Tag: Intermediate Level

5 reasons why people avoid retirement planning and die poor?

Posted on by Jagoinvestor

From last 8 yrs, I have been talking and dealing with investors & I can see some progress on how people see their retirement these days. They have got more “serious” about retirement planning.

Almost all the clients we have, for them retirement is a big goal and their focus on it is worth appreciation. But that’s a very small number, few hundred may be.

If we talk at the mass level (All India level), there is almost no seriousness for retirement planning. At the mass level, people are very short sighted and plan for their short term goals, but not “long term goals”

Retirement Planning

5 reasons why investors don’t plan for their retirement?

What about you?

Have you started your retirement planning?

Is some money being invested for retirement goal each month?

By “Retirement planning”, I mean a well thought investment plan (it might not be written) for your future. Are you consciously thinking about create a big enough corpus at your 60, which will support you for next 30-40 yrs?

Please do not confuse “retirement planning” with buying some random policy for your 80C deduction, which had a word “retirement” in the name. It’s mostly a well marketed product sold to you on the name of retirement.

Now, let’s see some of the top most reasons why people don’t invest for their retirement seriously!

Reason #1 – It’s a “Selfish” Goal

I recently attended a session where the speaker asked this question – “Which is the most important financial goal of your life?”

To this, there were many answers like ..

  • Retirement
  • Children Education
  • Buying a House
  • Getting Debt free
  • Stating own business
  • Daughter Marriage

But the trend was clear… “Retirement” was not in majority.

The group age range was between 30 – 50 yrs. The speaker was silent for a moment, but then he said something which really hit me.

“Most of the people know deep down that Retirement is their biggest goal, but they refrain to accept it because it’s a SELFISH Goal”

Planning for Retirement is a “selfish goal”

Yes, retirement is about you and your requirement. Your retirement is the most costly financial goal and long duration goal, which will have to be provided for not just years, but DECADES.

It feels very odd to openly accept this and say this, especially in a society where we are always taught to first provide for others and think of others needs. We are taught from childhood that we should not think about yourself, we should not be self centered, we should think about others, we should think of others before thinking about yourself.

“Others” here can be our parents, children, friends, relatives, husband, wife or anyone else.

Retirement is a selfish financial goal

It’s a taboo to tell someone that “I want to first think about my own happiness and requirement at the cost of others”. You suddenly become “self-centered” and “rude”.

This is one major reason why a lot of people think of their own retirement at the end, only when other goals are planned for.

I think this is changing slowly and the way people are prioritizing things is slowly taking a new shape. I can now see a trend, where people have started giving importance to their own dreams and desires, compared to our parent’s generation.

While, you plan for important financial goals of your life, like buying a house, your kid’s education, children marriage etc, you need to give first priority to your own retirement.

It does not make sense to not plan for your own retirement, at the cost of other goals.

Reason #2 – Because it’s too early to plan

Imagine you are 30 yrs old.

It’s been just few years since you started your career. The top most thing in your mind right now is “how to buy the house?” and how to get the better pay package in the next job?

You are so engrossed into the hustles and bustles of life, and suddenly something says to you “Are you saving for your retirement?”

“Dude, I am just 30” – You feel !

Let’s be honest, it’s very tough to get serious about retirement at such a young age.

Some days back, we did a small survey with 379 people where we asked them what was the biggest reason why they did not consider retirement planning as their #1 goal in life, and the top most reason they choose was “It’s too early to plan for it”, the average age of this group was 30.4 yrs.

Which clearly shows that people are 30 are avoiding retirement planning because they feel it’s too far in future to even think about it.

retirement planning survey

But there is a problem…

Most of the youngsters never get out of that “I am still young” mode for decades. And one day when they hit 40-45, they feel they made a mistake of not starting early. Some people realize this at 50.

And then by that time, it’s very late.

So even though your retirement is very far away, you need to get this once and for all that you would need a big sum of money at the end, and early you start, better it is. You might not give high priority to retirement saving in the start, but start with something at least and increase the allocation later in life as you move from 30 to 40 .. and so on.

Reason #3 – They are not able to visualize the “Retirement” goal

We all are very bad at predicting how our lives will turn out to be after 10 or 20 yrs old. Just think about your past for a moment. 10 yrs back, did you have even a slight idea of how your life would have been today?

Not at all!

So it’s tough to predict how good or bad the future will be.

This is the reason, why most of the people do not plan for retirement. They are not able to visualize how serious it is to plan for retirement and how tough it will get if they do not have enough retirement corpus.

Most of the people who earn sufficient money right now never realize that one day the SMS – “Your salary XXXX  amount has been credited in your account” will permanently stop and they will be left with another approx 40 yrs to be alive.

Thinking about your retirement

Your health will not be at the best level and your kids may not be in position to take care of you in the same way you imagine them to take care of you. They will be busy and struggling with their own life issues.

It’s not easy to look far ahead in future and visualize it especially when you have a very active income right now. Just like its very tough to image how it feels to be hungry, when you are easily getting 3 meals each day.

There are various examples of successful people who died poor and struggled in their retirement life. If you do not have enough money in your retirement, you do not have power with you. People do not treat you well, and that’s the harsh reality of life.

Don’t be that guy !

Subra has written a great piece called “Retirement Failure”, where he talks about how a retirement life looks like, if you do not have enough money at retirement. He is one of the best authors and writers on the topic of retirement, so you can trust him 🙂

So start getting serious about future and plan for the D-Day !

Reason #4 – Not able to save enough money

People also don’t save for retirement for the simple reason that they just don’t have any surplus left at the end of month. It’s fairly logical!

Incomes are not increasing, while expenses are growing like amoeba in all directions. It’s getting tough to save in today’s times especially if you are single earning member in family with 5-6 people in a big city.

It’s true that you are not able to save much, but that’s something to get altered to and act on it, rather than hide behind that fact and just let years pass by.

Just because you were not able to save enough for future, no one is going to give you money at your retirement.

So take charge of your future now, and act on it. Work on your income, work on your expenses and make a start. Start saving with Rs 1,000 a month first, then Rs 2,000 and eventually go up and up.

Even if you are able to save Rs 5,000 or Rs 10,000 a month at minimum, a good retirement corpus can be generated. You will not be a RICH guy, but you will have something to fall back on at least.

What can you do with Rs 10,000 per month?

Below is a graph which shows you the power of investing Rs 10,000 per month on a regular basis for next 30 yrs. You can create close to 4 crore at retirement if you are a 30 yr old person.

Wealth creation for retirement

It can be a slow start, but that’s OK.

If you want to talk to our team for your retirement planning, just leave your details on this page and our team will call you to discuss about your retirement planning.

Reason #5 – They see their kids as retirement corpus

I am not giving my own comments on this point, it has to be written by you.

Yes, I do not want to give my comments on this point because it’s such a sensitive topic that various people will have very different style of thinking on this topic.

From my side, I can only say that I can see lots of people in big cities these days who are very clear that they do not want to depend on their children for anything. They want to give the best to their kids and raise them as amazing people, but then they do not expect anything back from them.

But from the small city I have come from (and many of you) , it’s almost a crime to think like that. Most of the people really see their children as “Budhape ka Sahara” and literally expect them to take care of them “because” they have also raised them and spend on them all their life, so it’s now their turn to return back.

How do you see the relationship with your kids?

Few months back, we did one online survey on this website to understand how do people see their relationship with their children. 49% participants in that survey choose the option which said “Give and Take Relationship”, where as only 21% felt that it’s only a “Give Relationship”.

are children retirement plan for parents?

I can’t comment if it’s right or wrong, but would like to know from everyone, what they feel about this point? Please expand this 5th point in comment section and have some fruitful discussion.

Now get a short term loan in your Paytm account by ICICI Bank

Posted on by Jagoinvestor

Paytm, India’s largest mobile payment network has partnered with ICICI bank to provide short term small loans to its users. This is India’s first scheduled commercial bank tie-up with a mobile payment platform, and it is named as Paytm-ICICI bank postpaid.

The main motive behind this partnership is to provide 24/7 digital money support to millions of Paytm and ICICI banks common customers across all over India.

This feature is introduced to ease the daily expenses of all ICICI bank customers who are using Paytm, by providing them Digital credit. The below image shows you how it works

Paytm ICICI bank tie up

As per this tie-up, you can take digital credit in your Paytm account from ICICI bank, which you can use for your daily expenses like paying bills, booking flight or bus or even buying a movie ticket. You can use this credit anywhere where Paytm payment is accepted.

Please watch below video to know the details.

Type of loan and interest rate

This credit will be interest free for first 45 days. If you repay it within 45 days, then you will have to to pay only the principle amount and no interest will be charged. But if you delay the payment for more than 45 days, then you will have to pay a late fee of Rs.50 and 3% interest.

How much maximum credit can you take?

This credit limit ranges from Rs.3000 to Rs 10000. It means you can take digital credit of minimum Rs.3000 and maximum of Rs.10,000. And if you have a good repayment history which means you payed all your credit loan in time, then the limit can be extended for you upto Rs.20,000.

Which means that this is going to be useful mostly to students and those people who are left with no money by the end of the month or have severe cash crunch.

Right now this facility is available for the customers of ICICI bank who are using Paytm, but soon all the Paytm users also can get benefit of this newly introduced postpaid digital currency.

Who should use this?

