17 tips to tell you how to manage your Personal Finance and save money

POSTED BY manish ON December 21, 2009 COMMENTS (118)

Personal finance is not only about your saving and investment, it includes tax planning, savings, expenses, debts, retirement plans, investment products and all the insurance and other policies. It is an understanding of how these tools works together and also affects each other.

In this article I will tell some tips which will be helpful for your personal finance.

Personal Finance Tips

Image source: Wealthfit.com

1. Split your Term Insurance

You should split your Term Insurance for two reason:

1) Top most reason is flexibility in Decreasing the cover later. So in case you need cover of 60 lacs now, you can divide the cover into 30:30 or 20:40 and then in future whenever you need that your insurance requirement has gone down you can just stop one of the policy.

2) The second reason is that your risk of claim decline from insurance company goes down, but this is a secondary reason.

2. Invest in Tax Saving Products for long term goals

Most of the people still invest in Tax saving funds for their shot term financial Goals. The fact that the money invested will get locked for long term should be taken in positive way and hence you should invest in these for your Long term goal, so that you don’t feel bad about the lock in period because you anyways need money after many years.

For example – Child Education, Retirement, Holidays abroad after many years. For short term goals like Buying car, paying fees, saving for some short term commitment should not be taken care by Tax saving Instruments.

You should use Fixed Deposits, Fixed Maturity Plans, Debt Funds, Balanced funds and Non Tax saving Equity Funds (Risky) for Short term goals. Once you think like this the lock in period will not matter to you at all πŸ™‚

Watch this video given below to know about the tax saving investment tools in detail.

3. Use Top up’s in ULIP’s to minimize Cost

For investors who are going to buy ULIP’s or using ULIP’s for their long term goals, they should use Top up facility in ULIP to minimize the cost. The Allocation charges are generally linked to theΒ  regular premium you pay and not the Top up’s. So if you are investing 60,000 per year as premium, you should rather take a 20,000 policy and top up your policy with 40,000.

This way your will save charges on top up money. You can decrease your cost (charges) by anywhere from 50% – 75% using Top ups.

4. Investing in GOLD ETF’s instead of physical GOLD

Why do you want to invest in Physical Gold? The biggest reason is for Daughter’s Marriage and Jewellery required for the same. But the underlying reason always is capital appreciation.

So why not always invest in Gold ETF’s [ Understand what is ETF ] and whenever you need Physical gold, sell the ETF’s, take the money and Buy the Physical Gold at that time. Most of the people invest in Gold physically for Daughters marriage, but the better way would be to invest in ETF’s and when time comes you buy the physical gold by selling the ETF’s.

That is a better way because its more flexible, safe and easy route.

5. Use your LTA, HRA and Medical Reimbursement

I am amazed to see that many Salaried Employees especially youngsters do not care to take the benefit of LTA, Medical reimbursements and HRA just because of Β their laziness.

So make sure you take advantages of these even if you partly use these things you will save couple of thousands in Tax. All you have to do is save the bills, take the xerox and walk couple of steps to your Finance department and submit them, don’t you think its worth if its can save you couple of thousands in tax saving?

6. Control your Credit taking Habit

good credit habits

Image source: freecreditreport.com

Most of the people take Debt more than they can afford or deserve. Criteria for giving credit is mainly how much you earn. The company never knows your expenses and your future goals, your risk appetite, your future plans etc.

People earning 5 lacs per annam take debt of 30 lacs for Home, unnecessary personal loans for buying LCD’s, going for vacation and other non-priorities in life. This can have ill-effects later on.

Also companies are now keeping an eye on your credit taking behavior and it affects your credit score through which companies in India have started using as a decision making variable. So watch out your credit taking behavior. Don’t over-do it.

7. Dont Over monitor your Portfolio

Keeping an eye over your portfolio is great. You should look at your shares, mutual funds, ULIP’s etc. but overdoing it can be fatal sometimes. Some of us have this obsession of watching shares, mutual funds NAV and ULIP’s NAV on daily or may be weekly basis. See How much time you should invest in Personal Finance.

This is not a good sign for long term investing especially for people like us who are into regular jobs and have no much time to contribute in your Finances.

When you are a long term investor, why keep track of short term movements, these moves will have not much value in your all growth and short term movements will affect you mentally and tempt you take take decisions in short term because your money is either going up or down fast.

More of anything is bad and same things is true for your over involvement. Couple of hours per month or every quarter is good enough. Don’t get a feeling that successful financial life means more action.

8. Share your Financials with Family

If you are dead in another 1 hour, do you think your Family will be able to find out all your investments and Insurance documents and successfully claim them?

Are they unaware of the fact that you took a huge Insurance cover for them or you invested 50,000 in a ULIP last month?

Most of us graduate from novice investors to a good investor but still are left behind in taking care of this extremely critical point of sharing each and every details of our finances and making sure that the documents are within reach.

Let your wife, children have a good idea of where the documents are and where your investments are, have xerox copies of every document and have them at 2-3 different places and make sure people know about them. Emotional pain of losing some one and no idea of the finances which will take care of them is a kind ofΒ  situation you never want you loved ones to be into πŸ™‚

9. Don’t compare your returns with others

Comparing personal finance with others

Image source: i.ytimg.com

You are different, be proud of this fact. If your returns are less than your friend’s mutual funds that’s fine. Don’t compare your self with others, there are many things which determines what you get in life like knowledge, luck, skills, timing etc.

