Professional Documents
Culture Documents
GettingYouRich.com
Rohit Shah
Smitha Hari
Vidya Kumar
Version 1
Published: January 2014
About GettingYouRich.com
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Publisher:
GettingYouRich.com
Shah Rohit Financial Services Pvt. Ltd., Mumbai
Website
: www.gettingyourich.com
Email
: listen@gettingyourich.com
Authors:
Rohit Shah is a Personal Finance coach and a social entrepreneur. Rohit has co-authored four
Personal Finance eBooks. Rohit is Founder & CEO at GettingYouRich.com. Prior to starting
GettingYouRich.com, Rohit was a Corporate Executive. He worked for 14 years with IBM, Citigroup
& Sterlite and handled Finance, Project Management and Technology assignments. Rohit is a
CFPCM and Post Graduate in Finance.
Smitha Hari is an MBA and has 7+ years experience in investment banking, equity research and
consulting. She has Co-Founder a Financial Consulting Firm. Smitha works as Personal Finance Blog
Editor at GettingYouRich.com.. She has co-authored four Personal Finance eBooks. She is listed as
a personal finance expert on moneycontrol.com
Vidya Kumar writes regularly on our Personal Finance Blog. She is a management graduate with
an experience of 6 years in personal finance writing on various websites & blogs. She has coauthored three eBooks on Personal Finance.
Credits: The contents of this eBook have been originally written by the Authors as mentioned
above. Our knowledge in the personal finance area has been shaped over the years through
research and reading through various magazines, books, newspapers, conferences and thought
leadership of veterans in the financial services industry.
Rights: All rights are reserved by GettingYouRich.com. This eBook is made as a part of our
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be downloaded from our website under the FREE section. This eBook can be freely used by any
one for personal and educational purposes. However, any commercial usage is prohibited.
Disclaimer: The articles in this eBook are compiled & edited from the various articles written on
GettingYouRich.coms personal finance blog. While care has been taken to include latest and a
concurrent analysis, readers should engage a Financial Planner for a formal advice. This eBook is
not an investment advice. Errors & Omissions expected (E&OE). There is no warranty on accuracy
& we do not accept any liability for any error, omission or any loss in this regard.
Gratitude
This eBook is dedicated to Financial Planners Guild, India (FPGI) and
Network FP
Table of Contents
i. FINANCIAL PLANNING ............................................................................................................. 6
1. What is stopping us from Getting Rich? ................................................................. 7
2. 10 factors to consider while making your Financial Plan ................................ 8
3. Financial Tips for youngsters ................................................................................ 10
4. Financial Planning for new parents ..................................................................... 11
5. Women and Money ................................................................................................... 12
6. Cant afford Financial Planning? Do it yourself with these resources........ 13
7. A Guide to Asset Allocation .................................................................................... 15
8. Calculating your Networth - the why and how of it ......................................... 16
9. Health and Money- Is there a connection? ......................................................... 17
ii. RETIREMENT PLANNING ..................................................................................................... 18
1. All about Retirement Planning ............................................................................. 19
2. Falling short of retirement corpus? ..................................................................... 20
3. Now Annuities from Reverse Mortgage Schemes are Tax Free.................... 21
4. I am retired and I have surplus money ............................................................... 23
iii. INSURANCE .............................................................................................................................. 25
1. The why and how of life insurance ...................................................................... 26
2. 11 Smart Tips to buy your Life Insurance .......................................................... 28
3. All about life insurance policies under the Married Womens Property Act
........................................................................................................................................ 30
4. 6 Smart Tips to take your health cover............................................................... 32
5. Should you continue your ULIP policy? .............................................................. 33
6. What do you do when you have inadequate health insurance? ................... 35
7. 9 Tips to save on your Car Insurance Premium ............................................... 37
8. Common reasons why Insurance Claims are rejected .................................... 39
9. Accessing Insurance Policies online - What this means to you .................... 41
iv. INVESTMENTS ........................................................................................................................ 43
1. So what's the right way to invest in Equities? ................................................... 44
2. Top 5 Investment Mistakes to Avoid ................................................................... 45
3. Are Mutual Funds Direct Plans suitable for you? ............................................. 46
4. Looking for fixed income investments? Look beyond Bank FDs ................. 47
5. Are Gold Saving Schemes by Jewellers good for you? ..................................... 49
6. What is the best way to invest in Gold?............................................................... 51
FINANCIAL PLANNING
I am your friend. Whether you are young or old, single or
with family, wealthy or poor, I can help you. I can be
Product based or Fee based, depends on what you need.
If you plan to meet me then lets be prepared. If you
follow the right methodology, I can give you the best
results. It takes time but I can deliver. Check me, out.
I feel so sad when you look at me and think only of
Investment Planning. Remember, I am Budgeting, Risk
Management, Retirement, Goals, Investments, Taxes and
Estate Planning.
But why plan? Well, if you spend 90% time in planning,
then execution takes only 10%. So do you like this way or
the other way?
Do you want to Get Rich? I can help.
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2.
3.
4.
Selection of the Planner: In addition to the expertise and certification of the planner,
check the quality of testimonials. See the overall cost structure of the engagement and
see if you are required to execute the plan only through the planner. Normally, it will
help to retain the flexibility to execute the plan through the planner or through any
independent channel. Does the planner need to in the same location as you? Not really,
as we all live in a virtual world. Financial Planning is not a rocket science and can be well
done through tools like Skype. If you prefer personal service, then a local financial
planner may suit you well. Recently, SEBI has mandated Investment Advisers to be
registered with SEBI and comply with their regulation. Ensure that either your planner
has obtained the registration or has at least filed the application with SEBI.
Fees: How much should you pay to your financial planner? Well, this depends upon
factors like the level of service, size of your assets, experience and reputation of the
planner. We have noticed that making a decent quality comprehensive financial plan
could you cost you at least Rs. 15,000, to start with. You may also like to clarify on the
yearly renewal model that your planner offers. Remember what the Master said. Price
is what you pay and the value is what you get. You should focus more on quality of the
engagement and the values that your planner demonstrates. Integrity, Transparency
and Client First attitude is something that will help you go a long way in working with
the chosen financial planner.
Asset linked charges: Some planners may charge you fees as a percentage of the total
assets they advise. In Mutual Funds, this model is typically observed. Based on the
experience and the value addition by the planner, you may be charged 1% to 2% of your
portfolio size. From a client perspective, its natural to resist giving such variable fees
and ask for a fixed fee. We suggest that you strike a balance between your need to cap
the fees to giving an incentive to the planner. In the percentage sharing model, you are
naturally motivating your planner as his income is directly linked with the growth of
your portfolio.