If you are using Paytm heavily and if you are the type of person who has severe cash crunch and want to take short term credits, then this facility if for you.

We do not recommend this facility to be used unless you really need the money. Its better to always maintain liquidity in your bank account and not fall for this kind of service.

I hope this information is useful for you. If you have any query, leave your reply in the comment section.

How money shapes our life? An amazing “money story” of Priyanka

Posted on by Jagoinvestor

Today you are going to read “money story” of Priyanka Jadhao from Pune. She is 26 yrs of age and just started her career few months back.

She will be discussing about her life journey till date from the money perspective. I mean she will talk about her view about money, the incidents from her life which shaped her mindset about money. What she feels about money and how some incidents made her realise if money is important or not.

The special thing about her is that she is from Jagoinvestor Team 🙂

Few days back, when we were discussing on what kind of new writing we can do, we relised that we should start a series called “My money story” where a person jots down their journey of life from financial perspective and they felt about money all these years.

So I asked Priyanka to write her own money story. I think she has done an excellent job. This is the first post in the series we are going to call “My Money Story” where anyone can contribute with their stories.

Over to Priyanka from here.. I hope you will enjoy her money story.

Written by : Priyanka Jadhao, 26 yrs, Pune

My Story

I belong to a small town in Maharashtra, where most of the people are either government employees like teacher and regional officers or farmers. Other major businesses are very rare there, because most of the people have fear of taking risk, while others want to go on with the traditional ways of earning. In short, they want to play very safe game in life.

I was my parent’s first child, so it is obvious that everyone in my family had showered all their love on me. My family was not too rich, but it was financially stable enough, so I never faced any major hardships because of lack of money.

We should put limit on our needs

From my childhood, my parents taught me to put a limit on our needs, so that we can save for future. Everytime we needed something, the first thing we heard was to limit it or rethink about it before spending money on that.

This was the way of life and this had deep impact on my thinking. I slowly started beleiving that this is the absolute truth of life and it just got ingrained in my belief. Hence from childhood, I also started avoiding any extra spending, and always lived in limits.

Fortunately, I was never a spoiled child due to this mindset.

I can remember clearly, when I was a child, whatever things I needed like books or other study materials, my parents never gave me money directly in my hand. I had to ask for it and then only they used to buy those things for me.

People around me 

I have seen people from my childhood considering money as a matter of pride, because of which they keep on collecting it and putting in their bank, rather than spend it on things. The focus was on just increasing wealth in numbers and not to make use of it for their happiness.

I grew up in an atmosphere, where earning money and saving it for future was the only motive. I have seen people who earned a lot, but never spent it to complete their dreams or for their hobbies because this was considered as a stupidity.

It was the way of life for them and they all thought that this is the “Right” way to live a life. They were satisfied and had no regrets about this. But that was because they had mastered the art of “controlling the need” and live with the most basic things.

My childhood experience with money

I was a shy child then, I never asked my parents more than what I actually needed. But when I used to see my friends buying dolls or fancy frocks, I always started thinking that ‘when I will grow up, I will earn lots of money and buy so many dolls and new dresses just like that friend of mine have’.

One incident I can still remember, I was in 5th std, one of my friend had a very beautiful lead pencil (lead pencils were very rare in those days, we were “Natraj Pencil” kids 🙂 ) having a beautiful less tied with eraser and two small Ghungroo’s on its cap. I wanted it so badly, but I didn’t have the courage of asking it to my parents.

Then I realized, that my birthday was coming in 2 months and my parents will definitely buy a new dress for me. So I waited for 2 months. And when my birthday came, I asked my parents to buy me that lead pencil instead of a dress. I can still remember its price, it was Rs.12.

Parents perspective about money

Both my parents are teacher. They earned a lot and invested it for only two goals, one is my brother and second one is me. I had never seen them spending money to complete their dreams or hobbies or even their basic wishes which were within their reach.

Whenever I asked them why do they work this much hard and can’t even take some time for themselves, the only answer I got was “Because we need to earn and save money, for both of your bright future”.

One more experience I would like to share. From my childhood I was fond of traveling. But as I told you earlier both of my parents were employed, we never had a family trip till date. My father had his own passion of farming.

Every day after job he used to go our farm (even today) and returned home late night. Whenever I asked him to plan a family trip, he always had his own reasons. He never said – “NO”, but he just always used to postpone it for next vacation.

When I was in school, one day I stared asking my father to plan a trip now. I was literally annoying him. So finally he said Yes, but I knew my father very well.

So, I took a page from my notebook make it look like an agreement paper by sticking a Rs.10 note on it (because I had seen picture of Rupee on some agreement papers before) and I wrote down on that paper – “We are going on a trip this time, papa already has approved it and so papa will now sign this paper” and then I actually took my father’s signature on it.

This time I was sure that the trip is going to happen as there was a written “agreement”.

But, that trip didnt happen till date.

This may look like a very small funny incident to you, but I was kind of shaken because of this. Even after an “agreement” was there, the event didnt happen. The focus was still on making more and more money and not on the trip.

And this incident made my belief stronger that earning money is more important than everything and everyone else.

All these circumstances made my mindset that I should also go on the same path, earn a lot of money, keep it in my bank account or invest all of it into some property like land or real estate so that one day I can had over it to my kids.

My belief become more stronger during my college days

In my college days, when I was completing my post-graduation, I always had to hear one common sentence from everyone – “Study hard beta, you should get good scores otherwise you will not get job and will have to spread your hands in-front of others for money”.

I was very afraid of this statement because of my over imagination, I was actually imagining myself begging for money and only started working hard because of this.

I started relating everything with money. I started seeing everything around me though the lens of “money”.

I started realizing on every point of my life, that without money there is no life. If I wanted to live a happy life, we need money.. and it became my behavior that I actually could not live without money. Whenever the money in my wallet was approaching ZERO, I become uncomfortable. I start feeling like “Oh My God.. What should I do.. ?”

I could not see my existance without money. If money is there, I am there. If money is not there, I thought I will not be able to live life.

I started feeling like if money is this much important then how can I ask for it to anyone? Including my parents!

And this feeling increased my hesitation in asking for monthly pocket-money to my parents.

I started feeling so helpless without money. But fortunately, I never had lack of money in my bank account and was satisfied with whatever I had.

How I turned a money minded person?

I was post graduate and still jobless. I had less money compared to my friends. I want to be on par with me. I wanted to have same lifestyle like them.

So getting a high class and well paid job was my dream just like every other youngster.

Now looking at my friends who had already started working and here I am still unemployed was quiet frustrating. I started feeling awkward, while asking for pocket money to my parents and a cycle got  started in my mind asking same question repeatedly – “How to earn more and more money?”

One of the funniest moment which happened with me, is when my mother took me to a numerologist, who was suggested by my father’s friend.

That person asked for my details like date of birth, education etc. and then while predicting about my career and personal life he said – “She does not have dreams like a common girl, She is totally a money minded person and wanted to live just for earning money”.

I started smiling and thinking in my mind “Isko kaise pata chala?”

I used to get lots of free advise from people (Our uninvited financial advisers) that money is not everything, dont run after money, money is evil and things like that.

Which made me confused. If money is not everything, then why all these people are running behind it?

When I lost all my pocket money

5th September 2013, it was my first week in college – Modern college, Pune. I was new in Pune at that time and hardly knew anyone. On that day, all students including me were busy in the arrangements for the event of teacher’s day. I placed my bag on one of the bench.

Meanwhile I got a call from my mother. I went out to receive the call and came back to class finishing the conversation very shortly.

After that event and one lecture, I went to a snack center which was on my way to home to buy some food. I realized that my wallet was missing. I called a friend of mine and asked him to take me back to college, because I didn’t even have money for buying a bus ticket or for lunch.

I searched for it a lot, asked all my friends if they had seen it, but I was not able to trace the money. I couldn’t find it back.

I had a bad habit of carrying cash all the time instead of using card.

I lost all my pocket-money of that month and some other important things in one moment. But luckily my cousin was also living in Pune, so he came and helped me in that situation.

Since then, I used to carry less cash and started using card as much as possible. I learned that I should keep my money in various forms and at different places.

I started earning and my perspective changed towards money

A year after completing my PG, I started earning as a freelancer and I was little bit relaxed as I was not dependent on others for money. But my earning was not much, whatever I earned used to get spent.

Every month, money came in bank account and it just vanished in my expenses. Though, I was happy because of the feeling of independence, but still something was missing.

I wanted to earn more and more money, so that I can save for future.

Then, I joined Jagoinvestor Team

Before I joined Jagoinvestor team, I saw money as something which is to be earned and invested, and not for spending it for enjoying life.

But then my life changed and my perspective about money totally shifted. I came across various dimentions of money.

I used to hear my teammates talking to clients about their investments for their goals. At first I was completely unaware about goal based investing, which is what is practiced at Jagoinvestor (click here to get help from our team). I even created an audio related to goal based investing which you can hear below.

Only after creating that audio, I really understood why linking your money with goals is important and how it gives real meaning to your money and investments.

https://www.jagoinvestor.com/wp-content/uploads/files/goal-based-investing.mp3

I had never looked at my money from this point of view.

We started having conversations at tea time and lunch time which made my ideas more clear about money. I started looking at money with a completely new perspective and in a more healthy way..

After that, when I looked at my bank balance it was looking like meaningless money, which was just lying in my account without any purpose, because of which it just got spent here and there without any planning, this this resulted into increasing my monthly expenses.

