Automobile Atrocities

Recently I purchased a Verna from a Hyundai dealer. The cost came about 15.20 lakhs. When I checked the invoice, the insurance component alone was 73K. I found that it was on the higher side.

When I checked with one of my friend in the Insurance industry, he said he can do it for 53K for 12 Lakhs IDV (Insured declared Value), with the same insurance cover, which includes bumper to bumper with consumables.

If the difference value was 2K or 3K, I could have gone with the dealer itself. But when the difference value was about 20K, I was not able to digest.

I inquired with the Sales Manager of the showroom, why there’s a huge difference between your insurance with the other insurance companies.

He said, we will cover everything boss including consumables whereas other insurance companies will not cover those. Since this insurance comes from Hyundai; you will not have any problem in the claims.

I was little confused, again and went back to my close friend and inquired about that. He told that, the Sales will get a kickback from their company for promoting their own insurance. Hence they will say all cock & bull stories. If you are ready to fight it out, I will back you for getting the insurance.

Still I was not convinced. I thought it was prudent to clarify this issue on my own. I googled it to find out the truth, the motor vehicle insurance act, the law clearly says that, one cannot force the buyer to buy the insurance from them. It’s absolutely the discretion of that individual to choose the insurance company.

I decided to speak with CRM of Hyundai. Got a reply stating that, since you are buying the car from us, you need to take the insurance from our company only? The moment when I talk about the Motor Vehicle Insurance Act, she kept quiet and said, I will ask the concern person to speak with you sir!!

Since there was no revert for my calls, I wanted to document the same and I wrote couple of mails, but it remained unanswered. The delivery date was scheduled; the sales manager was pressing me for the remaining payment. The situation was forcing me to take decision. The difference amount of 20K was still stitching my mind continuously.

I called the Hyundai Customer care number in New Delhi. The executive who spoke to me was very clear in her statement. We will not force any customer rather we cannot force any customer to buy insurance from us. He requested me to take the Sales Manager on con-call.

I called the Sales Manager; I once again started the story from the start. Because I wanted them understand the entire story. I allowed him to talk more; he went on to say, as per Hyundai Policy, the new customer has to take the insurance from the dealer only. Otherwise the customer would face a problem if any claim arises in the future. The Sales Manager not aware that, the customer care executive is over hearing the entire conversation.

Suddenly the customer care officer, interrupted the conversation and asked the Sales Manager, gentleman can you please quote where it was mentioned in the policy.

The Sales Manager was bamboozled with that intervention of Hyundai people. When he understood that it was Hyundai people, he assured that he will do the best to satisfy the customer.

I must appreciate the courtesy and professionalism with the Hyundai customer care people.

Later the dealer accepted to take insurance from outside and I saved about 20K for myself.

On the following day, the Sales Manager had called me and gave a nice compliment in a sarcastic way – I never seen a customer like you sir!!

Jokes apart, with a little rigidity, I saved my money.

When I shared this information with my friends, surprisingly no one aware of that, we can take the insurance from outside as well, this made me to dig deeper about this insurance fraud.

Since I live in a large gated community; I get an opportunity to see all brands of cars, every week I use to see a newly registered car in our community. Out of curiosity, I started checking with new car buyers about this. Shockingly no one was aware of such things. They all told me, we thought it was a package.

So next time, if your friend or relatives buy a new car for themselves. Please share this info with them, help them to save their money and demand for a big treat.

For a matter of fact, it’s happening with all familiar brands. The awareness has to come from the people.

In 2017, over 32 lakhs of car were sold in India. Even if you keep the insurance margin to 10K per car, you may need a calculator to calculate the swindled money from the public. It was staggering 320 crores of money has been looted from our pocket.

Every month, the corporate is pocketing 26 crores of rupees from us. This is only the car segment alone. There are some other segments like commercial vehicle, Agri-vehicles, two wheelers and many others.

We can keep this atrocity in one side and we talk about another atrocity which people are doing to themselves.