Payment Terms: Financial Planner may demand fees to be paid in advance. It depends
upon the engagement fee structure and the quantum of the fees. For substantial fees,
you may like to pay in parts and link to deliverables. Whatever you agree, remember
that if you are working with a credible Financial Planners, he is not going to run away
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with your advance fees. The planner will only benefit from your engagement only if he
adds value to your finances and serves you for a long period.
5. Documentation: Ensure the terms of the engagement are signed in writing. Review the
confidentiality clause. Once you start the engagement, ask your Financial Planner to
send you the minutes of every meeting. Make your notes as well. Remember, verbal
discussions are not considered as advice. So make sure you put up all queries in writing
and ask the financial planner to give you a written response. Ask your planner to give
you a schedule that will be followed during the engagement. Unless you really need,
avoid physical copies of the plan. This is efficient and gives better security to your
information.
6. Financial Assessment: Once you agree on the engagement, the first thing you need to
work on is your current financial assessment. This is also called the baseline phase. Here
the data that you provide to your planner forms a crucial part of your plan. This
includes your monthly budgeting, bank balances, Fixed Deposits, MFs, Stocks, Insurance
Policies, Assets, Liabilities and Financial Goals. Think through budgeting and financial
goals data. Involve your spouse. Normally, this is a lengthy exercise and clients tend to
procrastinate. You should provide as much information as possible to your financial
planner. Strike a balance between giving very little to too much information. Review the
checklist that the planner has provided and provide all data points and supporting.
7. Iterations: Normally, your financial planner will allow you to change data points once at
the draft plan stage. Ensure to review your draft plan so that any discrepancy can be
corrected. Go through the plan before your draft plan review meeting and understand
how your planner has structured the plan. You may like to suggest a different way to
prioritize your goals or a different way to execute. You may wish to optimize say your
retirement planning baseline or rework with your spouse on the life insurance corpus
that you must leave for the family if you are not around.
8. Procrastination: I have observed that people delay getting engaged with planners
inordinately. Sometimes, the engagement is started and the planners fees are also paid
but clients are not able to dedicate quality time to provide inputs. Every single day of
delay in implementing your plan could cost you money. Compounding is the most
powerful tool that helps you to accumulate wealth much faster. The earlier you start,
better it is for you.
9. Execution: Your planner will provide you an execution plan. Like everything else in life,
we never have enough time to do everything. So you should prioritize. An effective
approach is to space out the execution of the plan over say two quarters. This month,
address emergency corpus and health insurance. Next month, take a term plan and
then work on your insurance policy consolidation and so on. Make sure to put a target
date to all actions. Evaluate the products that your planner has recommended. Ask him
to justify his recommendations. Ask your planner to provide alternate products. A good
financial planner may already have detailed product analysis carried out.
10. Reviews: Agree on the review schedule with your planner. Block your calendar in
advance. Review your implementation plan in advance so that you can take your
planners help in the challenge areas. Look for status of your goals and overall plan
implementation.
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2.
3.
4.
5.
6.
7.
As soon as the baby is born, you need to include him/her in the medical/health
insurance plan that your company provides so that unforeseen contingencies are
provided for at least from a monetary perspective.
You are very happy and on an emotional high when you become a parent and
companies use this to the full extent. There are many marketing gimmicks which tempt
you to spend on a lot of products which might not be really required for the child. So
even though you might want to splurge, it is advisable to list out the needs and the
wants and spend wisely. It is always better to spend more time with the child than
money on the child.
Your financial security is very important for the wellbeing of the child. Therefore it is
important to have a proper financial plan and execute it such that your financial goals
are on track. There could be changes in income patterns. For example, if both parents
are earning members and one parent decides to take some time off work to take care
of the child, it could mean reduced earnings and this should reflect in the financial plan.
It is important to revisit the retirement goals and ensure that the plan of action for
retirement is on track as it will be a big help to your kid that you are financially secure in
your sunset years and he/she can get on with his/her plans.
It is important to insure the parents so that resources for raising the child are there in
case of unforeseen circumstances.
You can also think of tax saving options when you become a parent. You can invest in
your minor childs name and if this investment generates an income, it is clubbed with
the parents income. However, you can claim up to Rs. 1,500 per child as a deduction in
your income.
It is important to include the child in the will made. You must have at least some
investments where the nominee is the child so that there is a sort of a financial backup
in case of emergencies.
Children are the biggest investment that one can make and one should plan for them
appropriately to ensure financial security for your children along with you.
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2.
3.
4.
5.
Be prepared: Women take a back seat in managing money as they know their fathers or
husbands do most of the work for them. In situations like death of the spouse or a
divorce it is essential to keep track of the finances. During these times, a person is
emotionally affected, and being unprepared financially only adds to the trouble. So it is
important that women take an active part in understanding and managing money.
Meet financial goals in life: Financial goals depend on financial conditions, family
situation etc. and changes from time to time. When women understand money, family
goals are not hindered even if the main decision maker is no more. It is also important
to create a savings corpus for the future. Although many financial terms are difficult, it
is possible by taking the help of a planner or the spouse to understand money.
Avoid over indulgence: Women, like men, sometimes face shortage of money because
of over spending. This is irrespective of whether they are working women or
homemakers. This results in a debt trap. When there is no understanding of money,
there is no responsibility; as a result, they are not prudent while spending. When
women are made to pay credit card bills and repay borrowings themselves, they will
understand how to control on the splurge.
Knowledge for better management of finances: A housewife is known to run the daily
household with a limited budget. With the basic understanding of finance, women can
also spend according to their daily needs and save for their future goals. Certified
financial planners may help you how to plan your budget according to your earnings. In
addition to managing expenses, knowledge about savings and investments is also
critical. Proper understanding of these aspects helps a woman manage finance better.
Achieve financial independence: Women arent usually financially independent in
India. They are dependent on their husbands or fathers for financial independence even
if they are having a steady job. However it is not impossible to achieve financial
independence. Cut down wherever possible and maintain a neat record of your
earnings and expenditures. A financial planner will help you focus on main areas where
you can save your money and how to go about it. Financial independence doesnt
necessarily mean that you can spend without taking anybodys permission. It consists of
spending wisely and curbing your intention to splurge.
Although women have progressed in different fields, a majority of women lag in
understanding finance even today. Lack of confidence, not understanding the
importance of financial goals and dependence on others are major reasons for this. A
little help and guidance can go a long way in helping women manage money efficiently,
helping both themselves as well as their families.
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articles on various areas. You can read all our articles by clicking visiting the Blog section.
