New Mis-Selling Strategies

As a regular writer & educator on different aspects of Investing, last week i received a call from my old client.

Being a lady, she had concern for her nephew, who was having business & was requiring immediate loan for business purposes.

The nephew had received a call from a reputed lending company & were insisting to buy traditional life insurance policy for getting the loan.

She asked for my help.

Friends, i regularly educate through various forums & blogs.

These revenue greedy companies go at any level for promoting their products. They are least bothered about client & his family as insurance is a contract signed by the client to pay premium for the complete term.

If any death occurs, the death claim or at maturity, the maturity amount is paid to the assignee i.e the lending company.

Analyse, you have taken a loan of 5 lakhs without any financial documents, you don’t have to pay EMI, just pay insurance premium of 60000/- every year for next 10 years.

At maturity after 15 years, the lending company, who is the holder of insurance policy will receive the maturity amount which will not be paid to you.

This is a viscous circle of mis-selling of life insurance policies.

Purpose of Insurance:- “Insurance is a means of protecting financial loss”

Small business owners, new businesses, vendors, housewife’s, salaried employees with additional business are soft targets of these companies.

My advise– Stay away from such offers, invest wisely.

PS: I have complete recording of the above mentioned sales call. If anyone needs to check it, pls comment.

Kaustubh Deole

Weekend Reading

The Porcupine Story

The story goes that it was a particularly harrowing time in porcupine land. The winter was severe and the porcupines were finding survival difficult. They were freezing to death.

That’s when they held a meeting to decide on a course of action. As they got together to discuss their survival strategy, they discovered that just by being in close proximity with each other they were able to feel warmer and protect each other.

Being closeted together meant that their bodies generated heat which helped keep everybody warm. So they found they could survive the cold by just staying together!

But there was a problem.

As they moved closer, they found each other’s quills to be a bother—they poked and hurt.

Feeling the discomfort, some porcupines decided to avoid the pain from the quill pokes and moved away.

And as they ventured out on their own, the cold got them and they died.

Soon better sense prevailed and the porcupines realized it was better to stay together and survive rather than go out on their own and die.

Getting poked by the quills of porcupines that were close to them seemed like a small price to pay for survival.

This story has a great lesson for investors.

1) Investors afraid of market volatility redeem their investment because volatility seems to hurt them. Only if they could tolerate a little volatility their lives would be much better off in due course but their fear gets the better of them and they hurl themselves into a bigger crisis.

2) Another lesson investors can draw from this story is of leaving their Advisors and practicing self advisory or self medication whatever one may like to call it because the small fee that they have dispense seems to hurt them. They eventually venture out on their own and with no Advisor to manage their irrational and emotional behaviour, they too fall prey to greed and fear and lose their way.

#learningneverstops

Kaustubh Deole

First Home Survey Poll

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At which age you purchased your first home?

Pls enter your answer in comment box – If not, then when are you planning to buy or Would you prefer to stay on rent?

Your personal data is secured.

Compounding needs time

You can’t build your body overnight. Time has to spent through compounding.

Through the power of compounding, a small amount of money over time can grow into a substantial sum.

Compounding is an investor’s best friend.

Investments can increase in value over time – and the longer the time frame, the greater the value. This is achieved through returns that are earned, but not spent.

When the return is reinvested, you earn a return on the return and a return on that return and so on.

Therefore it is important to start saving early in order to benefit from the power of compounding returns.

Kaustubh Deole

When you are Greedy!

When does a person feel greedy?This emotion can arise due to rising markets. Greed is the opposite emotion to fear. It is the emotion which wins over fear and promotes over-confidence. With the rising markets, investors become greedy and hold on for longer positions, or often make random trades, which they are not supposed to do in their investing system.

This emotion can arise due to rising markets. Greed is the opposite emotion to fear. It is the emotion which wins over fear and promotes over-confidence. With the rising markets, investors become greedy and hold on for longer positions, or often make random trades, which they are not supposed to do in their investing system.

So, it is the emotional control that is the key component, an investor must exhibit while investing. True success depends on this psychological strength of the investor. Greed has to be dealt with to maintain your focus and not to get swept away by illusions.

Kaustubh Deole

Financial Freedom

Financial Freedom means having zero tie-ins to anything financial. It includes your income, debt and expenses, lifestyle. It is of little matter how people perceive the meaning differently. Rather, it is more crucial to understand how to act based on your financial situation.

Loan Free
Being debt-free should not be confused with being financially well off. If you are only debt free, you still have to work in order to pay for your basic expenses and taxes. In order to achieve financial freedom, the first thing we have to ask ourselves is what does it take to be debt free?

Income & Expenses

Assume you purchased a car without any loans required, it does not imply you are financially debt free.

There are other factors to take account of like servicing & other maintenance costs, fuel costs, repairs etc. Moreover, this is just a car. Think of other factors also. Your expenses must be well managed to achieve this goal.

If expense is greater than income, you are far from being free from anything.

Financial Assets

Financial assets are financial tools that will generate annual cash flow for you. These assets can be pension, shares, bonds and mutual funds. You can get dividends from shares, receive regular payments from your bonds or mutual funds.

For retired individuals, they can enjoy the benefits of EPF, PPF, PMVVY(Pradhan Mantri Vaya Vandana Yojana)

Conclusion

It’s easy to sell a story of being financially free. You may have heard several discussion or lectures on the importance of generating ‘passive income’ and ‘self generating money’ tools.

Feel good stories sell the best and people buy into this.

Investments and savings are good, but as with most things in life, they come with risks like inflation.

In great books, being financially free does not equate to wealth accumulation but rather your lifestyle.

Live within your means, plan for the future and consider the role of inflation while calculating financial freedom. We might be of help.

Weekend Reading

Have a Proper Investment Plan

Boris Becker had it all — six grand-slam tennis titles, models hanging off his arm and luxury houses all over the world.

At the height of his career, the German ace had amassed a reported $63 million in prize money and sponsorships, but now the man once known as “Boom Boom” for his ferocious serve has gone from boom boom to bust.

Now 49, Becker was declared bankrupt by a British court, capping a fall-from-grace story that saw the one-time wild child go from Wimbledon champ to walking headline by blowing through money, women and business ventures in retirement.

His lawyer pleaded for more time and “one more chance” to make good on debts he has racked up in retirement.

But the judge said, regretfully, the man she had once watched dominating center court has already had plenty of chances.

“One has the impression of a man with his head in the sand,” Registrar Christine Derrett said.

The above news of Boris Becker, Six times grand slam winner and one of the most successful tennis player, becoming bankrupt sends one of the most powerful message to all the youngsters of today.

“Success is never permanent . Plan well when the sun is shining coz failing to plan is planning to fail. “

Financial management is most crucial lesson one should learn in these uncertain times.

Have a great weekend.

Kaustubh Deole