But now I have understood that the money is to be used for my important goals and has to be spent in a meaningful way.

I decided to give a purpose to that money.

My previous perspective about money have changed and I now realize that money is not just for earning or investing for future, but also to spend it for things we love and desire. Just accumulating money into bank account without any planning is meaningless.

There has to be healthy balance between spending and investing both.

We should keep a part of it for ourselves apart from our routine expenses and savings, so that we can live the life which we dream about.

How money is related with happiness?

Last week Manish Sir, gave me a 30 min video to watch and asked me to watch it till end, as it will give some new ideas around money.

I watched this video from Mr. Nilesh Shah about money, investment and Mutual funds. In that video one statement he made which took my attention was

“Money is not important – Make this statement once you earn enough money to spend your life smoothly”.

I strongly suggest you to watch this 30 min video below.

Happiness does not come just from accumulating more and more money, but how you make use of it. If you think of it logically then you will realize that money has become an inseparable part of our life. We cannot buy happiness directly with money, but still we depend on money at some point to be happy.

Writing, traveling, designing various crafts are the things that I want to do more than anything else. It’s my passion. But if I think of following any of these things, I can’t do that without money. Also, I need to have enough money with me, so that I dont have to worry about my basic needs and desires in life, so that I can find time to do things I love.

In short, money has has its own place and value in our lives.

My current opinion about money

I saw everyone around me just earning and passing on to future generation by compromising on their desires and wishes.

I think thats not the correct way to deal with money. If everyone will pass their own wealth to next generation, then who will use it?

If I earn a lot of money just like my parents did and in future my future generation (my child) also choose to earn his own money then what will happen with my investments or savings?

I now want to save for future, but at the same time, I also want to spend it wisely so that I do not regret fulfilling my hobbies and dreams. If I earn Rs 100, I will use Rs 30 for my basic needs, spend another Rs 30 for my wishes and desires (like travelling, shopping, eating out, entertainment) and save Rs 40 for future, which can be used by me only or can be passed to my children.

How I feel after sharing my story

When I took this post to write on, at first I thought I may not be able to write much on this topic. But once I actually started writing, it became more exciting than I thought about it.

I started realizing, how different I was earlier and what have I became now. Meaning and importance of money has changed completely for me throughout all these years and I didn’t even realize it.

Now when I read this article myself,  I feel like I was completely a different person before. All these changes happened because of the experiences in different situations and the environment where we live.

This was my experience about money throughout my life.

What is your money story?

If you want to write your money story, Leave your details here and we will get in touch with you with next actions.

What do you think about my money story? Did you enjoy it? Can you share your views about money and how it changed over the years?

7 sites where you can easily learn stock trading without risking your money

Posted on by Jagoinvestor

Do you want to learn stock trading, but don’t want to lose money in the process? In this article, I’m going to tell you about 7 best virtual trading websites or apps which will help you to learn stock trading without risking your money.

virtual trading

A lot of investors are excited to know about stock markets and how they can make a lot of money. They open a Demat account and start trading based on tips from various third party websites, or using their own judgment. But in the process, they lose a lot of money because of various mistakes.

However now, it’s easy to first practice stock trading. Have you heard about virtual stock practicing apps or websites? Have you ever tried using them?

How Virtual stock trading works?

Let me explain virtual stock in market India for those who are new to this

  1. You open an account on the virtual trading platform or app
  2. Then login to the account and load some virtual money in the account like 1 lacs or 10 lacs to start with
  3. You can then start buying and selling various stocks as you do in real life
  4. Like this, you can make various trades and see your profits and loss over time
  5. Over the next few weeks, you will learn how stock market trading works and you can also see how you have performed
  6. Once you are confident about your abilities, then you can open a real trading account and start stock trading with your real money

Now let’s look at some of the websites which you can use to practice stock trading.

1) Moneybhai

Moneybhai, a virtual stock trading game is a product of money control virtual trading which is popular in India. In this game you will get Rs.1 crore virtual money on your portfolio account and also the limit of Rs.1 crore intraday trading limit, which means that you can only buy and sell worth Rs 1 crore in a day.

You will have the option to invest in stocks, mutual funds, FD, bonds, etc. So here you have lots of options for investing with the imaginary brokerage charge of 0.50% in the virtual trade market. This is a great feature because here you are also paying virtual brokerage charge which you have to pay in real life when you trade with your real money, so that is taken care in this website.

Who should use this one: If you want a lot of options to invest like FD, bonds, mutual funds, stock, etc. then this game is good for you.

Moneybhai

You can start trading at any moment once you are logged in. If you feel that you have made any mistake in investing or you went wrong at any point then you can reset your portfolio back to the original corpus of Rs.1 crore and start again. I personally feel that one should not use that option of reset because then you don’t know how you are performing exactly.

2) TrakInvest

TrackInvest as the name suggests itself is an investment guide. It is build up by considering the beginner’s point of view. If you have heard of the stock market but don’t have enough basic knowledge then this website will guide you in your virtual investment.

Who should use this one : If you are an absolute beginner who has no understanding of how the stock market works and you also need tutorials to educate yourself, then you can try this.

Trakinvest

The simple interface and helpful content will ease you into the world of trading. It is more easy than it actually looks. It enables learners by giving a better understanding of the market. You can build your portfolio with zero risks and improve your market skills.

It gives the investors access to the real stock market from multiple global exchanges to trade-in. It also builds up your portfolio like an expert and tests your investment strategies and leverage analytics.

3) Dalal street

Dalal street is an investment journal that offers you Rs.1,000,000 as virtual money at the initial stage and provides an experience of real time stock trading with a virtual portfolio.

Who should use this one: One who wants to learn stock trading by using investment journals can get the advantage of this website.

Dalal street

Here you can also discuss your strategies with like-minded participants in a group. This will help you to improve your skills and strategies by other people’s experiences.

4) Wall street survivor

Here you can get the actual experience of stock trading with the virtual money because of the updated data. Wall street survivor doesn’t believe in the concept of teaching through content only. As per their opinion investment is more like fun, challenging and potentially lucrative activity rather than education.

Who should use this one: If you want practical knowledge through tutorials and improve your skills and decision making which will found new strategies then try this site.

Wall street survivor

This website also offers some courses to educate you about stock trading and tests your knowledge about investment and personal finance. They have lots of articles and videos which will keep you engage in various activities by aiming to improve your skills.

5) Investfly

Using investfly is not as hard as making money through your investment. Investfly make it easy for you to make money first virtually and then in the real stock market.

Who should use this one: If you want to trade with advance information and more trading options then you can try this site.

Investfly

This website provides you a brief summary of how to start investing. This will be of great help for the beginner investor who had never invested in the real stock market. If you are interested in learning about stocks more then this will be a great platform for you.

6) ChartMantra

ChartMantra is a free online virtual stock market trading game cum analytical platform. It is a virtual game for trading. You can learn the basics of the technical analysis in stock trading and apply it to an actual stock exchange to analyze your portfolio.

Who should use this one : This platform is for those who want to learn stock trading and also its analysis.

Chartmantra

Here you will get Rs.1 lac virtual money and the objective of this game is to make as much money as you can from it and go the top of the rank. This game will analyze your buying and selling and give you an analysis of it so that you can track your record and apply the analysis on your real trading account.

The trading will cost 0.1% brokerage which will make the trading more realistic.

7) Moneypot

Moneypot is a game of virtual trading in India which provides the platform of virtual stalk trading to students, corporate as well as investors. It aims to connect an online investment community through a social trading platform.

Signing in here just like other virtual trading sites. Once you open the website you can see the sign-up button and play game button. you can click on sign up if you are new to this site and then can play the game.

Who should use this one : This is the best virtual trading site for beginner investors or stock market learners.

Moneyspot

Advantages of Virtual trading

The advantages of virtual stock trading are as bellow:

  • For beginners it is good way of practicing because it allows the direct buying and selling the virtual stock.
  • You don’t need to invest real money.
  • As there is no real money you can take higher risk.
  • You get basic understanding and knowledge about the functioning of stock market.
  • You can learn through actual practice rather than only reading.
  • Mistakes don’t cause any loss here.

Disadvantages of Virtual trading

The disadvantages of virtual stock trading are as bellow:

  • As we said you don’t invest actual money, there is a possibility that you may not get emotionally attached with it because you are not losing anything in any case, which does not happen in real life.
  • If you don’t get emotionally attached to it you will get bored after some time and stop playing.
  • Sometime there is a possibility of getting bored because they are not getting any return in actual.
  • If you make profits in virtual trading, people tend to get very over confident about their abilities to make money

Now as you get a lot of options for virtual trade practicing you can start to learn to trade and get the real experience  of stock exchange. Leave your queries in the comment section and let us know your views regarding this article.

Buying Term Insurance Plan? Here are 20 Critical things to keep in mind

Posted on by Jagoinvestor

If you are planning to buy a term insurance plan in coming weeks, then you are at the right place, because today I will share dozens of points which any term plan buyer should know before they buy the cover.

So, if you have no idea of how does term insurance work, and if you have asked yourself – “Which term plan should I buy?”, then you are at the right place today.

Most of the buyers who are new to term insurance plans do not understand various critical facts and points which they should consider while they are buying the policy and because of that, I came up with this checklist which will help you.

