal Finance. Guess where? It was at Mussoorie and the audience were 120 IAS officers who graduated last year and are posted at various parts of the country. This workshop was done by Me and Nandish at LBSNAA , Mussoorie .

I would like to thanks Nagarajan, who is our reader and an IAS Officer himself, who invited us for the talk. His stand for his community is commendable and worth appreciation. He took a lot of effort in gathering all the officers, organising the talk and co-ordinating it with us. It won’t have been possible without his involvement and dedication towards Personal Finance.

Jagoinvestor workshop personal Finance for IAS Officers

Offline Workshops in Different cities

We have been collecting data of all those readers who are interested in paying a fee and attending our 1-2 days workshops in their cities, we will now start our offline seminars/workshops starting next month in different cities. We would really like to provide the value in these workshops. If you are interested in attending these workshops and want us to intimate you about fees and content before we do it, please register your details here . You can also fill up the form if you can gather a group of 20+ people .

I would like to hear from you what you think about these offline seminars/workshops, please put your suggestions and expectations in comments section. Note that these seminars would be a 1 or 2 day premium seminar which will take care of lot of your financial life related doubts and also give you a proper direction.

How to file your income tax returns online in 6 easy steps

Posted on by Jagoinvestor

What is the best way to File your income tax returns online ? Tax filing season is on and most of us will still wake up after few days.

I will talk about efiling your tax returns with govt website and also private websites like taxspanner, taxsmile and investmentyogi which are autorised by income tax department. You can also win some free coupons for income tax filing through some online p0rtals .

Income Tax efiling using govt website

I just want to tell you that incase you are just salaried and have no income from other sources, then the whole process of e-filing is just as simple as filling up details in tax return form at govt website, creating a .xml file and preparing an acknowledgement form using the tools provided by income tax website and then you need to speed post it to Bangalore Income Tax Office.

Read do & dont;s of tax filing

File Income tax return online

Steps for Online Income tax filing

Step 1: Login to https://incometaxindiaefiling.gov.in/ and download the appropriate software from the website as per your case. This software is nothing but a nice detailed excel sheet (enable the macro’s)

Step 2: Once you have the excel sheet on your computer, fill up all the details (if you don’t have form 16, you can still fill all the details manually). After that verify it once again and then export it to XML (the export button is there in the software itself)

Step 3: Once you have the xml file with you, you need to login to the website (you will have to register for it once). You will see the option called “Upload Return” on left side after login. Click on it.

Step 4: There will be two options called “Digital Signature” and “No Digital Signature”. As most of the people would not have digital signature, just choose the option. Upload your XML file and just create your acknowledgement form called ITR-V , You need to download it . Once you have the acknowledge form, just verify it once again.

Step 5: Just send this acknowledgement form using a regular or speed post (no courier allowed) to “Income Tax Department – CPC, Post Box No.1, Electronic City Post Office, Bangalore – 560100, Karnataka”

Step 6: You will get the receipt of your ITR-V receipt by email in some weeks (takes time) , you can track its status of your ITR.

A lot of people who work in big companies might already have filed their taxes as they get lot of tax filing agents coming in their offices, but for people who still want to do it by themselves, they can take this pain. I personally prefer to to through an agent 🙂

E-filing your tax returns through private websites with Taxspanner or TaxSmile

There are various online websites authorized by income tax department who can file your tax returns . The major reason why you might want to explore these online options are because they are really convenient . One more reason for you to start e-filing your taxes is because in coming years e-filing is set to become mandatory (just like for corporate’s) .

Watch the video given below to now how to file ITR online:

So may be you want to be comfortable with that before it becomes mandatory . There are multiple benefits of filing e-return especially through private websites authorized by income tax department. The additional benefits over govt website include convenience, accuracy, tax planning cum saving, professional support after filing ITR and

1. Processing on real time: 

E-filing ensures income taxes are uploaded in the tax system instantly which helps in tax computations processing on a real-time.  If PAN details are matching the income tax department and income tax return filed, the taxpayers gets an acknowledgement on e-mail called ITR V.

In case PAN card information is incorrect, the electronic returns get rejected and the taxpayer is intimated for failure i.e. the ITR V copy is not delivered.  This ensures the return has been submitted in time.

2. Jurisdiction free:

In case the return is being filed manually and an employee gets transferred to other city than he/she need to transfer his income tax return to the city where he is working presently. Whereas, e-filing is jurisdiction free.

This means your PAN address will be the jurisdiction and same can be continued even if you move out of city or country.

3. Faster refund:

As per the Controller and General Auditor of India, there are 40 lakh pending cases of refund with the income tax department as on 31.12.2010. Refunds are generally received in 10 months in the case of physical tax returns ran.

Whereas, the refunds are getting cleared within 1-2 months in the case of return filed electronically. “We want tax-payers to file electronically as that helps in faster processing of refunds,” Sudhir Chandra, chairman, Central Board of Direct Taxes.

4. Revise return online:

In case the return is filed online before the due date, and taxpayer has missed out on declaring any income or investment. He/she can revise the return online without visiting ITO.  If the original returns have been filed physically then, the revised returns cannot be filed online.