So just make sure that you are getting what you try for. Don’t lose focus from your goals, your main aim in life is to achieve your financial goals easily and smoothly.Β Financial Planning is a race where everyone who reaches their personal target is a winner.

Make sure you don’t hurt yourself by competing with others.

10. Investigate everything before you Buy it

When you buy something, make sure you try to get information on Internet, ask on forums at different websites and make sure you find out maximum about thing product you are buying. Spending 30 minutes investigating your product can save you from lot of trouble.

One person I know recently took a home loan from HDFC and went for additional Life over from same bank for 30 lacs. He didn’t investigate much about the cost. It was around 8k per year for the term Insurance. When some days back we saw quotes from other company, the cheapest quote was around 6,000 from ICICI Prudential.

He was paying 2,000 more for the same thing because he didn’t spend 5 min extra investigating about the product. Just think what is the loss of spending some time investigating your product. How many of you took an ULIP after agent explained it to you and didn’t inspect much about it.

Email This to your Friend:

11. Invest and Spend, not vice Versa

You receive your salary -> then you spend all your money -> then save or investΒ  if you are left with something. This is not a right attitude.

You should change it to Get Salary -> Invest your money as per your future goals -> Spend the rest.

Once you are saving some part of your salary, somehow you will find ways to spend on things which are of first priority and would refrain from spending on things which can be avoided but if you spend first and try to save later, you will end up spending on unnecessary things.

So better change the order of spending and saving. You can definitely live with your 90% salary , so at least save 10%. There is no harm in trying out this. If it does not work, you can go back to spend and save.

12. Build your Emergency Fund now

Make sure you have emergency fund.Β If you are listening about this from long time and haven’t done it yet, the best thing would be to take a pen and paper right now and plan for it.

This is the money with the aim to provide you immediate access, not growth of money. Don’t concentrate on getting great returns from this part of your portfolio. The aim of this part is just to give you high liquidity in case of emergency. That’s all.

So simple rule is 2 months of expenses in Cash which you can access in minutes from ATM and 3-4 months of expenses in Liquid funds, which you can get back in 3-4 days.

This is preparation for a situation like if you lose your job and need time to search for something you really like, or get a long term illness and cannot earn money in short term or special emergencies. You can always reach out to close friends and Family for money, but why to depend when you can be self-dependent.

Its’ all about strong planning.

13. Equity for Long term, Debt for Short term

I say this again and again, this is the golden rule, one of the fundamentals of Strong financial planning. Long term goals whose target date is more than 7-8 yrs like Child Education and Retirement should always be linked withΒ  Equity products like Equity Mutual funds, Direct Stocks, ULIP’s, Index ETF’s, Index Funds.

That’s because you can get great returns in long run from these things with lesser risk. On the other hand short term goals should be achieved by debt products like FD’s, Debt Funds, Recurring Deposit, Short term bonds. You can also use Balanced funds if you have moderate risk appetite and time horizon is 3-4 yrs.

14. If you dont understand, Don’t take it

How many investors understand how their ULIP works and what are different costs and how to use it efficiently? Not more than 3-4 % I believe.

How many people know why they have invested in Mutual funds which had a fancy name and which makes you feel like you have invested in something great and how many Endowment Policy holders know the overall final return they would get from their Policies?

Investors get into products which they do not understand well and then they can’t make best use of it which defeats the purpose. In reality the best products are least complicated one’s like Mutual funds, FD’s, Term Insurance, ETF’s, Gold ETF’s etc.

So if you don’t invest in something which looks fancy, you are privileged and should be thankful to god. Companies come up with complicated things which makes general investors feel that they are dumb and these companies are some big shot high class super knowledgeable in field of finance.

Read features of a good Portfolio

Just ask yourself Β if you want to eat the best, tasty and healthy food in this world then where will you go? 5 star hotels? I don’t think so πŸ˜‰

15. Try new products now

There was a time when LIC policies, FD’s, NSC and PPF were the only thing in one’s portfolio. There was not much choice and people were risk averse. That was a different time.

Things have changed today and Finance world is different now and it’s more complicated now compared to olden days because of lots of choices in Financial products for us today. Don’t hesitate by trying out new stuff.

There are different products these days like Index ETF’s, Index Funds, GOLD ETF’s, SIP in Mutual funds, Reverse Mortgage etc. Don’t be stuck in same products like our Fathers and grand fathers have done.

16. Take Personal Loan to pay off your Credit Card Debt

In case you have any Credit card debt and you have converted it to EMI, it would be a better option to take a personal loan and pay off your Credit card debt as soon as possible.

Credit card interest charges are anywhere from 36% to 48% per annum which you don’t realise because it sucks your money slowly and it’s not significant per month so you don’t feel it. So taking a personal loan is a better choice and pay 15-20% interest on that.

You should always try to stay away from Credit card debt at the first place anyways.

