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Money, Honey

Where are you?


A Personal Finance Strategy Guide

GettingYouRich.com
Rohit Shah
Smitha Hari
Vidya Kumar

Version 1
Published: January 2014
About GettingYouRich.com
We specializes in financial planning for Executives, Directors, VPs, Owners, Business Heads and
Senior Professionals. We are Liked, Followed or Read by 2,500 Friends all across the world.
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
Corporate Social Responsibility Program to spread financial literacy. A FREE copy of this eBook can
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

Financial Planners Guild, India is a select group of practising


Financial Planners. FPGI advocates high standards of professional
conduct and integrity and promotes the profession. FPGI is headed
by Suresh Sadagopan, a leading Financial Planner in the country.

Network FP is Indias first knowledge sharing and professional


networking platform for people who are passionate about financial
planning. Network FP is founded by Sadique & Preeti Neelgund.

In the formative period, GettingYouRich.com has tremendously


been benefitted by associating with FPGI & Network FP. They
connected us to the larger profession, showed us the right practices,
helped us to shape our thought leadership and guided us on
complex issues.

Knowledge is the Power.

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

7. 7 Common Mistakes when you buy a House...................................................... 54


8. 6 Smart Ways to Deploy your Surplus Money ................................................... 56
v. TAXATION................................................................................................................................ 58
1. How can you save tax beyond the common deductions? ............................... 59
2. How to leverage your Salary Structure to minimize Tax Liabilities ........... 61
3. E-Filing your Income Tax returns the easy way ............................................... 62
vi. ESTATE PLANNING ................................................................................................................ 64
1. Everything you wanted to know about Estate Planning ................................ 65
2. Writing a Will - how do you do it and its importance? ................................... 66
3. Does being a nominee actually mean you are the owner of assets? ........... 68
4. Important documents to claim assets after your loved one's death........... 69
vii. BUDGETTING .......................................................................................................................... 71
1. How to save money at home .................................................................................. 72
2. 5 Ways to keep a check on Unnecessary Expenditure .................................... 73
3. Be money-wise while travelling ........................................................................... 74
4. What you should look out for when you purchase on EMI ............................ 76
5. What should you look for when you opt for Car Loans?................................. 78
6. How can credit counselling agencies help you? ............................................... 81
7. 20 tips to come out of liquidity crisis .................................................................. 83
viii. FREE Personal Finance Resources .................................................................................... 85

Money, Honey, Where Are You

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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What is stopping us from Getting


Rich?
Sometimes I wonder what stops us from getting rich. I have met a number of families for
financial planning and analyzing their situation and this is what I have concluded.
We either earn less or spend more. Sometimes its because we dont save and some other
times it is because we have lot of responsibilities. If all the above is not a problem, then we
still have a problem because we invest poorly, get cheated or we just dont focus on asset
allocation.
Are you wondering all of the above is not applicable to you but you are still unable to build
wealth? It is possible. Sometimes, its our economy and politics that just does not facilitate
opportunities to grow. Sometimes, its our fear, lack of knowledge or past experience. We
love fixed deposits but we dont realize that generally low risk = low returns. We love liquid
assets but then we forget that good liquidity means easy access, possibly leading to
impulsive spending and of course lowering down of your portfolio ROI (Return on your
investment). We continue to love Mr. Fixed Deposit, Mr. Gold and Mr. Real Estate. We dont
realize that inflation eats in to our returns and the greatest risk we have in front of us is that
we will either die too early or too late.
So how does one get rich? Well, we are yet to find that secret formula. But what we can tell
you are our four secrets to Get Rich.
1. Manage your personal finance by Metrics. Look at your critical ratios like Income to
Saving, Liquidity, Cost of Insurance to total income & EMI to total income
2. Focus on Asset Allocation. Move in or out of the asset class based on your total exposure,
age, risk tolerance and stage of your life.
3. Pay attention to taxes. Ensure you leverage every tax exemption. Leverage tax friendly
asset class like equity
4. Kill the risks. Ensure you are adequately insured for Life & Health Insurance and as
appropriate take Critical Illness & Personal Accident insurance.

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10 factors to consider while making


your Financial Plan
Before you sign up your Financial Planner, check his/her expertise, certifications, testimonials
and cost structure. Get clarity on fees and payment terms. Ensure all discussions are well
documented. Once you get started, ensure you give quality time for assessment. Participate
proactively in iterations and avoid procrastination. Work closely with your planner on
execution of your final plan and participate fully in the reviews.
Thinking about making a financial plan for you is a good idea. More and more professionals
are increasingly planning their finances to secure their future, financially. I have noticed that
few clients end up getting on the engagement and executing their plan faster and in a resultoriented manner. Lets see what factors can help you get the best value of the financial
planning engagement.
1.

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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Financial Tips for youngsters


When you are young, you want to utilize your money in various ways. It is important to plan
finances sensibly so that your financial future is set on a smooth course.
Fresh out of the college, most youngsters dream of spending their earnings in a plethora of
ways. Some want to buy expensive things; some give it to their parents, some in charity and
rest of them while it away in partying.
Gettinyourich.com interviewed some youngsters working for MNCs and tried figuring out
how they think about making their finances stable. Vishal, a man in his early twenties from
Ahmedabad, shared, My take-home is around 24k. When I started earning, my dad took a
home loan of 10 Lakhs. Of course, we had to chip in some of our own money. Of the total
home loan EMI, I pay an EMI of 16k per month. I have been doing this since last one year
and within some years I will completely own that house. This can turn out to be a very good
decision for Vishal in longer run. It has kept his hands tight while allowing him to enjoy his
basic needs. When he will have to bear the brunt of the family expenses, he would have
been almost done with his home loan.
Another youngster named Bhavin from Mumbai shared a similar experience, My take-home
was 20k. I desperately wanted to do an MBA after a two year stint. Buying a house was not
an option as I wont be able to pay EMI when I would be pursuing MBA after two years. So I
decided to invest in gold. I used to buy gold worth 12K every month; although this was a
paltry sum given gold is a soaring commodity. After 2.5 years when I went for my MBA, I
could pay all my tuition fees by myself by selling the gold. Gold has shown very good
returns over the long term and is a hedge against equity. The strategic and traditional
importance of Gold in our country makes it even more glittery and attractive.
We all would like to have financial freedom, buy extravagant things, enjoy holidays and
luxury. But before going for luxuries, we should ensure that we never run out of the finance
needed for basic necessities in life. Sharing a heartening incident, Chandan says, When I got
the job in 2007 at 35K per month, I was happy. I had bought electronic items and other
luxuries on EMI. It was all going good until 2008 came with its recessionary jaws. I lost my
job and I was yet to pay for almost all of the items. My world came crashing down. Finally,
after a struggle of 2 months, I managed a job with 20k. I struggled for 2 more years haggling
for every penny and paying up my bills. But I learnt a big lesson. Luxuries at EMI are a big no.
Whenever you are supposed to pay an EMI, it should not be more than 40% of your salary.
Before incurring expenses or making investments, analyse to find out if you actually need it.
Go ahead only if you think it is of utmost importance to you at this stage of your life.
Some youngsters go for fixed deposits (FD) in the bank. It is surely a safe option but not a
preferable one considering the current inflation rate. Diversification of your portfolio is very
important. Equities provide the best returns over the long term. However, do your research
well before you invest in the equity market. Mutual funds are a better bet compared to
direct equity. Start investing with smaller chunks, so that even if you lose you do not regret.
As you start getting a hang of it, increment the investment. The increase in investment
should directly be proportional to your increase in earnings. Never fall for Double or triple
in a year schemes. If that were possible, every second man would have been the worlds
richest. Life is like a cricket match. One who plays too safe can never score a century and
one who plays too risky gets out. Sensibility is proven in playing safe in tight situation and
taking lofty shots in boom. It all comes with experience and time.

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Financial Planning for new parents


It is important to have a financial plan in place before your child arrives. You should budget
for the childs needs for the first 6-12 months and ensure that the budget is followed strictly.
Revisit the financial plan to ensure all goals are aligned and you work towards your targets.
Life is never the same. There are constant ups and downs and it is constantly changing.
These changes have to be considered in your financial plan. One such important milestone is
parenthood. Parenthood indeed makes you feel at the top of the world. But it brings in a lot
of changes in ones life. One of them is a change in your financial status. It is important for
the parent/parents to give enough thought to the financial plan considering this change.
You have to evaluate your income and expenses before your bundle of joy arrives and plan
necessary adjustments so that the new member in the family does not change anything
drastically. Budget for the child and the expenses you will incur on healthcare, vaccination,
daily baby needs etc. once you become parents. It is essential that you stick to the budget.
Here are some important things to consider
1.

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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Money, Honey, Where Are You

Women and Money


A woman is an integral part of any household. It is critical for women to understand money
and take part in financial decisions so that they can manage finances better and be
financially independent.
Men usually claim that their daughters and wives tend to go splurging on unnecessary
things. It is crucial for women as well as men to understand the value of spending money
wisely. From buying groceries to buying jewellery, women deal with money to a great
extent. Women tend to do the most spending at home, so it is essential for a woman to
learn about managing finances even if she is not the primary earning member in the family.
Here are some reason why women should give importance to money and finance 1.

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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Cant afford Financial Planning? Do it


yourself with these resources
Everyone cannot afford financial Planning. You can try planning your finances yourself by
referring personal finance books, attending personal finance training sessions, personal
finance websites and using personal finance software. These methods will not give you the
benefits of hiring a professional planner, who brings in rich knowledge and experience.
Nevertheless, these are good resources to help you start planning your finances, rather than
not doing anything about it.
More and more people are increasingly engaging expert financial planners, as professional
advisors bring in the much required experience, knowledge and objectivity to their advice.
But can everyone afford financial planning by a professional? I understand that this may not
be feasible for many and therefore here are some resources that will help you start planning
your finances.
Hiring a professional planner and doing financial planning yourself cannot be compared.
Services of a planner also cannot be replaced. The different components of a financial plan
like insurance, retirement, goal planning, investment planning and budgeting are interlinked
and therefore require you understand the complete picture before making financial
decisions. You must also be prepared to go through a lot of paperwork and review your plan
regularly. However, some action is better than no action. Although these resources cannot
help you build a comprehensive plan by yourself, it is a good starting point1. Personal Finance Books: Personal finance books can give you knowledge and
understanding about various aspects of financial planning. You can visit a library or
simply order books online. Select books which are written in easy language and which
explain concepts in a simple manner. You can select personal finance books written by
Hemant Beniwal, the Jago Investor Team or Parag Parikh. Ranjan Vermas Lights Camera
Action Steps on Money Management is also another book on financial management
concepts. All these can help you understand various personal finance topics. We, at
GettingYouRich have already released our free eBooks on Insurance and Mutual Funds
and will shortly release our very own Personal Finance eBook as well. Do visit the Free
section to read our eBooks. Although books can be a great source to enrich your
knowledge, sometimes, information given is pretty generalised and may not cater to your
unique needs. A book can also not give you the practical knowledge needed which a
financial planner gives you.
2. Personal Finance Training: Leading Personal Finance experts in the country schedule
their training sessions regularly. Such sessions will allow you to learn lot more about
personal finance and take result oriented actions. MoneyLife in Mumbai conducts such
sessions regularly. These are also made available on YouTube. Jago Investor and The
International Money Matters also conducts such sessions. GettingYouRich.com too has
an initiative for Financial Wellness sessions. You can check more details about our
sessions and schedule by clicking here.
3. Personal Finance Websites: There are innumerable personal finance websites and blogs
available which can give you a wealth of knowledge and information. Blogs by
SubraMoney, Manish Chauhan, Hemant Beniwal, OneMint and TheWealthWisher are
some such resources*. Goodmoneying, fpgindia, networkFP and the blog by Ranjan
Verma also carry a wealth of information. GettingYouRich.com has a wide range of

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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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A Guide to Asset Allocation


It is important to diversify your investments to hedge against different market conditions, be
invested in different types of assets and get higher returns in the long run.
The basic premise of asset allocation is that different assets give different returns in
different economic scenarios. Instead of putting all your eggs in one basket, you should
diversify your investments so that you can take advantage of different market conditions.
The portfolio will have assets whose returns are not perfectly correlated and this reduces
portfolio risk. It also has the potential to give higher returns over a longer period of time.
It is important to get the right mix of assets in your portfolio and it is even more important
to review this mix in different conditions and different stages of life

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.

BEST PRACTICES FOR ASSET ALLOCATION


1. One should invest from a young age as early as possible and also build a diversified
portfolio from that time. When you are young, you can invest a higher percentage in
stocks which have a higher reward potential though are more risky. But at that time
generally risk capacity is higher.
2. List down your financial goals with a clear timeline as to when the goal is to be
achieved.
3. If you are not sure of planning your finances independently, get a qualified financial
planner. You can read more about getting the right planners here.
4. Regular re-balancing of your portfolio is an essential for long-term investment success.