If there is refund in the revised return then, you will get the benefit of faster processing and refund.

5. Rectify the mistake online: 

In case of physical returns, if there is an error at the time of filing, the mistake cannot be rectified online which means it will be more time consuming and costly too. The process of online rectification is faster and simplified.

However, online rectification is allowed only for the returns filed electronically

300 readers win free tax filing discount coupons

Whats the use of this blog if I cant get some freebies 🙂 . TaxSpanner & TaxYogi has agreed to give 100 & 200 promotional codes (taxspanner – 100 and taxyogi – 200) to jagoinvestor readers which can be used for free tax filing from their website.

I will pick 300 best comments on this article & other articles and all of them get to file free tax return using the promotional code. Note that it will be totally free and there are no charges for you . Apart from taxspanner.com & taxyogi.com, even taxmunshi.com has offered 5 promotional codes to jagoinvestor readers .

Note that these can be used to file only ITR1 & ITR2. Some other websites which can be used to file tax returns are taxsmile.com & taxshax.com.

E-Filing means faster tax refund

Did you know that if you have some refund to get back, then e-filing would ensure that you get it back faster than manual process.

With online filing it saves a lot of time which is taken in other process like generating acknowledgement form, feeding your details from the form and various other things, that itself takes few months. So e-filing ensures that you get your refunds faster. On of the very active members of our forum , Ashal Jauhari confirms this

Dear Rakesh, I’m already e-filing ITRs from the last year i.e. FY 2009-2010. Till date I have not face any problem for me & my friends (mainly office friends). Last year I e-filed some 40+ ITRs & this year the figure is already over 125.

Error has been reduced tp a great extent after e-filing on our parts.

Me or my friends who were calculated refund refunds, got the same last year within 40-50 days of ITR-V reaching Banglore & that too through ECS. Cool isn’t it?

Thanks

Ashal

No need to file return if, you have only salary income and earnings are less than 5 lakhs per annum

If your only income is from salary and its less than 5 lacs in 2010-2011, then you are not required to file the tax returns. Note that this is true only if you don’t have any other source of income. If you have some income from mutual funds, shares or bank interest etc, then you need to file tax return.

So which website is the best one to file your income tax returns online ? Which one did you use ?

How Chit Funds Works

Posted on by Jagoinvestor

What are Chit funds and how do Chit funds work ? There are lots of chit funds in india like shriram chit funds , margadarsi chit funds and I would like to show you how chit funds exactly work and what are pros and cons in Chit funds. Over the past many years there has been large scale frauds and scams done by large chit fund companies. However, a lot of people do not understand the working and wonder how chit fund works.

Chit Funds in India

What are Chit Funds & How they work !

Let’s say there are 20 people who come together and form a group. Each one will contribute Rs 1,000 per month and this will continue for next 20 months (equal to number of people in the group). In this group there will be one organiser, who will take the pain of fixing the meetings, collecting money from each other and then doing other procedures.

So each month all these 20 people will meet on a particular day and deposit Rs 1,000 each. That will make a total of Rs 20,000 every month. Now there will be a bid on who will take this money. Naturally there will be few people who are in need of big amount because of some reason like some big expenses, liquidity crunch, business problem, Beti ki Shaadi etc etc … Out of all the people who are in need of money, someone will bid the lowest amount, depending on how desperate he is for this money. The person who bids for lowest amount wins. Suppose out of total 3 people who bid for 18,000, 17,000 and Rs 16,000, the one who bids the lowest will win. In this case it’s the person who has bid Rs 16,000.

There will also be “organiser charges” which are around 5% (standard) of the total amount, so in this case its 5% of Rs 20,000 , which is Rs 1,000. So out of the total 16,000 which this winner was going to get, Rs 1,000 will be deducted and the winner will get only Rs 15,000, Rs 1,000 will be organiser charges and Rs 4,000 is the profit, which will be shared by each and every member (all 20 people), it comes out to be Rs 200 per person, and it will be given back to all 20 members. So here you can see that the main winner took a big loss because of his desperate need of getting the money and others benefitted by it. So each person actually paid just 800, not 1,000 in this case (they got 200 back). Note that when a person takes the money after bidding, he can’t bid from next time, only 19 people will be eligible for bidding.

Now next month the same thing happens and suppose the best bid was Rs 18,000 , then winner will get 17,000 (after deducting the organiser fees) and the rest 2,000 will be divided back to people (Rs 100 each) . So each person is paying effectively Rs 900. This way each month all the people contribute the money, someone takes the money by bidding lowest, organiser gets his charges and the rest money is divided back to members. You will realise that the person who takes the money at the end will get all the money except organiser fee, as there is no one else to bid now. So the person will get around Rs 19,000 in the end, if you try to find out the returns which he got out of the whole deal, it will depend on two things, how much lower bids were each month and the fees paid to organiser, if bids and charges are very low, then a person will make more money at the cost of other situations.