17. Educate your self more

At the end, you have to learn stuff. No need to become a pro ,but you should keep updating yourself every month with basic things. Read Personal Finance Magazines like Outlook Money (Link to online issue) and Money Today (Link to online issue) and other blogs on Financial Planning .

Also if you are new to this blog, Subscribe to Email Updates to get fresh content in your Inbox twice a week. .

Readers Contribution

18.Β  If appears to good to be true then probably it is not: So better if something looks great, then make sure you investigate well because there are more chances that it’s not that good as it sounds .There is no free lunch πŸ™‚ – Amit Kumar

19. Learn simple maths : This is very nice point . Learning basic formula’s can help you a lot , you should know CAGR , IRR and Future Value formula ..Β  – Amit Kumar

20. Find a right Financial Advisor : Find some one whom you trustand he is within your budget and you are comfortable with . – Guru

21. Plan for retirement Early in Life : See important of Early Investing and How to plan for your Retirement in 6 steps . – Swathi

Want to add yours…., please leave a comment πŸ™‚

You are a valuable reader and your participation is needed , Please share any tip here like the one I have discussed , even 1 sentence is worth listening to. Also let me know which was your Favorite Point among these 16 points

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118 replies on this article “17 tips to tell you how to manage your Personal Finance and save money”

  1. Deepak Kumar Badru says:

    Take Personal Loan to pay off your Credit Card Debt

    I don’t agree with this statement, As its only True If Personal Loan Interest Rate is 14% or 15% But If more than this, both becomes equivalent

    1. Deepak

      How does it become equivalent ? How much is credit card interest on yearly basis as per your understanding ?

      1. Deepak Kumar Badru says:

        Its 18%!

        1. Deepak Kumar Badru says:

          I spent 124722 on credit card, Paid back 3118.04 on EMI Conversion, 321.15812 Service Tax, Interest 12424 (Comes out to be 18% Reducing)

          So total amount I paid back is 140585.1981

          1. How much is monthly interest rate mentioned by Company ?

            1. deepak badru says:

              37.8 % Per Annum

            2. Then does it make sense to not take a person loan which is at 18-20% PA and close a loan which has 37.8% interest ? Why did you say in the start that it does not make much sense ?

            3. deepak badru says:

              I completely understood your point, but what I wanted to convey, is not this. I’ll write you a mail regarding this. I am also eager to know from an expert like you, that “what I calculated! is that wrong?”

  2. sunil gavaskar says:

    This is about Jeevan Saral as an investment option instead of NSC/PPF … I discussed with couple of development officers directly to gather such info.. Please read on
    W.r.to endowment policies, it is right that 6-6.5% of return, but this policy differs from others that the projected return as 10% compounded because,
    1. Loyalty addition applicable ( a kind of bonus ) to policyholders who are holding the plan for 10years and above
    2. The plan doesn’t have tax procedures. i.e LIC needs to pay 12.5% service tax + 5% government share on profits, but the profits from this plan are exempted from TAX altogether
    3. The corpus of this plan is invested as Loan to industries like TATA and others for @13%
    4. The objective is long term i.e 10yrs and above so one can expect good return of around 10% compounded or 8.5% in a worst case..
    5. LIC mosted trusted org itself has distributed the brouchers with projected profit as 10% compounded.. And of course return is non taxable !!
    Please post your views on these..

    1. sunil gavaskar says:

      And an article about the policy in Hindu
      http://www.hindu.com/2004/03/15/stories/2004031500261800.htm

  3. amy says:

    Hi, I am Amit kumar of 26 yrs from rajasthan.I am a govt.employee with a monthly income of 25,000.I am having two LIC ENDOWMENT plans of which one is of sum assured 6 Lk and a annual premium of 28000 and other with a sum asssured of 1 Lk and a annual premium of 6000.I am also having 2 ULIP plans of which one is LIC MARKET PLUS (optioned GROWTH) with annual premium 10000 and other is ING VAISYA (optioned GROWTH) with a annual premium of 4000.There is also a deduction of 10% from my monthly salary under contributory pension scheme(C.P.F.).
    I have started up with a monthly SIP of 1000 in canara robeco equity tax saver(growth) last month.now i am planning to open a PPF a/c wid SBI.i am also planning to invest in two equity diversified MFs wid monthly sip of Rs 1000 each.
    I request u to plz analize my above portfolio and suggest me two or three good equity diversified MFs.I am having a goal of 7 Lk after 5 yrs.I also want to know that as i am having C.P.F. deduction whether i should open P.P.F. a/c or not. plz mail me.
    Thanks.

  4. Pavan Kulkarni says:

    Manish,
    Great article, as always!! I love the way you and Subra write!

    I don’t completely agree with you on 7 (over monitoring portfolio). It’s my personal view though and I wouldn’t dare say that it is a general rule. My logic is simple. I investigate throughly before I buy stocks/funds. Once I buy, I check everyday to find the right time to buy the next lot in the same stock/fund. That helps me accumulate good stocks and lower my prices. Of course, it requires lot of self-discipline to not to panic when situations are not rosy. In fact, those are the right times to into market (instead of exiting). Thanks to WB for all this wisdom πŸ™‚

    1. Pavan

      Thanks for your views , whatever is pure monitoring for you may be over monitoring for many i guesss πŸ™‚

      Manish

      1. Pavan Kulkarni says:

        Yeah…that’s why I said it’s my personal view! A knife can be used in many ways πŸ™‚

  5. sowmini says:

    Hi manish

    As usual your blog was very good on personal finance..informing your beloved is the more important than even saving or investing……I have a question for you…I happen to read about this HDFC endowment super which has a life cover and also the investments go into Equitites.the charges are 15%,10% and 5% for the 1st 2nd and 3rd years.