Let look at each point in detail.

buy term plan checklist

1. Earlier you buy a term insurance plan, better it is

There is no minimum or maximum age for term insurance. Earlier you purchase the policy better it is.

Do not be very late because as time passes, your premium amount will also increase depending on your age and also if you develop any illness or disease, it will get tougher to get the policy later. So once you are clear that you require a certain amount of life cover, go ahead and complete the action within a few months.

2. Buy the term insurance policy only till your retirement age

Till what age should you buy a term plan? Should a 30 yrs old guy buy a term plan up to 80 yrs? The answer is NO.

You should not buy it for the longest tenure possible because you only need life insurance policy till your retirement and not beyond that. This is because not many family members will be financially dependent on you beyond your retirement age.

When we are young, we have more financial responsibilities, and hence it makes sense to take a big cover. But as our age increases, our assets will grow and at the same time, we will be moving towards the retirement age, at which point we no longer remain provider for our families.

3. Don’t get mislead by “per day premium” marketing gimmick

A lot of insurance companies have started to advertise their term insurance plans by sharing the cost per day basis, like for example – “Buy 1 crore term plan just for Rs 25/day”. However, note that these numbers might be applicable only for a certain age group and tenure of the policy.

Like it might happen that the advertised premium per day is only for the clients around 25 yrs and for a policy of 40 yrs.

cheap term plan premium

Your case will be different and the premiums might differ for you, so don’t get trapped by the lure of cheaper premiums.

4. Don’t buy single premium policies

At times, you have to choose between single premiums vs. regular premium while purchasing a life insurance policy. A lot of people think that just because they can afford to pay a onetime premium, it makes sense, but it’s not true.

Other than some cases, it does not make much sense to pay a one-time premium (single premium) while buying a term plan. The best option which will work for most people is the yearly premium. So if your agent is trying to explain to you how a one-time payment will help you save the cost, run away and don’t fall for it.

5. Take an increase in premiums in a positive manner

This is a big one which is critical to understand.

When you buy a term plan (or even health insurance), sometimes your premiums can increase after your medicals are done and you may be asked to pay an extra premium. This increase in premium is due to health issues and it’s very valid to ask you to pay this extra premium.

Most of the buyers are very critical of the premium increase and choose to not move ahead or postpone their decision of buying the plan.

However you should understand that the premiums increase is a natural thing to happen if you are of the high-risk category (like a smoker, alcoholic or if some past illness). It’s actually a good thing that the company is beforehand checking the facts and still offering you the plan, though at a little high premium which is very fair from their point of view.

If you are still not clear on this, you should learn how insurance companies work and what is their model?

At that point, rather than postponing the decision, the best thing is to go ahead and buy the policy.

6. Don’t get over-excited by term insurance riders

“Riders” are great add on with a term insurance plan, but only if you really require them or if they are specific to your case. Don’t add them just because it’s available and gives you a sense of more security. I mean if you do a lot of travel and are most of the time in your case, the risk of dying in an accident is higher for you, so in that case, you can add an accidental rider. Here are various types of term plan riders

  • Accidental Death Rider
  • Permanent & Partial Disability
  • Critical Illness
  • Waiver of Premium
  • Income Benefit Rider

In the same way, if you feel that you want to cover the risk of some critical illness in the future and don’t want to buy a separate policy, then you can add critical cover. But don’t add any term insurance riders for the sake of it.

7. Buy the basic version of the term insurance plan

A term plan comes into various flavors nowadays. The most basic one is the one which pays you a lump sum on death. However, there are other variations now which also gives you income for 10/20 yrs along with the main cover, or pays only the income for the next 10/20 yrs and a small lump sum at the time of claim.

I think one should just choose the base policy in most of the cases. Most of the other options are designed for very specific situations and they are not “better” or “bad” compared to the base policy. To check this, you can go to any term insurance premium calculator and find out the premium with rider and without a rider.

8. Tell them if you are smoker/alcoholic

One of the worst things you can do while purchasing any life insurance plan is to hide the fact that you are a smoker or consume alcohol. Please don’t hide it. There is nothing like a best term insurance plan for smokers in India at the moment.

Your premium calculation happens based on this critical information and if you hide these facts, then you are actually breaching the contract with the company and almost always your claim will be rejected at the end. Also, don’t think that just because you smoke just once in a while does not make you a non-smoker.

Below is some data from economic times on the rising number of claim rejections because of the hiding of information.

Claim rejections in life insurance

If you smoke (even though every fewer number of times), you are a smoker in the eyes of the life insurance company. Same is the case with those who take alcohol.

Make sure you fill your own form because there have been cases when an agent just mentions the policyholder as non-smoker or non-alcoholic to make sure the policy is easily issued.

9. Don’t hide your health information

Another grave mistake done by policy buyers is to hide any critical health information while purchasing the policy. If you have any health issues or have gone through any major operations/surgeries then you should clearly communicate that to the insurance company. One of the reasons for term insurance claim rejection is hiding important facts while purchasing the policy.

Please don’t wait for the insurance form to ask you the exact details.

An insurance policy is actually a proposal from your end in the eyes of law where you have to disclose all the facts and the company will accept your case or reject it. So the bonus of providing all the information is on you.

10. Don’t hide your family health history

Even your family health history matters. If your parents or siblings have some illness, then even that should be shared by you. Please don’t hide it because even that information impacts your premium.

Many people think that just because their parents had diabetes, it does not matter at all. That’s not true.

11. Don’t take small insurance cover (like 10-20 lacs)

Do you know that the average sum assured per India is in the range of Rs 90,000 to 1 lac only? Indians on average are highly uninsured, however, that’s mostly true for those who do not have term plans. But even those who have term plan try to cut the corners and eventually take less term insurance cover.

The most favorite number nowadays is Rs 1 crore. I see most of the people just taking a 1 crore term insurance plan thinking that it’s the right number. No, it’s not the case.

life insurance formula

With the rising costs and lots of aspirations, Rs 1 crore might not be enough for most of the families all their life. I suggest you should take a good enough cover which gives you enough peace of mind.

Make sure you add up all your liabilities, 300 times of your monthly expenses and some more amount which can help your family reach your other financial goals and take at least that much cover.

If your life insurance requirement is Rs 1.3 crore, better than a 1.5 crore and not 1 crore.

12. Don’t overanalyze and delay your decision

Do you see that ad these days on TV where a lady shouts on her dead husband for forgetting to buy the life insurance even though they had decided to take it

“Kya, tum term insurance Lena bhul gaye, ab Ghar ka kharcha Kaise chalega”?

One of the biggest issues with most of the potential policy buyers is that they want to buy the best term insurance policy and don’t want to make any mistake. They are aware that they need a life cover, they also start searching for the policy, do the term insurance comparison, but then start to over-analyze the policy, its features, the premium comparison and what no.

Finally, they just don’t take any decision because of the analysis paralysis. They postpone the decision and think that they will “soon” buy it.

Don’t do this

But a decent term plan asap. Do some study, but don’t get into that zone where you are just stuck because of small points. It’s better to have a good term cover with any company, rather than having no cover trying to search for the best company.

13. Don’t forget adding nominee name

While filling the insurance form, make sure you carefully put the nominee name. But who can be a nominee in insurance? Ideally, it should be wife, children or someone whom you want to pass the term plan money. But try to avoid very old people as the nominee (in general).

Also make sure you mention this fact in your WILL too, or if you are not going to create a WILL right now, you can take the life insurance policy under MWP Act, so that your nominee will be the final person (it can only be wife and kids if you add MWP) who gets the money.

If you have bought the term plan long back and now your preference has changed, it’s better to change the nominee name.

14. Don’t take more than 1-2 policy

You should ideally have 1 term plan policy in your life insurance portfolio, the max can be 2 policies. But nothing more than that.

I have seen some people dividing their 2 crores of the cover into 4 policies of 50 lacs each with 4 different companies and it’s a little bit of stretch. In almost all cases, 1 single policy of a big amount is good enough.

However, if you still feel that you want to break it into two policies, that’s the maximum you should do. Also, some people who are buying another term plan after a couple of years should not note this point that they should eventually not have more than 2 policies.

15. Disclose the old insurance policy

When you buy any life insurance policy, it’s mandatory as per their rules to disclose the old insurance policy you already have. In most the cases, when people buy a term plan for the first time, they already have a couple of traditional insurance plans, but they fail to declare that.

I suggest you don’t do that because as per life insurance policies, a company should know how much coverage you already have and only based on that they will offer you additional cover.

One should disclose old insurance policy while purchasing new insurance policy

If you have already bought a term plan without mentioning your old policies, you should reach the customer care of your term plan company and share with them about your old policies.

16. Be open to try online brokers

There are various online brokers which are building a long term business in the insurance space and provide various extra benefits to their customers like fast service, claim settlement assistance without you (customer) incurring extra cost, because they get compensated by the insurer (without putting any additional cost on your pocket).

The premium for you is the same if you buy it from the company directly only or through these brokers. These brokers give you various options to choose from and help you buy the policy which you want.

You can approach these brokers if you really feel they will add value to your transaction. I am not saying that online brokers are the only way to buy. If you are very critical of them or are old fashioned, then you can directly reach to company or your neighborhood broker.

17. Check the policy papers once you get it

One of the things which you should immediately do after receiving the policy is to check all the fine points and a copy of your medical examination. Nowadays, the policy papers have your medical records.