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Calculating your Networth - the why


and how of it
Your Networth is the value by which your assets exceed your liabilities. It is important to
know your Networth so that you are aware of your financial standing which will help you to
take appropriate steps to reach your financial goals.
Networth is as much applicable to an individual as to a business. In simple terms, it is the
amount by which your assets exceed your liabilities. Knowing your net worth is tantamount
to knowing your financial aptness and the flaws that might be holding you back.
Why Calculate your Net worth?
It is a very simple process (given that you understand the steps and can source all the
information required). Here you analyze everything you have, will have in the near future
and want to have. A simple spreadsheet or a chart can be drawn at the end of this process,
which will be your personal financial inventory. You must review your Networth at regular
intervals, ideally every 3-6 months to make sure you are working towards achieving your
goals. When you are familiar with the process and get a proper handle on your finances, you
can settle for annual revisions to make sure your targets are still met.
How- The process
The first step in calculating your Networth is to list down all your assets. This includes
Jewellery, equity investments, debt investments and cash. You need not include every item
you own, but should consider those assets that are of considerable value. Start by making a
list of all your primary assets. This list would include your home, land, any additional
properties, vehicles that you have under your (or the family's) name. Note down the nearest
estimates of these assets in terms of the current market values. You must also analyze and
account for your liquid assets- all your current, savings and fixed deposit accounts. Any cash
deposits or even your retirement deposits would also fall under this category.
The next step will be evaluating the total value of all the assets. This figure represents your
total assets.
Now, come down to your liabilities. Start with the biggest debts, mortgage loans, car loans
and place them in one category. The next category will figure all your personal liabilities.
This includes your credit card loans, student loans etc. Now, add up both sets of categories
under total liabilities.
Now, eliminate the total liabilities amount from your total assets amount and the final figure
will be your current net worth. This figure is your comparison point for all the future
calculations that you will add or subtract.
If you are just starting out in your career, family or maybe just started seriously figuring your
personal finance responsibilities, make sure to review your Networth status every 3-4
months. Gradually, you can bring down the frequency to once a year revisions, but ensure to
keep this up to date and preserve all financial details, receipts, and decisions to include them
in your calculations.
Tip: Do not inflate your assets when calculating their values. This might make your Networth
look impressive on paper, but may not reflect the real situation. It is best to take the help of a
professional financial planner to calculate your Networth, especially if are doing it for the
first time.

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Health and Money- Is there a


connection?
You have to take care of your health and wealth to ensure you live a good life. We look at
some common factors in both.
If you are healthy, you can automatically work efficiently, earn more money and build
wealth. You also build wealth by not spending on medicines and doctors. However, have you
realized that there are several aspects which are common to being healthy as well as
building money? Lets look at some common factors between the health and money:
1. There is no short term solution: Good health is built over a long period of time. When
you give up on habits like smoking and drinking, exercise regularly, have a proper diet
and lead a healthy lifestyle, you will witness the positive effects on your health. Good
health cannot be obtained overnight. Similarly, building wealth also happens over the
long term. Investing in equity gives the best returns over the long term, and this will
happen only if you are not swayed by short term volatility and instabilities in the market.
A sizeable corpus can only be built when you give it sufficient time to grow.
2. Discipline and regularity is of utmost importance: Most of us begin exercising or
following a healthy diet ambitiously, only to give it up within a short span of time.
Following a healthy lifestyle religiously under all circumstances is very important to
remain healthy, and this is possible only if you have discipline and commitment. Similarly
you cannot build your wealth if you are irregular in your saving and investment habits or
if you do not maintain budgets regularly.
3. Investing time and money is of equal importance: When you wish to be healthy, you
must invest sufficient time to exercise, go on walks and follow healthy diets. Spending
money in the form of enrolling for gym classes or dance classes is also sometimes
necessary; although you can remain healthy even without this if you have a good
lifestyle. Investing money is of more importance when it comes to building wealth. With
a plethora of investment products, it is very easy to get lost. Invest in a good financial
planner, good books and attend programs which help you build your wealth.
4. Have a good mix of everything: You cannot achieve good health by eating healthy or
working out. It requires a combination of several things like following a good diet, having
a healthy lifestyle, getting sufficient sleep, being stress free, exercising regularly etc.
Similarly, when you want to grow your money, you should have a healthy mix of
investments in your portfolio like debt, equity, gold, real estate etc. It is important to
have a balanced asset allocation in place, which suits your risk and return expectations.
5. The earlier you start, the better: We all know that it is never too late to start anything
good. Nevertheless, the earlier you start working towards a healthy lifestyle, the better it
is for you and the easier it is for you to reach your goal. In the same way, the earlier you
begin saving and investing, the more you build your wealth, in a shorter span of time.
6. Small mistakes prove to be costly: Both in getting good health as well as building wealth,
you realize that small mistakes can balloon into big complications Whether it is eating
unhealthy food regularly or spending more than saving, you will realize that these stop
you from reaching your goal. It is for this reason that both health and wealth are taken as
priorities usually when it is too late and you do not see any other way out.
It is known that enjoying good health as well as building huge wealth leaves all of us
energetic and fresh in the mind. So start today and build both a healthy and wealthy life.

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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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All about Retirement Planning


Retirement Planning is a crucial element in financial planning. I have some important aspects
of retirement planning here which will help you to ensure whether you are geared up for
retirement or not and what you have to do to ensure your sunset years are taken care of
from a financial aspect.
The other day, in a family get-together, some uncles got discussing about their retirement
plans. One of them had realized from his financial planner that he fell short of the
retirement corpus he required to maintain the present lifestyle. He had 10 years to go for his
retirement. Many of you might be facing this situation, when you have only a few years left
for retirement, but the amount invested looks short of what is needed.
Retirement planning is a critical part of financial planning. The retirement corpus you build
should be able to help you sustain your current lifestyle after retirement as well after
factoring in inflation.
The following steps will help to build your corpus to the desired level and to have a
comfortable retired life:
1. Ensure you have adequate risk cover for your life and your health. Post retirement,
purchasing insurance policies may be impossible or expensive due to the age factor.
2. When you have about 10-12 years left for retirement, take a stock of the retirement
corpus you will have on retirement with the present level of investment. If you realize
you are falling short of the target, the first obvious step in this direction will be to
increase your contribution towards this goal. When a majority of your investments are
exposed to equity and equity-related instruments, you can achieve your retirement
corpus in an easier manner than when compared to debt exposure. However, make sure
this suits your risk profile.
3. When you get closer to retirement, at say, five years or so, you should look at gradually
de-risking your portfolio. This is to insulate your retirement portfolio from volatile market
movements, which can reduce the value of the corpus. However, you must not
completely move your investments to debt, as you may realize that returns may not
match up to inflation. Therefore you should always leave a small portion of your portfolio
in equity-based investments to give a fillip to your overall returns.
4. When you are nearing your retirement, you may have to meet important goals of your
life like your childs post-graduation or your childs wedding. When you receive any
windfalls or a large lump sum when you are nearing retirement, use this to meet your
goals and do not dig into your retirement savings.
5. Invest in instruments that will give regular returns after your retirement. Examples of
such investments are fixed deposits and dividend mutual funds.
6. Repay your debt before you retire. Home loan is the most important liability of any
individuals life. If you do not repay your debt before you retire, this will cause a strain on
your cash flows post retirement. This necessitates a larger retirement corpus. Hence
make sure you have no outstanding liabilities when you retire.
Saving is always worthwhile, and it is never too early or too late to start saving for your
retirement. Retirement savings is usually an ignored concept. Make this a priority. A wellstructured financial plan can help you lead an easy, stress-free retired life.

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Falling short of retirement corpus?


As part of your financial plan, you have to ensure that your retirement corpus is enough to
take care of your retirement goals. Here are steps that you need to take to plan your
retirement.
With rising inflation, Retirement planning is gaining focus in India. Let us see how you can
plan for your retirement. I recommend the following steps:
1. Baseline your current expenses under various categories like Household, Lifestyle, Travel,
Insurance, Dependents and EMIs etc.
2. Now estimate what expenses you would need in the retirement period. As an example,
Health Care expenses are likely to be significantly higher and EMI Payout is likely to go
away.
3. Add inflation factor between now and when you retire.
4. Decide your retirement age. Normally, Age of 58 is a decent assumption.
5. We recommend Life Expectancy of 85 Years of Age. This can be higher or lower
depending on your situation.
With these inputs you can calculate your Retirement Corpus with the help of Retirement
Calculators available on various personal finance web sites, use Formulas in Excel or ask your
Financial Planner.
Now, if you assess that with your current and planned retirement savings, you are likely to
have a shortfall, here is what you can consider:
1. Review your current expense levels & expected changes in retirement period. See if there
is anything that can be optimized.
2. Re-look at your Retirement age of 58 Years and see if you can work bit longer. Consider
part time working for a longer age.
3. Increase your retirement savings between now and your retirement age.
4. Invest more of your Retirement Savings towards Equity through Mutual Funds.
5. Your post retirement corpus can also be partially invested in Equity through Mutual
Funds.
6. Review your other Financial Goals and prioritize Retirement Savings. For example, if you
planned to send your Daughter for US Studies, consider part funding by you and the rest
through a bank loan by her. This will allow you to invest more for your retirement.
7. See if you can build regular income through Rentals from 2nd Home etc. We suggest you
do not completely depend upon such rental income for your Retirement.
8. See if you have any inheritance that you have not factored so far.
9. Consider staying in a Joint Family with your Son. This will mean fewer expenses for both
yourself and your son.
10. Consider Reverse Mortgage of your House as a backup plan.
Please note that you should also keep in mind your Risk Tolerance while making any
investment decisions. Getting a Risk Profile will let you know your Risk Tolerance. While you
may like to take an aggressive investment approach to meet your Financial Goals or secure
Retirements, you must consider your ability to withstand the adverse financial outcomes.
For getting your risk profile, you can consult a Financial Planner or use resources available
on personal finance websites like Moneycontrol.com

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Now Annuities from Reverse


Mortgage Schemes are Tax Free
The Reverse Mortgage Scheme has had few takers in its 5 year history. The Government
announced some changes to the scheme to increase its popularity. These include making the
annuities received by the senior citizens tax exempt, increasing the period of annuities
receivable to the lifetime of the borrower and a possible increase in the amount of annuity
received.
When the Reverse Mortgage Scheme was introduced in 2008-09, it was expected to be
widely accepted and beneficial to senior citizens. However, in its 5 year history, there have
been few takers, and only Rs. 800 crores worth Reverse Mortgage Loans have been
disbursed of the estimated market size of Rs. 20,000 crores. To sweeten the scheme and
attract more senior citizens, the Government has recently brought about some important
changes to the scheme, the most important being making annuity payments tax free.
So what is the Reverse Mortgage Scheme? For the uninitiated, lets give a quick background.
Budget 2007-08 saw an introduction of a scheme, wherein senior citizens (above the age of
60) could unlock the value of their property and earn a regular income, while continuing to
remain owners and staying in the property. This means a senior citizen who owns a property
and is in need of regular cash flows can mortgage his property with a bank or housing
finance company. The bank will value the property and set the interest and tenure of the
loan.
The senior citizen then gets a certain proportion of the house value as a loan. Part of the
amount is paid as lump-sum and the remaining amount is regularly paid as annuities as per
the frequency opted i.e. monthly, quarterly etc.
The Reverse Mortgage Scheme has had few takers in its 5 year history. The Government
recently announced some changes to the scheme to increase its popularity. These include
making the annuities received by the senior citizens tax exempt, increasing the period of
annuities receivable to the lifetime of the borrower and a possible increase in the amount of
annuity received.
The catch here is that the bank can sell the property and recover the loan if the borrower
permanently moves out of the house (for example, to an old age home) or on the death of
the last surviving spouse. Any extra amount after settling the loan is paid to the legal heirs. If
the legal heir wishes to save the property from being sold by the bank, he can pay back the
loan to the bank, along with the accrued interest till date.
Although annuities paid by banks were tax free, they were very low. It was possible to take
an insurance cover for the Reverse Mortgage Loan where the annuities received by
insurance companies were higher than that received by banks. However, such annuities
were thus far taxable in the hands of the senior citizen, which was a huge disincentive to the
scheme.
Recently, the National Housing Bank Chairman announced that annuities from insurance
companies will also be tax free. This is expected the make the scheme more attractive, as
the income earned will not be taxed.