Only 4 out of 10 people take the car on every day basis. Which directly translates around 60% people is not doing any justice to the EMI they are paying.

For a 12 lakhs car, you pay an EMI of Rs. 25K per month, which translates about 3 lakhs per annum. Apart from that, you have fuel cost, insurance cost, depreciation cost and service cost.

For 20,000 kms, let’s take average mileage of 12 km/per litre. Which directly translate into Rs. 1,33,000 (11K per month), then insurance amount of Rs. 40K (3333 pm), then 10% depreciation of 1,20,000(10k p.m.) and service cost of 20K (1600 pm)…. Which all adds up to Rs. 25933.

And it doesn’t stops there; you add up your EMI of Rs. 25,000 then add the other component of Rs. 25933 = 50933.

Hence your spent per month is Rs. 50933.

Based on your car value, you can calculate it accordingly.

If you are not driving anything less than 20,000 kilometres, we can charge a criminal case against you.

Now again who is helping the corporate, the same ignorant people. My request is, if you are going to drive less than 20,000 kilometres per year, please don’t buy a car. Instead hire a Merc, wherever you go. It works out much cheaper than owning a car.

Per annum spent Kms ran Rs spent per km
635196 30000 21 Rs.
635196 25000 25 Rs.
635196 20000 31 Rs.
635196 15000 42 Rs.
635196 10000 63 Rs.
635196 8000 79 Rs.
635196 5000 127 Rs.

** Per annum spent derived from 52933*12
** Rupees spent was calculated kms ran / pa spent

I can keep adding another atrocity by the consumer. Only 50% of the car owner washes their car everyday. Out of which only 10% cleans the interior.

I have seen many people were driving their NEW car with the polythene cover in the seat. They are trying to safe guard the seat. The R&D team works very hard to give a comfort for the car owners to give a pleasant experience to drive their cars. But we are not enjoying it, in spite of paying money for that car.

Author: Unknown

Source: Facebook

Money Lessons for your Kid Part – 3

Changing times, social media like facebook, instagram, whatsapp has impression on kids.

Learn how to teach them money lessons.

Money lesson for your kid aged 15-16:

Explain loans & credit reports before the bad habits of his peers get ingrained in him. Ensure he understands the importance of high credit score to eventually get the loans for things he wants, e.g. a house or a car in future. Make him understand how loans work — principal, interest, repayment, good loans Vs bad loans, tax benefits (80C, 80E etc), Insurance cover for loans etc.

Money lesson for your kid aged 17-18:

Give them more leeway in Bank A/c where they can store the money & write cheques. Don’t add money to this account. They should fund it from their savings. Have them write cheques for costs like student activity fees, and sit down with them monthly to balance account. Also, discuss topics like work-life balance, financial freedom etc.

Money is great, but it’s worthless if you’re not leading a balanced life.

#artharthifinancialservices

#kaustubhdeole

Money Lessons for your Kid Part – 2

Why Money Lessons are important for your kid in changing markets.

Money lesson for your kid aged 11:

Keep pointing out advertisements of different brands to your kid. Explain how they try to manipulate consumer’s emotions by making their products look cool through paid advertisements.

Money lesson for your kid aged 12:

While shopping, point out a cheaply-made product & a higher quality alternative, explain the difference (the feel of fabric, brand etc.) and how to choose between the two. If you buy eco-friendly product, explain why you’re willing to spend more on it. She should learn smart purchases rather than just the cheapest.

Money lesson for your kid aged 13:

Get in the habit of clarifying financial concepts. Tell your kid, ‘I invest in Mutual funds, Bonds, Stock Market etc to make money grow’. Show the ups & downs of Nifty (just call it ‘the market’) and explain why people invest in it.

Money lesson for your kid aged 14:

Make your teen work for extra allowance, e.g. chopping vegetables etc. Let her feel the power & freedom of making & spending money. E.g. if she wants a Rs 1200 jacket, explain that she’d have to babysit for 12 hours at Rs 100 per hour to afford it. Convey that she has to work in order to get what she wants.