    Do you think it is a good choice of investment.I have a home loan for 80 laks and if i invest 2lacs per annum-do you think this life cover will really prove to be successful as i can see that there are a lot of difficulties when it comes to claiming the money incase of any uncertainity.

    thanks
    sowmini

    1. sowmini

      It looks like a ULIP . please dont get into it . Your Life cover requirement seems to be around 2 crores arleast considering you have 80lacs of loan in home loan , now this ULIP can not provide that kind of insurance at good cost . You should take a term cover asap .

      Manish

  6. Krishna says:

    Hi,
    Manish,
    I need help from you I purchased Profit Plus Ulip Plan from LIC in Dec 2007 for 50000.It was single premium payment.Recently i switched my fund to Bond fund. After switching the number of Units allotted got reduced to 3497. Earlier in the growth fund it was 4146 units. How the number of units allotted got reduced. I contacted LIC they told me it has lockin period of 3 years I cannot withdraw now.How to proceed further so that I get atleast my invested money back from this plan. Please Help me

    1. Krishna

      Dont worry much πŸ™‚

      So in ULIP for each kind of fund you have seperate NAV , so then you switched to Bond fund , looks like its NAV was higher , so accordingly the Units got reduced , but your net value must have been same πŸ™‚

      Check NAV at : http://www.moneycontrol.com/insurance/latestnav/homebody.php or http://www.licindia.in/plan_navs.htm

      manish

      1. Krishna says:

        Hi,
        Manish,
        Yep Net Value is Same.Thanks for replying can you suggest should i hold till the NAV comes up or should i exit immediately after the lockin period.Kindly Suggest

  7. Akhil says:

    Here you go Again awareness awareness awareness.. damn this gonna get close my or so many type of me, shops… lol πŸ™‚

    But Manish I would like to congratulate you for such informative article… I believe everybody, who visit this article once… get out with some information, some knowledge.

    In the end, all I can say… What an article, sirji??? :p

    1. manish says:

      Akhil

      Nice to get a comment like this .. What do you do personally .. The fact that you are able to accept that this article is great even if you are into sales shows that you are a good agent .

      manish

  8. Vijay says:

    Cool 17.

    1. Cool .. the shortest comment on this blog till now .. Great πŸ™‚

      Vijay , which one was your favorite ?

      Manish

  9. SB says:

    Hi Manish,

    Please write a post regarding the difference between NSC and PPF and about the advantages and disadvantages of both. Which one is best in terms of returns and tax planning?

    Regards,

    SB.

    1. manish says:

      Sure .. I will add a “Wishlist” tab on blog soon . You can add your list there . For now I will keep a note .. But remind me later

      Manish

  10. pattu says:

    Dear jmoorthy,

    Wow! That is a nice list!
    Answers to most of your questions can be found in the policy document. It is beat to read that carefully and then ask about issues not answered there to an agent. Sometime if you ask too many question to an agent they may misinform you. They are human after all. A policy document has legal binding and is the ultimate authority.

    Term insurance covers all forms of death incl suicide after 1 year. The only condition is that policiy has to be in force.
    The cause of death has to be established clearly; So any document which helps to do this will be reqd. You cannot cremate or bury a body without doctors certificate so how can you make a claim without one. I think a doctor cannot give a certificate in case of accident or suicide without FIR so its obviously reqd.

    “In case of un-identified suicide (train sucide), what is the process, how to prove.

    “If nominee dies”
    Better to leave a second nominee if possible or legal heir certificate has to be produced by next of kin. This will take a long time. So claim must be sent first
    the died person is policy holder?”

    This is tricky if fingerprints are available I guess that is acceptable. If face, identifcation marks and both hands are disfigured its trouble. So better to take a single piece of your hair put ir in along with your policy document! When need comes you can make a DNA test for identity. Good point!

    There is no such thing as a private doctor. Every doctor has to have govt approved reg. number

    1. manish says:

      “There is no such thing as a private doctor. Every doctor has to have govt approved reg. number”

      Thats a nice points Pattu .. All the points you guys have put are great , Guru can add up some points more here πŸ™‚

      Manish

  11. jmoorthy says:

    Excellent writeup !!!

    I have a list of questions which should be discussed with insurance agent/company before taking term insurance. You can use this as a checklist.

    There are 4 typses of death.