Websites and blogs can give you knowledge, but again, like books, not the personal touch
required to put your finances in order. You must also be wary of the credibility of the
website, as any wrong advice followed can upset your finances.
4. Personal Finance Software: Here are some personal finance software and Do-It-Yourself
websites available which can help you either partially or completely do financial planning.
i. IMyGoals is a website which allows you to understand your financial profile and
build a plan.
ii. Rupee Managers financial planning toolkit helps in recording your current situation,
goals, risk cover and financial plan.
iii. The software by InvestPlus looks at different facets of personal finance.
iv. MProfit is a desktop portfolio management software which can help you manage
your assets online.
5. Other Sources: There are various small tips which are displayed on GettingYouRich.coms
social media page from time to time to help you in planning. The Dilberts post for
example, is uncomplicated and highlights all important parts of a financial plan you must
follow.
Independent agencies like Money Life, which promotes financial literacy and
consumer and investor initiatives, can help you in specific issues.
Independent financial advisors do product based financial planning, where you
don't have to pay the advisory fee, but the commissions from the product suffice
for the adviser. However, we don't subscribe to this view.
Another source of help can be your friends and relatives. However, the help
provided from this source is not professional and therefore must not be followed
blindly. Further, friends and relatives would advise based on their own
experiences and this might not be applicable to your financial situation.
The above Do-It-Yourself resources may not give you the advantages which a professional
planner brings to the table. Nevertheless, these can be good starting points and can enhance
your knowledge considerably. Start today and use these resources to start understanding
your finances. You can always reach out to a professional financial planner for complete
financial planning.
* Source: Ranjan Vermas blog on Top 10 Personal Finance Resources in India
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Typically the advice given is that you should subtract your age from 100 and number is
the percentage of the portfolio that you should keep in equity and the rest you should
invest in other assets. For example, if you're 25, you should keep 75% of your portfolio
in stocks. If you're 75, you should keep 25% of your portfolio in stocks. But this is a very
simplistic view and other factors apart from age should be considered. There are
different stages in life based on various events.
For example if you are have children who will be going to college soon or are planning
to buy a house in the near future, the asset allocation should be such that there is
capital preservation and assets can be cashed out soon.
If you are a young person who has just kick started his/her career and do not have any
financial obligations, you should have a more growth oriented asset allocation. You can
invest in assets that have a greater reward potential. Typically since your income will be
growing each year and savings will increase each year, you can invest more and build a
large portfolio. You can have a majority of your investments in equity and equity based
Mutual Funds.
Asset allocation also depends on risk tolerance and risk capacity. Risk capacity is the
measure of risk that can be afforded by you based on your financial situation. Risk
tolerance is the measurement of how great a loss/risk are you willing to bear as an
investor without being emotionally or financially affected regardless of the capacity of
risk your financial health permits. It is very important to consider these factors along
with other factors like goals, market conditions etc.
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RETIREMENT PLANNING
So, I come last. Alright. I am yet to meet a family that
saves adequately for Retirement. For an average family,
Retirement Gap runs in to several Crores. This is because
Inflation is a far bigger enemy than what we can realize.
Dont believe me? Try any Retirement calculator on the
internet and you will know what I mean.
I like that you love your family. But I suggest you prioritize
your retirement savings and then look at Education and
Marriage Corpus for your children.
Equity is my friend. Whether you are saving for Pre or
Post Retirement, there is this Equity for Retirement
Combo deal that always works in your favour.
So whats your strategy for me?
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You must Leverage Equity: Its hard for anyone to stay away from Equity, we believe. This is
likely to generate best performance on a real returns basis, in the long run. So to beat
inflation, you must take some exposure to Equity through MFs, based on your risk appetite.
Consider investing in Large Cap funds that invest predominantly in Bluechip stocks. If you
like to tone down the aggression, then look at Hybrid MFs with Aggressive Equity
component. If not, then look at Hybrid MFs with Aggressive Debt component. These will
have a minor component of Equity that is likely to provide a higher ROI, overall. In
retirement stage, after initial 10-15 years, the corpus starts to drop as inflation catches up. If
you use these 10-15 years to invest in Diversified Large Cap Equity MFs, then you may be
able to build a significant corpus that will help you in later years.
Fixed Income Avenues: Well, you could consider Senior Citizen Savings Scheme, Post Office
MIS, Fixed Deposits, Tax Free Bonds or Debt MFs giving regular income. For Fixed Deposit,
consider splitting the corpus equally between Nationalized Bank FDs and Corporate FDs with
high rating. For Post Office savings, keep in mind the physical visit and other logistics. Prefer
online facilities so that you could manage it even remotely. If you like to invest regularly,
then see if you like the Step Ladder approach. Here, you can invest say Rs. 5,000 PM in a 1
Year FD. From 13th month, your investment will double, as the earlier FD would have also
matured. This way, you can build a sizable corpus over a period of time. Based on your
overall income, keep the tax implications in mind while you make the investment.
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INSURANCE
I am so lucky that all of you love me so much. I know you
also love my Brother Investments. But do you know that I
am a Risk management tool and not an investment
vehicle? When you come to me and expect something in
written, you are often mislead. Best way is that you treat
me and my brother Investments separately.
Design you insurance corpus, balance the need of risk
management V/s the cost of risk management and take
me in my purest form i.e. term plan. With the money you
still have, now you can go to my brother, Investments.
I am happy that you love your family. But buy me for
them only if your family has an economic value.
If your net financial assets are sufficient to take care of
your financial liabilities and aspirations then you dont
need me.
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If you are not sure if you at all need a life insurance, then you are not the only one. So here
is a rationale to decide if you need a life insurance or not.
Insurance is a function of your financial liability. If you have adequate assets to take care of
your liabilities, then you dont need to spend on life insurance. Now, the question here is
how do you determine your financial liabilities? Well, you need to take a stock of what kind
of financial goals & financial responsibilities your family will have, in your absence. The areas
like children education & marriage, 1st or 2nd Home etc. are easy to estimate. The difficult
part may be in arriving at a value for income replacement. This is simply a sum total of all
money that your spouse will need for monthly household expenses between today and end
of his or her life, adjusted for inflation and expected return, net of tax. We normally
recommend a life expectancy of 85 years. You can use present value formulas in excel for
such calculations or ask your Financial Planner.
Now, you know how much money your family will need if you are not around today. So lets
look at how much money your family will get if anything happens to your family today. So
total up the sum assured in your insurance policies and also see if your Employer has any life
cover for you. Dont forget to also calculate the value of net assets that you hold today.