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Another development is that the annuity amount is expected to go up by 3 times, as


insurance companies are more adept in offering annuity products compared to banks. There
will be a tri-partite agreement between the lender, the insurance company and the
borrower.
Earlier the loan was only for 20 years from the date of signing the agreement. That is,
annuity payment was restricted to 20 years only. However, now this period has also been
extended to the residual life time of the borrower, meaning that as long as the owner is
alive, he will get the annuity payments.
Although popular abroad, the Reverse Mortgage Scheme has not really taken off in India due
to the sentimental value attached to the property, taxable income and complicated
paperwork. It remains to be seen if the changes introduced can actually help in the pickup of
the scheme. The recent development is a positive step in this direction.

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I am retired and I have surplus money


You should review your overall finances. See if you have enough liquidity and adequate
health cover. Check for financial goals that may be still left. See if you would like to make an
estate plan, invest in yourself or contribute to a social cause. If you still have funds left, check
your risk tolerance, try to leverage equity and go for the best alternatives on the Fixed
Income avenues.
So you are a Senior Citizen with some extra money? Wow, thats impressive. You can go for
a dream vacation, gift money to your grandchildren, buy a senior citizen friendly gadget or
just call for a big party. But then, as usual, I like to take a structured approach. Here are a
few tips on how you can utilize this surplus:
Do you have enough liquidity? Do you get adequate cash flow from your retirement corpus
or does it vary? Based on how you get the returns from your retirement portfolio, you may
need a corpus for 3 to 12 months of your monthly expenditure. So, accordingly, first utilize
the extra funds for this purpose. You can invest in FDs with Senior Citizen Rates or go for
Liquid MFs.
Do you have an adequate Health Cover? Based on your health situation and existing health
cover, you may need to invest in additional health cover. It depends on your specific
situation but generally we recommend a family floater of at least Rs. 15 Lakhs for a Retired
Couple. It may be a good idea to spend on preventive health care.
What about your Financial Goals? You may not have a significant financial liability or a
financial goal remaining now. But think through your wish list. Ask your spouse. Do you need
to save for a dream vacation? Are you expecting a grandchild and would you need to spend
money there? Would you like to contribute seed funding and let your children take the loan
to buy the house? So review your financial goals, liabilities and aspirations and see what is
feasible.
Would you like to make an estate plan? If yes, then invest the surplus funds in long term
asset class for growth opportunities. It may be a good idea to hire an estate planning
professional and make a plan.
Invest in yourself: You may like to work part time and create a regular income, additionally.
So see if you can take up any courses that will help you to market yourself better. Learn a
new skill, go take up a leadership course or attend a decent training.
Consider a social cause: Consider repaying to society or community givebacks in your
religious or professional area. See if you can join hands with an NGO working on your
preferred social cause and you may like to donate some funds to them.
Thought through all these options and you still have surplus money to invest? Alright, then
here we go.
First, assess your Risk Appetite: First, use a psychometric test on the Internet or ask your
Financial Planner for a Risk Assessment exercise. This will give an idea of your risk tolerance.
Based on this, you could take a position in growth oriented assets like Equity MFs which
generate decent returns in the long term but can be volatile in the short term.

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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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The why and how of life insurance


We have tried to answer these questions like

Why do you need life insurance?


How to design your life insurance corpus?
How to account for your current financial assets and expected outflows in future?
What are the critical factors to keep in mind?

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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11 Smart Tips to buy your Life


Insurance
Before you buy such a long term product, let's get some smart checks done. Follow a rational
approach to decide the cover, look at the features and your requirements and select the
Company, try and split the cover across two companies, avoid tenor beyond your retirement
age, buy through an adviser if he adds value, fill in all information yourself, avoid combining
insurance and investment, prefer online for cost inefficiencies, opt for MWPA and avoid
single premium policies.
I recommend you to consider the following guidance before buying life insuranceDecide the amount of the cover and your budget: You can use popular calculators available
on the Internet on various personal finance websites and arrive at a value of the additional
life insurance you need for yourself. Remember that Insurance works on a principle of
indemnity. This means that you should look at Insurance to indemnify against the loss, and
not to make a profit.
LIC or Private Sector Players: LIC has an excellent goodwill and a track record. This also
generally means a significantly higher premium you pay, for term plans, as an example. The
Private sector players on the other hand are far more price competitive due to online model
and other factors. Based on your budget, preference and amount of cover, you can decide if
you like to go for LIC or one of the Top Private Sector players.
Split the cover: If the amount of cover is high, say Rs. 50 Lakhs or above, then you should
split the cover across two companies. This has two important advantages. If your family
makes a claim upon your death and if one company rejects the claim and if the other one
settles the claim then your family has a stronger case to approach the regulator and ask for
intervention. Another advantage is that you can have flexibility to continue one policy after
few years and surrender the other one, if your insurance requirement has reduced.
Duration of the Policy: Your life insurance need is a function of your financial liabilities. If
you have surplus financial assets to take care of your financial liabilities, then you dont need
to spend on life insurance cover. In most cases, with increasing age, your financial assets
increase and your financial liabilities decrease, progressively. Once you retire, the economic
dependence on you reduces drastically. We normally advise to take cover with a duration
that ends near your retirement age.
Declarations: Remember that honesty is the best policy in life. We suggest you fill in the
application forms yourself and take adequate care to disclose all material facts. Hiding
information about your present medical status (e.g. Diabetes, High BP) is not in the best of
your interest. With medical advancement, insurance companies have access to superior
techniques that bring out the true picture of your health.
Buy through an Adviser or Direct? Check with your adviser on the level of service that he
can provide and ask him to present you a comparison of product with his recommendations.
Your adviser may add value in case of premium loading, medical tests, MWPA, Insurance
Demat account opening and most importantly, help your family to raise a proper claim when
you are not around. You should understand if going through an adviser would increase your

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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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All about life insurance policies under


the Married Womens Property Act
If you think that purchasing a life insurance policy in favor of your loved ones will safeguard
them after your demise, you may have to think again. If you are a businessman with
outstanding debts and face a winding up order, your life insurance policy will also be a part
of your estate and will be used to pay off creditors. This is also true for any other debt taken
by you that needs to be repaid after your time. Purchasing a policy under the Married
Womens Property Act will ensure that your wife and/or children will receive the proceeds of
your policy.
Imagine you are a businessman who has taken a life insurance policy in favor of your wife. If
you have accumulated debts and are unable to repay your creditors, then this policy will also
be attached towards your estate, and will be used to pay the creditors. How then, can you
ensure that your wife and children get the benefit of the life insurance policy you take for
them? Worry not, for you can use the Married Womens Property Act (MWP Act) to
overcome this situation.
What is the Married Womens Property Act?
The MWP Act protects properties of women from others and even their husbands.
Sec 6 of this Act deals with life insurance policy, wherein the man can take a life
insurance policy in favor of his wife and/or children under the Act. This can
effectively ensure that the proceeds are in favor of the intended beneficiaries only.
How does buying a policy and getting its benefits work under this Act?
A married man can buy a life insurance policy in his name, naming his wife and/or
children as beneficiaries. Note that only the proposer himself can assure his life
under this Act.
Even widowers and divorcees can use this Act to buy a policy, in favor of their
children.
Any type of life policy can be purchased.
The beneficiary can be the wife alone, the child/children alone or both the wife and
the child/children.
The policy is created as a separate trust, and trustees will need to be named. The
trustees can be the wife, children or a third person, taken together or in isolation.
While purchasing the policy, the proposer should fill in a separate form mentioning
that the policy is created under MWP Act. Beneficiaries and trustees should be
mentioned and the share of the benefits should also be declared. Also, a letter
should be submitted mentioning that the policy will need to be issued under MWP
Act. The original document will then reflect this.
Can the beneficiary and trustee be changed during the lifetime of the policy?
The beneficiaries once named cannot be changed at any time by the proposer.
However, the trustees can be changed.
Can the trustee and beneficiary be the same?
Yes, the beneficiary can also be named as the trustee in the policy.

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What are the benefits of this policy?


As mentioned earlier, buying a policy under the MWP Act can safeguard your wife
and/or children from relatives and creditors. So this can greatly benefit your family if
you are a businessman, especially in the SME sector, as your personal property
stands at a greater risk of being used to repay your business debts if there is a
liquidation order. A policy under MWP Act is exclusively for the benefit of your
wife/children and no one else can use the proceeds for any purpose. It can also help
if you are a part of a joint family, as there are higher chances for family disputes in
this case. Nevertheless, this option is favorable even for salaried people, as it comes
without a cost and is easy to carry out.
Any drawbacks?
Although there are no specific drawbacks, not many people make use of this Act, as
there is low awareness. Also, the proposer is not allowed to take a loan against the
policy or assign the policy to another person. Any changes in the policy are also not
possible without the consent of the beneficiaries. In case the proposer outlives the
maturity period, the maturity proceeds would still go in favor of the beneficiary.
Further, in case of policies with an investment component, this will also be in favor
of your wife and/or children and you cannot individually benefit from the returns
from the policy. This may not go down well with many men.

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6 Smart Tips to take your health cover


A health cover is one of the most important insurance covers you should necessarily have.
However many people do not consider purchasing a health insurance as they think the cover
provided by their employer is sufficient. Here are some smart tips for you to purchase a
secondary health cover.
Many people think, I dont need to take Health Insurance separately as I am getting
covered by my Company. We strongly recommend you to consider a secondary health
insurance for below reasons:

The amount of the Company Cover may not be sufficient


Your Company can change the Medical scheme in future
As you grow, you may develop medical problems and may not get a new health policy
If you change the Job, the new Company may not have a good scheme or may not have
a scheme at all, if you join say a start-up
Not all Companies cover your parents

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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Should you continue your ULIP policy?


Lets look at the parameters on which you can evaluate your ULIP Policy and take a decision
if you should continue paying the yearly premium, go for a premium holiday or surrender the
policy.
Lets look at the parameters on which you can evaluate your ULIP Policy and take a decision
if you should continue paying the yearly premium, go for a premium holiday or surrender
the policy.
Charges structure: ULIP Policies normally levy Premium Allocation & Policy Administration
Charges. The extent of these charge vary in each policy. From the premium you pay
premium allocation charges are deducted and net premium is invested in the fund as per
options selected by you. Policy Administration Charges are normally levied on a monthly
basis. If your policy was taken few years before, it is likely to be a high cost structure.
Generally, if these charges are exceeding 1% of the annual premium, then it makes us
uncomfortable and we normally raise a red flag.
Lock in Period: Normally most ULIPs come with a lock in period of at least 3 years. So even if
your cost structure is high, but lock in period is not over, then you would need to continue
the policy at least till the lock in period is over.
Surrender Charges: While you make a decision if you should continue your policy, please
also have a look as to how much surrender charges you will have to incur. Your policy may
have zero surrender charge after about 5 years. So based on the surrender charge currently
being applicable, it may be a good idea to wait for a year or so and then surrender your ULIP
policy.
Fund Performance: Your policy is costly but is your fund is doing well? If yes, then you may
end up with a positive ROI, depending upon market situations. If your policy is costly and the
fund is not doing too well, then this may further worsen the situation. Please also check if
your funds are invested appropriately mapped to your risk profile? Say if you are in early
30s and have 5+ years to go before this policy matures, then its likely to be a good idea to
invest a major part of your fund corpus in this ULIP in Equity. Most ULIPs allow 4 fund
switches free in a year. So you could accordingly switch your funds
Insurance Cover: Do you still need the Life insurance cover available in the ULIP policy? Your
Life Insurance corpus is a function of your financial liabilities. If you have sufficient assets to
take care of your financial liabilities, then you may not need a life insurance cover. On the
other hand, if you have a sizable cover in the ULIP policy, then you should check your overall
need of Life insurance and assess if you will be able to get a new life insurance cover. If you
have a medical situation (e.g. Diabetes) then getting a new cover may be difficult or
expensive.
Expected benefits: Some ULIP covers give Sum Assured+ fund value. Some ULIP covers
provide Highest NAV guarantee. Some ULIP covers have a premium continuance option i.e.
the policy continues even if you die mid-way, no further premiums are to be paid and the
policy cash flows are paid to the nominee. Some ULIP covers provide additional benefits like
102% premium credit after 10 years. Some ULIP covers allow you to take a loan against fund
value. So, please consider such factors while you make a decision to continue or surrender

