Monday, August 21, 2017

HappyLoan – to facilitate dreams come true

Partner for Indian MSME industry - ArthImpact
#happyloan #digitalloans #paperlesss loans #arthimpact
Financial services in India is witnessing a significant growth in the area of investments and lending. The avenues and the methods are increasingly getting easy and affordable with digital disruptions. Start-up ecosystem of India is contributing significantly to this revolution. One of such revolution I would like to talk here about is digital lending to the unserved population of India.

‘Digital lending’ concept initially began with lead generation, now is evolved to complete end to end paperless solution. One of the pioneer of this segment is “Happy Loans”, launched to address the needs of small businesses, they lend from Rs. 2000 to 1 lakh with flexible tenure and an attractive rate of 2% per month which is almost at par with the personal loans provided by Banks and much better than informal lending. “Happy Loans”, a micro-lending initiative of #ArthImpact, a self-funded start-up by Mr. Manish Khera and Gautam Ivatuary. HappyLoan mostly served the un-served and underserved Indians. They have taken up alternate channels and method to determine the repayment capacity of individuals. “Happy loans” is a microfinance initiative with presence in 100 cities in India, also helps borrowers building a credit history by disciplined repayment approach.

Manish Khera is known to be a serial entrepreneur, and one of the early movers in financial inclusion and digital banking. Manish Khera’s two decades of corporate journey began at ICICI Bank, where he played a crucial role in setting up the institution’s Alternate Channels Group, after which he moved on to found FINO Paytech in the year 2006, which has served over 70 million customer. He then joined Airtel Payments Bank as CEO. Through his journey of banking, he realized the demand gap for lending to customers with formal credit history and steady income source is huge. The acquisition cost of Banks is too high to address the small borrowers. So, to address the need of these 600 mn people who do not have access to mainstream credit facility in India, he launched Arth Impact. The organization is bound by its vision of financial inclusion. Arth Impact is more focused towards a solution that could ease the everyday cash flow problems.

The attractive features and benefits of Happy Loans are as follows-
·       Lends Rs. 2000 – Rs. 1 lakh ( for ex - you may take the loan to re-do your shop/ buy some new items)
·       Flexible tenure of repaying the loan beginning 30 days
·       Loans are disbused within few hours
·      No physical filing of documents required
·      Complete end to end digital process to seal any leakages
·      Low cost, as the complete lending is digital, minimizing the operational cost
·     Customer without credit history, can build credit history by taking loan from Happy Loan
   Moneystreets Take – Besides structured microfinance Industry, Arth Impact promoted “Happy Loans” stands out with its low cost structure, easy interest repayment, and flexible tenure makes it a convenient option. The background of the promoters is credible and note-worthy which ensures a superior experience. With end-to-end digital solution, it is new-age product with best experience for the customers.

#happyloans #digitalloans #paperlesss loans

Saturday, August 5, 2017

Loans are not bad, we need to be responsible with it

#Loan and the peril of the compounding

The topics on savings and investing through various means and modes have become quite popular, thanks to the conscience of regulatory bodies and growing numbers of personal finance experts. Before we go into any other diacussion, we need to appreciate that Indians are known for their savings habbit with more than 30% of their income goes into savings. In Investing, wide range of financial products have been introduced through last three decades. Mutual fund industry alone trebled their assets under management with Indian retail investors in last decade. Concept of SIP and power of compounding is already doing the magic. However, the overall financial behavior is yet to mature. 

The term "risk" doesnt go well with our especially middle class elders. The younger generation however are more experimental given their high disposable income and less family responsibility and small family structure. In last 100 years Indian economy  has gone through massive change, so is the socio-economic behavior. But due to lack of adequates and inherent orientation, the new earning fraternity is often found clueless and spoilt for choice on the financial front. 

Loan is one of those frowned terms in Indian households as the equity investing has been. Thanks to evergrowing mutual funds industry, it has turned around the conservative indian investors by beating market returns and with superior offering. But, loan is still a forbidden word owing to our paternalistic regulators and still conservative experts. Its high time, that we look at Loan more rationally. This is not neccesarily an evil. The evil is caused because of irresponsibility, which is result of low or no understanding of the product. Loan as a financial instrument is one of the oldest financial products in the world. If we have to define loan in simple terms, when we are depositing money in the bank, we are lending our money to bank and bank in returns is giving us predecided interest depending on the tenure. Same way bank lends out with a predecided term and interest rate. The difference is bank being a large institution with huge establishment and loan repayment capacity, it offers us lower interest when we lend to the bank and it charges a higher interest rate from the customers, as it runs higher risk on its capital by lending to individuals. 