#artharthifinancialservices

#kaustubhdeole

Money Lessons for your Kid

Money lesson for your kid aged 7:

Talk to your child about career & money. Try to instill positive feelings towards work. Explain what you do at work, why you chose that field and why you like it. Convey that people should try to choose the jobs based on what they enjoy.

Money lesson for your kid aged 8:

Explain that some money that you earn have to be spent on the bills. Let your child sit next to you while you make the payments. Some amounts like rent or EMI — will be too big for her, but you can ask her to match the balances. Focus on Savings too.

Money lesson for your kid aged 9:

Open a Minor Savings A/c. Don’t let him withdraw money at will — if he wants to save for a bike, he should talk to you first. Tell him that he will have to make regular deposits to the bank, monthly or quarterly.

Money lesson for your kid aged 10:

Inform about different kinds of cards & Bank A/Cs. Take your cards out of your wallet and explain which one is for debit, which is for credit, their differences, and the importance of always paying back dues in full & on time.

#goodeducation

#artharthifinancialservices

#Weekend Reading Behavioral Biases

Creating and managing a portfolio by the investor requires investment decisions to be made on which asset classes to invest in, how to invest, timing of entry & exits and review & rebalancing the portfolio. These decisions have to be based on the analysis of available information so that they reflect the expected performance and risks associated with the investment. Very often the decisions are influenced by behavioral biases, which lead to less than optimal choices being made. Some of the well documented biases that are observed in decision making are;

Greed and Fear

These are the most common biases impacting the retail investors. Investors enter the market when prices are already high and sell when the market bottoms out; thereby losing in both the scenarios and finally concluding “equity is the worst investment class”. Few who exercise patience overcomes these biases and emerges as winners.

Loss Aversion: The fear of losses leads to inaction. Studies show that the pain of loss is twice as strong as the pleasure they felt at a gain of a similar magnitude. Investors prefer to do nothing despite information which may lead to a loss. Holding on to losing stocks are manifestations of this bias.

Over confidence Bias: Investors cultivate a belief that they have the ability to outperform the market based on few investing successes. Such winners may be the outcome of chance rather than skill. If investors do not recognize the bias, they will continue to make their decisions based on what they feel is right rather than on objective information and lose out in the long run.

Familiarity Bias: This bias leads investors to choose what they are comfortable with. This may be a familiar asset class, stocks or sectors that they have greater information about. Investors holding only real estate or a stock portfolio concentrated in shares of a particular company or sector are demonstrating this bias. Since other opportunities are not explored , the portfolio is not diversified enough to mitigate the risks of a concentrated portfolio.

Herd Mentality: This bias is an outcome of uncertainty and a belief that others may have better information, which leads investors to follow the investment choices that others make. Small investors keep watching other participants for confirmation and then end up entering when the markets are over heated and poised for correction. Investing by taking tips comes under this bias.

Choice Paralysis: The availability of too many options for investment can lead to a situation of not wanting to make the decision. Too much of information also leads to a similar outcome on not taking action.

Sunk Cost:These are observed more in buying Insurance for investment. After paying premium for a long period, there is reluctance to discontinue the policy despite knowing that the return is very low. The selling agents exploit this bias by telling that the money already paid will be lost and advise not to discontinue the policy.

Individual investors can also reduce the effect of such biases by adopting a few techniques. As far as possible the focus should be on data and analysis. Adopting process-oriented investing and reviewing methods can help biases. Facility such as systematic investing (SIPs) will help. It is always good to have an adviser whom the investor can trust.

The Bucket List

Imagine you were told you had 6–12 months left to live.

What would you do with your time left?

Today i watched the movie again.