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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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What do you do when you have


inadequate health insurance?
Insurance is of course important for everyone but it is also imperative to take adequate
insurance cover. Here are steps to be taken when you do not have enough insurance cover.
I do not need to stress the need for a health insurance to be taken by every individual,
keeping in mind the rising healthcare costs. One aspect which is often ignored by people
taking a health insurance is the amount of coverage opted for. It is generally seen that a
small amount of coverage of Rs. 2 lakhs or Rs. 3 lakhs is construed as sufficient, irrespective
of the family size and family needs. This is usually a basic cover provided by the employer,
and most people do not bother to enhance this cover even when there is a need.
So you must first evaluate the ideal amount of health coverage your family will need,
keeping in mind the size of your family, the needs of your family, your premium paying
capacity and the amount of existing cover you have, if any. You must also look into the place
where you are residing (as the cost of treatment in a metro is generally higher than in a Tier
2 location) and the existing health situation (past history or family history of any specific
diseases). Since longevity is increasing, you must consider inflation for at least the next 30
years. If you realise you do not have sufficient health cover, you should take steps to
enhance this.
There are a few options you can look at, in case you find yourself having inadequate health
insurance:
Opt for a high Sum Assured
The first step would naturally be to increase the coverage you have. However, it is seen that
most insurance companies stop with a maximum Sum Assured amount of Rs. 5 lakhs or Rs.
10 lakhs. Some policies like Apollo Munich and Star Health offer policies up to Rs. 15 lakhs.
However, beyond this, a higher Sum Assured option is a rarity. Max Bupas Heartbeat plan
has an option for Rs. 50 lakhs, but the premium is exorbitant, crossing Rs. 1 lakh per year for
a family of 4, with the primary policyholder being 40 years of age. ICICI Lombard also has an
option for Rs. 50 lakhs, but it is available in the offline mode only. Check the total health
coverage you have for your family (including what your employer provides you) and assess if
you need to increase this amount.
Currently, porting from a company group cover to an individual policy is not directly
possible. If you along with your family members are covered under a group policy, then you
should first migrate from such a group policy to an individual health policy or family floater
policy with the same insurer, and then as a second step port the policy to another insurer.
This means that if you are a 30 year old, then secondary cover will not be so much important
as you can shift the insurer. However, this may not apply to a person in his early 40's since
cover after 45 has to go through medicals, cost rises and post retirement in 58, he would
then need to use porting. Moving from company group cover to individual cover may be
difficult at that age. Please click here to read the recent IRDA guidelines which include the
portability clause.

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Split the Cover


You can also look at de-risking your health cover by taking insurance cover separately from
two insurers. You can consider splitting the cover for yourself and your spouse in one policy
and for your children in another. Alternately, you can also consider taking a policy for
yourself and your spouse separately from two leading insurance companies. This way, you
can cover your entire family for the desired amount and de-risk your health cover.
Go for a Top up Cover
Another way of enhancing your health cover would be to opt for a top up health cover. This
is an additional insurance which gives coverage over and above your existing health
insurance. Top up covers are an inexpensive way of adding to your existing cover. However,
you can claim under the top up cover only if expenses are beyond a certain limit known as
the deductible and also only for a single occurrence of hospitalization. Hence look at both
the positives and limitations of a top up cover before you opt for one. Please click here to
read in detail about top up health insurance plans.
Base Health Cover + Critical Illness & Personal Accident Covers
Having a base health cover for a lower amount and taking critical illness and personal
accident covers can help in reducing overall costs and also partly de-risking your cover.
Please click here to read about personal accident insurance policies and please click here to
read about critical illness insurance policies.
Build a health corpus
Some people like to de-risk by having reduced dependency on insurers. This can be achieved
by creating a sizeable health corpus via regular investments in MF investments or purpose
specific ULIPs. However, you should be careful of costly ULIPs. The basic health cover of Rs.
15 Lakhs can continue and the health corpus can be used post retirement for any major
illness. The health corpus can also be partly used for regular preventive check-ups etc. At the
end of your life, the left over corpus can be part of your estate planning.
Thus one of the most important questions to be answered while evaluating health insurance
options is - How much coverage is sufficient? In todays world, even a cover of Rs. 10 lakhs
for a family of four looks low. Therefore you must make sure you have a decent amount of
family coverage, in order to avoid rude shocks of having to meet medical expenses from
your pocket

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9 Tips to save on your Car Insurance


Premium
We need to take insurance for our vehicles. We give some tips here which will help you save
some money in the premium payments.
Car insurance is an important part of owning a car. Most people simply continue to renew
their existing car insurance policy which they have taken through their car dealer or agent,
without giving a second thought about it. However, did you know that with a little effort,
you can save on the premiums you pay for your car insurance? Here is how.
Compare and shop: Although the basic car insurance offered is the same across different
players, the premiums charged vary widely. It is therefore important to compare quotes
from various insurers before you decide on which one to opt for.
Purchase online: Purchasing car insurance online can often give you better rates, as you
save on agent commissions. Opting for this mode of purchase will also help you compare
different products extensively, helping you choose the best option in terms of price and
features.
Opt for a higher deductible: A voluntary deductible is the amount which you must put in
before the insurance coverage kicks in, if there is a claim. A higher deductible will result in a
discount in the premium you pay. However, take note of the amount you can afford to pay
in case you have to file a claim.
Renew before the due date: By renewing your car insurance before the due date, you get to
save on inspection costs and other inconvenience you may have to go through to get a new
insurance. Always remember to renew the policy before it lapses.
Make use of discounts which are available: Discounts which can be available on your car
insurance are often neglected by car owners, or they are simply not aware of such discounts.
If you are a good driver, it means you do not have accidents and as a result, you have a NoClaims Bonus you can fall back upon. This will result in a lower premium. You can also get
group discounts and low mileage discounts. Buying more than one type of insurance from
the same insurer (for example, home insurance and car insurance) or buying insurance for
all your vehicles from the same insurer can also result in lower premiums. If you fit your car
with an anti-theft device, you can ask for a reduction in the premium charged, which the
insurance company will agree to do.
Request for rate reductions: There are a few instances when insurance companies can grant
a reduction in premium based on changes in your personal life. For example, if you get
married or move to suburban areas of the city, you can get a reduction in premium. Your
profession and your experience in driving can also get you a reduction in premiums,
depending on the insurers internal policy.
Make full payments: As in the case of other insurance policies, if you opt to make a monthly
or semi-annual payment of the premium amount, the total amount paid as premium will
work out to be more than what it would have been, had you opted for the annual mode of
payment. Hence it is always advisable to make the payment in full in one shot.

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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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Common reasons why Insurance


Claims are rejected
We all take insurance cover to help our families in emergencies and unfortunate situations.
But we need to ensure that all loose ends are tied so that our near and dear ones have no
hassles while claiming insurance.
Insurance being an important risk cover to protect your life and your familys needs in your
absence is useful only if you are able to have an easy and hassle free claim settlement
process. However, there are many cases when claims are not settled by insurance
companies, which add to the distress and agony you or your family may already be suffering.
Lets look at some cases when your insurance claim may be rejected by the insurance
company and what should be done to avoid this:
Incorrect information in the application form: This is one of the most common reasons why
an insurance claim may be rejected. Any kind of insurance policy is issued based on the
information you provide about yourself in the application form. As the premium you pay is
also dependent on this, it becomes an even more critical factor in determining your claims
status. As a policyholder, it is your duty to be honest and transparent in all declarations - be
it age, income, occupation, lifestyle habits, details of other policies you hold, etc.
Information is usually misrepresented either because of fraudulent intentions or due to the
difficulty in gathering the facts. Remember to always be truthful and give accurate details, as
hiding this can be a potential reason for claim rejections later.
Getting the agent to fill in the application form: Sometimes, incorrect information is given
in the form because you do not have the patience to fill it yourself and ask you agent to do
so. Remember that the agent is not interested if you will receive the claim benefits at a later
date. As a result, he will not take the trouble to ask you details of your family or your
medical history. He is only concerned with selling the policy to you and earning his
commission. When you trust your agent blindly, you may end up purchasing inappropriate
policies or giving incorrect information by mistake. You must therefore remember to read
the policy details carefully before purchasing it and also fill in your application form yourself
carefully, to avoid claim rejection shocks at a later date.
Medical reasons: Although most insurance policies stress the need for a medical test, many
policies do not make this mandatory. A policyholder also usually does not insist on taking a
medical test, to avoid hassles and purchase the policy fast. However, it is always better to
get a test done by the companys doctor before buying a policy, in order to rule out preexisting medical reasons for rejection. Further, there are many medical conditions which do
not come up in the routine tests conducted. You must always declare your medical history
and also your familys history, if it is a family floater policy. This includes disclosing your
alcohol and tobacco consumption details. This also becomes important, as the premium
amount is dependent on such declarations. Declaring this upfront will avoid claim rejections
at a later date.
Incorrect nominee information: Updating correct nominee details is very important in an
insurance policy. When an unmarried person takes a policy, he usually names his parent as
the nominee of the policy. After marriage, most people forget to update the spouses name
as the nominee. This can be risky, as there are chances that on the death of the insured, the

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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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Accessing Insurance Policies online What this means to you


IRDA had launched the Insurance Repository system, which will enable you to maintain your
insurance policies online, in the Demat form. The facility is free of cost now, and you will
need to open an e-insurance account for it. All your policies will be centralized and this will
save you both time and efforts. We recommend you to opt for digitization, as there are
several benefits associated with this move.
The Insurance Repository helps you access your insurance policies in the electronic form.
What does this mean?
An insurance repository is a means of holding your insurance policies in the Demat form, just
like how you hold stocks and mutual funds. You will need to open an e-insurance account
with an insurance repository to enable you to do this.
How do I open an account?
IRDA has approved five entities in the country with which you can open an e-insurance
account. These companies are Central Insurance Repository, SHCIL Projects, NSDL Database
Management, CAMS Repository Services and Karvy Insurance Repository. One individual can
have only one e-insurance account. To open an account, you can either approach any of the
five repositories directly or route it through the insurance company where you hold a policy.
You can also avail the services of an Approved Person appointed by the repositories. You
should fill an account opening form and give the completed form along with your
photograph, cancelled cheque and KYC documents (for proof of address and proof of
identification). The Aadhaar card is also accepted as a valid document for this purpose.
When the process is completed, you will be sent a welcome kit with the login ID and the 13digit account number along with the account operating instructions. The PIN will be sent
subsequently. After this, you can start digitizing your policies.
What are the policies which are applicable?
At present, IRDA has extended this facility only to life insurance policies. It is expected that
this will be available for car, health, home and other forms of life and non-life policies as well
in a few months time.
What are the charges for this?
At present, the policyholder can open an e-insurance account free of charge. There is no
charge to be paid even for converting existing policies to demat form. Experts opine that
even if this facility is made chargeable in future, policyholders should go ahead and opt for
this, as it is advantageous.
What is the treatment in case of a new policy?
When you purchase a new insurance cover, you can opt for an e-policy. For this, you must
have an existing e-insurance account. If you do not have one, you should first open an einsurance account and then purchase the new policy. When you purchase the policy, you
can quote the e-insurance account number in the form and opt for the electronic policy. You
will not need to submit fresh KYC documents, as this was already done when you open the
e-insurance account. When the new policy is issued, it will be reflected in your Demat
account.

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What is the procedure for existing policies?


The doubt arises as to what should be done when you already have several policies across
different insurance companies. The procedure is quite simple. You will first need to convert
your existing policies to Demat form if you want to store them in the e-insurance account.
You should approach your insurance company and fill in the conversion form. Submit the
filled in form along with the policy documents. The insurance company will co-ordinate with
the repository, post which the data transmission will take place. You will then receive the
confirmation of the same.
How can I make changes in the policy?
As all your insurance data is in one place, you should make the changes in the insurance
repository. That is, the repository will be the single point of contact. Changes can be either
at the account level (e.g. contact details) or at the policy level (change in nomination or
account details). If the change is at the account level, the repository does the changes and
forwards it to the insurance company. If the change is to be made at the policy level, then
the request is first forwarded to the insurance company. After the changes are made at the
companys end, it will be reflected in your account.
Is this a compulsory process?
No. But policies that are in Demat form can do re-matting; that is, the policyholder can also
change the electronic version back to the physical form at any point in future.
What are the advantages of an online policy?
When your policy is online, the risk of losing the physical policy documents is eliminated.
You can simply download a copy from the account, when you need it.
You dont have to repeat KYC requirements every time you buy a new policy, as all your
details are already verified in the e-insurance account.
You can also easily track your policies online, without any difficulty. As all policies are in one
place, it gives you and your nominee a better idea of how things stand.
It also becomes easier for you to manage the policies, as you wont have to run to different
offices.
Claim settlement is hoped to become easier because of this facility. The policy benefits will
be paid to the beneficiary in an electronic form to the registered bank account.
Another important advantage is that instances of mis-selling will reduce, as the agent will
not hold the policy till the expiry of the 15 day free look period.
Should I opt for digitizing my policies?
Yes, definitely! We, at GettingYouRich recommend you to opt for digitization, as there are
several advantages associated with this.
Are there any drawbacks?
The scheme is an easy and convenient way of maintaining insurance policies. However,
there seems to be a problem in the designing of the system. This is because; a policyholder
is allowed to have an account with only one insurance repository. Whereas, the insurance
companies are free to have a tie up with one or more repositories. So if a policyholder has
an account with a particular repository, but his insurance company does not tie up with this
repository, then the whole concept fails. So the key to the success of the e-insurance
concept is for every insurance company to have a tie up with each of the five repositories.