Decade ago things were little different. Especially India had a practice of "sahukar", the informal lending channel, which ruined many households with malpractice for centuries. The trauma and fear has been carried as burden by generations. Even post independence, untill 1990s, the interest rates were very high in the banks and with the compounding effect, cost of loan was very high. But, with lowering the interest rates and competitive environment, loans are available at much lower cost. 

However, no way I mean that one should take a loan without any rhyme or reason. The way investment has a purpose, loan should be taken 1. If it is absolutely neccesary 2. You have enough money to pay and just want to ease the cash crunch. Lending beyond repayment capacity will create huge trouble.

The way investing early is applauded because of power of compounding, for loans it is exactly opposite, we may call ot as "peril of compounding". If one misses out loan repayment instalments, the interest would be added to the outstanding amount and the interest will be calculated on the whole outstanding ruther than the principal in the next instalment onwards.

Given all the facts, India is waking upto the reality of modern financial system of the world, and doors have opened for new age loan products especially in the personal loan space like peer to peer lending, short term small loans lending, credit line addition to our ever evil Credit Cards. Thanks to prudent approach of RBI and CIBIL history, loan industry is well regulated. In all likelyhood, loans will be mire accepted product and will be used very responsibly by us

Monday, June 19, 2017

Planning your finances before the stork arrives

Written by Shiv Nandan Negi -

Appeared on Daily News & Analysis-11-May-2017

Finding out that you are expecting a baby is the most memorable day of your life. Women start thinking about the cute little baby clothes and diapers. But what most women forget to take into consideration are the expenses that would follow this joyous news. There are some major pre- and post-birth expenses that you need to take into account and budget for, before you go on your maternity leave. Here are some tips to ensure a relaxed and peaceful maternity leave.
Medical expenses and hospital fees : The doctor's fee and the hospital bill will be your biggest expense. Talk to your doctor and find out what bill amount to expect in case of a natural birth or a C-section. Take into account the cost of a few ultrasounds, various blood tests and prenatal tests during these nine months.

Talk to HR : Find out about your company's maternity leave and insurance policy. Check what all maternity expenses and how much of your hospital bill will be covered by the insurance policy.
Spend wisely : Save money to make necessary expenditure later like BPA free feeding bottles, bowls, cutlery and toys, hypo allergic skin care products and diapers. Look out for any sale or discounts in the market to get lucrative deals.

Delay your maternity leave: Contrary to what women do, the maternity leave span is more crucial after the baby arrives. So, don't be in a rush to avail your maternity leave, and use it cherish the moments with your baby instead. This can also help in case you have less than 26 weeks of maternity leave or are just not yet ready to get back to work.
Budgeting after the baby has arrived
1) Baby birth is a time for gifts. Most of the time your family and friends will ask you what to gift the baby; use this opportunity to get items on your checklist to ease your financial burden. If you get double gifts then check with friends if they can be exchanged for something else that you need.
2) A lot of relatives and friends would give cash, use this money wisely to manage any unexpected expenses. You could also invest this money in a liquid fund so that it grows and is easily accessible when you need it.
3) If you live in a nuclear family, then you might want to check out day care options or hire a nanny to look after your baby when you get back to work. A few corporates offer day care facility to their employees, so find out if your company has any such facility.
Extended maternity leave : If you are still not ready to leave your baby then tap into your unused sick leaves, public holidays or any comp offs to buy in a few more days to spend with your baby. Check with your boss if you could work from home for a few weeks until you get back to work.
Extra income : Raising a baby is a physical, emotional and financial commitment and it is expensive. If you have any skills or are in a field that offers free lancing work, then you should take up those opportunities to earn an extra income. You would have to work three-four hours from the comfort of your home.
As the child grows so will your expenses. If you have already not started an SIP for your child's education and other expenses then please do so now. Invest in an equity and debt fund to diversify your investment and secure your child's future.
All in all, having a baby is a life changing experience which can be absolutely precious when well planned.