So this is pretty much how a chit fund works, there are various versions of chit funds and how they work , but the idea was to communicate the basic model and how it works.

Trusted and untrusted Chit Funds & Some experience

A big question which is in every one mind is “Should I invest in Chit funds?“. Chit funds are not some investment products in which someone invests! By design you can see that it’s only a support structure for needy people who are unsure of their cash flows or some big expenses coming on the way. It’s only for those who can’t get loans from banks or some lender. In which case chit funds provide that structure where one can take the benefit of it. But beware!  Whenever someone says “Chit funds”, the only thing which comes to the remind is “Fraud”, “Scam” and “Something Fishy” and its true to great extent as there many chit fund companies which come in market and run with the money. The only condition where I feel one can go for it is if all the participants of the chit fund are known to each other properly and there is high level of trust between them. For example, you can do it with your colleagues at office whom you trust and are friends with for long. But if you dont have liquidity issue and can get loan from a bank, then I dont see any need of doing this.

Good experience

In smaller cities, you can see your father, grandfather and even many housewives form these groups with friends with whom they are from last many years. A lot of people on this blog might have experienced how their father used these networks to get huge cash at the time of need. One of the readers Jagadees shared his experience with me on mail

The great advantage for the village people would be availability of immediate funds in the times urgent need. My father would say that he met all his life obligations like his sister’s marriage, his marriage expenses, my grandpa’s medical emergencies, our education expenses were met solely through this type of monthly chit fund investment.

Bad experience

Greed has no limit. What was created for help to each other under a trusted network is now converted as a business and many people have started opening Chit fund shops where they become the main organiser and pocket the organiser fee. Investors have started looking at these chit fund companies from investments point of view and in greed of high returns, they invest their hard earned money with these chit fund companies and at times there are frauds and scams. Chit fund companies are regulated in most of the states by Central Chit Funds act,1982 and they come under the purview of state governements. RBI has no role in regulating them. But still you know how easy it is to do frauds and scams in India (don’t forget commonwealth & 2G and 3G and 4G scams, wah !  I am futuristic). Let me share with you a horrible experience how an old man lost his 40 yrs of earning in chit fund

My father-in-law when he retired, without telling any of us he put all his money in a chit fund. nobody knows how much & in which chit fund he deposited. That was the time when a series of chit funds went bust in chennai. Pity the chit fund in which he deposited also went bust. he had a mild heart attack. The pain he underwent other than the heart attack was terrible. He was in an ordinary job & after 40 years of hard work he had earned that money.

More than the loss of the money, it’s the shame, foolishness and the iyalaamai to take any action by us, the government kills.we supported him, but he wanted to be independent even after retirement. that objective was defeated by his shear foolishness. none of us ever asked him anything about it. but every day he must have been repenting for that . (via)

Easy & MicroFinance Tool

Can you believe that as high as 5-10% families are associated with chit funds in South India ? For example – The share of households participating in Chit Funds increased by 9% in Andhra Pradesh, 89% in Delhi, 15% in Tamil Nadu and 4% in Kerala between 2003 and 2006. You can see below graph that shows Kerala having 9%+ penetration in Chit funds which means 1 out of every 10 family is in some chit fund.

Chit Funds in India

Source : IFMR research

As per a report from IFMR on Chit Funds , most of the people in smaller places are attracted to chit funds, because of easy availability of easy credit and simplicity of chit funds. In small places banks are not much interested in lending to poor people and poor people see chit funds as perfect way of getting a loan, though at a high cost. So you can also look at them as microfinance tools. All of south India and Delhi is deeply flooded with chit fund companies (thousands of them) and its reach is much above what you are thinking right now.

Should you invest ?

Overall, chit funds are not recommended unless it’s a person group formed by friends and relatives whom you trust a lot. I don’t think one should put money with chit funds which are not among their social circle. It might make sense for people in smaller cities to look up to them. As the last note, these chit funds are not investment vehicles where you park your hard earned money, So please avoid them unless you want to exactly take that kind of risk.

Please share your personal experiences about chit funds , I am sure all the readers who are from smaller places , they have seen it and for sure there father or grandfather had used chit funds at some point of time to fund a financial goal 🙂 .

Difference between Gold Saving Funds and Gold ETF ?

Posted on by Jagoinvestor

Today we will see what is the difference between Gold Saving Funds and Gold ETF’s .

The biggest marketing pitch for selling the Gold saving fund is that one can invest in gold funds without a demat account and can set a SIP for the same, which is true.

However, the alternate option of Gold ETF’s doesn’t not allow investments and/or SIPs without a demat account. But most of the agents hide these details of costs and do not educate their clients on how things work!

how to invest in gold

Source : Kotak Website

As of today, Reliance, Kotak and Quantum have launched their Gold Saving Funds of Funds. All of these Gold saving funds are almost same. Lets take an example of Reliance Gold Saving Fund, which is nothing but a fund of funds which invest in their respective Gold ETF’s 🙂 Did you know that?

Difference between Gold Saving Funds and Gold ETF’s ?