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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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So what's the right way to invest in


Equities?
Right methodology, goal based investment and your commitment is a key to a successful
investing in Equity. We look at some of the key considerations of investing in equity like
investment goals, risks, MF investments and investment methodology.
You can invest in Equity Market by buying Equity Stocks, buying Mutual Funds, signing up for
a Portfolio Management Scheme or taking an exposure through Futures & Options or
structured products. It is good to invest in equities for long term through mutual funds as a
core strategy. Here is the methodology that I suggest.
Align investment to your goals: Decide the objective and duration of your investment. The
Equity MFs are suitable only for a long term period i.e. 5 years or more. Goal based
investment is one of the best ways of building a portfolio.
Ascertain Capacity to take Risks: Equity investments come with market risks. You should not
invest in Equity if you are not comfortable with fluctuations and possibility of losing capital
especially in the short term. You can use Risk Assessment tools on the Internet and decide
exposure to Equity based on your age, risk profile & goal requirements.
Design your MF portfolio: We normally recommend actively managed Large Cap Equity
MFs. Based on your risk appetite, you can also invest in Mid & Small Cap MFs. Additionally,
consider taking an exposure on specific sectors up to 10% of your MF portfolio. Ideally, you
should not invest in more than 4-5 MFs. Some experts prefer passively managed funds given
the lower cost structure & market linked returns.
Identify top performing MFs: Check http://www.valueresearchonline.com or
http://morningstar.in/ to research the right schemes for you. Compare rankings on two sites
for a second opinion. Your Financial Planner may have paid research tools and better
insights. Remember that past performance is not a guarantee of future performance. Try &
diversify across AMCs & stick to those AMCs which have a long standing track record.
Invest through SIPs & withdraw through SWPs: Leveraging SIPs (Systematic Investment
Plans) is a core to a successful equity investing. Invest through SIPs and hold the investments
at least for 5 years. When you have to withdraw, again use SWPs (Systematic Withdrawal
Plans). Start SWPs a year or two before your goal is due. Keep taxes in mind.
Keep a regular check on your MF portfolio: Assign Buy, Hold or Sell ratings to your MFs at
least once in six months. But avoid shuffling your portfolio very often. If your Fund is not
performing well, you can stop the SIP and then watch for few quarters. Continue investing if
your fund is giving returns higher than the category average & if you are comfortable with
the volatility.
Hire an expert: Investing in equity is not rocket science if you follow the above steps. But do
consider outsourcing this job to your Financial Planner if you are unable to dedicate time or
if you have a large size portfolio.
Manage logistics: Invest time in getting access to transact online & getting monthly email
updates from your fund houses. You may have to fill in additional forms. This can save lot of
running around.
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Top 5 Investment Mistakes to Avoid


It is important to have a sound investment plan in place and ensure that we do not make
mistakes while investing our hard earned money.
We all know that making sound investments as per our goals is important. Here are 5 deadly
investment mistakes that one should stay far away from.
Lack of Financial Plan and Budget: Some of us make random investments with no sound
plan in mind. We buy some stocks on the basis of some friendly tips, make some last
minute investments towards the end of the financial year to save on tax without really
understanding what those investments are and whether they are suited to our financial
profile. We should make a financial plan listing out goals, income, expenses, dependents etc.
on the basis of our risk profile and then execute the financial plan.
It is also important to have a budget in place and stick to it. If this is not done strictly, we
could easily spend beyond our means in unnecessary things and will not have money for
important things like buying insurance.
Making Investments without really understanding them: Of course, you do not have to be
an investment whiz, but you should be aware of the instruments, assets or businesses that
you are investing in. Understand the market for it, the returns expectation or how the
business is organized. If you are not aware, you should make an effort to learn more or avoid
investing in it.
No Diversification of Investments: You need to make investments in different kinds of
assets depending on your returns expectation and financial goals. If you invest only in 1 or 2
types of assets, and there is a downtrend in that asset market, your financial plan will
backfire and you will be in a losing position.
Family is unaware of the financial state of affairs: Many a time, only one person in the
family is aware of the financial status of the family. It is normally the person who does the
investments. This has to be avoided, as life is unpredictable. More than one person in the
family should know all financial details like insurance claim and medical claim details.
Physical assets like investment documents, gold, bond certificates should be kept safe and
secure and at least one family member should be aware of the details. Banking and Demat
account passwords should be kept secure but there should be a way for someone
trustworthy to be able to access them if required.
Holding on to non-performing investments: We put money in investments which do not
perform well, either based on some professional advice or based on our own research and
analysis. But the decision could backfire and the investment may not perform as per
expectation. It could also happen that the asset class was on a bull run for a temporary
period and then is priced by the market to its real value. Many of us make the mistake of
holding on to such useless investments, thinking it will bounce back in the long run. It is
better to admit our mistake, sell the non-performing investments and use that money to
invest in some better quality asset.
Investment of our hard earned money is critical for our as well as our familys future and we
should ensure that our investments work just as hard as us. Therefore we should avoid
costly investment mistakes.

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Are Mutual Funds Direct Plans


suitable for you?
Every MF Scheme should now have a direct plan as per SEBI guidelines. We look at all
features of direct plans here. Direct plans are good for savvy investors and others should
keep a watch on how they are performing and then take the step to invest in them.
What are direct plans?
Securities and Exchange Board of India (SEBI) regulations dictate every MF scheme must
have a direct plan as well. This basically means investors can buy MF scheme units directly
from the fund house without any broker/distribution house/agent etc. from 1 January 2013.
As the middlemen are eliminated, these will have no distribution and commission expenses.
Therefore these schemes will have a lower expense ratio. SEBI has instructed the AMCs to
declare distinct NAVs for these. As the expenses are lower, the returns on these schemes
could be slightly higher than the same schemes sold by a distributor.
What are the advantages of direct plans for the retail investors?
Today if an investor buys directly from an AMC, the distribution expenses/commission falls
into the hands of the AMC. With the new ruling, AMCs have to offer direct plans with
distinct NAVs separately. This means the cost of investing for the investors is less. Since
expenses for the AMCs are lower for such schemes, NAVs and returns should be higher.
Industry experts estimate that this could translate to yields being higher by 0.5%-1.25% for
retail investors per year.
What should the retail investors be cautious about? What are the disadvantages of direct
plans for them?
Lay investors who are not well versed about investing in mutual fund products should not
buy direct plans right away. They need to do their research thoroughly. They need to
understand where the scheme fits in their portfolio or in terms of asset allocation.
All the documentation would have to be handled by the investor alone like getting the
forms, filling it, attaching relevant documentation, sending it to the AMC and then ensuring
that purchase and sale related proceeds and documentation each time is in place.
Monitoring the NAV movements; keeping a tab on charges; revision of portfolio; changes in
expense structure and maintaining all documentation will be the responsibility of the
investor. These responsibilities are not easy for lay investors or first time investors. Changing
from your existing plan to a direct plan would have tax implications. You should also think of
SIPs that are already in place for existing plans.
Savvy investors can take advantage of direct plans. We would recommend a wait and watch
policy and keep track of benefits on schemes that you already have before taking the
plunge.

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Looking for fixed income investments?


Look beyond Bank FDs
You should look at investing in fixed income instruments apart from Bank FDs. Corporate
bonds are fixed income instruments that give a higher rate of return and though they have
more risk than FDs, you can consider bonds of reputed companies.
Fixed Income investments have long been associated with Fixed Deposits in banks. However,
you can look at corporate bonds to get a higher interest rate. Corporate bonds are
considered to carry a higher risk compared to government bonds, as a result of which you
get higher interest rate. However, the interest on corporate bonds is subject to central,
state, and local taxes.
Decision for investing in corporate bonds depends on risk taking ability of an investor. Some
investors believe that corporate bonds have little or no risk. They range from investment
grade to junk grade depending on the issuing companies. The main risk is that the company
issuing the bonds might become insolvent. This means you could lose some or all of your
money because the company is not able to pay its creditors due to lack of funds and or if it
goes into liquidation. Corporate bonds are also subject to other investment risks like interest
rate risk, liquidity risk and prepayment risk. It is always advisable to go through the
prospectus of the bond issue to understand the issuer and all other factors associated with
the bond issue.
For example, bonds issued by companies like Infosys, Wipro and L&T are considered very
safe considering their goodwill and sustainability in the market. Corporate bonds come
under the Debt category and it is the companys borrowings. Therefore, it is generally less
risky than investing in shares of the company. Bonds have different features or
characteristics depending on the specific issuing organizations or institutions. The two major
types of Corporate Bonds are as follows:
Secured Bonds: These are also known as asset covered bonds. Bonds are backed by any
collateral security or mortgaging any asset of the company. So, there is a safety that in case
company becomes insolvent, assets can be sold and the principal amount will be repaid.
Unsecured Bonds: Also known as debenture bonds, they are backed solely by the general
credit-worthiness of the issuer. Regular corporate bonds are an example of unsecured
bonds. They are not so safe mode of investment.
Here is a brief look at what to consider when evaluating corporate bonds:
Coupon: Coupon rate on bond may be fixed or fluctuating. A fixed rate bond is a type bond
with a fixed Coupon (interest) rate, as opposed to floating bonds. A fixed rate bond is a long
term debt paper that carries a predetermined interest rate which is payable at specified
dates before bond maturity. Remember that corporate bonds are not generally designed to
maximize your wealth (that is, the bonds you buy are unlikely to increase in value during the
time you have the investment).
Duration: If you are not a long term investor than you cannot block your money on bonds
with higher duration of time say 10-15 years. Invest in corporate bonds after considering
your financial goals and your investment time horizon.

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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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Are Gold Saving Schemes by Jewellers


good for you?
Jewellers have gold saving schemes wherein you can deposit a fixed sum of money with the
jeweller and after a certain period buy jewellery from the jeweller with the jeweller giving
some kind of bonus. In such schemes, either the money is converted to gold at the end of the
predetermined period or money is converted to gold each time a deposit is made during the
predetermined period. There are other ways to invest in gold as well like Gold ETFs, Gold
funds or gold bars.
Traditional modes of investing in gold (investing in jewellery, gold coins and bars) have
historically been the most popular way of buying the yellow metal. In order to attract more
and more people, jewellers have introduced schemes which help investors in saving small
amounts regularly. Gold saving schemes require investors to periodically deposit money
with jewellers in order to buy jewellery after a certain fixed period. Floated by most
jewellers in the country, such schemes are especially popular with big players like PC
Jewellers, Tanishq, Tribhovandas Bhimji Zaveri and Gitanjali among others.
Types and Working of Gold Saving Schemes:
Gold savings schemes are of two types:
Money deposited periodically with jeweller: Under this scheme, you deposit a fixed amount
every month for a fixed period. The amount that is accumulated is converted to an equal
value of jewellery on maturity of this period. The jeweller offers a bonus to you, which is
either one or two months instalment amount. Tanishqs Golden Harvest scheme follows this
model. The duration of the scheme is 12 months. You have to pay 11 monthly instalments of
lets say, Rs.5,000 each to Tanishq. At the end of 12 months, Tanishq contributes one
months instalment, i.e.: Rs. 5,000 to your accumulated pool of money. You can now
purchase jewellery worth Rs. 60,000 (11 x Rs.5,000 + Rs.5,000) at the end of 12 months. The
bonus paid by the jeweller in this case is 1 months instalment.
Money deposited periodically is immediately converted to gold: Here, you deposit a fixed
amount every month for a fixed period. But unlike the previous type, this money is
immediately converted into an equivalent value of gold. The total gold collected can then be
converted to jewellery on expiry of the period.
Consider the following 3 cases offered by GRT Jewellers under this scheme:

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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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What is the best way to invest in


