Home Buyers, Beware of Festive Offers

A company manufacturing dog food was having a brainstorming session with the entire team of Management, CEO, Sales Director, Marketing Director, Advertising Head on how to revive the falling sales of their product.

The usual blame game started with the Sales pointing finger at Marketing, and Marketing doing the same at Sales. Both together blaming the Advertising and vice-versa.

Suddenly the Assistant of the MD, got up, called a dog, placed the food at the dog. The dog sniffed at the food, and walked away without even touching it.

Well the reality was the end consumer was not willing to bite and there in lied the problem.

Similarly for the Developers and the Real Estate Sector, you can have tremendous debates, blame demonetisation or interest rates, RBI for poor sales of their home units.

The fact is the prices of the houses are beyond the reach of the end users and the end users are not willing to bite.

Time to get the message straight.

You can fool some people all the times, all people some times,

But you Cannot Fool All the people, All the time.

Happy Gudi Padva to All & Happy New Year

How a Password can create Wealth

Sorry for late post. Was hosting a workshop on Financial Independence.

Inspired from a true story from the Reader’s Digest …

I was having an average morning until I sat down in front of my office computer “your password has expired”, a server message flashed on my screen, with instructions for changing it…

In my company we have to change passwords monthly..I was deeply depressed after my recent breakup. Disbelief over what she had done to me was what I thought all day long ….

I remembered a tip I’d heard from my former boss. He’d said, “I’m going to use a password that is going to change my life”.

I couldn’t focus on getting things done in my current mood.. My password reminded me that I shouldn’t let myself be a victim of my recent breakup and that I was strong enough to do something about it.

I made my password – Forgive@her.

I had to type this password several times every day, each time my computer would lock. Each time I came back from lunch I wrote forgive her.

The simple action changed the way I looked at my ex-gf. That constant reminder of reconciliation led me to accept the way things happened and helped me deal with my depression..

By the time the server prompted me to change my password following month, I felt free.

The next time you have to change your password consider some of the following passwords :-


2) @investforgoals

3) @investforthelongterm

4) @equityinvestingisbestforretirement

5) @startinvestingearly

6) @dontcheckyourinvestmentstoooften

7) @dontworryaboutmarketvolatility

9) @riskmeansshorttermmarketfluctuation

Keeping at it brings great results and will create great wealth for you.

Money Tips

Some very important financial tips that everyone should know and execute it for better life….

1. Avoid buying property on loans as it eats most of your earnings unless you have a clear plan for its repayment. It’s important to monitor cash flow. Though, the house will be your asset, your liability will be much more. A better idea is to stay on rent as rental yields are low. Secondly your liquidity will increase. Thirdly your investment corpus will increase. All this will result in more wealth creation.

2. Start a SIP at a very young age. Try to save atleast 15–25 % of your earnings.

3. Avoid buying a car unless you use it everyday.

4. Do not let this sentence scare you. “Mutual fund investment are subject to market risk. Please read the offer documents carefully before investing”. Most people avoid investing in mutual funds just because of this one warning. Yes, there is a market risk, but look at the history and growth of mutual funds.

5. Try having a simple wedding.

6. Most of your wealth should be liquid so you can utilize it when necessary.

7. Considering inflation, you are actually losing money if it is in savings bank account. Do not keep huge money in savings bank account.

8. If you invest in stocks, pay due attention.

9. Else a mutual fund portfolio is a better and sustainable option where an expert fund manager looks after your portfolio.

10. Do not have a belief that property and car make you rich. Its what you save and invest, that creates wealth.

11. Never invest in insurance for returns. Insurance is not an investment option. It is a risk management tool.

12. Never use credit cards for lavish spending. Use credit cards intelligently and for Needs not for Wants.

13. Cancel all credit cards before you retire. Or inform family about all your accounts, credit cards, loans and saving now itself. Even a small residue will cost your family much.

14. Invest on yourself and then on other investments.

15. Always try to balance your earnings with your savings first, then on spending and loans. Never take unnecessary loans. Always have reserve and utilise them.