Now, while you do that, remember to exclude the consumption assets like your house
where you stay and the Gold & Jewellery that your family uses. From this, subtract,
outstanding liabilities so you have net assets figure. Ensure you include current values of
your retirement accounts. A critical assumption here is that your financial assets will be
liquidated by the family as and when needed to meet the financial goals.
So, now, you should know how much your spouse will need and how much your spouse will
have. We are sure this is complicated for you, so lets try to give you an example.
Suraj and his Wife Chanda have an 8-year Son, Joy. So here is how Suraj calculated his Life
insurance corpus need:
Education Corpus for Joy
Marriage Corpus for Joy
Income Replacement
Total Needed [A]
Sum Assured total of all Insurance Policies
Value of Financial Assets
Current Liabilities
Net Financial Assets
Total Available [B]
Insurance Corpus Gap [A-B]
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Rs. 13 Lakhs
Rs. 5 Lakhs
Rs. 82 Lakhs
Rs. 100 Lakhs
Rs. 25 Lakhs
Rs. 42 Lakhs
Rs. 7 Lakhs
Rs. 35 Lakhs
Rs. 60 Lakhs
Rs. 40 Lakhs
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Suraj can buy an online term plan for Rs. 40 Lakhs to bridge the current gap in his Insurance
Corpus. Kindly note that this is a simplified illustration and you may have other factors to be
considered. There are alternate methods to calculate your life insurance need. As an
example, say 10 times your current annual income or corpus taking your future income in
account.
Key factors to keep in mind:
1.
2.
3.
4.
5.
6.
7.
Dont forget to include the investments that you may have made (e.g. ULIP Policy)
Consider your spouses profile as the money will have to be managed by her / him as
you will not be around
Involve your spouse as you work on your insurance corpus
Balance between the need to cover the financial risk v/s. the cost of insurance
If your insurance corpus works out very high, then revisit the outflow in each of the goal
and see if you can optimize. See if your spouse can partly work & see if a higher ROI can
be assumed in the insurance corpus.
It may help to take a psychometric test to know risk tolerance for your spouse and
yourself
Take a tenor that goes up to around your retirement age. As your financial liabilities will
be fulfilled and financial assets will grow, the need of insurance will go down drastically.
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total cost. Based on this, the level of services being provided and value being added, you
could decide if you need an adviser to assist you.
Which Policy to buy? Study the comparison of leading insurance policy on various websites
on the Internet. Compare your requirements against the product features and narrow down
your search to 2-3 good policies. Consider visiting 2-3 websites and review their
recommendations. Review the benefit illustration table before you finalize a policy. For a
term plan, there is obviously no benefit if you survive the policy maturity. However, we still
recommend you to review the benefit illustration table, as you will be able to identify any
hidden costs.
Insurance and Investment: Normally, treating your insurance and investment separately
works out far better for you. When Insurance and Investments are combined, you are likely
to be going in for a complex product structure like ULIP which could be expensive. In the
best of your financial interests, taking an online term plan and using rest of the surplus for
goal based investments as per your risk profile, is likely to be a far better option.
Buy Online or Offline? Buy an online term plan from any of the top players. Buying online is
convenient, efficient and likely to save a lot of money for you.
MWPA: Getting a policy issued under Married Womens Protection Act (MWPA) will ensure
that upon your death the insurance proceeds go to your family and cannot be used to pay
your liabilities, if any. This is helpful when you are a businessman or a professional with a
liability exposure.
Regular Premium or Single Premium: Regular premium is likely to give you a better
opportunity to absorb the tax benefits. In a single premium policy, your effective cost of
insurance may work out higher if you die in the early years, as you would have paid in
advance for all the years. You may have a better use of money for other financial goals. With
more and more innovative features coming in, it makes sense to retain the flexibility with
you. In case you do not have a regular income source and would conservatively likely to
ensure that insurance is in place, once and for all, then single premium policy may be your
preference.
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Now, if you decide to go in for a secondary health cover, then here are few tips to determine
what kind of cover and amount you should opt for:
Current insurance cost: First, review your current cost of insurance as a % of your total
income. As a broad guidance, we suggest that your total yearly cost of insurance should be
around 10% of your yearly take home income.
Keep in mind your Age & Medical History: If you are in your 40s, its a good idea to start
investing in a solid secondary health cover. Based on your present health condition and
family history, you can decide the type of cover and amount of the coverage. In addition to
the normal health cover, now there are specific policies for Diabetic & Heart patients.
Go for smart features: As you are likely to continue using your Companys policy as a
primary health cover, we suggest you opt for a high no claim bonus policy. Private sector
leads with innovative features like high amount of no claim bonus, combination of Individual
+ Family Floater cover and no sub limits for the claim purpose.
Take the right amount: You can decide the amount of the coverage based on your current
lifestyle, medical situation, your location (i.e. Tier 1, Tier 2 or Tier 3 town) and available
budget. As a broad guidance, it is good to take a Rs. 10 Lakhs family floater health cover.
Based on situations, this can be far higher or even lower.
Select the right Company: You could go with National Insurers, Private Sector Players or opt
for the Group Health cover by Nationalized Banks. With competitive pricing and innovative
features, private sector policies generally score higher. Group Health cover by Nationalized
Banks are cheap and often the only option for people above 65 years of age. You can check
comparative analysis available on many personal finance blogs.
Prioritize: You should prioritize Health Insurance before Life Insurance as the probability of
hospitalization is higher than death. Again this depends on client specific situation.
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the policy.
If you do happen to take a decision to surrender or go for a premium holiday, then please
communicate your decision in writing to your Insurance Company, fill up required forms and
follow up with them to get a confirmation response. You may seek help from the Advisor or
Customer Support Executive from the Insurance Company to guide you while you make this
decision though they may be biased in you continuing their policy. Alternately, you can
consult your Financial Planner.
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Lower IDV: The insured declared value is the amount for which your car is insured, which is
the amount you will receive if your car is stolen or wrecked. Some companies allow you to
reduce the IDV. If you choose to opt for a lower IDV, your premium will also be lowered.
However, remember that the amount for which you choose to reduce from your IDV will not
be paid to you in case you file a claim.
Become a member with an auto association: If you become a member with auto
associations like Automobile Association of Southern India or the Western India Automobile
Association, you can get a discount on the car insurance premium you pay, as these
associations are recognized under the law and organize courses on advanced driving and
road safety.
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parent may also be deceased. Another situation is that if the original nominee dies before
the death of the policyholder, another person must be named as the nominee immediately.
Although these are simple things to be done, most people often ignore them. When you do
not update your nominee information correctly and on time, it may be extremely difficult, if
not impossible to follow up, complete the legal formalities and get the claim passed in favor
of the actual beneficiary.