Gold?
There are different ways of investing in Gold. You can buy jewellery, physical gold or invest in
Gold ETFs, Gold Funds or Gold futures. You have to choose the best option for you depending
on your need and investment plan.
Gold, as an asset class has clocked the highest returns in the past few years, compared to
other asset classes. Today, investment decision in gold is not just determined by the
prevailing price, but also by the mode of investment. Apart from the traditional mode of
buying physical gold, there are other options like Gold ETFs, e-Gold, Gold Futures and Gold
Mutual Funds. Lets look at the most popular options:
Physical Gold: This is the oldest and the most popular mode of investing in gold. Physical
investment in gold is either in jewellery or gold bars and coins.
Jewellery: Investing in jewellery has for long been the most accepted and preferred mode of
buying this asset class. People generally buy jewellery and ornaments if there is an
impending wedding in the family or during festival seasons. This becomes your investment,
as the value of the jewellery appreciates when the gold prices increase. Cash purchases
above Rs. 5 lakhs attract tax at 1% of the purchase amount.
Advantages: It is the easiest mode to buy gold. You only need to have the cash to buy gold.
Disadvantages: The biggest drawback when you buy jewellery is that you will have to pay
making charges in addition to the market price of gold. In some cities like Chennai, the
jeweller also collects a certain percentage towards the wastage he incurs. Storage of
physical gold also becomes difficult, as the chance of theft is high. It is important to buy
jewellery from a reputed jeweller, as it is very easy to mix other metals and reduce the
purity.
Gold Coins and Bars: You can buy gold in coin or bar format from any bank or jeweller.
Available in different weights, these bars and coins can also be used at a later date to
convert into jewellery if needed. All bullion purchases (other than coins below 10 grams) will
attract VAT of 1% if the value of the purchases exceeds Rs. 2 lakhs.
Advantages: They are easily available at banks and jewellery shops. As it is generally not
meant for regular use, you can store it in your bank locker. Unlike jewellery, you pay only
the market price of gold and not any making or wastage charges.
Disadvantages: They are generally sold at a premium to the market price. When you want
to sell them, you will again have to incur a loss, as it is generally bought in the market at a
get a slight discount to the market price. You cannot sell the gold coins back to the banks, as
banks do not buy back the gold coins sold. So your selling options are limited to that extent.
Gold ETFs: A gold ETF is akin to buying physical gold online and storing it in your demat
account. You will need to have a demat account to purchase Gold ETFs. There are several
Gold ETFs in the market today, and prices are usually benchmarked to the London gold
price. Short term Capital Gains (STCG) tax is applicable if you sell your Gold ETF units in less
than 12 months. Long Term Capital Gains (LTCG) tax of 10% without indexation or 20% with
indexation, whichever is lower is payable, if you hold these units for over 12 months.
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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.

Which is the best option to invest in gold?


It depends on your need and time horizon. Buying Gold Jewellery is suitable only when you
need it for a function or marriage. If you wish to hold gold as an asset class, purely from an
investment perspective, it is best to opt for Gold ETFs or E-Gold units.

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7 Common Mistakes when you buy a


House
Buying an own house is a dream for many people and we list down common mistakes to
avoid while making this buy decision.
In India, most people consider buying a house as an important financial goal. Despite this
being among the most expensive financial goals, people take rash decisions and commit
some common mistakes while buying a house. Here are a few such mistakes and suggestions
to avoid them:
Under-estimating the total cost of the property: One of the most common mistakes
committed by buyers is not estimating the actual total cost of the house before deciding on
which property to buy. The rate per square foot multiplied by the total area is not the total
cost. Remember that there are other costs like registration charges, stamp duty, parking
costs, society charges and other charges like electricity and water supply charges. Also,
banks do not fund these extra costs, and grant loans only to the extent of 80%-85% of the
actual cost of the property. These additional costs can work out to be quite substantial and
thus you must always ask the builder to disclose all these costs beforehand, so that you can
exactly estimate how much you will have to pay from your pocket.
Choosing a house which costs more than what you can afford: Often, when actual costs are
not correctly estimated, you end up settling for a house which you cannot afford. As
mentioned earlier, banks grant only 80%-85% of the cost of the property, and you should
fund anything above this. Lenders decide on the loan amount based on both the cost of the
property as well as your income levels. Although each lender has different eligibility criteria
for lending, you can generally expect a loan amount such that EMIs do not exceed 40% of
your take home pay. When you decide to purchase a house without considering your loan
eligibility, you will end up having to fund the remaining amount as a down payment, which
will hamper your savings. Remember to always select a house within your affordability and
budget, to avoid financial stress.
Not reading legal documents carefully: The house agreement you sign with the builder has
several legal terms, and as a result only few buyers take the efforts to understand the finer
details. This can land you in trouble if the intention of the builder is to take advantage of
your lack of knowledge. Hence you must never ignore the terms of the agreement, and if
necessary, take the help of a professional before signing on the dotted line.
Not understanding what you receive: Most builder quote the property rates based on the
built up area and not the carpet area. As a result, you pay for the area of the walls of the flat
as well as for the divided common area, in addition to the actual carpet area of the flat.
Many buyers realise this later. Although this is the norm of the industry and cannot be
changed, it is useful to understand these concepts before you purchase the property, in
order to avoid shocks later. Also remember to confirm if the difference in area is really what
is being declared by the builder.
Not determining the background of the builder and the potential of the property:
Sometimes buyers do not bother to check the authenticity of the builder. It is very important
that this is verified to be sure of the delivery of the property and also the quality of the
products used. Looking at the past track record, checking reviews on online forums and

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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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6 Smart Ways to Deploy your Surplus


Money
If you have got extra cash in your hands, it is important not to squander it all away. It is
better to look at your current financial situation and take the best course of action by saving,
investing appropriately and paying down loans. You can use it to reward yourself
occasionally as you have earned it. You can also use it to contribute to the community in
different ways.
This is one place where everyone would like to be in- have much more cash than required or
having income that is much greater than expenditure. This could be due to a sudden
windfall, inheritance, bonus, second income etc. What should you do if you are in this happy
place? For starters, you should feel good about it and then be very careful with it. Many of
us are less careful if the money is not from our regular income and are tempted to splurge
by buying expensive things or experiences or use it to buy lottery tickets or for gambling. It is
obviously sensible to make better use of it so that it helps our future financial security.
The important steps would be to save first, invest and then pay off debts. We have listed
below various options that you can choose from:
Keep a Sufficient Emergency Corpus: If you have extra income or cash or gets some
windfall, you should save it to ensure there is adequate cash for exigencies. Depending on
whether you are young or have dependents or are close to retirement, the amount of cash
for emergency purposes is different.
When you are young, it is recommended that you should have cash up to 2-3 months of
living expenses (Expenses for food, utilities, housing etc.) as an emergency stash. When you
have a family and/or loans, it is generally said that you need up to 5-6 months of living
expenses as ready cash. When you are nearing retirement or are retired, a sum close to 2
years of living expenses is recommended as readily available cash.
Realign Financial Plan: If you still have excess cash after satisfying the conditions above, you
should consider investing in some assets as per your financial plan. If you do not have a solid
financial plan in place, you should consider making one. It will help you decide where to
invest the excess money.
You might be tempted to put your money on that hot stock tip that you got from your friend
or expert trader in the neighborhood. But that is not such a smart move. You should make
an informed decision based on current market conditions and personal financial standing.
You should invest based on asset allocation suitable for you. You can also take the help of
your financial planner/advisor to put the money in the best investments to get good secure
returns.
You could also draft a will and then update your investments based on the same.
Pay off Debts: It is a good idea to pay off some part of your loans- educational loans,
housing loans. Lower debt in your portfolio is always better. It also is a feel good factor to
know that you have paid off your loan installments in advance. You should target the high
interest loans first. Of course you should check the clauses/penalties/processing fees etc. for

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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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How can you save tax beyond the


common deductions?
Tax planning is an important aspect of financial planning. We list down some ways to ensure
that you utilize the tax deductions well thus reducing your tax burden in a legal manner.
Planning for your taxes is an integral part of financial planning. In India, it is noticed that a
majority of the salaried class use the most popular Sec 80C deductions and a few other
provisions to reduce their tax outflow. Please click here to read on popular tax deductions
which will help you reduce tax outflow. However, tax planning generally stops with these
few sections of the Income Tax Act for most people. But did you know that there are many
other legitimate ways of saving tax under the Income Tax Act?
Set up a Hindu Undivided Family (HUF) Trust: A HUF Trust is considered to be a separate
entity for the purposes of taxation. A HUF Trust enjoys the same tax exemptions and tax
slabs as a resident individual. Hence, you can gain a significant tax advantage by creating a
HUF Trust. Please click here to understand more on this.

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.

A Summary of various tax-saving methods:

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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How to leverage your Salary Structure


to minimize Tax Liabilities
Cost to Company (CTC) is the total salary that is agreed upon as an employees
compensation. Net salary is the amount of money that comes in his or her bank account post
taxation. One should ensure that the various perks, allowances available are used judiciously
to maximize the net salary.
The magical three words for most persons employed in the corporate world are Salary is
credited. But there is a difference in the compensation mentioned in your appointment
letter and the amount that finally gets credited in your bank account and some of us get a
shock looking at the difference. So it is important to understand the salary structure and also
ensure that at the time of joining a company, one structures his or her salary along with the
HR department to maximise the take home pay (net amount that gets credited to the bank
account). We list down some ways to maximize salary and minimize tax liability:
Medical Allowance: Medical Allowance up to Rs. 15,000 is allowed as deduction provided
bills for the amount are submitted to the employer.
Telephone Reimbursement: Amount paid towards telephone bills are exempt from tax up
to a maximum of Rs. 12000. You will have to submit the relevant bills to your employer.
LTA: LTA stands for Leave Travel Allowance. The Income-Tax department allows you to claim
tax exemption on the amount spent on travel for you and your family twice in a block of 4
calendar years. It is a good tax saving device for salaried employees. Read our article on LTA
to understand it better.
Food Allowance Coupons: Food Allowance coupons are a good way to save tax. Nowadays
of course some of the stores have a surcharge on the bill if coupons are used to pay but the
coupons are redeemable freely at most restaurants.
HRA: House Rent Allowance (HRA) helps you lower your tax liability if you stay in a rented
house. The amount exempt from tax is the lower of the following: (a) Actual HRA received
(b) 50% of your Basic Salary if you live in the metros or 40% of Basic Salary if you live
elsewhere (c) Rent paid in excess of 10% of Basic Salary.
Perks like transport, driver, and club memberships: Companies offer perks like driver
facility, transport to and from office, club memberships, magazine subscriptions. Depending
on your requirements and interest levels, you can have such perks as part of your gross
salary and this would be exempt from tax in your hands.
Superannuation Scheme: Senior employees get the benefit of a superannuation scheme in
which he or she makes a contribution and the amount exempt is up to Rs. 1 lakh.
It is important to submit proper bills and not misuse the facilities provided by the company.
Your employer may or may not be offering the above allowances and perks to you. Hence it
is important to discuss with your HR department, take a relook at your tax structure and
salary components and analyse if you have an optimum salary structure.

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E-Filing your Income Tax returns the


easy way
Income Tax Returns can be filed on the Tax departments website. We list down the steps
required to file your taxes online so that filing returns becomes an easier process for you.
The last date to file your returns is the July 31st of every year. You will be required to file
your returns online if your taxable income has crossed Rs. 5 lakhs for the year ending March
20XX. Over the past few years, the Income Tax department has tried to make the E-filing
process easy and user friendly. This year, with several more assesses expected to file returns
online, the process is expected to become easier. So why should you depend on others to Efile your returns when you can complete the entire E-filing process in less than an hour?
Returns are filed on the Income Tax departments E-Filing website. Heres a look at the
simple steps you will need to follow to file your Income Tax returns online.
1.

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.

The IT Department is working towards simplifying the process further, by planning to do


away with the mandatory submission in paper form after one files returns online. With more
and more assesses coming under the E-Filing umbrella, it is hoped that the IT Department
will ensure the stabilization of the website, in addition to making the process easier and
more simplified.

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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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Everything you wanted to know about


Estate Planning
Estate Planning is an important part of financial planning. It is necessary to have an estate
plan in place so that your wealth is transferred to intended beneficiaries without hassles. It is
not a simple process and therefore enlisting the help of a financial planner or a professional
will help you in getting it right.
Estate means the Networth of a person. Estate planning refers to making arrangements such
that your wealth is taken care of and distributed to beneficiaries, as you desire after your
death without too many legal hassles. Here are some guidelines on estate planning
Creating a will: The will should state the wealth that you have and how it should be divided
between your beneficiaries. It should also contain information about how donations should
be taken care of. It can be either handwritten, in a computer file or there are even online
services that can draft your will. It is important to name a person who will execute the will
when you are not there. You should sign the will in the presence of witnesses. For more
information on creating a will, you can read our article by clicking here.
Setting up a Trust: The other way to secure the transfer of ones networth as desired is to
set up a trust. This is normally done when the intended beneficiaries of the estate are not
ready to take up the responsibility. The trust will take care of the estate and when the
beneficiaries are ready to take up the estate, it will be handed over to them.
Division of assets and liabilities among heirs: Estate Planning involves listing down legal
heirs who may not necessarily be relatives and detailing out who gets what. Documentation
of this aspect is important so that there is no confusion on who gets what.
Nominating a guardian for dependents: If you have any dependents, the estate plan should
state how they should be taken care of in your absence. The plan should highlight who
should be responsible for the dependents. For example, if you are taking care of disabled
relatives, you should detail out how they should be taken care of when you are not there.
Financial Planning: As you know, financial planning is an ongoing exercise, it is important to
have a broad outline of steps in place so that the ones taking care of your finances and do
what is required to reach the financial goals set.
Review your estate plan: It is important to review/update the plan once in a while. Some
reasons which could mean an update to the estate plan

Value of Networth changes


Your relationships changes like you have a child or you remarry
Laws related to estate planning change.