16. Always have a plan for future events on your career, life, spending and finance.

17. Always have a reserve on your savings for contingency and urgent situations.

18. Your personal life and health are the most important investment. Do have a regular health check and do healthy workout every day. Stay healthy and live happily.

19. Always remember death can come anytime…..so please do buy adequate Term Insurance if you have dependents.

20. Prepare a Will. It may avoid unnecessary fights after you die.

Charges in Mutual Funds

There was much uproar of my yesterday’s post on Insurance Premium Charges and received comments to write a blog on Mutual Fund Charges.

Here are my excerpts:

Asset Management Companies charge certain fees on schemes held by investor. The AMC manages the fund portfolio, monitor market fluctuations and makes investment decisions.

To Manage funds Professionally costs are incurred such as Advisory Fees, Operational Costs, Investment Management Fees, Registrar & Transfer Agent Fees, Legal & Audit Fees, Agent Commissions & Ongoing Service Charge. All these charges are termed as Total Expense Ratio (TER).

  • Total Expense Ratio (TER)

SEBI has specified the limit as follows

Average AUM Equity Debt
1st 100 Crores 2.50% 2.25%
Next 300 Crores 2.25% 2%
Next 300 Crores 2% 1.75%
Balance 1.75%


  • Transaction Charges

There are no Transaction Charges for investment less than Rs. 10000. The charge is only levied to investment of more than Rs. 10000. New Investor- Rs. 150 deducted from his investment spread over equally for 4 months. Existing Investor- Rs.100 deducted from his investment spread over equally for 4 months.

  • Entry Load

There are No Entry Charges for Investment in Mutual Funds.

  • Exit Load

This fee is levied to discourage investors who opt out of the scheme. Different AMC’s charge different exit loads. Generally, exit load in Equity Scheme is 1% before completion of 365 days and 1% in Debt Scheme before completion of 3 yrs.

  • Taxation
  1. STCG: If any investor withdraws the invested amount before completion of 1 year, the profit generated on the invested amount is taxed by 15% known as Short Term Capital Gains.
    1. LTCG: If any investor withdraws the invested amount after completion of 1 year, the profit generated on the invested amount will be taxed by 10% known as Long Term Capital Gains. (This rule will start on 27th March 2018)

Till then, any investor can book profits & utilise the amount for further investments.


Complete Break – Up of Your Life Insurance Premium

The premium of a life insurance policy comprises of various charges put together. Some charges are common, a few vary on the basis of the type of policy, e.g:- Term, ULIP, Endowment etc…


Endowment Plans guarantee a maturity benefit after the policy tenure. To cater to this, a portion of the premium is invested in various avenues such as bonds, government securities, and GILT and money market instruments. This is not really a charge but a contribution that is made by the policy holder towards building a maturity corpus, deducted from the premium.

ULIP – Unit Linked Investment Plan

  • Mortality Charges

The most important part, mortality charges are what you would be paying the insurer, for the cover you get in return. Considered as the actual cost of your insurance, it is a vital part of the premium (around 15%). This mortality charge is calculated by insurance companies by using what is known as a “Life-Mortality table”, prescribed by the IRDA. The calculation is based on the average Indian life expectancy ratio. It also considers gender, age, profession, place of residence and overall profile of the insured for calculation. The younger and healthier you are, mortality charges work out lower.

Mortality charges are higher in riskier investment based insurance policies such as ULIPs in comparison to Plain Vanilla Term Plans.

  • Fund Management Charges

The fund management charges are typically applicable to an investment insurance policy such as a Unit Linked or Endowment Plan. For managing and investing your money in a particular fund, a fee is charged by the insurance company. The amount is anywhere between 1% to 2.5%, of the Assets Under Management (AUM). Fund management charge greatly depends on the type of fund chosen. The more aggressive the fund manager’s role in the portfolio, the higher the charge, in comparison to a low risk debt fund.  This charge is adjusted in the daily Net Asset Value of the fund.