App download link - MintWalk

Co-Founded by private equity industry veterans and IIM alumni, Shiv Nandan Negi and Nikhil Banerjee, MintWalk ("GetClarity Fintech Services Pvt Ltd"), is a goal based Digital mutual investing platform.  It provides honest financial solutions, helping users fulfill their dreams (goals) in life through customized financial plans. 
Driving the concept of achieving our life’s goals and dreams, MintWalk provides a clean, immersive, non-intimidating user experience which is focused on decision making, and tracking the portfolio. MintWalk takes into consideration the user's goals, age, time period till Goal, tax bracket amongst multiple factors to customize the right plan. Algorithms work on artificial intelligence based systems which understand and anticipate needs better.  
A key feature that MintWalk provides is the periodic review of your investments, and based on progress, the App suggests course correction or modification of investments, thus ensuring that the user does not waver from their goal.
Mintwalk combines world class machine learning analytics with deep insight into behavioural sciences to create a platform  that anticipates user needs and provide a dynamic experience most relevant for the user. The app is now live on Google Play Store (iOS/web version work-in-progress).
MintWalk is registered with Association of Mutual Funds of India (AMFI) as a registered intermediary (ARN-107889) and is one of the very few firms in online and offline domain having a Registered Investment Advisor (RIA) license issued by the regulator- SEBI.

Friday, June 16, 2017

Waiting Period in health insurance policies

#Icici Lombard #Apollo Munich #Hdfc  ergo
In past I have written about Top 10 common exclusions in health insurance policies, In this post I would like to bring to your notice about the #waiting #period in any health insurance policy. With  series of new and old products in this category from basic to elite plans, insurance companies design the product categories keeping in mind the cost it needs to bear the risk. More the risk for the company more will be the premium for the product. So, while buying a health policy, choosing the cheapest option available may leave you in a lurch as it may have maximum exclusions and waiting period. Unlike features, exclusions and waiting periods are stuffed in the terms and conditions section and only available in the download section at the bottom of the insurer website. Pull that out. 

Especially if you have certain medical conditions or have a family history of certain health issues, it would be prudent to check the waiting period segment very carefully.

What is Waiting Period in health insurance policies?
Insurance policies come with waiting period clause, which is nothing but the length of time within which you cannot claim any/ certain benefits of the policy. Even if you have to undergo certain treatment/ hospitalisation, the insurance policy will not cover the expenses. The waiting period can be put under three categories - initial waiting period, pre-existing ailment waiting period and disease-specific waiting period.

Initial Waiting Period
This is for the first term buyers of the insurance policy. In this, if policyholders fall sick within 30-90 days of buying the policy, insurance companies don’t cover varying in each policy. However, in the case of hospitalization or medical expenses arising due to an accident, the policy is valid.

Pre-existing disease
If the policyholders have pre-existing medical conditions like diabetes, hypertension, Thyroid etc. Any ailment related to these or mentioned in the contract of the policy will have a certain waiting period 1-4 years to get the insurance benefits on the treatment. However, any other medical treatments will be covered during this period.

Disease-specific #waiting period
Any medical expenses arising from specific diseases listed in the policy document under this head would not be settled by the insurance company within the said period. The common disease under this categories are – arthritis, cataract, kidney stones etc.
#waiting period in health insurance is equally important aspect as exclusions

Waiting period for maternity cover - Many insurance policy doesn't cover maternity in the benefits list as it is not an emergency. However, few company offers it as fixed benefit plan as an additional option within the health policy fir extra premium. However, maternity benefits plan have a waiting period of 9 months to 48 months. So, buying policy early in life can help get this benefit as well. 

Insurance companies are in business of risks. They cover Medical expenses risk for a fraction as a premium. The under writing team develop the products after assessing the on their profitability and ensures that the have to settle least of the claims. However, it doesn't mean we stay away from buying health insurance, it is about taking informed decision and not choosing the cheapest product available in the market without comparing.

Stay healthy. Buy a good insurance product which suits your current health Profile, family history and offer adequate protection.

#Icici Lombard #Apollo Munich #Hdfc  ergo

Sunday, June 11, 2017

How safe is your fixed deposit in India?

The banking sector has been a roller-coaster ride for a while now! After losing 1.3 lakh crore market cap, Banks saw a sharp recovery in the stock performances of about 50% in 2016-17. While the stock market is always a bumpy roller coaster, Indian society of conservative saver, thought Bank to be the safe haven for keeping their wealth.

While capital markets volatility is always under scrutiny, nobody really questioned the sovereignty of the banks. In last decade, banks have come out with a major issue of NPA (where the companies and entities after taking loans, have stopped paying interest and (or) the principal, has turned into a bad asset for banks) and raising substantial capital to comply with Basel III norms. Many public sector Banks struggling with the pressure are taking the route of the merger to cope with the situations. While private players look comparatively well placed, many co-operative banks are coming under scrutiny because of their regional structure and lack of governance systems.