It’s about Billionaire Edward Cole (Jack Nicholson) and car mechanic Carter Chambers (Morgan Freeman) who meet in the hospital and learn that their respective illnesses will kill them in less than a year’s time. Instead of letting the news bring them down, they decide to create a bucket list together, which is basically things each of them want to do in life before they die. The rest of the movie explores the relationship between the two men as they go out and try to live their bucket list.

It’s a beautiful movie that I’d definitely recommend.

Lessons I learnt from The Bucket List, thought it might be useful to you:

  • Death often comes Unexpected: Edward and Carter were in their old age when they found out they were going to die. But it still crept up on them. They were living normal lives, and then suddenly their time was going to be up.

    Whether old or young, death often comes when you least expect it. You really never know what can happen. That’s why you need to grateful for every day you wake up and make sure you’re living the life you want.

    In financial context, make sure you have adequate Term Cover & Health Cover for your family to support their lives.

  • Make your Bucket List Now:Seriously. Don’t wait until life passes you by and it’s too late. Start today!

    Write down all the things you want to do in life. Dream big.

    List all your objectives, goals, aspirations to achieve. You get life only once.

 

  • Actively plan to execute the objectives mentioned in the list:Making the bucket list is the easy part and only Step 1. It’s worthless unless you start planning out how you’re going to accomplish the things on it.

    Edward and Carter couldn’t really plan since their time was limited. They just took action, which is a major part of the equation too.

    While you likely have a lot of time to accomplish the items on your bucket list, don’t wait for “some day” to come. Again, you never know when your time is up here, so there needs to be a little sense of urgency and desire to take action. Squeeze everything out of life while you can. Start by picking an item that is attainable and take the first step to figuring out how and when you can do it.

    Planning & Execution is the Key to achieve the goal. Planning your finances, spending, investing, formulating a financial plan & executing it makes sense.

 

  • Bring joy to other people’s lives:In the same story about the deceased waiting to get into heaven, Carter tells Edward that the question god ask them is “Has your life brought joy to others?”

    Life isn’t meant to be all about you. Yes, your dreams and goals matter, but it’s really about impact and legacy. How many people’s lives can you touch while you’re here? How can you be a role model for others?

    As Carter said in the movie, “You measure yourself by the people who measure themselves by you.”

    I try to educate & empower all through right financial planning, financial awareness, personal finance & investing principles for wealth creation.

 

  • Be adventurous:When Edward and Carter saw the world, they did it in style. Their journey was all about having fun and doing things they had always wanted to do. They pushed the boundaries of what they thought they were capable of and grew in the process.

    We should all try new things more often. There’s so much out there to be experienced. If there’s something that’s been on your mind a lot that you’ve wanted to do, just go do it. Take someone with you. Create memories you can hold onto. Have the most fun possible. Do it all.

Continue reading The Bucket List

Quiz

Rs 100 is kept by your great greater and greatest grand father in the year 1818 in a secret box – Hint to open the box is written in encoded format on the box

Money in this box is growing at a rate of 10% per annum compounded annually

In the year 1918, your great grand father found the box and tried to open, but he was unable to decipher the code. Box went into hidden secret place after that… And still money is growing at 10% p. a

In the year 2016, when you went to your hometown, you heard from some of your neighbours about the secret box and you wanted to explore.. So you took the help of nearby archaeologists and excavated some places in near by village where ur great grand father used to live and finally you found the box

You took it home started trying to decipher the code.. You logged in the decipher code on super computer and it took 2 years and finally super computer revealed the secret code.

You arranged the numbers on the box as per the code revealed by super computer and the box finally opened

Can you tell the amount of money you see TODAY in 2018 year?

Also, tell me what would be the value of money ur great grand father would have seen if he opened the box in 1918 year?

Kaustubh Deole

How to be Happy & Successful in Life?

munger

By Charlie Munger

If all you succeed in doing in life is getting rich by buying little pieces of paper, it’s a failed life. Life is more than being shrewd in wealth accumulation.

A lot of success in life & business comes from knowing what you want to avoid.

Develop good mental habits. Avoid evil, particularly if they’re attractive members of the opposite sex.