Kindly go through each point and make sure things like your age, name, blood group, address and other important things are mentioned correctly.

There have been cases, where the information has been wrong. If things are wrong, you can reach out to their company customer care to get it corrected.

18. Don’t fall for “10 times of Income” marketing

Almost all the call center marketing people try to sell you the cover equal to 10 times your yearly income. This often is a very simplified way of finding your life insurance coverage.

A better way to find out your coverage is to find out 300 times your monthly expenses and add up your outstanding liabilities to it. In the end, you can include 30-40 lacs more into the final number to take care of your other financial goals in future like kid’s education, etc.

For example, a guy with monthly expenses of Rs 50,000 per month and with 60 lacs of the outstanding loan will need 300 x 50,000 + 60 lacs = 2.1 crores at the minimum. So he can take a 2.5 crore term plan for himself.

However much life insurance you should take is a function of your expenses and liabilities and not your income. What if a person earns 6 lacs a month, but a modest Rs 50,000 month expenses with no liability?’

How to calculate life insurance cover value?

The “10 times of your income” marketing will say that he should buy a 6 crore term plan, whereas his right number would be in the range of 1.5 to 2 crore only.

19. Choose a strong and good brand while choosing Insurer

There are 24 life insurance companies in India (the year 2017) right now. Do you think each of them are equal in terms of surviving, claim settlement experience (not ratio), dealing with clients, depth of medical examinations, integrity in conducting business and what not?

Here are the list of all the life insurance companies in India as of 2017.

  • AEGON Life Insurance
  • Aviva Life Insurance
  • Bajaj Allianz Life Insurance
  • Bharti AXA Life Insurance
  • Birla Sun Life Insurance
  • Canara HSBC OBC Life Insurance
  • DHFL Pramerica Life Insurance
  • Edelweiss Tokio Life Insurance
  • Exide Life Insurance
  • Future Generali India Life Insurance
  • HDFC Standard Life Insurance
  • ICICI Prudential Life Insurance
  • IDBI Federal Life Insurance
  • IndiaFirst Life Insurance Company Ltd – India First
  • Kotak Life Insurance
  • Life Insurance Corporation of India (LIC)
  • Max Newyork Life Insurance
  • PNB MetLife Insurance
  • Reliance Life Insurance
  • Sahara Life Insurance
  • SBI Life Insurance
  • Shriram Life Insurance
  • Star Union Dai-ichi Life Insurance
  • Tata AIA Life Insurance

When you choose a life insurance company, you should make sure you choose the one which has a strong presence, along with a good brand (not the biggest). Read reviews online and check their data and read about them.

20. Communicate to your family that you bought a term plan

You should share about buying the term plan with your family immediately along with the policy papers and the contact number of the insurer.

You can also write down the claim process on paper and keep that at a safe location and share it with family. I know it’s not an easy conversation to do even though it’s a logical thing to do. But at least communicate with your family about the important things they should be aware about.

20 things to know before buying a term plan

Steps to follow while buying the term insurance plan online

  • Understand your requirement first, find out how much insurance cover you are looking for
  • Go to various term insurance premium calculators on the web, and see what is the premium amount
  • If the premium is within your budget, then apply for the term plan
  • Make the initial premium payment and start the documentation
  • Medicals will be arranged for you by the term plan company which you should complete on time
  • Once everything is fine, your policy will be issued.

Let us know if you still have any queries?

7 alarming signals that you will not retire RICH in future

Posted on by Jagoinvestor

Will you become RICH in the future?

I know it’s your aim and you want to become rich, but there might be many things you are doing which are increasing your chances of remaining poor or middle class going forward. These are clear indications or signals that you might not become RICH and it’s time to do something about it.

Will you retire Rich or Poor?

I want you to read each point I am going to talk below and check if it’s applicable for you or not. Rather than an intimidating article, I want you to see this article as a wakeup call for yourself and redesign your financial life.

Signal #1 – Your Focus is not on increasing your income

Is your focus on increasing your current income? Do you think about it, fantasize about it and try to take any action? No, it’s fine if you are not succeeding right now, but the main question is – “Is it on the conscious checklist that you need to increase your income?”

Not increasing their income was one of the top most regret of most of the people in our survey

A lot of investors are just going with the flow of life and treat their income increase as fate. They feel they do not have much control over it and hence don’t do anything about it.

Given the way expenses are increasing these days, it’s almost a given that you will not be able to create wealth if you do not work towards an increase in your income.

Signal #2 – You depend too much on credit cards and loans

Are credit cards and personal loans your lifeline?

Are you consuming most of the things like Car, Bike, Vacations, Mobile on EMI? If that’s the case, you are in the EMI trap already and coming out of it is not easy.

Time will keep passing and it will be difficult for you to get out of it. This is a big signal that there is something seriously wrong in your way of life. Other than a home loan and the Education loan, or any emergency personal loan, if you have made taking loans and swiping your credit card every now and then for trivial things, it’s a big signal that you will not end RICH

Signal #3 – You are unable to save anything from last many years

Past performance is not an indicator of future, BUT past indicator is at least signal of what can happen in the future. If you are unable to save much from your salary from the last many years, it’s something to worry about.

There is a great chance that what has happened in past will continue unless you give it a direction yourself.

[clickToTweet tweet=”Once you reach #retirement, your income will stop, but your expenses will not. ” quote=”Once you Retire, your income will stop, but your expenses will not, That’s the reason you should start your retirement planning”]

It’s time to meet a good advisor and work on your financial life. Either you seriously need to work on your income potential or take some drastic steps to reduce your expenses.

There is huge number of investors who think that – “From next year, I will start saving” and this is not happening from the last many years. It’s a signal that you might not get RICH in the coming decades.

Signal #4 – You are already very late in saving

Just because you are late, does not mean that things can’t change now, but the effort you will have to put in will be a lot now. It’s like a game of cricket. If you have to chase a big score and you have lost some wickets before 25 yrs and have not made many runs, now you need to show the extraordinary game to win the match. The run rate required will be quite high.

Let’s take an example of 3 people who started saving at 30 yrs of age, 40 yrs of age and 45 yrs of age and they all want to retire at 60 with Rs 10 crore corpus.

The one who starts saving at 30 yrs, will have to save Rs 35,000 per month throughout his life. However, the one who was late by 10 yrs will have to now save Rs 1.15 lacs, around 3 times more.

And the one who is late by further 5 yrs (at 45 yrs) will have to save Rs 2.25 lacs (almost 7-8 times more).

late investing example

In the same way, in your financial life, if you have lost a good chunk of time already, you will have to save much more and take more risks to reach the goal of wealth creation.

I anyone wants to start their wealth creation, then you can open a FREE mutual fund account with Jagoinvestor.

Signal #5 – Every month-end is a struggle

If every month end a struggle for you financially?

If it’s happening from the last many years, you need to understand that this is not a good sign for the future. You first need to get into a situation, where your month-end is not a struggle, then at the next stage you need to move to a stage where you save some month each month and finally, you need to work towards a situation that you save substantial money each month.

Signal #6 – If your job opportunities are very limited

Are you into a business or a job where it’s very tough to survive to find another job easily? In short, are employed in a sector that does not have enough opportunities? If that’s the case, and if you rank yourself “average”, then you might find it tough to search for other jobs that pay better salaries.

Also if your skillset is limited, your main challenge is of “survival” and that’s not a great aim to have.

Signal #7 – You seek too much “safety” in your investments

Finally, if you are an investor who does not want to take enough risk with their investments, means they just want to get predictable near inflation returns, then it means you are a Fixed deposit or PPF lover. Nothing wrong in that, because it’s your design internally and you have got developed as that kind of investor, but you need to be clear that you are earning only near inflation returns.

Check out the video below where I talk about why investors should avoid fixed deposits for long term investments.

If you invest in FD’s or equivalent products, your corpus will become bigger and bigger in number over the years, but it will not increase your purchasing power. Unless you invest very huge amounts, the corpus you will create will not be enough to be called RICH in the future.

How many signals are present in your financial life?

Out of these signals which we discussed above, how many are true for you? What are your thoughts on the points above? Can you share them in the comments section?

Hey Married Men – Do you know about buying Life Insurance under MWP Act?

Posted on by Jagoinvestor

Do you have any life insurance? And are you really very sure that it will protect your family?

Majority of people who buy life insurance in India, buy it for the sole reason of protecting their family’s future. But is taking the life insurance a sure shot way to protect your family (I mean your immediate family here, which is spouse + kids)?.

protecting family under mwp act

If the primary breadwinner dies because of any reason, the family will have to suffer in absence of a regular income. The spouse will suddenly not get any income and might have to start earning. Your family and kid’s future is also at risk.

Let’s see some risk your family has 

  1. What if you are businessmen and you owe money to someone? After you are dead, the creditors will approach the court and they will get the money out of your life insurance proceeds
  2. Consider you have a big home loan which you have not accounted for while taking a term plan. If you die, the first right will be of the home loan lender because the loan is on your name. The right of the family comes only when your loans are paid off.
  3. What if you have not created your will and there are family members who claim their right in your life insurance proceeds?
  4. What if you yourself change your mind later and don’t want to give the insurance proceeds to your own family?

Are you prepared for this situation? If not then think about it. There is a way which will help you at some points if this such situations appears in-front of your family in your absence and the solution is MWP Act.