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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Writing a Will - how do you do it and


its importance?
It is important to write a will that will list all your assets and liabilities and how they are to be
distributed among your near and dear ones after you. You should take help of people who
have the relevant qualifications to draft your will.
Most of you spend long hours planning your investments. But have you thought of who will
benefit from your assets after your demise? You are most probably answering this question
with - Family, who else. But have you legalised this wish? Have you thought of writing a
Will so that your loved ones will not have to run from pillar to post to receive your assets?
A Will is a document which talks about how you wish to distribute your assets after your
death. It can be made by anyone above 21 years of age in India. There is usually a
misconception that a Will needs to be made only by the wealthy or only during the later
stage of your life. However, you should make a Will irrespective of your portfolios size. The
earlier you make a Will, the better. It should be one of the first few things you do when you
begin investing and building assets.
How can writing a Will help you and your family?
When you write a Will, you can decide who will get how much of your assets. You can also
decide when the beneficiary will get the inheritance. Having a registered Will can help your
family and loved ones receive your property after your death without any legal hassle. The
absence of a Will may result in court intervention to distribute your property and several
years may pass while the legal formalities are being complied with.
How can you make a Will?
A Will can be hand-written or typed on a simple A4 paper (there is no need for stamp
paper). It is however better if your Will is hand-written, as it is easier to verify it later in case
of a dispute. It is not compulsory to register your Will. However, when you register a Will
before a Sub-Registrar, it will be a prima facie proof that it has been duly executed, and
challenging its veracity after your death will be difficult. The registration can be done at the
Registrars or Sub-Registrars office. You must be present in person, and must be
accompanied by two independent witnesses. The Will must be signed by you and verified by
these witnesses by signing and giving their details. The witnesses should not be beneficiaries
in the Will. You must mention the date and place in the Will and seal the envelope. Keep it in
a safe, fireproof place.
Although it is not required by law, it is recommended to take the help of a trusted lawyer
before you write your Will.
Here are a few things to keep in mind when you write your Will:
1.
2.

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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Does being a nominee actually mean


you are the owner of assets?
Contrary to popular perception that a nominee automatically inherits the assets on the death
of the owner, he/she simply acts as a trustee and holds the assets only till the legal heirs are
established. Only in the case of equity shares and EPF monies, a nominee becomes the owner
of the asset automatically. In all other cases, the persons named in the Will, inherits the
assets. In the absence of a Will, succession laws will take over.
The nominee you name may not automatically inherit the asset after your death. Surprised?
Remember that a nominee is essentially a trustee, which means he holds the asset only till
the time the court passes an order of the actual legal heir. Thereafter, the legal heir named
in the Will, or those determined by succession laws will inherit the asset.
Lets briefly look at the position of the nominee in the case of different assets:
Insurance: On the death of the insured, the insurance company is supposed to give the
amount to the nominee mentioned in the policy. The nominee will then distribute the
amount to the legal heirs, according to the Will of the deceased. If there is no Will present,
then succession laws will be applicable, and the amount will be distributed as per this.
Share in co-operative housing society: Similar to the case of insurance, share in the housing
society will only be temporarily transferred to the nominee. The nominee has to then
transfer the shares to the legal heirs as named by the Court, or as mentioned in the Will.
Further, the Maharashtra Cooperative Societies Act states that the transfer made to the
nominee will not result in vesting of the flat with him. In case of a self-acquired property, the
Will becomes the deciding factor. If there is no Will, then the property will be treated as an
inherited property. In the case of an inherited property, the immediate family members of
the deceased person will get an equal share of the property. If there is joint ownership of an
acquired property, then the surviving owner will be the sole owner.
Shares in a company: The treatment with respect to shares in a company is different
compared to other forms of investments. Here, the Companies Act is applicable, and the
nominee named in the demat account will legally inherit the shares after the death of the
person. In fact, in the case of shares, the nominee will be the owner even if some other
person is named in the Will.
Employee Provident Fund: Similar to shares, the amount in the EPF account of the deceased
person will be inherited by the nominee named therein. The nominee will again supersede
the person named in the Will. Nomination can also be done in favour of multiple family
members, mentioning the share each nominee will inherit.
Other assets: Apart from the above, nominees of other assets like mutual funds; public
provident fund and bank accounts (savings bank, fixed deposits) will also not become
automatic owners of the asset. The Banking Regulation Act specifies that the amount in the
account of the deceased should be distributed according to the applicable succession laws.
As you can see, simply naming a person as a nominee will not make him the owner of the
assets, except in the case of equity shares and EPF monies. Therefore, we recommend you
to immediately make a Will.

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Important documents to claim assets


after your loved one's death
The process of claiming assets on the death of your loved ones becomes lengthy and
complicated in the absence of nomination or a Will. Hence it is always better to prioritize
Estate Planning. When your loved one passes away and you wish to claim the assets as a
legal heir, you will need a few important documents in place. Death Certificate, Claim
Application Form, Probate of Will and Succession Certificate are a few such documents.
Dealing with the death of your loved one is extremely painful. In addition to the emotional
stress, there could be financial stress as well. This worsens if you realise you will have to find
legal battles to get what your loved one left behind for you. Estate Planning is an often
ignored concept of Financial Planning, and as a result, the legal heirs end up going through a
lot of legal hassles to claim the assets. Bank accounts, insurance policies, shares and mutual
funds, valuables in bank lockers, real estate and provident funds are a few assets which will
need to be claimed. Not mentioning the nominees name or not having a proper Will in
place can cause significant problems to the legal heirs, as banks and other institutions
require proof that you are the rightful owner of the assets after your loved ones death.
Here are some important documents you need to have when you claim the assets of your
loved one after his/her death:
Death Certificate
A death certificate is the basic document one needs to have to prove the death of the
person. This can be obtained from the Municipal Corporation or the Gram Panchayat, as the
case may be, after verifying that the person in question is really dead. A death certificate
states the date and time of death. This document is very important for all institutions and
should be produced even if the nominee is named or a Will is present. The procedure of
obtaining the death certificate changes depending on the circumstances of the death, and
you must take steps to obtain the death certificate as soon as the death occurs. Please click
here to read more and understand the process.
Probate of Will
Having a proper, registered Will in place is of utmost importance in todays world. Please
click here to read more about Will, how you write it and to understand its importance.
However, many people still shy away from writing a Will. Sometimes, even though a Will is
in place, it is not registered, leading to chances of fraud. When a Will is not registered, you
will even find two or three versions of it, often leading to confusion as to which is the
original one. In such cases, you will need a Probate of Will which can be obtained from the
Court. This document will have the seal of the court and certifies that the Will is authentic.
You will need to take the help of a lawyer, pay the required fees and wait for a considerable
amount of time to get the Probate of Will.
Claim Form
A claim form is provided by the institution from which you are making the claim of assets,
and will have to be submitted when you make the claim. You will need to fill in various
details of the assets to be claimed, along with the details of the deceased and your
relationship with the deceased. Each institution will have its own claim application form.

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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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How to save money at home


Indians are known as big savers. But many of us are sometimes careless when it comes to
spending. Here are some ways to save money so that we live up to the moniker given to us.
We all know that money saved is money earned. But how many of us actually remember this
in our day to day lives? If you put in a little effort and time, you can save quite a bit on your
monthly household expenses. Lets look at some simple ways of saving money at home:
When you shop: You must be careful to control your urge to spend. Impulse shopping can
be really harmful for your wallet. A shopping list prepared beforehand can be helpful, as this
will help you to stay focussed. As supermarkets today display all the items you need, you
may be tempted to buy even those things which you may not need. Sometimes people end
up buying things which they already have and this can result in wastage. So it is always
better to make a note of what you need before you step out to shop. You should try to shop
for clothes, shoes, electronic appliances and other big ticket items when there are offers and
discounts. Using online portals to shop can also get you attractive discounts.
When you spend for your children: Spending for your child is necessary. You can consider
using the outgrown clothes, toys and books of your older kid for your younger kid. However,
it is better not to make this a regular practice, as your younger children may feel left out.
Nevertheless, you can re-use books and toys to save money. Shopping with your children
means a huge bill on eating! Feed them before you go out, as this will reduce your expenses
on snacks. Older children can be given allowances to help them understand the importance
of money.
When you spend on personal care expenses: Visiting salons and spas has become both
necessary and fashionable in todays world. Although all beauty treatments cannot be done
at home, you can try home treatments for the easier things, so that you save on hefty bills.
Another way to save your personal care bills is by checking for discounts and deals online,
helping you get better returns for your money.
When you spend in the kitchen: You can save money while cooking. You can save on the gas
consumed by giving some thought and planning. By deciding beforehand on what to cook
throughout the day you can combine cooking rice, pulses and vegetables together. Cooking
on medium flame with the lid on can help you to cook faster and save gas. You should keep
your containers and spoons dry to avoid infestation by insects. Remember to cook before
the due dates mentioned on various items to avoid wastage.
When you spend on electricity bills: Electricity expenses form a major part of utility bills of a
household. You should reduce your bills by switching off devices you are not using,
remembering to switch off fans and lights in rooms which are unoccupied and optimising the
use of electronic equipments. Use power saving equipments and LED lights to save your
electricity consumption. If you cross the basic threshold consumption limit, your bill will
shoot up manifold; hence it is advisable to be prudent in your electricity consumption.
Simple, yet effective ways of bringing down your day to day expenses will help you to save
more and go a long way in adding that extra bit to your investment corpus. Start today!

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5 Ways to keep a check on


Unnecessary Expenditure
It is not enough to have a financial plan and revise it regularly. One should be aware of his or
her spending habits and ensure that money is not spent on unnecessary items. Disciplined
saving and spending habits will ensure a good financial future.
Many of us also have a financial plan in place and some of us have professional advisors who
draft a plan for us and regularly revise it as required. But we have to be careful on our
expenditure so that we do not go overboard without realising it. Sometimes we spend
without proper thinking and splurge on items that are not really needed. Sometimes many
small purchases add up to a large amount. This causes imbalance in our budget and financial
plan. Here are common ways where we end up spending more money than estimated and
some ways to curb overspending and staying within the budget limits
Credit Card Usage: Credit cards are great for purchasing. You go to a mall, like something
and want to buy it. If you do not have cash with you, it is fine, as a credit card will allow you
to buy now and pay later. It is a great option but if you are not careful, the credit card bills
will rise faster than you can pay them off and then you have problems with interest charges
and timely repayment. Use cash or debit card for normal usage and credit card only for
emergencies. Using cash makes you aware of your spending rather than card usage.
Temptations: People around you seem to be having the time of their life going to fancy
restaurants, latest movies, buying the latest gadgets and taking vacations in exotic places.
You are also tempted to do what everyone else is doing. But before you go ahead and enjoy
all the pleasures of life, take a look at your plan. Ensure that you do fun activities within your
budget. This will ensure that your financial future is secure.
Impulsive Purchases or Overindulgence: When we go shopping, it is easy to buy fancy,
expensive things that please our eye. This is not good for your financial plan. It is better to
plan your purchases by simply making a shopping list. Before you go for your weekly
shopping jaunt or an impulsive shopping stroll, make a list of things you need to buy and
stick to it. Of course indulgence in a couple of items once in a while feels good but if
indulgence becomes a habit, it would become expensive and turn the budget topsy-turvy.
Personal Loans for Excess Spending: Personal loans are advertised heavily. They also seem
to have attractive schemes. It is tempting to take a personal loan for the vacation you have
been dreaming about or the luxury car that you want to buy. But it means you are paying
much more than what is really the price of that indulgence. Think hard if the expenditure is
really required NOW or if it can be postponed or substituted with what is within your means.
Other Unnecessary Expenses: Sometimes, day to day expenses may also not be really
necessary. For e.g., take a relook at your cable subscription, call plan and internet usage plan
and decide if it is really the best plan for you in terms of expenditure and usage. You may
find that there is scope for optimization.
Ensuring that money is not lost unnecessarily requires a little bit of research, and discipline.
Once you practice it for some time, you can always find new ways to check your spending.
This will ensure that you are not caught in a tight spot.