    1. Natural due to aging
    2. due to illness – Cancer, Herat attack, Kidney failure….
    3. Suicide
    4. Accidental death

    1. In case Natural death,
    a. what is the claim process.
    Death certificate/corporation certificate & original policy docs
    b. What are the documents do we need to claim this
    c. In case nominee is not available who will be eligible to claim & what documents
    they need to claim
    d. how to change nominee & what is the process & is there any limit in nominee
    change
    e. How many days it will take to settle the claim
    f. Both nominee & policy holder died on the same day, who will get claim & what
    docs required

    2. due to illness – Cancer, Heart attack, Kidney

    a. Is there any restriction in illness category
    b. All deceases death are covered
    c. Claiming process
    d. Documents required to claim
    e. Doctor certificate required? private doctor or any govt/hosptial doctor?
    f. with in how many days we should initaite the claiming process?

    3. Suicide

    a. Eligibility to claim the SA in sucide case starts after 1 year from the policy
    commencement?
    b. All suicide death covered? like hanging, poison, train
    c. What are the documents required?
    d. If both Policy holder & nominee committed sucide, who will get the SA & what
    docs they required
    e. Police FIR required?
    f. post-mortem required?
    g. In case of un-identified sucide (train sucide), what is the process, how to prove
    the died person is policy holder?

    4. Accidental death

    a. In case accident death, both policy holder & nominee died, who will get SA &
    what is the process & what are the docs required
    b. Due to accident, policy holder body is un-identified, how to claim?
    c. FIR required?
    d. post-mortem required?
    e. death case of murder, how to claim?
    h. In case nominee kills policy holder, will nominee gets SA?
    i. In case of accident, policy holder/nominee/kids died, Policy holder parents will
    get Sum Assured?
    j. Policy holder missing for long time & found murdered later some years. how to
    claim?

    If death happened in foreign, can we get Sum Assured?

    -Jmoorthy

    1. manish says:

      Very nice compilation .. I will try to find out answer and make a post out of it. thanks for giving this .

      Manish

  12. pattu says:

    Well said Manish. IRDA has to come up with uniform guidelines. In fact the under written rules should also be the same. This is the best way to enhance claim settlement ratios for all insurers.

    1. manish says:

      Pattu

      I just mailed irda this query .. lets see if i get a reply back πŸ™‚

      manish

  13. pattu says:

    Kotak life insurance wants “Original Death certificate issued by the requisite authority” and
    “Last Attending Physician’s Certificate in original.”

    There are few other insurers who only mention “death certificate” while some others explicitly mention copy is enough. Similarly some say hospital records while others say copies of hospital records. Well unless the claimants are educated about what exactly to do in the event of death getting two claims is messier than a single claim. Its just too much work.

    The point is in every other investment or health insurance benefits can be enjoyed by the individual who pays so he/she can factor his/needs needs/wants etc.

    When it comes to term insurance the beneficiary is the nominee and his/her needs, convenience, education level, ability to use common sense when need to make a claim etc. must be factored in before taking two policies. Its not just about decreasing cover later and cheaper policies or claim rejection etc.

    1. manish says:

      I believe IRDA should come up with some common ground rules or frame work for Claim settlement .. Seeing each and every company with different rule can be frustrating for customers ..

      Pattu , What do you think ?

  14. pattu says:

    Dear Yogesh,

    Great point! Convinced!

  15. Yogesh Tiwari says:

    Hi Manish,

    Just wanted to put my 2 cents.

    Manish’s Quote : yes .. I will have to agree on that part .

    If you buy the jewelery today. the making charges would be of today’s value .. I never thought of this point .. Anyways how come men are supposed to think that way .. Women are great

    Manish

    My observation.

    We are missing one very important detail, that is we always buy physical gold which is of 22 carat (I havent heard anybody buying a 24 carat coin or bar even). However, ETFs are based on 24 carat gold price. Hence, on any day, when we sell an ETF unit it ll give enough money to buy a 22 carat jewellery + making charges.

    No doubt women have much better sense of design. we can always afford a 22 carat gold unless we are getting a designer jewellery from D’Damas or Tanishq….LOL

    Regards
    Yogesh Tiwari

    1. manish says:

      Nice observation .. I never thought about that πŸ™‚

      Sometimes I wonder what will be this blog without this kind of great interaction . I would like to thank everyone πŸ˜‰

      Manish

      1. Rupali says:

        Yes nice observation Yogesh.

        But Manish if you can it would be helpful if you explain about the gold ETF’s. As there are lot of confusion about whether it is good investment option or not. As many charges are there in gold ETF’s so to avoid that people follow traditional purchase like gold coin,bar,etc.

  16. Jitendra says:

    Dear Manish,

    I liked Point No. 9 Most. (Dont compare your returns with others)

    Most of the problems in the financial world (or for that matter in other areas of life also) start from comparing with others. If we are doing better than our friend, we get elated. If we are poor than him in the investments, we get depressed, just by comparison.
    i.e. Till there is no one ahead of us, we feel better and vice versa. And the moment other guy does better than us, we sink to bottom of our hearts.
    I think this is to search for external validation to boost the ego “Yes, I am better than others”. Instead, the best way would be to compare with ourselves only, with what we were 6 months back, 1 year ago and so on. The same rule applies to finance also. More money does not means that they are more happy. They might be having more problems in some other life areas which we may not be knowing.

    Lot of spirituality πŸ™‚ but it is important to know these points.