Lapse of policy: Usually, for all policies, a grace period is granted by the insurance company
after the premium due date to pay the premium due. Some people may forget to pay the
premium even within the grace period, resulting in a policy lapse. If in such a case, the
policyholder dies after the grace period, the claim gets rejected and the beneficiary does not
receive the claim benefits. Therefore, remember to pay your premium promptly and avoid
claim rejection due to a lapse of policy.
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INVESTMENTS
Welcome. I am the most misused word. Everyone has a
view on me. Someone Gets Rich, someone stays poor.
Well, I dont work more for some or less for others. I am
just what I am. But the smart guys know how to make
best of use of me.
They use Systematic Investment Plan (SIP) and make
only Goal Based Investments. They make tax friendly
investments. They target 3% to 4% returns over inflation.
Before they jump on me, they think through. They first
fix their Emergency Corpus, then take Health Insurance,
then take Life Insurance and then focus on me through
Goal Based Investments. They patiently stay with me as
they know what the master said Time in the market is
more important than timing the market.
Are you still wondering how they Get Rich?
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Convertibility: These bonds can be exchanged for some specified amount of common or
preferred stock in the issuing company. At the time of issue, the terms of conversion will be
outlined, including the times, prices, and conditions under which it can occur.
If you are willing and able to make a riskier deal invest in Corporate Bonds as they have
higher returns than fixed deposits.
In a nutshell, here are the features of Corporate Bonds:
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As you can see, if the customer chooses jewellery which is equal to the weight of the
accumulated gold, he does not have to pay any extra wastage charges. Any difference in
quantities and the wastage percentages will have to be borne by the customer. Such plans
usually do not have bonus. However, it gives protection against rising gold prices.
The Pros and Cons of Gold Saving Scheme:
While the advantage of this scheme to investors is that it helps in encouraging regular
savings, to invest in gold after a period of time, the negatives are many. The biggest
drawback is that you are compulsorily required to purchase the jewellery from the same
jeweller at the prevailing market price and not at the average price during your investment
period. The prevailing price may be higher than the average price. Further, you are bound to
follow the jewellers terms and do not have the freedom to compare charges or designs with
other jewellers. The bonus you get, if any, depends on your prompt payment of instalments.
Further, this scheme results in purchase of jewellery only and does not give cash benefit in
your hands.
Taxation:
When jewellery is bought at the end of the period, you must pay any taxes applicable on
jewellery purchases. Cash purchases above Rs. 5 lakhs attract tax at 1% of the purchase
amount.
The Verdict:
Gold saving schemes which allow immediate conversion to gold is better than the first
option when conversion takes place at the expiry of the period, as you are protected from
price-rise. However, it is not advisable to bind yourself to any particular jeweller. These
schemes may not be good for you if your sole purpose of buying gold is from an investment
perspective. In such a case, you can opt for gold ETFs or E-Gold. Physical gold investments
can be made in gold coins or bars which do not entail making charges. Click here to
understand more on different ways of buying gold and which will suit you the best.
Please note that the examples given above for the schemes by Tanishq and GRT Jewellers
are for illustration purposes only and do not represent the actual scheme. Please contact
individual jewellers for actual details of the schemes.
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Advantages: You need not worry about the purity, storage and safety of your investments.
You can buy in small quantities - as low as 1 0.5 gram of gold. This is a liquid form of
investment, as you can sell the Gold ETF and realise the proceeds within 2 working days. The
good part is when you are selling the Gold ETF; you get the standard market rate that
everyone gets. So there is a price transparency here. Gold ETFs do not attract wealth tax.
Disadvantages: As in the case of any other stock market investment, you will need to pay
brokerage charges to your broker when you purchase Gold ETFs. You need to have a Demat
account to start purchasing Gold ETFs.
E-Gold: It is an online mode of investment in gold. Started by the National Spot Exchange
Limited (NSEL) in March 2010, E-Gold units can be bought and sold through this exchange.
Although E-Gold is similar to Gold ETFs in many ways, the main difference is that you can
convert your E-Gold units (1 unit is equal to 1 gram) to physical gold at a later date. The NSEL
has designated delivery centres in Delhi, Mumbai and Ahmedabad, where the investor can
take delivery of the physical gold in different denominations. If you wish to invest in E-Gold,
you must open a Demat account with one of the members of NSEL As regards taxation, STCG
tax is levied if the E-Gold units are sold before 36 months. If held for over 36 months, E-Gold
attracts LTCG tax of 20% after indexation. On conversion to physical gold, you will have to
pay VAT at 1% as well as other local taxes, if applicable. The E-Gold units you hold are
considered while calculating your wealth, and wealth tax of 1% is applicable if the net wealth
exceeds Rs. 30 lakhs.
Advantages: e-Gold investors need not worry about the storage and purity of gold. The EGold units can either be converted to physical gold or can be sold as E-Gold units.
Disadvantages: E-Gold investments require the opening of a Demat account specified by
NSEL. If your existing broker is not in the list, then you must open a Demat account with a
new broker in your vicinity. The value of E-Gold is included in taxable wealth.
Daily investment in Gold: This scheme was introduced by Reliance Money and is called My
Gold Plan. In this scheme, you set aside a fixed amount every month (minimum initial
subscription amount of Rs. 1000 and multiples of Rs. 100 thereafter) for a tenure ranging
from 1 to 15 years. This amount is then split into equal parts and gold grams are purchased
over 20 working days of the month. You can thus benefit from the daily rupee averaging of
the price of gold. A low price gives you more gold grams and vice versa. The accumulated
gold grams should be converted into gold coins or jewellery at the end of the tenure (called
fulfilment). On fulfilment, the investor is required to pay VAT and local taxes, if applicable.
Advantages: This method is useful to accumulate gold in small quantities at periodic
intervals. You can efficiently keep track of the gold grams you own, as statements are
regularly available. You need not worry about the purity and storage issues as well. The
scheme is flexible as you can convert your accumulated gold into gold coins or jewellery.
Disadvantages: Administration charges are very high at 1.5%, i.e.: the daily gold price is
marked up by 1.5% before making the investment. If the delivery of coins or jewellery is not
taken during the validity period, the customer needs to pay storage cost of 0.5% per annum
till he takes delivery. At the time of fulfilment, taxes and coin making charges also need to
be paid.
Gold Savings Schemes: Jewellers offer these schemes across the country, wherein the
customer is required to pay instalments for a specified period. At the end of the period, the
jeweller also contributes cash, and you can purchase ornaments with the accumulated
balance in your account. E.g. Tanishq runs a scheme where you pay 11 instalments, and the
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jeweller pays the 12th instalment. You can buy jewellery from Tanishq for the value
accumulated at the end of this period, based on the market price on the date of purchase.