From news "In March, RBI imposed restrictions on Mumbai-based Kapol Co-operative Bank whose depositors were allowed to withdraw only up to Rs 3,000 of the total balance held in every saving bank or current account or any other deposit account, irrespective of the balance.
Every depositor is entitled to receive only up to a monetary ceiling of Rs 1 lakh, of his/her deposits from DICGC

Some facts we don't know- 

  • Incase Bank faces a closure or cancellation of license, you are exposed to risk of losing entire money above Rs. 1 lakh (Insured by DICGC), a wholly owned subsidiary of the Reserve Bank of India (RBI)
  • All bank deposits including Fixed deposits, recurring deposits, saving and current account deposits are insured only up to 1 Lakh per account per bank
  • The DICGC is liable to pay the account holder within two months of claim receipt
  • Deposits in different banks are covered separately by DICGC
  • The insurance premium is paid entirely by the bank
Though public sector banks come with government backing, it is not immune to the challenges.    

In Global Context
In western countries, fixed deposits in banks are well insured. Hence, the bank can go bust but the deposits are much safe than Indian counterparts. Indian banks have a very low coverage of Rs 1 lac. Canada has protection for bank accounts and the Canadian Deposit Insurance Corporation offer covers till $100,000

What you can you do?

  • Choose big public/private sector banks - They are cash rich and comparatively safe
  • Don't choose FDs which offer much higher return than peers. This is a signal of risk
  • You can choose liquid funds and short-term debt funds, they mostly invest in government bonds(risk-free), and high-quality corporate bonds.  They offer higher interest income as well. 

India needs a better insurance cover for fixed deposits.
How safe is your fixed deposit in India?  How safe is your fixed deposit in India?

Saturday, June 10, 2017

Your wealth is not defined by your salary


Hi folks!

The appraisal season is almost over by now, must be getting the new salary in your account. You will be amongst lucky few if you are happy with the appraisal you got. For those who aren't satisfied, there is a trick to make it better for your bank account and own happiness. There are many ways you can save that extra buck, more than often even having an extra cash-flow besides your 9-6 Job salary. Even if you are happy with your salary, still you can try!  I am listing 10 things to duel upon. Wear a thinking hat and find your one!

Hobby - This particular Skill we mostly pick up in childhood days! Like collecting coins, stickers, painting, singing, playing an instrument, photography etc. With age either we give up, or make a career out of it. But few in us keep a hidden interest in the subject and occasionally think about how to make a new beginning in it. Yes! new beginning is right decision at any scale you are comfocomfortable from making YouTube video of your recipes to having an exhibition of your artwork. Making some interesting YouTube video is a very inn thing! Making some quick dollars! Challenge your creative side! And enjoy!

Credit card - more than often considered as a villain for making financial mess, is a good product for easing out the cash flow. For making annual purchases like a TV, Fridge etc.. you don't need to make the chunk payment at one go, with a 50 day credit cycle, you can divide in two months  (by prepaying half of it) and saving a cash crunch situation and some brownie points as loyalty points on your credit card. Using it smartly helps you develop a good credit score, proves to be quite useful for a loan taking purpose in future. 
*pay Credit card bill on time, if you dont remember the dates, this idea is not good for you

Dividend mutual find (equity or equity based balanced mutual funds)- This particular product is really efficient as a second income. In case of some extra spending above your monthly budget this comes as a saviour. This is also tax efficient. You may consider monthly/quaterly/annual dividend plan. This attempts to provide a regular pay Out as promised, easing out some cash crunch issue, if you don't require the sum, you may chose to re-invest or keep the cash in bank account for liquidity.

Pool car - If you take your car to office, you can consider sharing the ride with Neighbors or office colleagues in the vicinity and share fuel cost. It can bring down a significant cost on fuel and also environment friendly.

Share your house - This is tricky. This is especially for people who own a house and find it difficult to pay the EMI and maintenance cost at the same time, to ease out here, you make keep like minded paying guest or opt for AIRBNB partnership of you have an extra room to spare.

Share a meal - Pizza Pasta, Burmese Khausue is a comfort food for many of us. Eating alone could be very boring and to heavy for the stomach. Mind sharing the meal with a friend and the cost?  Save upto few hundred rupees each time. 

Recycle/upcycle - Do you know even cigarette butt can be recycled? And you can earn from it too! Your discarded plastic bags bottles can be used for the repairing roads? Or China extract Gold and silver from your discarded phones! Too much cash in the trash I tell you. Next time think bwfore throwing anything in the garbage box! Money and environment both can get better.