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Be money-wise while travelling


Travelling is a hobby for many of us. If we are not careful, it can burn become an expensive
affair. Here are some tips which will help you to travel smart and save money.
We all like to go for vacations so that we can take a break from our usual routine. Vacations
help us to rejuvenate. It is important that the vacation goes well, else the purpose of going
for one is lost. We give you some tips to travel smart as well as protect your money so that
you have pleasant memories of the time.
Look for deals and offers
There are a host of travel websites. You should look for deals here. For example, hotels.com
gives great bargains on accommodation. Expedia.com offers discounts on vacation packages,
hotels etc.
Go to an off season destination
Each destination has a season when people flock to it. But everything is expensive during the
tourist season. Try to plan your vacation such that you arrive at your destination just before
the tourist season or after the tourist season. Hotels, tourist places of interest will have
offers during these times, as business is tougher than usual.
Travel light
You do not have to pack everything. You need to carry essentials of course but ensure that
you do not carry unnecessary items. Shopping is a must for many people in vacations but
one should take care of what one is buying as most airlines have luggage restrictions and
you might end up paying for extra baggage.
Plan in advance
Vacations are for fun. We do not need to work on big excel spreadsheets for them; but it is
important to plan in advance. Plan your itinerary so that you do not waste time and money
after you reach the destination by thinking on the course of action. Sightseeing can be
planned in advance so that you get the relevant information and decide the best way to do
it.
Look for secondary destinations/budget destinations
There are always vacation places that are in vogue. But then they could be expensive as they
would be the most sought after. Think of nearby places which can be covered in a modest
budget. For example, in Europe, everyone wants to go to France and Switzerland. But you
still get a wonderful European experience in countries like Czech Republic and Poland.
Once you have reached your vacation destination, you should be careful. Of course you are
going for fun and want to let your hair down but you have to be smart and not let your
guard down. Here are some tips to ensure that you have a wonderful time at your vacation.
1. Take care of money, wallet and cards Many tourist places are vulnerable to pickpockets
and thieves. Ensure that you secure your money, debit cards, credit cards and wallets.
2. Do not put all the eggs in one basket which means do not keep all money, cards etc. in
one place. Divide it. If you have travel companions ensure some of you if not all carry
money and cards so that there is a backup. Keep some money in the hotel safe as well as
a backup.
3. Do not take all your cards on your vacation and risk them all getting stolen. One debit
card and two credit cards should be enough.

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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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What you should look out for when


you purchase on EMI
Interest cost, Processing fee, Absence of discounts, Penalty if there is default in EMI payment
and Pre-closure Penalty are some additional costs that you should evaluate before selecting
an EMI Scheme. You should also read the fine print thoroughly, compare the price you will
pay vis--vis the MRP, compare the price across different stores, see if you can get discounts
if you do not opt for EMI scheme, analyse pre-payment penalty clause and ascertain the
change in credit limit.
Nowadays many merchant outlets and credit card companies offer payment schemes by
Equated Monthly Instalments (EMI) in order to ease payment mechanisms to customers as
well as to boost their sales. Commonly seen for sale of mobiles, laptops, electronic
appliances and other gadgets, EMI schemes help in using the purchased product
immediately, with payments being made over an extended period in instalments. While such
schemes look attractive prima-facie, you realise that there could be many extra costs
involved in an EMI purchase when you dig deeper. Here are a few such costs which need to
be borne when you opt for an EMI scheme:
You dont get discounts: Generally products having the EMI options do not carry benefits of
discounts or offers, which may otherwise be available on such products. For instance, a
mobile phone which costs Rs. 37,000 under the EMI options may be available at Rs. 36,000
without the EMI option in the same store.
You may end up paying a higher amount: Most EMI schemes come with a hidden cost,
which represent the interest you will have to pay to make use of the facility. Lets explain
with an example. Suppose you opt to purchase an LCD worth Rs. 35,000 through an EMI
scheme offered by the merchant outlet, in tie up with your credit card company. It is a 6
month EMI option with a down payment of Rs. 5,000, which should have translated to a
monthly instalment of Rs. 5,000. However, on enquiring further, you realise that after a
down payment of Rs. 5,000, your monthly instalment for 6 months works out to Rs. 5,500,
resulting in you paying Rs. 3000 more on the total bill. This represents the interest cost.
Dont forget the other costs apart from interest:
Most card companies charge processing fees when an EMI scheme is opted, which is a
percentage on the transaction amount.
You will even be charged hefty penalties if you default in paying the EMIs. This is because
the EMI amount is added to your monthly credit card bill, and any failure in payment will
mean getting charged a normal interest of 24%-36% for non-payment + late payment fee +
taxes and also the specific basic interest cost for the EMI amount.
The third fee which your credit card company will charge you is if you pre-close your EMI.
This means that if you wish to pay off the entire outstanding amount at any point during the
tenure, you will be charged a pre-closure penalty, which is usually between 2.5%-3% of the
outstanding principal amount.
So what should you evaluate before you opt for an EMI Scheme?
The different possible costs attached to an EMI scheme necessitate thorough evaluation of
the terms and conditions before you opt for it. Remember to read the fine print carefully as

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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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What should you look for when you


opt for Car Loans?
Most of us opt for a car loan when we buy a vehicle. We should consider factors like your
eligibility for loan, interest rates, other charges, deals, foreclosure of loan etc. before
selecting an appropriate car loan.
With the Indian auto industry witnessing a never-before boom, there are several new
models of cars and brands entering the market every year. The four-wheeler is becoming
more and more common in every average Indian household, as families with two-wheelers
buy a four-wheeler, and families already having one car opt for the second and third.
According to industry sources, close to 80% of car purchasers opt for a car loan. As a result,
auto loans or car loans are one of the most popular products of any bank. But as a borrower,
what are the factors should you consider when you evaluate banks for a car loan?
Eligibility and credit history: Every bank has certain pre-set eligibility criteria which need to
be fulfilled by the borrower. For instance, your limit on car loan which can be taken may be
linked to your take home salary, and the bank will accordingly increase or decrease the loan
amount. It is important to understand your limits before you decide on the car and model.
Similarly, banks also check your credit score before sanctioning the loan to you.
Interest rates: As there are several types, variants and models of cars in the market, car
loans are also customized according to the car models. Accordingly, interest rates charged
also vary depending on the car model, duration and type of the loan (fixed or floating rate).
An existing relationship with a bank can get you better interest rates. It is seen that public
sector banks generally offer better interest rates compared to their private sector peers in
India. Research the various options well, as a small difference in rates charged can make a
substantial difference in your total cash outflow over the tenure of the loan.
Other charges: Similar to most other loans, you are charged a processing fee for your car
loan. This can either be a flat fee or a percentage which is based on your loan amount. Some
banks also charge a late payment fee (which is normally 2% per month of the outstanding
amount) if there is a delay in payment of your EMIs. These charges also need to be
evaluated carefully.
Foreclosure of car loan: If you wish to part pre-pay your loan or foreclose the same, be
prepared to pay hefty foreclosure charges. Also note that some banks like ICICI Bank do not
allow you to part prepay the loan. This is an important factor to be checked, as there is a
chance that at some point during the tenure of the loan, you find yourself with surplus cash
and would want to close the loan.
Package deals: In most cases of car purchases, dealers offer car loans and insurance as a
package along with the sale of the car and its accessories. It is definitely convenient to take
the loan and insurance from the dealer. However, it is worthwhile to evaluate other options
available in the market too. You might be going in for a costlier interest rate or paying higher
insurance premium if you opt for the package deal from the dealer. It is usually seen that
dealers earn commission if they sell the loan or insurance to car buyers. It is always better to
understand the nuts and bolts of what you are getting before making the choice.

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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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How can credit counselling agencies


help you?
Credit Counselling agencies help in managing the credit situation of individuals and
corporate, advising clients on a variety of credit related issues. Some agencies charge a fee
for this, while most agencies backed by banks offer these services for free. If you are having a
low credit score, poor credit report, stuck in a debt-mess or if you think you are spending way
too much money on servicing costly debt, it would do you good to use the services of such
experts to sort out your financial situation.
Credit is an integral part of our lives - in the form of credit cards, home loan, vehicle loan
and personal loans, to name a few. Specialised agencies offer services in various creditrelated areas to both individuals and corporates.
Credit counselling for individuals:
Now as you may all know, an individuals ability to borrow and take credit (including credit
cards) depends on his credit score and credit report. These credit reports and scores are
provided by the credit bureaus which act as a repository system to store, maintain, update
and generate scores based on the data. In India, currently there are four credit bureaus
CIBIL, Equifax, Experian and Highmark that maintain the credit history of all individuals and
supply this information to banks and other lending institutions. These lending institutions
evaluate an individuals credit worthiness based on the credit report, score and their internal
credit policies. You, as an individual can also access your credit score and credit report from
the credit bureau by paying a fee.
Obtaining and reading a credit report could be easy but interpreting or decoding the
technicalities is where the difficult part kicks in! An experts guidance and counselling could
help a great deal in such situations. Analysing the credit report helps in finding out why you
were rejected a particular loan or what are the factors which affect your credit score, either
positively or negatively. Credit counselling agencies help you do this. Sometimes, factual
errors in the credit report can also affect your credit score and credit counselling agencies
can help you resolve this as well.
Credit counselling for corporates:
Credit counselling agencies offer their services across a wide spectrum of activities. There
are agencies offering consulting services to new and existing credit bureaus. Agencies also
offer their services to corporates to optimize the credit intake, mitigate credit risk through
various strategies and also devise policies which bring about an improvement in the credit
health of the company. Not only lenders, but also corporates in other sectors can also make
use of such specialised services.
What you should look for in a Credit Counselling agency:
When you choose a Credit Counselling agency, it becomes necessary for you to divulge all
your credit related information to the agency. Hence, it is important to choose a trustworthy
agency. Your credit counselling agency is going to take charge of your credit life and
facilitate you in improving and rebuilding your credit health. It is therefore important that
you choose the agency keeping in mind factors such as:
Trained counsellors
Domain expertise

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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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20 tips to come out of liquidity crisis


If you are in need of money, let's get creative. There are many ways you can obtain low or no
cost loans. You can reduce your expenses and take steps to progressively increase your
income. You can also check if you can leverage your financial assets.
When you have purchased a new house and settling down with the EMI or say spent a lot of
money recently in your marriage, you may face a severe liquidity crunch, unless planned
well. This means expenses shooting far higher than your income. Once you start using
expensive credit card, home top-up or personal loans, you start getting stuck in a debt trap.
So if you are in such a crunch, consider below suggestions.
Obtain Low or No Cost Loans
1. Request an interest free loan from your or your spouses employer.
2. Take loan against your Gold
3. Use the home loan porting facility & reduce the EMI. You will have to pay a one-time
charge of around 0.5% of the outstanding loan to the new bank. Your existing bank may
as well allow you to switch to a cheaper rate loan with a similar one-time charge.
4. Withdraw or take a loan from your insurance policies
5. Get a loan from your parents or your spouses parents.
6. Borrow money from a close relative or a good old friend at say 10% p.a. This is far
cheaper if you are using the credit card to fund your deficit.
Reduce the Outflow
1. Extend the home loan from say 20 years to 25 years.
2. Target say 10% cut in your household spend. Announce this in your house. Lead by
example.
3. Look at your Top 5 spends. If the discounts are not possible, ask them to give more
quantity and or value at the same price. If not, hunt for bargains. Use the Internet.
4. Defer expenses to next week, next month, next quarter or next year. In a liquidity war,
say no to every rupee that wants to go out of your pocket.
5. Stop all financial investments till the time you reach a surplus situation.
Leverage Assets
1. Sell non-performing investments & pay-off most expensive liabilities.
2. Surrender insurance policies not earning good returns & reduce liabilities. Use the
surplus by not paying premium to service the remaining loans.
3. Withdraw from Provident Fund. This can take 2-6 months. Use RTI if you get stuck.
4. Withdraw from your Public Provident Fund (PPF). Use Internet calculators to know the
eligibility.
5. Check for hidden assets. Any inheritance that you can leverage right away? Any NSC
certificate or Fixed Deposit forgotten in your wifes cupboard? Any Gold that you
purchased for investment purpose? Any pending refund from Income tax? Old physical
shares? Any loan you gave to a friend?
Increase your income
1. Are you taking all tax benefits? Can you restructure your package with your employer?
Any claims pending for reimbursements? Can you stop your Voluntary PF contribution,
if any?

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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.

P a g e | 84 of 84

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