Click Here to Buy Term Plan

Have you heared about MWP Act?

MWP means Married Women’s Property Act. This act is prepared by taking into consideration the rights of a married woman on her property. According to MWP Act . the earning of a married woman in India is considered as her own property and this Act Protects the property owned by a woman from Creditors, relatives and even from their husbands.

Buying Life Insurance Policy under MWP Act

MWP Act 1874 under which Section 6 deals with life insurance. If you buy a life insurance under MWP Act, then it will protect the women’s right on the life insurance proceeds money in all the cases. Even the husband can’t do anything about it once the buying is bought under MWP act. This applies to all kind of insurance policies be it a term plan or an endowment/money back plan.

mwp act meaning

Who can be the Beneficiary and Trustee?

When a policy is bought under MWP Act, the policy is treated as a TRUST and its guarantees that the proceeds from life insurance policy are free from any creditors or court attachments.

The first right is of the family only (women and kids). Imagine if you buy an endowment plan which matures in 20 years and you bought it under MWP Act. Once the policy matures, then even the person who started it will not be able to claim anything. The first right will be of the beneficiaries mentioned in the policy.

Beneficiaries can be:

  • The wife alone
  • The child/ children alone (both natural and adopted)
  • Wife and children together or any of them

Trustee can be:

Unlike beneficiaries, having trustee is not mandatory for this MWP Act. The policy holder can mention one or more trusties. Having a Trustee is not compulsory but if the beneficiary is minor then in that case it is compulsory to have a Trustee. The Trustee should not be minor. The Trustee can be change whenever the policy holder wanted. The Trusties can be –

  • A person
  • A bank
  • An institute
  • Beneficiary herself/himself

How will the beneficiaries get benefit ?

When something wrong happens with the policy holder and the insurance is claimed by the family, the creditors can claim for the insurance benefits. In this case the family members will get less benefit of the policy. Or sometimes the other family members can also claim for the part in that policy if the policy holder does not have will.

But if the policy is covered under MWP Act then the whole benefit will go to the wife or kids (whoever the beneficiary is) of the policy holder.

Procedure to buy life insurance under MWP Act

The process is very simple. All you have to do is fill up a MWP addendum form separately at the time of buying the policy. Your agent can help you with that form or talk to the company in case you are directly buying it from the insurer.

However note that it can’t be added separately once you have completed the process of buying the life insurance (means you can’t add the MWP act later)

mwp act addendum while buying life insurance policy

Who can take a Life insurance policy under MWP act ?

Any married man can take a life insurance policy under MWP Act. This includes divorced persons and widowers. The policy can be taken only on one’s own name, i.e., the life assured has to be the proposer himself. Any type of plan can be endorsed to be covered under MWP Act.

Difference – Insurance With MWP and Without MWP

There is not a lot of difference in taking a life insurance under  MWP Act or without MWP Act but we can see some points which shows the difference. See the following picture.

Life Insurance Policy with or without MWP

Are there any disadvantages of buying policy under MWP Act?

Yes, There are disadvantages to signing the MWP addendum as well

  • The Beneficiaries cannot be changed. In case at some point you decide to change the beneficiaries . It won’t be possible if you sign a MWP addendum.
  • Loan cannot be taken on the basis of the policy. The policy could not be used as a security against loan.

That makes it also necessary for loan providers on Life Insurance policies to check before taking it as a mortgage for lending whether the policy does not contain any MWP addendum, as they will not get the benefits from its proceeds.

Let me know if you want to know more about this?

1 small trick which can drastically increase your saving rate each month

Posted on by Jagoinvestor

Do you want to save more money each month?

Today, I am going to reveal a secret trick that will help you to increase your monthly investments by some margin. This trick is more of a psychological shift in the way you think about money, emergencies and how much should you invest.

However, this is applicable to only those who are already investing some money on a regular basis each month.

Let’s start …

One small trick which can help investors in saving more money each month

You might be thinking that my secret is nothing but making your savings “automatic”. But no, it’s not the case. Making your investments “automatic” is just the first step, but there is something else that will take your savings to the next level.

Let’s get into it!

Here is how most people invest their money

  • They earn a salary
  • They spend money on their regular expenses (Rent, Grocery, Movies, travel)
  • Some money is left at the end of the month
  • and finally, a partial amount out of that is invested

Did you see that last line?

Only a “partial” amount is invested in the leftover savings at the end of the month is invested, not FULL.

Let’s dig deeper into this …

Take a sheet of paper (or open an excel sheet). Write down the total income you get in a month on the left-hand side, and on the right side, mention all kinds of expenses you have. Put Rent, Groceries, Maid expenses, Travelling, Eating out, movies and whatnot.

Now add up all the expenses and find the total expenses and deduct it from the total income you get each month. You will get your Monthly Surplus!. This is the amount you are left over each month and you should ideally invest this whole amount.

Below is a template which you can use for the calculation

How to calculate monthly surplus>

What is your monthly surplus?

Will you start a Recurring deposit for that amount or start an SIP?

I guess the answer is NO.

As an example, if a person is earning Rs 1 lacs per month and their expenses are around Rs 60,000, their monthly surplus is Rs 40,000 per month.

But this person will probably invest only Rs 15,000-20,000 per month on a regular basis. They will keep the rest as “Margin of Safety” amount which they might need, because what if they suddenly need it?

margin of safety

The margin of safety is a simple concept, it’s just an “extra buffer” for “what if things go wrong” kind of situations.

This is called a traditional style of cash flow handling which is a very intuitive and natural way of thinking. We all do it and it feels right!

But there are some problems with this approach

traditional cash flow planning

But there is one big problem

While this traditional method looks very natural, there is one big issue with it. Here it is!

Once your investments are set, you feel a sudden excitement that now your investments are in shape, but because you have left a big margin of safety (the extra buffer), your expenses will automatically expand and eat away your margin of safety.

The mere availability of the buffer money will create various short term demands in your financial life and you will use that buffer each month.

Suddenly you will start ordering various things online (most of the time things which are not required), your eating outs will increase, upgrading your phone will appear within your budget, etc.

Supply creates its own Demand – Economics 101

The availability of money will create the demands in your expenses and almost all the time you will justify them. So from Rs 60,000 expenses, you will see that automatically it’s reaching Rs 80,000.

And after some time you will be used to Rs 80,000 per month expenses.

Just imagine, if the person had started a Rs 30,000 SIP and left just Rs 10,000 as a margin of safety? Can you see that here the person still has a margin of safety and invests 50% more amount each month?

What about Rs 35,000 SIP and just Rs 5,000 as a margin of safety?

Welcome to 10% margin Cash flow Management System

This is the crux of the system.

We all feel that we need to keep a big margin of safety because in our mind things will go wrong. And they will!

There is no doubt that things can go wrong in some months and some unexpected expenses can come up which can really disturb your regular investments and that’s why most of the people leave a big buffer between expenses and investments.

However, let’s deal with reality.

Most of the times these emergencies are not real emergencies and if we didn’t have enough margin of safety, we would have justified them as “not important” expenses!

Also, you should not depend on your monthly cash flows for emergencies and have a separate fund that can be touched in case a real surprise expense comes up. I call this new system as “10% margin Cash flow System”

10% margin Cash flow system

Here is how you design this cash flow system

Step 1: Write down all your expenses and make sure you put realistic numbers, neither less nor very big.

Step 2: Calculate 10% of your expenses and that’s your margin of safety. If your expenses are Rs 40,000 per month, then your margin of safety is Rs 4,000

Step 3: This margin of safety amount is the only extra money you will keep with you each month apart from your expenses, and even this money should be auto invested in a liquid fund, which can be redeemed on a short term notice of 24 hours.

Step 4: Make sure that before you start your actual investments on a monthly basis, you create enough emergency funds which can be 3X of the size of your monthly expense. Any sudden surprise expenses which are outside of your regular expenses list will be taken care of from this emergency fund and not your monthly surplus.

Step 5: Set up your investments in an automatic mode (like SIP in a mutual fund, or a recurring deposit or a combination of both) for all the money left other than regular expenses and 10% MOS (margin of safety)

Here is how it looks like

Taking the same example of Rs 1 lac income, the guy has Rs 60,000 expenses in total. His margin of safety is Rs 6,000. Rest amount left is Rs 34,000

For the first month, he puts this full 34,000 in a liquid fund. If any additional money is left from the 6,000 MOS then he puts that in an emergency fund, else he can spend it. For next 2 months, he puts 68,000 more in a liquid fund and his total liquid fund amount is around Rs 1 lacs +

Now, this guy will set up his SIP of Rs 34,000 per month.

Now imagine what happens in 4th month

In 4th month, here is how it looks like

  • Rs 34,000 SIP is executed and the money gets invested (make sure the SIP date is in the start of the month)
  • Rs 60,000 is the regular expenses
  • If there is any need of extra spending, then Rs 6,000 extra is already there (most of the months should be like this)
  • If for some reason, some surprise expenses come up, you redeem that much money from liquid fund and use it.
  • Repeat!

Can you see how the whole game changes here?

Margin cash flow planning

I hope you got the whole idea of this new model now.

You can always withdraw the money if a real emergency arises

I tried this concept on one of my friends last year. I asked my friend if he will be able to do any SIP?

He said “NO”.

His expenses were almost equal to his income. However, I said that he should start a small Rs 5,000 SIP. He said that he will not be able to because he is not left with any money at the end of the month.