Advantages: This scheme helps you to save regularly to plan for your investment in gold.
Disadvantages: You are forced to purchase gold at the prevailing market price. If the price
of gold has increased over the period of your investment, you lose. Usually you also pay
making charges for the jewellery, which can be very high. In short, you are forced to agree to
the sellers terms, and this may not be the best mode of investing in gold.
Apart from the above modes, you can also invest in (a) Gold Saving Funds, which is a mutual
fund which invests in gold companies and (b) Gold Futures (ideal for getting short term gains
by trading, rather than for investment).
A comparison table is presented below, for your quick reference.
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considering the payment option by the builder are some ways of checking the genuineness
of the builder. Buyers sometimes also make the mistake of not considering the potential of
capital appreciation or connectivity facilities of the property. Remember to consider these
factors as well.
Purchasing a property with no clear titles: Some builders build and sell houses on disputed
land. Checking the land titles is an absolute must. If you happen to buy a property on
disputed land, you will not be able to sell this property also at a future date. If you opt for a
bank loan, the bank will get the title deeds verified. Nevertheless as a buyer, you must also
check to avoid any mess.
Purchasing property purely based on offers: Many a time, builders offer limited period
discounts and freebies to attract customers to purchase the property. Some buyers act
impulsively to gain from these offers, without taking their financial position and other
factors into consideration. Also, you must be cautious of builders offering huge discounts
and opt for a house built by genuine builders only. While all such offers are not bad, you
must not make this the sole deciding factor in choosing a house.
Buying your own house is a dream cherished by many, but achieved only by a few. If you
plan to buy a house, remember to avoid the above mistakes.
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prepayment and then decide if the pre-payment is profitable or not. You should also
remember to consider the tax benefits you receive from certain loans like home loan and
education loan and balance prepayments accordingly.
Invest in yourself and family: You should reward yourself for managing to earn more money
as well. You can indulge in something that you always wanted or an experience that you
always wanted to have. You can spend it on your family as well. You can acquire a new skill
that you always wanted to have. You can pursue a hobby or two more seriously. You could
also take up a course for inner healing like Vipassana.
You could also take up courses or certifications that will update your professional skillsets
and enhance your career. If you are an IT professional, you can consider PMP certification.
You could take up executive MBA programs.
This kind of investment will definitely enrich your life and career.
Give back to Society: Another way to utilize excess cash well is to give back to the society.
You could support a cause that is dear to your heart. You could donate money to charitable
institutions and/ or orphanages that work towards noble causes.
If possible, you could take a break from your daily job and participate in some voluntary
work for the benefit of the society. For example, you can sign up for short-term assignments
with (UN) United Nations or volunteer for some time at Teach For India to teach Indias
underprivileged children. These steps will lead to a more fulfilling life.
Take a break: Consider going on a nice vacation with your family & friends. Give them a
surprise. Go read the book that you always wanted. Go close to the nature. Spend some
time and rejuvenate yourself. Listen to your favorite music. Relax & unwind. You will be back
with far more energy and positives.
The bottom line is that extra income should be saved, invested, used to pay off some loans
and also should be used to reward yourself once in a while as you have earned it and
therefore deserve it. You can also utilize it to give back to the community.
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TAXATION
I know you hate me, forever. It hurts me to take almost
1/3rd of your income but what can I do? When I tell you
that you can avoid me by leveraging long term capital
gain benefits, you dont listen up. You love my friend
Fixed Deposit and LIC
When you want to save on me, you are so desperate
that on the last day of the year, you invest in anything.
You will save on me but thats only 30% of the money,
now what about the rest 70% of your money that gets
invested. Shouldnt you understand what, where, when
and how?
Save on me by investing in long term tax friendly assets
like Equity. If you are a salaried class, then fully leverage
your salary structure. Dont forget to claim LTA. Ask your
HR if they can allow you Sec 80 CCD(2) for NPS. Take all
those Sodexho Coupons. Take maximum amount of
home loan for a maximum tenor, as long as you can
afford the EMI.
I do mean to Get You Rich. But you have to help yourself.
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Parents' investments: If your parents are above 65 years, they enjoy a higher basic
exemption limit compared to you. When investments are made in your parents' name
and if your parents have a low income or nil income, better tax-adjusted returns can be
enjoyed by your family.
Minor childs income: A minor childs income is clubbed with the parents income. If
you have invested anywhere in your minor childs name and this investment generates
an income, you can claim up to Rs. 1500 per minor child as a deduction on this income.
Rent paid to parents: If you stay in a property which is registered in your parents
name, dont think you will miss out on HRA benefit. You can still claim HRA benefit by
paying rent to your parents. However, your parents will be taxed for the rental income
they earn. Thus, this is most beneficial if your parents are in the lower income tax
bracket. Also, in this case, it is advisable to make an agreement with your parents, get
this agreement registered and keep a record of the cheque payments you make to your
parents towards rent.
Shares sold to parents to offset gains: A long term capital loss on shares can be set-off
against gains if you choose to make an off-market sale (without going through the
exchange). As finding buyers for off-market transactions can be difficult, you can sell
these shares to your parents to get the set-off benefit. However, shares should be sold
at the market price and cheque payment should be made for purchase.
Reduce your long term capital gains tax on property: If you sell your house after 3
years of purchasing it, you will be subject to long term capital gains tax. This can be
exempt if you invest the capital gain you get in another house (within 2 years) or use it
to construct another house (within 3 years). However, the new house purchased or
constructed should not be transferred by you within a period of 3 years from the date
of purchase or construction, as the case may be.
Structure your salary package, if possible: Some employees are given the option to
choose their salary components. A substantial amount of tax can be saved by opting for
tax-friendly components like food coupons, HRA (if you are staying in a rented
accommodation), medical expenses reimbursement, transport allowance and Leave
Travel Allowance.
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Invest in tax-efficient mutual funds: When you invest in mutual funds, look at tax
efficient funds, as they can increase your post-tax return. If you prefer equity mutual
funds for a short term, it is better to invest in a dividend scheme rather than growth
scheme, as dividend is tax free, and the short term capital gain is lower due to a
downward adjustment in NAV. On the other hand, if you prefer debt funds, a short
term investor with a high tax bracket should opt for a dividend scheme, as the dividend
distribution tax of 13.52% works out to be lower than the short term capital gains of a
growth scheme, which is as per tax bracket.