    Thanks ,

    Jitendra

    1. manish says:

      Wow .. a different angle πŸ™‚ . good one

      Manish

  17. Manshu says:

    I think buying real gold coins is way better than holding gold ETFs and such. You don’t have to pay any fees when buying real gold, there is no counterparty risk, no risk that NAV and trading price are different, and the ease of selling both of them are same.
    .-= Manshu´s last blog ..Target Gift Card Review =-.

    1. manish says:

      hmm.. depends ..

      Gold ETF;s are easier to monitor , save, sell . they are better from tax angle also .

      Atlast it depends on person to person .

      manish

  18. Guru says:

    Refer to
    http://www.lifeinscouncil.org/consumers/claims-process
    for claim related info.
    Couple of websites mention that the required documents for claim are “Original Policy document and death certificate”. This should not be mis-understood as Original Death certificate. It should just be read as “Original Policy document” and “Death certificate” (Attested copy is good-enough)

    1. manish says:

      nice link guru .. thanks for that

  19. pattu says:

    Thanks a lot Guru for the detailed advice. Considering the details involved I think everyone should inform someone trusted in the family about how to make the claim(s).

  20. pattu says:

    Thanks Karthik and Manish. My wife raised an interesting point about Gold ETFs. As a pure investment we both think its a good idea. However if you wish to invest in GOLD ETFs with the specific purpose of, lets say jewelery for daughters marriage then it might be a good idea to redeem the money periodically and buy jewelery. If we wait until the last minute we might end up paying more on creating the jewel and wastage charges. I thought the returns EFT offers maybe outweigh this charge but my wife feels that considering inflation the making charges will be a significant amount (min. 10% of gold cost)

    If we just want to make money then it wouldn’t matter. Of course a better thing to do would be to transfer the unit to your daughters name and save us the trouble.

    1. karthik says:

      Very good point Pattu..

      On Lighter vein my wife doesnt count gold ETF’s as gold.. I recently sold AIG World gold fund and gifted her some gold chain πŸ™‚

      My mother feels it would always be better to buy gold as jewels..

      I feel women just like the experience of shopping for gold more than the gold itself.:)
      .-= karthik´s last blog ..Basics of Investing : Investing Pyramid =-.

      1. manish says:

        haha .. good point .

        Women are generally details oriented . They like to talk about it and this stimulates their mind . or a women can always tell about her gold jewelry to her friend and feel good about it , but she can never say that ” my husband bought some gold etf’s for me and eventually it will be used for some jewelery” . So its a different thing .

        If not wrong , but its different .

        manish

    2. manish says:

      yes .. I will have to agree on that part .

      If you buy the jewelery today. the making charges would be of today’s value πŸ™‚ .. I never thought of this point .. Anyways how come men are supposed to think that way πŸ˜‰ .. Women are great

      Manish

  21. Guru says:

    Now, let us visit the claim process:

    The Insurance companies asks for most of the documents that Pattu has mentioned, except for the Original Death certificate. We can provide an attested photocopy of the death certificate.
    I have helped 5 nominees to settle their claims (3 from LIC, 1 from ICICI & 1 more from TATA-AIG; although I’m not an agent of any of these 3 companies) and all the 3 of them got their cheques

    The Company considers the Sum at risk, cause of claim and duration of the policy while asking for certain requirements. Eg. For accidental death, specific proofs such as Post Mortem and Police Report are required whereas for death due to illness, the Company calls for records from hospital, test reports, etc
    The Company settles the Claim within 8 working days after all the records, documents and necessary forms are submitted and documentation is completed.
    In case, the Claim warrants further verification, the Company keeps the Claimant informed of the same. Subsequently, when the decision is taken, it is communicated to the Claimant by a letter.
    As per IRDA (Insurance Regulatory Development Authority), the Insurance Company is required to settle a claim within 30 days of receipt of all requirements.
    However, if the claim warrants further verification, the Company should complete its procedures within 6 months from receipt of written intimation of the claim. If the Company settles the claim beyond 6 months period, the interest is payable by the Company on the claim amount. The interest is payable only where the Claimant has submitted all the requirements. Further, rate and period of interest are decided as per IRDA guidelines

    1. manish says:

      Amazing ..

      Thanks for the info ..

      Manish

  22. karthik says:

    Hi Pattu,

    Reg Gold ETF, you can also invest in gold mining companies. They support SIP. I had an investment in AIG gold fund thorugh SIP. Gave me decent return over last two years but got out recently as i felt Gold is over valued. Also I feel equity is a better investment option. Again it is a personal preference.

    Manish,
    What are your views.. I have written a article in my blog on fundamental constituents of a Portfolio..Let me know your feedback on the same.
    Karthik
    .-= karthik´s last blog ..Basics of Investing : Investing Pyramid =-.

    1. manish says:

      Karthik

      I think your decision of selling it was good . Your Investing Pyramid is exactly the same thing I am planning to write from long time . logical , crisp and effective πŸ™‚ .. good one πŸ™‚

      One tip for comments : Pattu might not see this comment of yours . Make sure you click on “Reply” button just below his message and reply , that way he will get notification that soemone replied back to him . πŸ™‚

    2. Guru says:

      Dear Pattu, et al

      In the Insurance industry, there is no rule mandated by IRDA that the competing companies should know about the coverage taken from other companies. Few companies ask the applicant to declare the coverage taken from competing companies. The one thing that the application forms of ALL the insurance companies ask is whether they have any policies being issued by the same company. The Sum asssured of all the policies taken from that company will be added up & the applicant will be subjected to a medical test for the corresponding slab of Sum assured.
      Even the companies which ask for the applicant to declare the policies taken from other companies perform a check before the issual of the policy. The Financial under-writer makes sure that the applicant is in need of this policy.