Contingency find - setting aside 3 months income for an emergency is a prudent way to be prepared for unforseen, and a relaxed mind.

Save on bills - if you are habituated at setting AC yemparature at 21 degree in the winter, try raising it to 24 levels, you will see a difference in the electricity bill. Saving some water and cooking gas also Will save you some money. 

It pays to have an opinion - YouTube, Instagram, blogs, Twitter and Facebook all can help you earn extra buck if you are consistent with posts. Create your niche.. from finance, food, Fashion, poetry, recipes every niche has dedicated viewers! 

Enjoy the monsoon😊


Wednesday, June 7, 2017

Rs. 1 is back! What you can buy for Rs.1.


In the World of Inflation and demonitisation, after making lot of wave by Rs. 2000 and Rs. 500, with a big bang the new kid has arrived! Rs. 1. 

When a water bottle cost Rs. 20, minimum Auto rickshaw fare is at Rs. 18 and Cab at 22, many major publications keenly following the re-launch of the hero Rs. 1 note. When my newspaper stack is sold Rs. 10 a killo, my interest on Rs.1 has increased many folds. I thought it would be interesting to see what all you can buy with Rs. 1. I have found 10 interesting things you can do with Rs. 1

Buy books on kindle - For this you need to have a smart phone, amazon app and kindle app. You will find dozens of book costing Rs. 1.

Take a cab - OLA Cabs just promoting share pass with Rs. 1 Grab it till the offer lasts! *terms and conditions applied.

Online shopping - Some crazy offers often can be seen on shopping portals as Rs. 1 sale

Invest in Equity-  No kidding, we have hundreds of share below the total value of Rs. 1. So literally you can own a company with Rs.1. (Hoewever funny it sounds, it's true. Yet buying penny stock can be injurious to financial health! This is just for information purpose)

Navaratna Hair oil  - Thanda and cool Navaratna oil available at Rs.1. Per pouch! 

Candies - Some candies still available at Rs.1 like Pulse, Vicks, alpenlibe! Grab it!

Shampoo - sunsilk shampoo pouches are available for Rs.1. 😊 quite a deal for a good hair wash!

Use public toilet - This also is available. You may use public toilet beginning Rs. 1

Photocopy - The black and white xerox or / photocopy is still available at Rs. 1 on in a A4 sheet in Mumbai.

Rs.1. As a loose change is awesome when Bata sell you shoes for Rs.1999, handing out the Rs. 1 change is a perfect revenge!!

Enjoy guys with the new Rs.1. Keep spending keep saving😊

# What-you-can-buy-for-rs-1

Some of my friends who contributed to do the ideas - Debo, Bono, Nitin.. and the list goes long. Thank you 😊

Tuesday, June 6, 2017

Banking terms you need to know for daily use

We Indians are getting digitally savvy, shopping to donation, mails to good wishes everything is done on digital platform.

Our financial habits are also getting the flavour of digital evolution.  We do bankiBanking, investing, transaction with some taps and swipes.
So, I thought of dedicating this post for some terms we often come across specially using banking services.

MICR Code - Magnetic ink character recognition codeThe MICR encoding, called the MICR line, is at the bottom of cheques and other vouchers and typically includes the document-type indicator, bank codebank account number, cheque number, cheque amount, and a control indicator. The technology allows MICR readers to scan and read the information directly into a data-collection device. 

NEFTNEFT is a facility enabling bank customers in India to transfer funds between any two NEFT-enabled bank accounts on a one-to-one basis. It is done via electronic messages. NEFT settles fund transfers in hourly batches (now 30 minutes batches)with 12 (Now 23 settlements)settlements occurring between 8:00 AM and 7:00 PM on week days. 

RTGSReal-time gross settlement are specialist funds transfer systems where the transfer of money or securities takes place from one bank to another on a "real time" and on a "gross" basis. RTGS systems are typically used for high-value transactions that require and receive immediate clearing. 

CVVCVV is an anti-fraud security feature to help verify that you are in possession of your credit card. For Visa/Mastercard, the three-digit CVVnumber is printed on the signature panel on the back of the card immediately after the card's account number.

IFSC -The Indian Financial System Code (IFS Code or IFSC) is an alphanumeric code that facilitates electronic funds transfer in India. A code uniquely identifies each bank branch participating in the two main Payment and settlement systems in India: the Real Time Gross Settlement (RTGS) and the National Electronic Fund Transfer (NEFT) systems.

mPinThe full form of MPIN is 'Mobile banking Personal Identification number'. It works as a password when you perform any transaction using mobile. It is a 4 digit (6 digits in some banks) secret code similar to the ATM PIN.