My simple solution was – “Withdraw the money in a month if you really need it”

His SIP ran for the next 12 months

He finally started his SIP with a lot of reluctance and the SIP ran for 12 months straight ! with 1-2 withdrawals in between. However, my friend was proved wrong.

The mere unavailability of money made sure that he had to fit his expenses into this “visible income”.

So don’t worry and dare to start a bigger SIP then you can handle, in the worst case, you can always STOP it, you can always redeem some money back if you need it. But in my experience in most cases, people are able to handle bigger investments each month compared to what they imagine.

Let us know if you liked this article and if you are going to implement this new model of investing?

Do you really think this unconventional way of cash flow management can bring different in your financial life?

13 things every investor should experience at least once in their financial journey

Posted on by Nandish Desai

It has been around 8 years we as a team are working in the personal finance space. We have worked with a few hundred investors one on one and there is a lot we have learned from their sharing and life experiences.

investors experience

We see personal finance as a journey and any journey will always have experiences. In today’s article we have tried to highlight some experiences which every investor should experience at least once, there is no compulsion but there is something to learn from each one of them.

1. Experience a bull run

For the first time in the history of Indian stock market the sensex has crossed 30k mark. The market is currently riding on a high PE (Price per earnings ratio).

Current PE is around 22-23. In such situation existing or those who started investing 3-4+ years back experience a spike in their portfolio. It’s a moment for them to celebrate as they see their wealth growing.

At the same time on the other side new entrants get attracted to the equity market. It is important to experience a bull run because in a bull run you are able to experience the real power of equity as an asset class.

Once you taste the blood (returns) you fall in love with equities. Bull market expands your risk taking ability, you get a sense of winning.

2. Experience bear market

A friend of mine jokingly came and said “ I made a killing in the market bust of 2008. I shot my broker.”

Remember 2008 market crash; the markets came down substantially in a very short span of time.

You can watch below video

Bear market is one of the greatest teachers in the world of investment. It teaches you patience, discipline and many other elements.

There are some very important lessons a bear market teaches an investor. Those who did not apply asset allocation strategy to their portfolio’s there money got wiped out in front of them. People chase returns but it is also important to check the risk on your portfolio. As your portfolio grows your risk also expands.

3. Experience Zero Bank Balance

Imagine having no money in your pocket and having a zero bank balance. It is a time when you hit the bottom and feel resigned and cynical about the world.

I have experienced the same. Some 9-10 years ago there was a time in my life when I had no job or business and was also not in a position to ask money from my parents. I approached a friend and took Rs.5000/- from him.

bankrupt no money in bank

At that time I was in Mumbai I went to Juhu beach, I took a stick and drew one line in the sand. I jumped the line and made a commitment to myself that I will never ever ask money from anyone and will create financial stability.

That day was a turning point in my life, my relationship with money and my career shifted and things started to move in the positive direction. The zero money day taught me a lot.

4. Work with a financial mentor

I always feel if you want to enhance your performance in any area than work with a mentor. It is said that when the student is ready teacher appears. Find someone and become a student of wealth.

Currently in my life I have a fitness mentor, business mentor and a hobby mentor. I surrender to all three of them and they help me in taking my life and business to the next level.

As an investor get a money mentor, someone who will help you to improve your money management skills, someone who will give an honest feedback to you. Do not have a mindset of saving all the time, some investors try to do everything on their own and are not willing to pay for quality advice. Your mindset is your true wealth and see that you invest in right  mentors.

5. Experience and engage with Charity

I recently came to know about someone who visits India every year and does charity of 1 crore. Last year he came and donated money to build an Olympic size skating ring for kids. Hundreds of kids practice on the skating ring every day and creating champions. What a wonderful GIFT he has given to young kids. This is awesome, this is inspiring and creates real fulfillment.

Below is a picture of the actual place.

Charity example

I don’t know the exact thing but there is some magic in doing charity. Charity adds a special dimension to your financial journey, it helps you to break your over attachment to money and teaches you the real meaning of the word “sharing”.

Charity gets you closer to abundance and you are able to free yourself from the trap called “scarcity”

6. Teaching about money to kids

Sunday morning you should do something special for kids to learn about money. Not just for your kids but it can be your society kids. Teaching is powerful; share your experiences about and around money with young kids or teenagers.

Most people do not take out time to teach KIDS about money.

You don’t have to be an expert, it is about sharing your heart with kids or teenagers in the area of money. You can do a small book read session, if you want we will help you in doing such short sessions.

7. Experience inflation

For this you need to leave your wallet, credit cards and mobile at home and carry limited cash with you. Take a Rs. 500 or 1000/- with you and see how much and what you can buy with that amount. Start making list of how many things you can buy.

The game is not about spending the amount it is about utilizing the amount in the best possible way. Trust me it won’t be an easy exercise.

inflation in India

When it comes to investing and inflation, what matters most is not what you make, but what you keep. As an investor you will always be having war with inflation and the only way you can defeat inflation is by learning discipline and simplicity.

Many investors are not in touch with inflation, they talk about it but they are not present to inflation when they get into the shoes of a spender.

8. Building personal finance library

People spend on having a home theatre but very few have a library at home. As an investor it is important to build your personal finance library. You will have some amazing thoughts while reading about money management.

Money management is a skill and you can acquire the same from reading good books. We have written three powerful books on personal finance, you can start with them and slowly add more books to your library.

Always remember your bank balance is directly proportional to your thought balance.

9. Experience the inner wealth and abundance

Go to some meditation retreat and experience meditation. I highly recommend vipassana meditation course to each one of you. Money exits in the outer world but the thoughts about money resides in your inner world. Your outer world around money is mere a reflection of what is going on inside you.

Doing a SIP or buying a real estate or buying GOLD is fine but what about your inner wealth, see that you don’t go bankrupt in your inner world. Creating balance between your inner and outer world is extremely important.

10. Experience debt

I am not saying if you are debt free then create debt. I have worked one on one with many investors who were in a debt trap and I could see their life changing after overcoming debt. Debt puts you on a slow poison and very few investors are able to break free from debt trap.

Debt Trap

When you fall in a debt trap it is not about money, it means you have mastered the art of mismanaging your financial resources. You fall in a debt trap only when you stop respecting money.

I have seen people putting a lot of effort in becoming debt free, I also know some of our clients who not just finished their debt but have created positive net worth for themselves. One of our clients once shared, “Easy ( credit card ) money has made my life tough”

11. Spend time with someone who is financially free

Create network of people who are financially free. Take someone for a coffee or dinner and have an empowering conversation with them. One of person who I admire a lot owns a few thousand crore pharma company, I look for opportunities to spend time with that person.

I have learnt a lot from that person and every time I meet it leaves me with a new insight about my relationship with money.

meaning of financial freedom

The way they view money, life, world and their work is amazing. The one thing to learn from them is their inner stance, financial freedom is an inner stance and not just a place to reach.

12. Experience completion with your parents

I know I am getting into a sensitive zone with this point and we have never dealt with such things on our blog. Your biggest wealth are your parents and nothing else but somewhere we kind of forget about it. Having a loving and caring relationship with your parents is extremely important.

You may acquire 1000 crore but if your relationship with parents is incomplete you will never experience fulfillment. If you are right now alive and reading this article it means your parents did their job very well. Do not expect anything more from them.

Write a thank you letter to them, do not try to change them or find any faults in your parent’s personality. Even if they are not alive try to have a completion with them, completion is an inner process where there is peace and joy. I am very sure when you start to run behind money your relationship with your parents will experience a rough patch.

13. Experience power of compounding

Start a small SIP and stick to it for 10+ years.

This SIP is not to achieve any goal but it is for you to experience power of compounding.

You can also document your experience and pass it on to your next generation. Power of compounding is magical and as an investor it is important to experience it. You can have anything in life by adding the power of compounding to your actions.

Start your SIP in Mutual funds with Jagoinvestor Help

Conclusion

Your financial journey should not be about chasing returns and only making profits. See that you fill your financial journey with rich experiences and see experiences as your teacher.

During the journey nothing is happening to you ( so stop taking things personally), in fact everything is happening for you and so cherish every bit of your financial journey and continue to make a difference.

Do share in the comment section if you could relate to the experiences we have listed, you are free to share some other life changing lessons that life must have taught you. Feel free to share the articles that we write on jagoinvestor and if you want you can get in touch with us and we can jointly create the content.

From successful CA to Entrepreneur – Real life Journey of Umesh

Posted on by Jagoinvestor

Here is the real-life story of Umesh, who is one of our long time readers. He agreed to share his life story on how he turned from a successful CA to an Entrepreneur. I am sure it will be an inspiring read for other readers and we all can take some learning’s from his story.

How a CA turned into an entrepreneur - A story

Over to Umesh …

I have been a follower of Jagoinvestor.com for the last few weeks. One post from Manish regarding how he quit his job with Yahoo was catchy and I responded back to him stating that I was happy for him as his story pushed me down the not so distant memory lane of my pursuit to being self-employed.

He has been kind enough to let me share the same with you readers and I hope I can add some value to the time that you will spend in reading the same.

And here it goes

I am a CA with over 25 years of experience. As a child, I had been brought up in the company of CA’s and when I had ceased to be an infant, my father – who is also a CA – joined Air India.