Gold ETF’s :

Let’s understand this for a moment. In simple terms, these are financial products which invests in physical gold and tracks its pricing on day to day basis. These ETFs have their own expense ratio which is considered very high if compared to US market, but that’s the price we pay to invest in gold electronically.

You need a demat account to invest in Gold ETF and you can trade these ETFs through stock exchange.

Gold Saving funds

Gold savings funds are nothing but mutual funds which invests majority of its corpus (90%-100%) in Gold ETFs (of the same sister company), a small portion might also be in money market instruments or some short term debt products.

For example –  Quantum Gold Saving Funds of Funds as per its mandate can invest anywhere from 95%-100% in the units of Quantum Gold ETF’s, and rest in money market instruments and other short term debt products.

But the important point you should note here is that the underlying investment is still gold, but not directly! It’s indirectly through gold ETF’s, and now as there are two layers in between, you pay charges two times!

So you pay charges for Gold saving funds and also for gold ETF’s, this part is generally not revealed by the agent who sells you these Gold saving funds. Also for the gold saving funds there are high exit load’s 🙂

Gold Saving Funds

So which one is better and which one you should choose?

We can’t make a general statement that one is good and the other is bad, because it’s not like that. If someone does not have a demat account and wants to automatically invest in gold each month through SIP, gold saving funds are the best option.

But for someone who is conscious about the expenses and can invest through his demat amount each month, Gold ETF’s are a good option.

But high charges will surely hurt in long run! One important point is that do not confuse gold saving funds with “gold mutual funds” which are mutual funds investing in gold mining companies, they are totally different.

Gold Saving Funds

Conclusion

A lot of investors are lured into these gold saving funds without giving any information on the charges, which is not right. Gold saving funds over a long-term can really eat away your returns because the high charges will cut a big pie out of the returns earned.

Form 15G and 15H – A Detailed Guide

Posted on by Jagoinvestor

Many people whose income doesn’t fall under the tax slab have mostly invested in products such as FD through which they can earn interest. But can we do anything to make sure that the bank does not deduct TDS on interest earned if our total income is not taxable?

If you all don’t know then let me highlight to you that it is mandatory for banks to deduct TDS on our interest income. If our income is not taxable and we also earn interest from other financial products etc..then we will have to provide Form 15G and 15H to the bank so that bank doesn’t deduct TDS since our income is not taxable.

In this article, I will be discussing all aspects related to Form 15 and 15H.

What is form 15G and 15H?

What are Forms 15G and 15H?

Forms 15G/15H are forms that an individual can submit to ensure that the Tax Deducted at Source (TDS) is not deducted on the interest income if she/he meets the applicable conditions. Always remember, that if an individual wants to claim tax deduction through Form 15G/15H, then the individual must have a Permanent Account Number (PAN).

Form 15G is to be filled by individuals aged below 60 yrs and Form 15H is to be filled by senior citizens aged 60 yrs and above. You can click on this link if you want to download the form directly from the website. If you want to have a look at the form, click on the link below,

Eligibility Criteria to fill these Forms –

a) For Form 15G –

  • An Individual or HUF or trust or any other assessee
  • Only Indian Resident can apply
  • Age should be less than 60 years old
  • Tax calculated on their Total Income should be nil
  • The total interest income for the year should be less than the basic exemption limit of that year

b) For Form 15H –

  • A Resident Indian Individual
  • Age should be 60 yrs or more (senior citizen) during the year for which you are submitting the form
  • Tax calculated on their Total Income should be nil

Who all are not eligible to fill these forms?

The following are not eligible for submission of Form 15G/15H –

  • Company (Private and Public)
  • Partnership Firm
  • Non-Resident Indian (NRI)
  • An Individual whose estimated total income or the aggregate total income exceeds the basic exemption limit.

Can these forms be filled online or just offline?

a) Form 15G (online and offline) –

An individual can choose to submit Form 15G offline or online, depending on the facilities provided by their bank or financier. Firstly they need to check if their bank allows submission of Form 15G online. If this facility is available in their bank, they can simply log on to their internet banking account and fill up the form online. Once you have filled up the form, recheck the details, and hit submit. For your future reference, you can download the submitted form.

The other option is to fill a physical form and submit it to the bank. The forms are available in the Income Tax Portal. You can download the form and get printouts of the same. You can then submit these duly signed documents to the bank or financier where you have the savings accounts. You can also submit it at the post office or the company you work for depending on your requirement.

Currently, there are 2 banks that provide online filling of the forms. If you have an account in the below 2 banks then you log in through internet banking and fill these forms –

b) Form 15H (online and offline) –

You can submit Form 15H online or offline mode. To submit it offline, you need to download the form from the Income Tax portal as discussed above. Once you have completed filling the form, you can submit these forms at your bank or post office or your employer (in the case of Provident fund).

If your bank or financier allows submission of Form 15H online, you can log on to your internet banking and fill up the form. You can submit the form directly using internet banking. For your future reference, you can download the submitted form.