      Moreover; after the death of applicant happens, the nominee is not mandated to inform the Insurance company about the claims from other Insurance companies.

      1. manish says:

        Great Guru .. thanks for the information . You Rock

        manish

    3. Anu says:

      On a lighter note; AIG World gold fund was not existent 2 years back πŸ™‚
      Its NFO was in May 2008

      1. karthik says:

        :)… Thanks for pointing out Anu.. Redeemed this fund recently (Used to be arrogant thinking that Iam good in maths..But Iam so wrong.Need a calci to calculate the period I guess πŸ™‚ ) Got around 20% return I think.. Not mind boggling…but decent..
        Will invest in Gold ETF in future but only when I feel I need diversification (When I feel I have exhausted my equity/debt allocation)…

        Please check out my blog and leave your comments (Iam sure I have made a quite a few mistakes that you can point out) πŸ™‚

        Karthik
        .-= karthik´s last blog ..Basics of Investing : Investing Pyramid =-.

        1. manish says:

          Karthik

          Your timing has been great it seems that you got 20% CARG . Nice job . But the CAGR return since inception has been just 9% . However dont forget that this same fund has given -44.65% return in a single month (26/09/2008 – 27/10/2008) .

          Looking at return is great . Looking at bad performance is Critical . So if the volatility of the fund is extreme and this can lead to heavy fluctuation in your value in this fund .

          make sure you are a high risk taker before you take this fund .

          Thanks Anu for bringing up this point .

          manish

          1. karthik says:

            Manish,

            I agree.I got sold on this fund by an agent last year. I dont think Gold ETF’s are great from risk/return perspective thats why I stopped the fund.

            I had invested 28000 Rs and when I redeemed , the fund value was 33,170.66. Absolute return was 18.45 %. But I redeemed it in the 15th month. So CAGR will be lot lesser.
            Hope Iam correct.

            Whats your view on this?
            .-= karthik´s last blog ..Basics of Investing : Investing Pyramid =-.

            1. manish says:

              yes .. correct .. CAGR would be less .. I wont say the fund is bad . But risky πŸ™‚

              Manish

  23. Mahi Vyakaranam says:

    Hello Manish,
    Thanks for writing these informative articles. These really help us to know better about our financial planning.
    Can you please clarify 2 of my queries:
    1. I have a liquid cash of 4 lacks. I want to make a short term investment for a period of 2-3 years.
    2. I would like to make a corpus for my child’s education for which I am ready to invest Rs.7000 per month for a period of 15 to 20 years.
    I would be grateful if you can suggest what would be the best possible way of investment for the above.
    Thanks in adavce,
    Mahalakshmi.

    1. manish says:

      Hi Mahi

      great to see your comments for the first time πŸ™‚

      Here are my views

      1. The 2-3 yrs investment is a short term one and i guess its for some important goals and hence cant be risked with . therefore you will have to compromise on return . dont expect more than 10% a year (which does not mean you cant get more) . Better invest in FD’s if you cant risk money or go for Debt oriented mutual funds https://www.jagoinvestor.com/2009/11/list-of-best-debt-oriented-mutual-funds-for-2009-2010.html .

      2. 7k per month for 15 yrs can make you 35 lacs and for 20 yrs can make you 70 Lacs . This is good enough for child education . I guess you can reduce the contribution to the exttent you want to generate . return assumed is 12% .

      To achieve this goal , you should open PPF account (invest 30% in that) and rest invest in 2-3 good Equity funds (Tax saving is preferred , but you can go for non tax saving ones also)

      Manish

  24. pattu says:

    Dear Manish,

    I agree with reasons associated with decreasing term cover. I am just saying a little extra money wont hurt. My objections are of course on different issues as stated above. Yes someone from the insurance sector can help better.
    All other tips are great.
    Reg. Gold ETFs: The disadvantage is having to own a demat account which I think will cost about Rs. 400-600 (a year?) to maintain. Also not many people are clear about how to operate one.
    As a substitute for physical gold it works great but as an investment alone it works on idea of inflation of gold alone. So is the risk associate more than in equity?
    Also we will have to buy units every month and automatic SIP option is not there. Its of course great if we wish to plan for a child’s marriage. We dont have to worry about safety and purity (for now!)

    Thanks
    Pattu

    1. manish says:

      Yes

      Your concern over the cost of demat account is correct. I was of assumption that one already has a demat account and uses it . So I didnt consider the cost of Demat account as extra charges . That was its an overhead . Also investing money in GOLD ETF’s per month is another issue . you are correct on that too .