Tax benefits from an under-construction house: Under Sec 24 of the Income Tax Act,
you are not eligible to claim interest paid on home loan during the period the property
is under-construction. However, the interest paid during the pre-construction period
can be claimed as a deduction in 5 equal instalments from the year the construction is
complete.
Owning a house is another city: You can claim tax benefits of both home loan (under
Sec 80C and Sec 24 of the Income Tax Act) and HRA benefits at the same time, if you
stay in a rented house, but own a property in another city.
The above methods are legitimate ways of reducing your tax outflow and results in Tax
Saving and not Tax Evasion. We advise you to consult a qualified Chartered Accountant to
help you make use of the above provisions and also for compliance purpose.
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You will first need to register yourself on the website. To register, you will first need to
select the User Type (Individual/HUF/Company etc). On selecting Individual, you will
need to fill in your personal details, including your Permanent Account Number (PAN).
Your PAN will act as your user ID. On completing the registration form, your registration
will be successful.
2. After you register, you can login to your account using the PAN as the user id, the
password you have set and your date of birth.
3. You can e-file your returns in two ways. The first option is to download the applicable
ITR form, fill it offline, generate the XML file and then upload this on the website.
Alternately, you can choose to prepare and submit the ITR online directly after you
login to your account.
4. Let us consider the first option.
i. You will need to download the Return Preparation Software of ITR applicable to you.
You can check the applicability of the form on the e-filing website.
ii. The Return Preparation Software is in the form of an excel file and you will need to
enable macros on the file for all the commands to work.
iii. Enter all the details in the Return Preparation Software which includes your personal
details, income details, the tax deducted at source and taxes you have paid. You can
fill this using the Form 16 issued by your employer, TDS certificates, interest
statement and any other statement which has details of all the income you earned
in the previous year.
iv. After you fill in all the details, you will need to validate the details in each sheet of
the file by clicking on the Validate button on each sheet. Next click on Generate
XML in the first sheet of the file.
v. An XML file will be generated and saved on your computer. You should then upload
this XML file on the E-filing website and select the appropriate ITR form and the
Assessment Year for which you are filing the returns. You will be asked if you want
to digitally sign the return. If you have a Digital Signature, then you can select Yes.
Else choose No and proceed to submit the form.
vi. On successful completion of the process, you will get a message on your screen, as
well as an email with your ITR verification form. If you have not signed the form
digitally, you will need to take a printout, sign it and send the form within 120 days
by normal post or speed post to the address mentioned on the form. However, if
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5.
6.
you have digitally signed the form, the process stands completed on submitting the
XML form.
In the second option, where you prepare and submit online, you should furnish all your
details online and submit the return. You will then need to take a print of the ITR form
you have filed, sign it and send it to the IT Department.
The E-Filing process is said to complete when the IT Department receives your form and
sends you an acknowledgement for the same. If you do not receive an
acknowledgement of receipt of the form by the IT Department, you will need to send
them the form again.
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ESTATE PLANNING
So I am another boring personal finance element, right?
I dont seem to be attractive enough as you guys think
you need me only when you are a senior citizen and
spending last few years of your life. Well, how do you
know when you are doing to die?
I am so simple that you can get me Free. You dont
necessarily need to hire a lawyer, neither register me.
Even if you write me with your hand, it works fine. All I
want you to do is make a list of your assets, decide asset
distribution ratio and appoint an executor in the will.
When you sign, ensure that two witness evidence that
you signed on me. They dont need to see what you have
written inside. Now keep the original in a fire proof safe
and let you know family know where I am. If your assets
are complex or when the disputes are likely, then get me
registered.
Simple, isnt it? So when you are coming to me?
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It is important to have an estate plan in place. Otherwise the estate would be given to legal
heirs, as per the existing laws of the state, and not in the manner you had in mind. It has to
be in place so that there are no complications on how your wealth should be distributed
after your death.
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A Will must be dated. In case there is more than one Will, the one dated the latest will
supersede all other previous Wills.
You must state you full name and address in your Will, with the title of the Will carrying
your name. The Will should also have a declaration that you are making the Will in your
full senses and not by force from anyone.
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3.
4.
5.
6.
7.
8.
9.
You must name an Executor (one who executes the Will) in the Will, and if an outside
person is nominated for this purpose, you must ask his permission first. The Executor is
the one who will be responsible in distributing your assets as per your Will and carry
out the process after your death. Hence, he must be someone trustworthy.
It is recommended that you write your Will in simple language, and clearly specify the
instructions. Do not write vague, unclear statements.
Your Will must contain details of all your assets (including the place of storage/location
of the asset) and their value. You must indicate the persons who will get a share of
these assets on your death and the proportion distributable to each person. In case of
transfer of assets to a minor, you must mention the custodians details as well.
Your Will should talk about the disposal of all your assets- both movable and
immovable. Ideally, even household items, paintings and furniture should be included,
to avoid any confusion at a later stage. Assets, for which provision is not made in the
Will, will be considered intestate succession.
As and when the situation changes or you add or dispose assets, these changes must be
incorporated in your Will.
It is recommended to number the pages of the Will and also indicate the total number
of pages at the end of the Will. This is to avoid substitution or replacement of pages of
the original Will by anyone.
A Will is a document of your assets, and hence you are not obliged to disclose its
contents to anyone.
Remember, your Will becomes effective only after your death. Thus it is entirely up to you to
deal with your assets in any way you want in your lifetime. A Will is one of the most
important documents you create. It is therefore advisable to prepare this with utmost care
and take qualified professional help from a trusted advocate.
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Succession Certificate
In many cases, there is no nomination on the assets and no Will as well. Even though you are
the legal heir, there may not be any legal proof of this. In such a case, you will need to
produce a Succession Certificate to claim the assets. A Succession certificate is obtained
from the Court, which proves that you are a legal heir. To determine from where you must
obtain the succession certificate, you must ascertain the jurisdiction under which the
particular asset/institution from which you are claiming the asset falls, and accordingly
approach the concerned district or high court. You must take the help of a lawyer, file a
petition for the Succession Certificate and pay the required fees. Thereafter, the court
advertises in the newspaper and waits to see if there are objections regarding the claim. If
there is no objection, the succession certificate is granted to the claimant, which can then be
used to claim the assets.
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BUDGETTING
I am often neglected by you, Mr. Busy. When it comes to
your Corporate career, you use me so well. But in your
personal life, you dont follow me. You manage by
metrics at your work place but in your personal finance,
you have no clue of any of your ratios. Remember, what
you cannot measure, cannot be improved.