Currently, there are 2 banks that provide online filling of the forms. If you have an account in the below 2 banks then you log in through internet banking and fill these forms –

A detailed guide on how to fill the form through SBI Internet Banking –

Different other scenarios where these forms can be utilized –

a) TDS on EPF withdrawal –

TDS is deducted on EPF balance if it is withdrawn before 5 years of continuous service. If an individual had less than 5 years of service and plans to withdraw their EPF balance of more than Rs.50,000, then they can submit Form 15G or Form15H. However, to fill this form the tax on an individual’s total income including EPF balance withdrawn should be nil.

b) TDS on income from Corporate Bonds –

If an individual holds corporate bonds, then TDS is deducted on them if their income from these bonds exceeds Rs 5,000. They can submit Form 15G or Form 15H to the issuer requesting the non-deduction of TDS.

c) TDS on post office deposits –

Post offices that are digitized also deduct TDS and accept Form 15G or Form 15H, if an individual meets the conditions applicable for submitting them.

d) TDS on Rent –

TDS is deducted on rent exceeding Rs 2.4 lakh annually. If the tax on an individual’s total income is nil, then they can submit Form 15G or Form 15H to request the tenant to not deduct TDS.

e) TDS on Insurance Commission –

TDS is deducted on insurance commission if it exceeds Rs 15000 per financial year. However, insurance agents can submit Form 15G/Form 15H for non-deduction of TDS if the tax on their total income is nil.

FAQs –

i) What will happen if I forget to submit the form on time to the bank?

If you forget to submit these forms on time then the bank will deduct the TDS. However, one can claim the deducted TDS by filing an ITR.

ii) What is the difference between Form 15G and Form 15H?

Both are self-declaration forms that an individual will have to submit to the bank once they open a fixed deposit. While Form 15G is for those who are below 60 years and come under Hindu Undivided Families (HUF), Form 15H is for everyone who is 60 years and above.

iii) Is the form provided by banks one and the same? Or is it different?

The forms which banks provide are a little different from the actual form which is available on the income tax website. However, both type of forms serves the same purpose. You can have a look at the form in the above section.

iv) Can HUF, NRIs submit Form 15G/Form15H?

HUF can submit Form 15G if it meets the conditions but Form 15H is only for individuals. NRIs cannot submit Form 15G or Form 15H. These can only be submitted by resident Indians.

v) Do I need to submit Form 15G/ Form 15H at all the branches of the bank?

Yes, you must submit one at each branch of the bank from which you receive interest income though TDS is deducted only when total interest earned from all branches exceeds Rs 10,000.

vi) Does filing Form 15G/Form15H mean my interest income is not taxable?

Form 15G/Form 15H is only a declaration that no TDS should be deducted on your interest income since the tax on your total income is nil. Interest income from fixed deposits, recurring deposits, and corporate bonds is always taxable.

vii) Will my interest income become tax-free if I submit Form 15G/Form15H?

Interest income from fixed deposits and recurring deposits is taxable. For senior citizens deduction of Rs.50,000 is available under section 80TTB for the interest income from fixed deposits/post office deposits/deposits held in a co-operative society. You should submit this form only if the tax on your total income is zero along with other conditions.

viii) I have submitted Form 15G and Form 15H but I also have taxable income, What should I do?

You must inform your bank that the tax on your total income is not zero. The bank will make changes and deduct TDS accordingly. You should report the entire interest income in your tax return and pay tax on it as applicable.

ix) Do I have to submit this form to the income tax department?

You don’t need to submit these forms directly to the income tax department. Just submit them to the deductor, and they will prepare and submit these forms to the income tax department. At times these forms can also be filled and submitted in the bank.

x) Is there any time limit for submitting these forms?

There is no time limit or due date for submitting Form 15G/15H to the bank. However, it is advisable to submit it at the beginning of the financial year (i.e. Apr 01) or as and when the new deposit is created.

xi) What is the time limit during which these forms are valid?

Forms 15G/15H are valid for one financial year ending on Mar 31 of every year. So, you will have to submit these forms every year if you are eligible. Submitting them as soon as the financial year starts will ensure that no deduction is done on any interest income earned.

xii) Is there any other way NRIs can refrain from TDS deduction as they are not eligible for Form 15G and 15H? 

For any NRI, whose TDS is more than his/her tax liability, such excess tax can be claimed as a refund from the Indian Tax Department (ITD) by filing the Return of Income in the particular Financial Year. Such excess TDS results in loss to NRI due to the time interval between the tax deducted and refund of such excess tax, which may take generally 1 to 2 years.

In order to address the above situation, a procedure has been prescribed under the Act, whereby NRI recipient of income can apply online to ITD (in a prescribed format) along with the relevant supporting documents to issue a Tax Exemption Certificate (TEC) authorizing the payer of income (who deducts tax) to deduct tax at a lower rate or Nil rate, as the case may be.

In the case of NRIs, whose actual tax liability is lower than the rate of tax prescribed under the Act, it is beneficial to obtain a TEC. An NRI should apply for TEC under few situations listed below –

NRI tax

Procedure – The Jurisdictional Assessing Officer (from the International taxation ward of the ITD) of an NRI generally issues a TEC between 2 to 4 weeks from the date of application.