  • Policy Administration Charges

For the insurance company’s expenses towards paperwork,  maintenance and administration, an amount known as policy administration charges (PAC) is levied. Chargeable on a monthly basis, this is a flat rate that varies from insurer to insurer, and policy to policy. On an average it is around 0.5% of the annual premium chargeable per month.

  • Premium Allocation Charge

Premium Allocation Charges are very typically associated with Unit Linked Plans. Though termed premium allocation, it actually has nothing to do with allocations. It is that charge that goes towards, any commission/ service charge for the insurance agent. It is deducted from your premium before the balance is invested in the fund of your choice.  Premium allocation charges are highest in the first policy year. It is deducted upfront from the premium paid on a yearly or monthly basis, depending on your policy.

  • Goods & Service Tax Charge

Mandated and declared by the government which is currently at 18% Goods & Service Tax (GST) is applicable on all charges such as fund management charge, premium allocation, mortality.

  • Other Charges

These below mentioned charges are levied along with your premium in case you opt for it.

  • Rider charges

If you seek a more comprehensive cover and opt for a rider such as a personal accident cover or critical illness benefit along with your life cover, you are charges an additional premium amount. The cost depends upon on the rider you choose.

  • Switch Charges

If you opt to switch over from one fund type to another in your ULIP policy, you may be charged for doing so. This charge is levied when the switch is actually made at; is a flat rate.


To Summarize

The Break – Up of insurance plan depends purely on the type of policy it is.

Pure Vanilla Term Plans have a premium comprising of mortality, administration and service tax only. As term plan does not have any maturity corpus, there is no requirement on the part of the insurance company to manage any portfolio. It is for this reason, term plans work as a cost effective insurance policy.

On the other hand, unit linked plans, top the scale when it comes to high premiums. Considering the investment component in the policy; it requires more management and administration, thus making it an expensive option.


Vikram Betal & Stock Market

विक्रमादित्याने आपला हट्ट सोडला नाही. त्याने मौन धारण केले व तो दलाल स्ट्रीटवर गेला, झाडावर लटकलेले प्रेत खांद्यावर घेतले व तो सोनापूरा कडे चालू लागला. येवढ्यात प्रेतात बसलेला वेताळ जागा झाला आणि म्हणाला,
विक्रमा तुझ्या सातत्यपूर्ण प्रयत्नांचे मला खरोखरच कौतुक वाटते असेच सातत्य आणि निष्ठा जर गुंतवणूकदार बाजारावर दाखवणार असतील तर त्यांना खूप चांगला परतावा मिळवून ते धनवान होण्यापासून त्यांना कोणीच रोखू शकत नाही, पण वर्तमानपत्र आणि टीव्हीवरील सतत येणाऱ्या बातम्यांमुळे गुंतवणूकदारांचे मनोधैर्य खचत नसेल का?
“Bloodbath on Dalal street” किंवा “गुंतवणूकदारांचे दोन लाख कोटी बुडाले”
वगैरे शीर्षके तू बघितलीस तर तुझेही मनोधैर्य खचेल असे तुला वाटत नाही का? “
या माझ्या सर्व प्रश्नांची तू मौन सोडून समर्पक उत्तरे दिली नाहीस तर तुझ्या पोर्टफोलिओची शंभर शकले होऊन ती तुझ्याच पायावर लोळु लागतील”
असे म्हणून वेताळ उत्तराची वाट पाहू लागला.
विक्रमाने थोडा विचार करून बोलायला सुरुवात केली, विक्रम म्हणाला,
“वेताळा, मुळातच शेअर बाजाराची किंवा म्युचुअल फंडाची गुंतवणूक ही दीर्घकालीन (long time) गुंतवणूक असते. अर्थात प्रत्येकाची लॉंग टर्म वेगळी वेगळी असू शकते. आणि इथेच खरी गल्लत होते. शेअर मार्केट अथवा म्युचुअल फंड यातील लॉंग टर्म कमीत कमी सात वर्षे व अधिक अशीच असावी. पण जे गुंतवणूकदार 15 ते 25 वर्षे गुंतवणूक करून थांबतात वा गुंतवणूक करत राहतात त्यांचे नुकसान होत नाही.
याच्या अगदी उलट जे गुंतवणूकदार बाजार चढा असताना बाजारात येतात व उतरू लागल्यावर बाहेर पडतात ते स्वतःचे नुकसान करून घेतात.
वेताळा एक गोष्ट लक्षात ठेव, शेअर बाजारात नुकसान त्यांचेच होते ज्यांना भीती आणि लोभ ( Fear and Greed) यांनी ग्रासले आहे.
वेताळा शेअर बाजार आणि म्युचुअल फंडातून परतावा मिळवण्यासाठी भगवान श्रीकृष्णाने सांगितल्याप्रमाणे “भीती” आणि “लोभावर” नियंत्रण मिळवणे आणि ऋषीमुनी प्रमाणे तपसाधना करावी लागते. एक तप म्हणजे बारा वर्षे समजलास.
विक्रम पुढे बोलू लागला “माध्यमातील बातम्यांबद्दल बोलायचे तर एवढेच म्हणता येईल कि , ती बालिश अशी बडबड आहे”
दोन लाख कोटी खरोखरच बुडाले असते तर देशभरात किती हाहाकार माजला असता.
अरे दंगली झाल्या असत्या. बँकांपुढे लोकांनी निदर्शने केली असती.
नाही का?
खरेतर लोकांजवळ असलेल्या शेअर्सचे बाजारमूल्य दोन लाख कोटींनी कमी झाले, (बुडाले नव्हे) असा त्या विधानाचा अर्थ आहे.