If your new behaviour earns you a little temporary unpopularity with your peer group, then the hell with them.

Beware of Envy

The idea of caring that someone is making money faster (than you are) is one of the deadly sin. Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain & no fun.  Why would you want to get on that trolley?

How to Get Rich

Spend each day trying to be little wiser than you were when you woke up. Discharge your duties faithfully. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts.

The Importance of Reading

In my whole life, I have known no wise people who didn’t read all the time. You’d be amazed at how much Warren reads.

I think when you’re trying to teach the great concepts that work; it helps to tie them into the lives & personalities of the people who developed them. I think you learn economics better if you make Adam Smith your friend. That sounds funny, making friends among the eminent dead, but if you go through life making friends with the eminent dead who had right ideas, I think it will work better in life & work better in education. It’s way better than just being given the basic concepts.

Reduce Material Needs

Most people will see declining returns (due to inflation). One of the great defences if you’re worried about inflation is not to have a lot of silly needs in your life. You don’t need a lot of material goods.

Avoid Debt

Once you get into debt, it’s hell to get out. Don’t let credit card debt carry over. You can’t get ahead paying 18%.

The Decline of Public Schools

You could argue that (the decline of public schools) is one of the major disasters in our lifetime. We took one of the greatest successes in the history of earth & turned it into one of the greatest disasters in the history of the earth.

Weekend Reading

Are you misbehaving with your money?

If you are of the opinion that you are behaving cordially and appropriately with your money, you are probably wrong. Given the way our brains are wired, it is impossible to not let our emotions overpower logical reasons. In the academic arena this is known as behavioural economics or behavioural finance. We can look at some routine day to day examples to prove this fallacy.

1. Neha had parked 5 lakhs Rs. in a fixed deposit at 8℅ p.a. and she is also serving a 3 year personal loan of Rs. 4 lakhs at 15℅ p.a.
Now logically it makes so much sense to close the personal loan as Neha has adequate surplus available with her. But by behaving irrationally she stands to lose. Having her money parked in fixed deposit gives Neha tremendous sense of comfort.
Wrong comfort zone, wrong investment decision.

2. Mr. Aggarwal is a so called intelligent investor. He follows Warren Buffett’s maxim, “Buy low and sell high.” He always buys stocks which have hit their 52 week lows and sells the ones that have hit 52 week highs.
However, Mr. Aggarwal has not made money. What is an issue? Choice of an arbitrary reference point. The company which has hit 52 week low may be in the downtrend due to some big problem and may go down further. Likewise, 52 week high does not stop the stock to go up as the company may have produced outstanding results and holds terrific potential due to some discovery.
Wrong reference point, wrong investment decision.

3. Wasim started Investing in ABC mutual fund via SIP 10 years ago. The fund performs exceptionally well and gives Wasim 20℅ compounded returns over 10 years. Wasim is happy as he is able to meet his goal of making down-payment for buying a house and is also able to prepay his car loan.
However, Wasim gets disappointed when he comes to know that his friend William has got 23℅ return during the same period.
Well, fund manager does not ideally aim to generate best returns but the returns should ideally be enough to meet investor’s goals. But Wasim started comparing his returns with William’s fund. However, what was the risk taken by William’s fund manager to generate extra 3℅ returns???
Wrong comparison, wrong investment decision.

4. If you analyse the stock portfolio of a large number of investors, you will notice the following.
a. There are few multibaggers.
b. There are quite a few failed stocks.
This happens because people hate losing money. They are affected by loss aversion. Similarly when the stock appreciates they are eager to book profits. Selling early denies investors huge amount of potential profits. Peter Lynch rightly said, “If you cannot imagine to see your investments going down 50℅ you should not be in the market. You are not yet ready.”
Wrong timing, wrong investment decision.

These stories amply prove that humans are emotional fools. Remember how companies shape our behaviour to make more profits.

#learningneverstops

Kaustubh Deole