Validity – TEC is normally valid for the period for which such TEC is obtained (i.e. a Financial Year) and for the specific income as stated in the TEC.

Filing Return of Income – NRI who has obtained the TEC has to compulsorily file his Return of Income in India for that Financial Year.

xiii) How can an individual make use of these forms?

These forms can be used only if the tax calculated on the individual’s total income is nil for the financial year. Both forms – Form 15G and Form 15H – have a validity of one financial year. That is why either of them is required to be submitted at least once every financial year. Forms 15G and 15H are basically submitted to save TDS on interest income.

For example, Banks deduct TDS on FDs when interest income is more than Rs 10,000 in a financial year. But if the total income is below the taxable limit, then Form 15G and Form 15H have to be submitted to the bank requesting them not to deduct any TDS on the interest.

Points to Remember –

  • An individual can only submit Form 15G/15H to a bank with a valid PAN, if an individual doesn’t have a valid PAN then, the tax will be deducted at 20%.
  • It is advisable to submit a copy of the PAN card with the cover letter.
  • The individual should make sure he/she receives an acknowledgement while submitting Form 15G/15H. This acknowledgement can be kept for future reference.
  • Acknowledgement of submission of PAN details is useful if a dispute with the bank arises.
  • The individual will need to submit the details of the Form 15G/15H submitted by him/her to other banks as well as the interest income amount mentioned in these forms.
  • As the individual has submitted his/her PAN, the respective assessing officer will have access to all the information submitted by the individual to other banks and will cross check if there is any incorrect information submitted by the individual or not.
  • There is a provision for imprisonment for a minimum of three months if an individual is found to have provided incorrect information in the declaration forms.

A short video on How to Fill these Forms –

a) Form 15G –

b) Form 15H –

Conclusion –

So this was all that I wanted to share in this article. If you have any queries then you can post them in the comments section.

Review of moneysights.com – Invest online in Mutual funds

Posted on by Jagoinvestor

What is the equity and debt exposure of your portfolio? How many different companies have you invested in through mutual funds? And do you know of any tool with great UI and simple features that can help you analyse your mutual funds and stocks in detail? If you wondered that there is no such website which can do such analysis and that too for FREE, I am happy to introduce you to moneysights.com. It does it all that for you and much more…

moneysights review

From a few months, I am in touch with moneysight’s team. At that time they were still building their product and were trying to solve some key issues which investors face today and I knew from beginning that users will like their product when it goes live. Just a month or so back when their product was in beta mode, all the Jagoinvestor readers on email (see sidebar for subscription link) received the beta invitation from moneysights and they got a chance to use their tool exclusively and in advance than others.

The reason why I want to know about moneysights is because they aim to solve 3 key problems that is faced by common investors in India. These problems have played a crucial role in ensuring that Mutual Funds & Direct Equity investments remain under-penetrated as fas as mass market retail investors are concerned. I have described these problems below from Mutual Funds point of view –

Problem 1 : Choice & Suitability

There are 4,000+ of Mutual Fund schemes in the India today. If one includes the variations & scheme options like Growth, Dividend, etc. These schemes are broadly classified in 10+ types like Equity, Debt, Balanced, MIPs, ELSS etc. Most of the average retail investors don’t understand or demand so much of choice and option. A large number of schemes not only adds confusion to the decision-making process but also often results in postponing our investment decisions (i.e. taking actions).

If the quantity of schemes in the market is the first problem, then knowing the suitability of the scheme to an individual is another problem to be cleared? Not every scheme is suitable to every type of investor. An ICICI Prudential Discovery or IDFC Premier Equity may have given great returns & hence they command a 5-STAR return rating but how many of us know that both of them primarily invest in stocks which most often may not be Large-cap stable businesses. And hence they may not be suitable for someone who is risk-averse or someone who is just beginning to invest. Wouldn’t investing purely on return ratings may bring-in a surprise to the investor when the markets go into a downward trend?

Problem 2 : Construction of Mutual funds portfolio

Reading my previous posts on how to create a Mutual Fund Portfolio or How many funds are ideal to have in a Portfolio, you would have realized that diversification in the Portfolio is very important. But then, why how does one construct a diversified portfolio of 4-5 different Mutual Fund schemes. There is so much information needed to construct a diversified portfolio that it’s definitely a cumbersome task to construct one manually.

For example having a HDFC Top 200 & a Birla Sun Life Frontline Equity isn’t diversification but duplication. They are 2 similar funds & having both of them doesn’t make sense in a diversified portfolio. Look at this jagoinvestor forum question of mutual funds portfolio review and moneysights helping him.

Problem 3 : Tracking of Mutual funds portfolio

After someone invests in a set of Mutual Funds, is there a way to track, monitor & manage the Portfolio in a seamless manner? Most websites do offer tracking services. But then, again people like Venshu had asked about  how to get annualized returns so as to compare portfolio performance, sector allocation, etc. so that one can get actionable insights to manage the Portfolio on an ongoing basis that minimizes portfolio risks & optimizes returns. I have used their tracking tool myself and it looks simple and good to me.