And thanks to his position in the national carrier, from my childhood days, I enjoyed traveling by air, in style and comfort of Maharaja Class… The jumbos of Air India really fascinated me as a child and with each passing year, my interest in them kept on growing. So much so that I decided mentally to become a pilot of one of those 747s.

This guy wanted to become a pilot

But I did not become a Pilot

Man’s wish can only progress towards reality when God concurs. In my case, God gifted me with powerful eyes and a nice pair specs and so my dream of becoming an airline pilot is still a dream.

I scored a distinction in SSC and had an alternate desire to become an Aeronautical Engineer – but the burdensome presence of Maths prevented me from opting for that even though I was getting admission. And then, like thousands of others, I joined Commerce and in due course of time the CA blood prevailed over everything else.

I ended up becoming a CA but airplanes and airlines were still part of my hobbies. Even during CA preparations, I used to read airline magazines!

I sent my resume to Singapore Airlines!

So much was the craving that the first CV that I sent was to Singapore Airlines! Knowing very well that it is unlikely that I will get a call. I was not interested in going in for CA practice as I found Taxation and Statutory Audit really taxing. I wanted to do something different – so in that pursuit, I started looking out for a good job or an assignment that I can manage on my own.

I struggled for several months and then my corporate life made a good and healthy beginning. And within a year and a half, I was able to finally enter the airline world on merit and Jet Airways became my third employer and the first in the airline industry. It was a dream come true for me and I simply liked the job.

I never felt that I was working, as airlines and airplanes were my passion and my work was though related to accounting was off-beat when compared to the typical book-keeping type.

I learned a lot in that company and ended up heading its Revenue Accounting unit as a GM at a very young age in comparison to those who were holding that position at the time with decades of experience. I progressed from there and moved on to head the function for 2 other airlines – one in India and one overseas.

I enjoyed the work even with Work Pressure!

Throughout my tenure in the airlines, I was positive and enjoyed the work though the work pressure was enormous, timelines extremely stringent as airlines being in the service industry have to work 24 X 7.

My wife and son and parents have seen me sometimes on the following calendar day but thanks to my passion, I always felt at home.

The best phase of my life was when I was overseas and working for an airline – the work environment was considered to be the toughest within the industry. However, my base was solid and passion too played its role very well and I felt that it was a lot easier than what was perceived.

It was a good exposure in dealing with people from different cultures, countries, and backgrounds. The flow was smooth – but my son was disappointed with the quality of education there and after due pondering, I chose to give his education priority over my professional satisfaction and we returned to India for good.

How I became an Entrepreneur?

By then, I had completed 2 decades in the industry and in my core specialization as well and I decided to do something different and become independent from the clutches of the employers. I had many tempting offers from the industry within India and overseas but I preferred to go the independent way.

Job vs business - which is better?

My family was with me and backed me solidly – I was in that age frame where if my entrepreneurial attempts fail, I would still have the opportunity to get back with humility to the corporate world. Initially, the going was tough and at times making me wonder if I had taken the right decision.

However, my wife was with and behind me like a rock and I remained committed to getting the first assignment before the bank account reaches alarmingly low.

I got my first assignment

Patience and eternal trust in god always pays and I got my first independent assignment overseas. And all in the house were happy and I was thankful to God for showering his blessings. It lasted for a few months – it was a unique experience as I was the boss of myself and had only the mirror to report to in relation to my work.

It was a great feeling and I still remember the moment when I sent out the first set of FEMA documentation to my bankers to get the inward remittance. Thereafter I have been able to keep the entrepreneurial spirit going with one assignment at a time – though I can manage more than one, I chose to work on my newer passion towards stock markets.

Since the past year, I have again been an active student of stock market and am learning by the day and have been helping a few make money by putting my knowledge to test.

I had my first stint as a trader for 2 years which was full of ups and downs and I had to take a sabbatical from the markets as I got an overseas assignment with my sleep hours slot was the active market hours slot in India.

Once I was back, I invested a significant amount in getting trained by the best in India and have since been working very hard to make this as my next profession – where I do not have to source business as the opportunities come knocking on the doors as long as I ensure that I have capital to take advantage of the opportunities.

Should I work for myself or someone else?

From Automobiles to Stock Market!

So in my career so far, I moved from automobiles to IT to airlines to BPOs to TMCs to stock markets – I have learned a lot from the markets – about stocks and related matters and about myself as well.

My ride thus far may seem like an uneventful and seamless but I went through quite a few rough patches and I always remembered the saying – If it were not for the rocks, the stream would have no song and also – Ships are safer in the harbor but they are not meant for the purpose.

In comparison to the present times, my salary was not that high especially after the 9/11 attacks in the US which changed the game altogether. Airlines turned out to be a good place for its vendors and not its employees.

16 habits which helped me become successful

However, I am thankful to some of my habits which helped me reach where I am today.

Few of these are

  1. I always ensured that I am able to pay off any dues immediately on my salary getting credited. Even if the amount was not due, I used to clear it to have surplus identified.
  2. I started investing in Mutual Funds – in NFOs with Dividend Payout Options. Such investments were made on a monthly basis and where there was no NFO in a month, I used to add to my holdings.
  3. I started a couple of SIPs and these ran for 3-5 years one of them was with Dividend Payout Option and one was the Growth Option – this ensured that when the market was up, the value of my investments would also be up.
  4. My father cultivated in me the habit of making sure that I keep making investments in the PPF account that he had opened in my name and then I opened for my wife and son as well and kept depositing whatever possible.
  5. Intermittently, I kept creating FDs – in companies – when the rate used to be 12-15% and in banks and worked hard not to prematurely break them.
  6. I invested in some shares [this was an unprofitable investment though] thanks to the friendly relative sub-broker who was so sure about the scrips recommended by him. I am still an “investor” in those carrying on a burdensome 5% of its original value!
  7. In the last 7-8 years of my corporate life, I started contributing VPF – additional sums as Voluntary Contributions to PF
  8. I had a car loan and 2 home loans – with hard bargaining, I could get a car loan at Zero Interest over a one year period and that helped me save close to 20-22% of the on-road price.
  9. With my above habits and 2 home loan EMIs, I was now having the real pressure to ensure that I do not end up breaking any of my FDs.
  10. Any increase in pay due to revision or change of job was used to either create FDs for home loan EMIs or to part pre-pay the loan.
  11. Sometimes, MFs used to pay handsome dividends and after retaining some for consumption, I used whatever little was left to make ad-hoc loan payments.
  12. Whenever I made an out of turn loan payment, I opted to cut the duration of the loan and not the EMI amount
  13. In the last couple of years of my corporate life, thanks to good revisions in pay, I increased EMI amounts as well which further accelerated the cut in loan term – obviously, the lending banks did not like me as their disciplined customer!
  14. Before I went on my overseas job, I chose to withdraw PF balance and much to the surprise of all, I made a significant part payment of the loans. I am sure many would have wondered if I was in my senses as PF is usually seen as the last resort for a person to touch – to be encashed only when one is retired from the services.
  15. Using up PF for a loan made a happy dent in the loan duration but the end was still far away – but I was feeling a bit relieved.
  16. Out of my final settlement from my last job, I cleared all the home loan dues and began my journey as an Independent Consultant with no hanging commitments.

The above may sound like a well-written script but the journey through these was tough, challenging and at times tense. There are still many who wonder why I am not working with one of the airlines and encashing my experience and knowledge.

I tell them that I am now used to not listening to anyone but my boss in the mirror and he is a tough guy and would not release me.

Should every salaried person become an Entrepreneur?

I have, in the last few years, counseled many regarding several matters, including why one should ultimately work as self-employed – this in no way undermines those who are in service.

Due credit also goes to some of the airlines/entities in India and overseas with whom I was/am associated as they helped me reach the state of Independence. Only those who are born entrepreneurs with no financial burden can start as a self-employed.

People like me and possibly many of you have to toil hard before even thinking of being on our own. Carefully note that since I am on my own, my insurance [car, health, critical illness, travel, term plan, etc.], welfare, administration, travel, infrastructure, capital expenditure, communication and possibly a few more are all on to myself.

Life as self-employed is not rosy!

So, please do not think that life as a self-employed is rosy. I strongly believe in the adage – ”The grass is greener on the other side.”

We have to learn to look at things from a neutral perspective and learn to remain humble, utmost patient and irrevocable trust in God and in our abilities to do the right things.

When we are looking at our future, we need to keep several things in mind – it is not possible to write about all these now, but suffice to say that such decisions have to be thought through and situations 10-15 years from now should also be considered before concluding on a decision.

My story is nicely covered by this picture which reflects the dream, the then reality and the present:

I hope my journey and my way of doing things gives the readers some idea about how easy / difficult it is to be self-employed and also financially disciplined. Whether or not you end up being self-employed, please be financially disciplined as money is required by all and the times are going to be tougher as we move along the path of this beautiful life.

Stay Blessed and financially safe!

Warm regards,

Umesh

Conclusion from Jagoinvestor

I think it was a fantastic life sharing and there were many lessons which can give you a great insight into decision making. It’s always a great thing to read someone else story, you get lots of inspiration and see how other people handled some situation. You get an idea of how things look like on the other side, you read about their struggles, achievements and eventually add the learning’s in your life.

I thank Mr. Umesh for this contribution and wish him the best of luck!

If you feel that you can also contribute to this blog (it can be an article, life sharing, valuable info), just get in touch with me using this form