UPIUnified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience. 

ECSElectronic Clearance Service (ECS) scheme provides an alternative method of effecting bulk payment transactions like periodic (monthly/ quarterly/ half-yearly/ yearly) payments of interest/ salary/ pension/ commission/ dividend/ refund by Banks/Companies /Corporations /Government Departments. The transactions under this scheme move from a single User source (i.e. Banks/Companies /Corporations /Government Departments) to a large number of Destination Account Holders (Customers/Investors). This scheme obviates the need for issuing and handling paper instruments and thereby facilitates improved customer service by the Banks and Companies/Corporations/Government Departments effecting bulk payments.

Standing instructionStanding instructions are a way of making an automatic payment of a fixed amount to a loan, bill, or credit card at the same time every week or month. It can be made from your savings or checking account and is most commonly used to make payments to a mortgage, car loan, or to pay bills

Source - Wikipedia, indiapost

Monday, May 29, 2017

Residential realty - buy home or rent home

Series of announcements in real estate sector. RERA has been in force in more than a dozen state and about a dozen of them are about to adopt. I often wonder is #buying-a-home is realistic or an emotional decision made by most of us?

Many expert says.. one should not measure monetary value of the house one reside in. "That is not for sale" If this is the argument for buying a house, go for it! Otherwise let's do a reality check on how residential real estate fair amongst all asset classes.

10 things you want to know about the cost and risks attached to property investment 
  • A large sum of money blocked as a down payment
  • Hefty EMI
  • Monthly mainatanance charges to society
  • Interior expenses once in few years
  • Cost and tax on electricity, water connection
  • Maintaining the structure gets costlier every passing year
  • Yearly property tax
  • Tax on rent earned
  • Difficult to sale at a fair value, besides a portion of earning goes in tax and broker
  • Property prices are not regulated, negotiation can be erratic
Renting a property is much easier with significant benefit.
1. Rent paid is tax free under HRA regulation 
2. Only capital blocked is advance payment of the rent/ deposit money, refundable 
3. Don't like the house, change it
4. Don't spend on interior, just choose a better one
5. Don't stay in the old house, rent a brand new every time
6. Changing the city for job? You don't have to think about leaving behind a previous asset.
7. Put the hefty sum set aside for down payment of equity. It is likely to give double digit return over long term 
8. No extra cost apart from the monthly rent of the house and basic bills
9. Maintenance is the job of the house owner, not yours
10. Put the EMI money in debt mutual fund and earn decent money over long term, to pay your rent, which can be offset on income tax return as house rent according to your income slab is eligible for tax exemption on housing rent. 

If you are a prudent money manager, renting is a much better option if you are staying in metro like a mumbai, smaller cities still give you a little better deal with cheaper maintenance cost. buying a second home is absolutely NO NO, you will earn a much better return with equity investments through mutual fund.

My money my way :) 

Monday, May 22, 2017

Sovereign Gold Bonds, SGB, Have you missed buying? No worries.. you have chance to buy it better

*Buy SGB on secondary market through your trading account

Gold, the Godly metal of Indian household, are nowadays available in fancy formats to woo the prospering Indians. Since the economy watchdogs kept repeating the perils of buying the physical format, the rush for paper gold nd electronic gold has become a statement. While GoldBEES (GOLD ETF) is here around for sometime, Indian Government has taken a bold step by introducing Sovereign Gold Bonds, which is issued periodically with an attractive interest rate payout attached to it.

The first two tranches of the SGB offered 2.75% taxable interest on the investment beginning September 2015, the third issue onwards it remained stable at 2.5% half-yearly or as they call it semi-annually. But what if you have missed the issues due to lack f cash crunch, indecisiveness or merely being lazy, you still have a chance. Not only chance to buy, but also to decide which one of the 7 listed bonds currently available in the list. 

Plan your life-goals with the new age ULIP!

Yes, that is absolutely true. You can choose the SGB Bonds listed on BSE/NSE from your stock broker, even better if you have a trading account. The bonds which come with 8 years of maturity, can be bought on the trading app with few clicks, now at reduced time period (as the maturity date is pre-decided). So, if you buy Sep 2015 SGB, the maturity stands at 2023 which is about 5 years and few months, much less than 8 years maturity. And, guess what, if you stay invested till maturity you will be exempted from paying any capital gain tax. Moreover, you earn 2.75% interest on each unit based on the issue price. 