Some more good features

Some of you who would have registered on moneysights.com may be able to relate to what i’m talking here. However, if you have not tried it yet, let me summarize quickly on what stood out for me –

1. Fund’s Performance Report Card

moneysights review

Moneysights allows you to get more information about a specific mutual fund scheme in a quick & simple way. Just go to the Find Mutual Funds section where you can search or browse for specific Mutual Fund schemes. Opening the detail page of a Mutual Fund scheme like HDFC Equity Fund would allow you to see –

  1. A unique way of portraying Fund’s Performance through Fund’s Performance Report Card – also notice the no-use of financial jargon
  2. Performance Comparison with fund’s benchmark, SENSEX or NIFTY – notice the lack of importance to NAV & prominence to performance chart w.r.t. various benchmarks
  3. Return Comparison with SENSEX, NIFTY, Category Average, etc. in tabular format during different time periods
  4. How much your money would have grown had you chosen to invest in this scheme – notice the actual amount of dividend you would have earned
  5. Mutual Fund Category Performance comparison within different time-frames
  6. Portfolio composition of the scheme in terms of asset class, market capitalization, sector exposure & underlying stocks

So, all the information you require for knowing how good or bad a Mutual Fund scheme is available within a single-page interface.

2. Portfolio Health

Now this is another valuable feature. Many a times, readers have posted questions on forum about specific funds that they have invested in. Questions like shall I stay invested in (say) a Reliance Vision Fund or Sundaram SMILE Fund which probably used to be good performers at some point in time but are not the best ones today. Does it make sense to redeem & divert the investment in some other fund in similar category? Portfolio Health answers this.

Moneysights review

The way I understand moneysights is doing is they find a scheme which belongs to same category as you have & check if there is a scheme which has performed better – i.e. taken lesser risk but has offered more returns. If they are able to find a better option, they show these options. Let me know what you feel about this in comments section.

3. Get a Portfolio

This is going to be useful for readers who want to start their investments from a scratch all over again or re-align their portfolio to their risk appetite. All you have to do is select a risk profile you can identify with & moneysights displays a portfolio of Mutual Funds which is appropriate to the risk profile selected along with how much exposure you should take in a specific scheme. I personally spoke to moneysight’s team & they mentioned that they give more importance to downside protection capability while choosing the funds & portfolio is constructed following best practices of portfolio management that control portfolio concentration risks. They also recommend funds which have proven history of performance & have a minimum AUM under their belt.

Moneysights review
If you play around with this engine you would notice that higher your risk score more is the allocation to Equity. You would also notice that the resulting portfolio is always diversified across schemes, fund houses, sectors & stocks. They also show portfolio’s break-up & its past performance against SENSEX & NIFTY that help you understand why the portfolio is being recommended to you & how it’s good.

Other Small but Significant Features that you may like –

While the above 3 stood out for me, you may also like the many things they do differently like –

  • Letting you enter the amount of Investment & SIP day for accurately tracking your SIP investments.
  • Annualized returns of the schemes you invest in as well as the Portfolio when your investments are more than 1 year old – a very handy feature for readers who have been looking for XIRR returns.
  • Dividends that you may have received for your investments.
  • Updating missed SIP details – You can also update if you missed investing in a specific month for one of your SIPs. Doesn’t it happen sometimes intentionally or unintentionally with us?
  • By allowing you to redeem Mutual Funds partially or fully, they also let you build history of your booked past profits/losses.

Wishlists for moneysights

There are some of the things which I would personally like to see in future releases . They are

  1. An advanced comparision tool which can show the past performance of the current portfolio
  2. Comparision of two or more mutual funds/indexes in much more detail.
  3. I wish if a user can create his own strategies and run it over the portfolio and see how the strategy would preform over long term.
  4. I also wish if there was a download your Portfolio report in xls and PDF format which I can download and keep it for my record from time to time or just offline viewing . That report can give the overall Report in nice format which is just awesome to look at and worth showoff .

Area’s of Improvement

  1. For most of the return analysis and comparision , it can be done only for the last 5 yrs , I hope if it can be maximum possible .
  2. Their UI is great and neat , but I still feel there are much more things on UI than required and some of them can be displayed on demand (on a click) . What do others think ?

Conclusion

To conclude, if you have feel that you can relate to even 1 of the above problems that I mentioned at the beginning of the post, you would agree after using moneysights that it’s an answer to those problems. I would love to know your opinion on this. Please share it in comments section.

Online Term Insurance Plans in India

Posted on by Jagoinvestor

Do you have any idea how many Insurance companies are providing online term plans in India at the moment ? There are total 7 Insurance providers have launched their online term plans and the premiums are highly competitive .

Online Term Insurance Plans in India

Online Term insurance Plan in India

Aegon Religare was the first company to come up with their iTerm plan which was the cheapest term plan of that time , after that ICICI came up with iProtect . There was a huge response for these policies for cheaper premiums , but both the companies didn’t meet the customer service expectations of customers. A lot of readers even on this blog bought policies from Aegon Religare and ICICI , but faced horrible service when it came to getting policies on time , communication with customer care and its officials , mess of documents etc . A lot of readers suggested that they will never recommend other to go for it.