एक छोटेसे उदाहरण देतो,
आपल्या भारतात 14 कोटी मध्यमवर्गीय कुटुंबे आहेत. या प्रत्येक कुटुंबाकडे सरासरी 25 तोळे सोने आहे. ज्या एखाद्या दिवशी सोन्याचा भाव रुपये पाचशे प्रतितोळा कमी होतो त्या दिवशी प्रत्येक कुटुंबाच्या सोन्याचे मुल्य रुपये साडेबारा हजाराने कमी होते. भाव जर हजार रुपयांनी कमी झाले तर ही घट 25 हजार रुपयांची होते. म्हणजेच 14 कोटी मध्यमवर्गीय कुटुंबांचे 3.5लाख कोटींचे नुकसान होते असे म्हणता येईल का?
वेताळा असे तेव्हाच म्हणता येईल जर त्यादिवशी 14 कोटी भारतीयांनी त्यांच्या जवळचे सोने विकून टाकले.
असे आजवर कधीही घडलेले नाही.
उलट ज्या दिवशी सोन्याचे भाव इतके पडतात त्यादिवशी लोक रांगा लावून सोने खरेदी करतात.

अगदी असाच न्याय शेअर बाजार वा म्युचुअल फंडाला का लावला जात नाही.
जेव्हा शेअर बाजार घसरतो तेव्हा शेअर्सच्या किंमती कमी झालेल्या असतात.
ही वेळ खरेतर नवीन खरेदीची असते पण माध्यमे वरीलप्रमाणे हेडलाईन्स टाकतात.
कारण त्यांना प्रत्येक बातमीमध्ये सनसनाटी हवी असते मग ती वाचकाचे नुकसान करणारी असेल तरी.
खरेतर अशा बातम्यांमुळे जे गुंतवणूकदार स्थितप्रज्ञ असतात ते अजिबात विचलित होत नाहीत.
परंतु जे कुंपणावर असतात त्यांचे नुकसान होते,व मग ते जन्मभर शेअर बाजाराच्या नावाने बोटे मोडायला लागतात.