Looks like a win-win situation for the new investors, as because of volatile markets, Gold prices have come down and many of these SGB is trading below their offer prices. Hence buying below offer price means better interest income (better yield). I am not fond of investing in Gold and recommend investing a maximum of 8-10% of total portfolio, but for somebody who likes the divine metal, it makes a smart choice to invest in SGB through the secondary market.

5 ways they sell you wrong financial products

*LTCG in Gold is applicable as debt instruments
*Selling SGB in secondary market will attract as per tax laws
*Tax-exemption benefit is available for only holding until maturity
*The volume of SGB is not very high in secondary market, difficult to trade in large quantity
* 1 unit of SGB is equal to 1 gm of Gold
* The price of SGB OF different tranche varies in trades, though having same underlying asset

Saturday, May 13, 2017

5 ways they sell you wrong financial products

#Mis-selling is rampant in financial services and it spares none! Beaware and take decisions rationally. Here in this post we would focus on how they sell you wrong financial products and how can you fight it.

Financial literacy is important. Even more important is to know how to manage own finance. Be it loan, insurance, stocks, or simple savings account in banks, on a regular basis we need to deal with some decision making with our finances which defines our financial habits and saving behaviour. Many people are averse to discussing this important aspect "money" as they dislike numbers, or even hate to keep a check untill a major decision needs to be taken like tax saving, taking housing loan, or god forbid some medical emergency. The sales representatives of various forms like advisors, brokers or plain simple sales executives of the financial industry mints money during these emergencies without providing the right guidance for which they are paid for. Not only the less educated people, even financially aware people fall in the trap lured by bonus, rewards and false promises. Let us look at what are the common methods are used for misselling the products. Surprisingly in many cases the buyer is partially aware that product is not right for them. Let us look at 5 common ways of getting conned.

1. Buy an insurance to open new bank account - without taking the name, this is a common feature in India's largest public sector bank. Public sector bank account pass book is often used as a address proof. So, when somebody especially new in the city tries to open an account in the branch of this Bank, he/she is politely directed to the branch manager, where the applicant is almost forced to buy a life/health insurance in exchange of a savings account. It has been a personal experience in large city as well as smaller towns. Besides account opening this method is openly encouraged by seniors in the system for any work/favor a customer asks for (within the scope of banking services )

2. Hiding the hidden charges - This is also common, cold callers luring potential customers with half information. It is seen that despite probing multiple times, the executives dont give out details. And, the customer only comes to know once he start using the product, hence, trapped for short time or for ever. It is common for life insurance and credit cards.

3. Emotional black mailing by family and friends - Rampant in life insurance industry, driven by incentive model, the large number work force is part-time advisors, highly crowded by house-wives, retired professionals or somebody looking for an extra income. They often sell highly incentivised product for quick buck without bothering about the need of the person. Being family or friends, buyers often give-in to save the relationship or motivate them. This emotional buying cost them dearly. They mostly don't even go back and complain even unsatisfied. 

4. The vanish act - Selling a product takes the seller closer to his target. Spilling the beans about the risks involved or fee structure can take them one step back and a 10 pitches back. To avoid the hassle, they simply sell the product to never return to service their customer. 

5. Not explaining the complex products - They are in a hurry or simply they don't understand the product. Often, they sell complex products like ULIP plans, endowment plans even pension plans without taking out time to explain the details unless asked for.

Take accountability 

Though regulatory bodies like SEBI, IRDA doing their bit, it is important for every individual to basic research on the product you are buying. The basic Google search on the product can throw up a lot of information on the product. The aggregator sites on insurance, loans, deposits can further help with additional information and best rates. 

Ask the broker for written guidelines on product usage and costs involved , especially on insurance and credit cards. Do read the terms and conditions, however pathetically time consuming it may feel. It is your duty to do double check as much as it is the with the sellers. And don't buy the product if you find discrepancy in what the seller said and mentioned in the written document.

If any official/broker/advisor sell you wrong products, do reach out to consumer grievance cell.

Beware. Take charge!

Wednesday, May 3, 2017

Plan your life-goals with the new age ULIP!