On the other hand there were customers who didnt face any issue and they got their policies on time . They are recommending others to go for it . However their numbers are smaller than those who faced bad experience. Bad customer service is not desirable by any customer , but I think we can see it improving over time with increased competition and with more better processes . Right now seven companies have come up with online term insurance plans and I am sure more companies are in process of launching it soon . I am not sure if LIC would join them in launching the online term plan , because their offline network is so big and dependent on non-term plans

Online Term Insurance Plans in India

How Online term insurance plan works

Step 1 : Offline

You go online and calculate your premium , then you start the process of buying the policy and submit your name, age ,  tenure , sum assured and medical information which affect your premium . After all this you get a premium quote and you pay it online . Most of the people take the premium amount very seriously and believe that its final premium , where as it’s not the case .

Step 2 : Online

After you have paid the premium, there are few things which are yet to be completed . You will get a mail from company or get a call from company that some representative of company will come to your residence and collect the important documents , the documents are also required for KYC . As per your age and given information , the insurer can decide if you will have to appear for medical test or not . If there is anything wrong in medical examination which can affect the premium (increase companies risk of insuring you) , then they can increase the premium (loading) . You can then decide to continue with them by paying the additional premium or cancel the policy .

Update – Apart from Kotak epreffered,  Aviva ilife , Metlife metprotect, ICICI iProtect, IndiaFirst anytime Plan, Aegon Religare iTerm and Future Generali Smart Life there are 3 more online term insurance plans introdued in the market which are HDFC Click2Protect, DLF Pramerica – UProtect and Edelweiss Tokia – Life Protection

Comments ? Do you believe in online term plans ? What can motivate you to buy life term insurance online ?

What is the worst advice that you have ever received?

Posted on by Jagoinvestor

Are free advises costly ? A lot of people in their early life get lots of advice from friends , family and relatives regarding money and other area’s of life . Some of those advises are great, but some are disastrous and you might have the “why did I take that advice ?” kind of feeling . Subra has done a post on worst investment advice and I really liked the sharing which happened there . I think a lot of readers here will relate to those worst advises, because the same thing might have happened to many of them . Lets look at some of the worst advises people have got (i am copying it from the comments section on his blog) . Please share your worst advice in comments section here , It would be worth reading and learning for others !

Worst advice in Personal finance

Ashok say –

Making me buy LICs Jeevan Shree in 2001 (36000 premium per year for 12 years). If I had invested the same 3000/- in a monthly SIP in HDFC Equity fund, I could have afforded a BMW now

Bigtimeloser says –

my worst investment advice was people asking me to do engineering. I had to take it up because i knew nothing about anything else..  Coming from a rural background with a good +2 score I had to do what everybody else was doing..

Iarab says

In 2004, I have been sold a ULIP (Rs. 10,000 annual premium), with an asset allocation of 50% each in ‘Liquid’ and ‘defensive’ schemes. I have been told that ‘liquid’ means ‘money is readily available’ & ‘defensive’ means ‘you will not incur any loss’. The result, after 7 years now, is that I am yet to recover my principal invested (Rs. 70,000), where as my ‘financial advisor(!)’ has graduated from a second hand Bajaj Chetak to Santro i10!

Krish says

One guy from the brokerage firm roped me into F&Os. Rosy picture was portrayed that I can earn thousand(s) a day. The lure was somuch that I borrowed money to trade in F&Os. After first three days I realised that it is gambling and addictive. My risk appetite graph was always up on each passing day to reduce loss and ever hopeful of making the kill. The reality dawn after a month into the trading and losing all the borrowed capital. More than losing money, the mental tension was too much to bear.

Jayant says

“Buy LIC, buy PPF. They are safe investments”. This is when I just started earning at age of 21. If I had started SIP that time, by this time I could have god good corpus. I did not know what seems safe is how badly it is being eaten by Inflation. How I rue !

Vimod says

I have been saddled with a lot of useless endowment policies and whole life plans from LIC of india. I pay a premium of Rs 1.4 lakhs per year as premium for the above insurance policies for a total coverage of Rs 18 lakhs. I will be surrendering
most of it in six months. I try to educate people about buying term insurance policies and not to trust these LIC agents blindly.

Rakesh says

My broker made me buy lokesh machines in Nov,2007. He said that the Big Bull RJ is going to buy/increase his stakes in this company. The price then was 140 and now its 40. I wonder will it even reach that levels ever again ?????????

SS Says

I got an advice to buy a ULIP from a so called friend-expert. What did I do…got rid of advice, got rid of friend (so-called) and got rid of ULIPs forver. i hate ULIps for personal reasons: I lost my friend (i dumped him), I realised he was an idiot and I was in no mood to take free financial advises from an idiot friend (most dangerous thing in finance).

Can you share your worst advice ever you got ?