वेताळा वरील हेडिंग देणारे पत्रकार हे “कुंपण” वालेच असतात.
अश्या बातम्यांपासून दूर राहणे व त्याकडे दुर्लक्ष करण्यातच गुंतवणूकदारांचे हित आहे.
वेताळा, तू सुरुवातीला माझ्याबद्दल व माझ्या सातत्या बद्दल जे कौतुक केलेस ना तसेच सातत्य शेयर बाजार वा म्युच्युअल फंडात गुंतवणूक करताना असायला हवे.
“गुंतवणुकीतील सातत्य व स्थितप्रज्ञता अंगी बाणवल्यास व बाजारावर निष्ठा ठेवल्यास तू म्हणतो तसे चांगला परतावा मिळवून धनवान होण्यापासून माझ्या राज्यातील गुंतवणूकदाराला कोणीच अडवू शकत नाही”.
येवढे बोलुन विक्रम थांबला.
तेव्हा प्रेतातील वेताळ म्हणाला “विक्रमा तुझ्या शेअर मार्केटच्या ज्ञानाचे मला नेहमीच कौतुक वाटत आले आहे. तुझे प्रसारमाध्यमांबद्दल चे निरूपण ही मला खरे तर निरुत्तर करून गेले. पण मनात आणखी काही प्रश्नांची गर्दी होते आहे. पण ते पुढच्यावेळी आता मी जातो”.
असे म्हणून वेताळ पुन्हा झाडावर जाऊन लटकला.

Author: Unknown

Source: WhatsApp

How to adequately manage Risk

Risks are a part of everyone’s lives and most of us live under the false impression ‘It wouldn’t happen to me’. This attitude is suicidal and can play havoc with one’s finances.

A simple planning can go a long way in protecting you and your family from hardships that arise from unfortunate situations. The emotional and mental trauma is something that can never be quantified or protected but we can at least save ourselves from financial hardships that accompany such unfortunate circumstances.

Following risks need to be kept in mind:

1. The risk of medical problem:

Buy your own comprehensive Health Insurance. Buy accident policy to secure from disability.

2. The risk of untimely death:

Every earning member who has financial dependents must buy Plain Term Plan. Please don’t buy endowment and ulip, they don’t cover you adequately and are damn expensive. And your insurance agent won’t tell you this reality.

3. The risk of earning loss:

Financial security is becoming increasingly important however there is no policy to cover this risk. One must invest through proper financial planning to face such situations.

4. The risk to physical assets:

Fire, theft, earthquakes can expose your valuable physical assets. They can be easily protected by way of home insurance.

Please don’t ignore risk. It can kill you financially.

Detoxify your Finances

Low yielding insurance plans:
Endowment & money back plans offer very low returns. Policyholder get taken by the projected maturity value without realising that inflation would have eroded its purchasing power.

Detox measures:

Surrendering an endowment policy leads to losses, but you save on the premium.

Convert to Paid-Up:

If you have paid premium for 3 yrs, the policy can be turned into a paid-up plan. Premium will stop but the cover continues & you get money on maturity.

If policy is ending in less than 5 yrs, it is better to continue paying premium.

Basic Awareness

To start with following golden money rules will prove very useful:

1. You don’t drive without learning and getting a driving licence, do you? In the similar way, invest in financial lessons before investing in financial assets.

2. Have a detailed financial roadmap. In the absence of this roadmap you will lose yourself like a stranded traveler in a jungle.

3. You are unique hence choose only what suits you. Blindly copying others is a bad idea.

4. Follow KISS principle. “Keep It Short and Simple.” A simple term plan, a simple mutual fund and a simple medical insurance will work well in most cases.

5. Start early, invest regularly and stay invested. Even the genius like Einstein was surprised by magic of compounding over long term.

6. Always pay your credit card bills before due date. This helps in building good credit records thus improving your CIBIL score.

7. Compare EMI/Lakh for a given tenure instead of comparing interest rates. Creative advertising could also be misleading.

8. Avoid exotic products and derivatives. They are Weapons of Mass Destruction. I don’t need to remind you what happened in USA in 2008.

9. Seek guidance from professional financial advisors like yours truly. Right advice and direction will save you a lot in terms of time, efforts and money.

10. Beware of scams and scheming agents. If anything sounds too good to be true, it usually isn’t true.

The above list is just a starting point.

Educate yourself, attend seminars. And please don’t self medicate, do not venture on your own in terms of your finances.

Hire a good advisor.