Often my friend Sheena is found daydreaming about her stress-free retired life, zooming past the country sides on a road trip with her husband, painting on a Goa beach and having detox SPA at Kerala. All of 35, Sheena is a school teacher and mother of a 5-year-old. One fine day, she called me up and asked me if it’s a feasible life goal she has and if her current investment style will be enough to take care of future needs? Averse from the new age financial instruments, her FD returns promised very low return and her worry of not able to fulfill her dreams weighed her down.
Like her, there are many of us, who undermine the new age financial products. There are many products like mutual funds and ULIPs which offer higher return and over the long term with some planning and discipline, reducing the risk with a disciplined approach. ULIPs offering SWP, a tax-free regular income can be generated for a long term period by selling units, which can work very well as pension or second income.

In this post, I would like to elaborate on one such product with smart features to suit the need of investors and help them realise their goals, and how one can make most out of it.
#ULIP, known to be insurance cum investment product, is actually an investment cum insurance product with some awesome features and thanks to stringent guidelines by IRDA.
And if  you already consider the new age ULIP as a dynamic investment tool with an additional life cover, you are a sorted investor. The main hurdle we find with the investments is choosing vehicles with irrational expectations because of lack of understanding and product and mis-selling. 

One such plan actually broke my misconception about ULIP is Wealth Ultima by Edelweiss Tokio Life Insurance. The ultra-low cost ULIP rewards you for being a disciplined long-term investor.
Edelweiss Tokio Wealth Ultima, a new product on the block comes with some amazing flexible features given the multiple life goals it aims to attain.
Notable Features
  • < >EdelweissTokioLife- Wealth Ultima is bundled with insurance cover with investment options of equity, balanced and bond funds
    Policy Term and Premium Paying Term as per your need:
    • Policy Term ranges from 10 years to ‘till age 100’.
    • Premium Paying Term* ranges from 5 years to ‘till the end of the policy term’
  • Policyholders also have a choice to switch portfolio in funds o his/her own
  • ULIP’s are a good choice as they allow an investor to choose market tools to invest in, and change their choice depending on how the market turns
  • The approximate cost per year based on the tenure chosen
  • Policy term – Minimum 10 years of maximum 100-entry age
  • Entry age – Minimum 0 years to maximum 70 years
  • Policy payment term – Minimum 5 years, maximum 70 –entry age or 100-entry age (depending on the policy chosen)
    The disciplined approach

  • Systematic monthly (Investment) plan – This feature gives the investor the freedom to invest a pre-decided amount monthly in the plan. It helps to address the short-term volatility of the market and rupee cost averaging of the investment
  • Systematic transfer plan – Based on requirement one may choose to protect their investment by systematically transferring the profit amount into less risky bond funds, which can be done with target profit booking/ life stage and remaining duration analysis, one also have a choice to self-manage the portfolio
  • Withdrawal - Retirement planning through SWP – Often we are worried about accumulating wealth, seldom we think on how to manage and withdraw investments in a logical manner. SWP in #Wealth-Ultima gives an opportunity to the investor to choose SWP after 10 years of lock-in period, wherein investor can withdraw the specific number of units according to his choice (Monthly/quarterly/semi-annually/annually) to fund their sabbatical/ retirement or just a second income. This unlike pension products don’t attract tax enjoying the triple tax benefit under section 80c
    Special features of the products
  • Double indemnity benefit under Little Champ benefit – Little champ benefit aiming to protect the future of a child is taken by one parent and can be started at ‘0 years’. In the case of the death of parent, the future premiums are waived but the plan continues for the child. Top-Ups – you may choose to top-up your investment flexibly
  • Reduction / Increase in policy payment term allowed  
  • It pays to stay – “Additions to the fund”
    • Loyalty additions  - Loyalty Additions will be added to the Fund Value at the end of every Policy Year, starting from the end of sixth Policy Year till the end of the Premium Paying Term
    • Booster additions - added to the Fund Value at the end of every fifth Policy Year starting from
    • end of 10th Policy Year till the Maturity Date of the Policy
    • Guaranteed additions - Guaranteed Additions are added to the Fund Value at the end of every Policy Year, starting from the end of sixth Policy Year till the Maturity Date of the policy

      My take – I also introduced this product to Sheena and she found that ULIP is one of the most cost-effective investments cum insurance tool for a long term horizon. The product offers dual benefit of investment and insurance, which makes it a complex in nature. Also, the product demands long-term disciplined approach and commitment. Looking at the above two points, it is prudent to consult a financial advisor and insurance company to make an informed decision. You must ask the advisor about the product features, lock-in period, policy charges and all benefits.
      If the investment is made with thorough understanding, one can enjoy maximum benefit.
      Please visit the website and download the product brochure for better understanding.
      Thanks to Edelweiss Tokio Life Wealth Ultima, it gave Sheena a chance to fulfil her dreams!