I have a secret to share. Thats my 30:30:30:10 rule for
you. 30% of what you earn must be saved. Another 30%
can go towards your EMIs. Another 30% can be for your
household expenses. The last 10% can be for your
insurance expenses. Now, this is a broad guideline. You
could save far more or slightly less based on your specific
situation. But the point is that you must measure your
personal finance.
So when are you starting?
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4. Ensure you have the phone numbers and other identity information required for
communicating with your banks, credit card companies handy so that in case of
unfortunate events, you can speak to the respective representatives.
5. It is good if you take travel insurance as in case of untoward events, you are covered
financially at least. There are counter arguments to the same as well which say that there
is no increase in risk when you are going to a different place for a cultural tour or a
normal sightseeing tour. You have to take the right decision based on circumstances.
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companies can change their terms at any time. Also remember to check the total amount
you will pay, including all EMIS and down payments. If this exceeds the MRP of the product,
it means you are paying more due to the interest and processing fees, and can get a better
deal elsewhere. So always check for the price of product across different stores - both offline
and online. You may get the product at a lower price if you do not opt for such a scheme.
You should also look at the flexibility in closing the scheme, by checking for pre-closure
penalty clause. Your existing card limit will come down to the extent of the outstanding
amount under the EMI scheme, and this is an important factor to be considered especially, if
you always spend close to the credit limit.
Should you or should you not opt for the EMI scheme?
A good EMI scheme makes purchases easy. But remember that this is one way of tempting
you to buy expensive products which you may not be able to actually afford. Hence try to
avoid this as the first option. Indulging first and relying on EMI payments later is not a
healthy practice when it comes to your personal finances. If at all you want to opt for such a
scheme, you must definitely consider all the costs associated, and accordingly decide
whether it should be taken or not.
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Various Car Loan options in the market: We have analysed car loans for new cars offered by
six leading banks in the country on various parameters. It is better to avoid car loans from
ICICI Bank as interest rate is high, part pre-payment of the loan is not allowed and maximum
repayment tenure is also lower than peers. Similarly, it is better to avoid car loans from Bank
of Baroda, as the interest rate charged is higher than other nationalized banks. Among
private banks, HDFC Bank car loans can be considered, as you can get good service levels at
interest rates comparable to nationalized peers. Among public sector banks, you can look at
car loans from State Bank of India or Bank of India, as interest rates are among the lowest in
the market. Punjab National Bank can also be considered, although interest rates are slightly
more than those charged by SBI and Bank of India.
A detailed comparison is available below, where we have analysed car loans offered by 6
banks for new cars in India. Terms will vary for a higher or lower amount of loan and for
financing of second hand cars. Some banks also quote different terms for different models
of cars. If you prefer to download the excel file, please click here. For more details, refer to
individual bank websites. Kindly note that this analysis covers offerings from major banks
only & not an all-product comprehensive comparison. The analysis is valid on the date the
article was published on the blog.
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Confidentiality of information
End end counselling and handholding
Make sure to take all advices in writing and also make the agency sign a confidentiality
agreement with respect to your personal information.
Different Credit Counselling agencies:
There are many private players which can help you with your credit situation for a fee.
Following Reserve Bank of Indias directive, banks have also started credit counselling
centres, which generally do not charge a fee for the services rendered. Service centres
supported by banks handle cases related to other banks as well, and help individuals in both
rural as well as urban areas.
Here, we discuss some popular credit counselling options:
1. Athena Credit Counselling Private Limited: Known by the name Credexpert, this
company offers its credit counselling services to both individuals and corporates and charges
a fee for the same. Analysis of an individuals credit report, developing solutions for score
improvement, credit bureau consulting, consulting lending institutions on optimization of
credit scores, consulting for corporates on credit related issues, are offered by Credexpert.
There are different packages for you to choose from. The highest package offers execution
help for you to improve your credit score and also track disputes. The company also offers
support if you are caught in a debt trap or if you find your loan applications getting rejected
repeatedly. This Mumbai based company has associated itself with GDS Link which is an
international risk solutions provider. Please click here to learn more about Credexpert.
2. DISHA Trust: The DISHA Trust is an initiative by ICICI Bank and has centres across 9 cities
in the country. This centre helps in overall financial counselling for the individual, dealing in
various areas such as investment advice, advice about financial products, debt management
and general money management. Financial education and financial counselling are thus the
two broad areas of service. Please click here to understand more about DISHA Trust.
3. ABHAY Credit Counselling Centre: Started in 2006 with the support of Bank of India,
ABHAY advises individuals to manage their debt situation and also creates public awareness
about financial management. The credit counselling centres by ABHAY are present in
Mumbai, Wardha, Chennai and Gumla. It is a non-profit setup and the customers are not
charged any fee for the advice given. Please click here to read more about ABHAY Credit
Counselling Centre.
4. Grameen Paramarsh Kendras: This credit counselling initiative has been started by Bank
of Baroda, and as the name suggests, is particularly for the rural community. Financial
awareness, information sharing, credit counselling and solving financial problems of rural
India are the main services offered. The centres are spread across 52 centres in the country,
in various rural areas. Please click here to read more about them
Does it make sense to opt for the services of credit counselling agencies?
Yes, if your low credit score or poor credit history is hindering your loan applications or your
financial life is debt ridden and you find yourself spending a bulk of your monthly income in
servicing costly debt, then, in the long run, it can do you good to spend some money today
and take the advice of experts to manage your credit situation.
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2.
3.
4.
Is there a way you can increase your income? Can you take part time tuitions or write
on blogs? Check out freelancer websites for opportunities.
Can you change your profile and earn more, say by joining sales team? Time to change
your job? Working abroad is generally very lucrative. But you will first have to create an
emergency corpus.
Can your spouse earn more by changing the job? If she is not working, can she work
part time and earn? Check out freelancer websites for opportunities
Best Practices
1. While you make these efforts, below best practices are worth keeping in mind.
2. Take a few days leave from work & focus fully to achieve your liquidity goals.
3. If you have multiple loans and multiple sources of funds, make a mapping table. Take
the most expensive loans and map them to the cheapest source of funds.
4. Take one step at a time. First, get from deficit to neutral situation. Then move from
neutral to surplus situation.
5. Have Plan A & Plan B & Plan C. One of them has to work in your favour.
6. Use Personal Finance Ratios. As an example, as you progress, your debt repayment as a
% of monthly income has to come down. Your savings ratio has to go up. Your solvency
ratio has to improve.
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18 Articles on Mutual
Fund by 3 Experts
Pages: 50
Insurance
Planning
Comprehensive Guide
Product Comparison
Pages: 42
Sample
Financial Plan
Comprehensive
Sample Financial Plan
Pages: 20+
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