      Hence we have pros and cons , so now one can go for Gold etf;s if it suits him/her , else there are alternatives like GOLD funds (which is again a different thing)

      Manish

  25. Rajan T says:

    Hi All,
    For point # 8 I have a better option..Whenever i buy/create any Investment/Password I normally track that transaction in a Excel sheet and make it password protected.If there are some encrypted msg then I will let my Dependant know them and Periodically(once in a quarter) I will verify the password with them to ensure that they still remember them.So at any point in time my loved ones know the transaction currently present(For ex: Name of the AMC,Fund Name,Portfolio no.,SIP or Lumpsum,Ending year,Deducting back account) etc…Likewise twice in a year this sheet will be sent to her Email id for further convenience.

    Note : Sharing the Excel sheet with your Spouse is an individual decision.I trust my wife with my life (of course with my Sheet too):)

    1. manish says:

      Rajan

      very nice tip πŸ™‚ .. I hope people implement this , very logical and very effective .. Thanks for teaching us this important tip πŸ™‚

      Manish

  26. Debashish says:

    Nice Article Manish , As many has said , Point 8 is the most imp. Though I can not think how my parents will take it when I give them List Containing My Bank Accounts , MF Folios ,DMAT and Insurance details . Have you ever discussed Finance Plans with your parents . If yes that can be a good Topic .
    Apart from that I need to work on point 7 .

    1. manish says:

      The fact that talking about our finances with parents in our country is weird is very unfortunate . many families suffer because of this shyness we feel .

      Yes, I personally have given a Xerox Copy of my Insurance recipt and documents to my Father , Yes its looks little unusual , but thats the right thing πŸ™‚ . So just go ahead . An embarrasment of one time is better than regret of lifetime πŸ™‚

      Manish

  27. Rakesh says:

    Manish,

    Very good post, It would be nice to include Health Insurance too, i think everyone should take it.
    I like point no. 8, which i feel very few of us do. We had a similar experience during my dad’s death few years back.

    Rakesh

    1. manish says:

      Thanks Rakesh

      Health Insurance is important , but dont you think its not a “Tip” πŸ™‚ . Its more of a very important mainstream thing πŸ™‚

      Manish

  28. Manish says:

    Hi Manish,
    I have been reading ur blog’s for some time .You seem to be suggesting equity every now and then.
    Equity have given high returns only in the last 4 yrs(starting from 2005 ),If you look at the returns from shares from 1992 to 2004(12 yrs) it would come to measly 4-5%. See the article below.Returns from 1992 to Mar, 2007(15 yrs,i assume its enough to be called long term) was also 7% CAGR(Simple interest even less) . While calulating returns please dont just look at the figure of last 4 yrs. Do let me know your views.

    http://www.icmrindia.org/casestudies/catalogue/Finance/Risk-Return-BSE%20Sensex-Bank%20Fixed%20Deposits-Case%20Studies.htm

    And before thrashing FD’s suggested by older generation ,do some calculation as to what would the return be if invested in 9.5% PA in an Interest compunded FD in 1992 and same invetsed in stock market in 1992.

    I Agree that for Insurance one needs to take term Policy,And dont fall for any other insurance which are nothing but misselling by agents.Also would suggest to take insurance from LIC as its claim rejection ratio is around 1.5% where as for private insurers claim rejection ratio can be as high as 23.5%.Imagine paying all the premiums in vain if the claim is rejected when the needs are utmost in case of unfortunate death.

    Thanks

    1. manish says:

      Wow !! .. We have some thing to analyse here very closely . The doubt you have is very beautiful in itself and there is a even more beautiful explaination for this .

      Case 1
      ———-

      So the Sensex on 31st Dec 1992 was 4285 and on 30th Mar 2007 it was 13072.10 . The compounded return for this 15 yr period is 7.72% . Accepted πŸ™‚

      Case 2
      ———-

      However just shift this window of 15 yrs by 3 months back (from 1 Jan 1992 to 2 Jan 2007) , The index values were 1957.0 and 13942.0 . The CAGR return in this case comes out to be 13.98% for this 15 yrs duration .

      So Case 1 is 31/03/1992 – 30/03/2007 : return of 7.72%
      Case 2 is 01/01/1992 – 02/01/2007 (Case 2 – three months) : return of 13.98%

      So the gist of the analysis is that this 15 yrs period (Case 1) is very special tenure in our stock market . You should not concentrate on this particular 15 yrs period .

      Just like 2003-2007 was the exceptional period in stock market with more than 40-50% annual return . The same way 1992- 2002 was also a period which was very special (in a bad way) . In this 10 yrs period the index almost didnt move at all .

      Other point is that you are looking at one time investment option . SIP investment every month would have given a very different result (a better one) because there are lot of ups and downs in market during that time touching highs and lows several times , so SIP would have shown its magic of averaging down the cost .

      I have always projected 12-14% of return from Equity (Equity Mutual funds) over long term and always said that Equity risk goes down in long term . But never said that the risk is 0% . There will always be some element of risk and this 12 yrs of period from 1992-2004 is that period which carried that equity risk when things didnt move much . You should not concentrate all your mind on that period . Concentrate on average 15 yrs period . If you look at all the 12 yrs period possible in Equity history , you will see that the least return was in this particular 12 yrs period πŸ™‚

      I guess I cleared your doubt . I must say that this was an awesome question and tought me something today i didnt realise πŸ™‚

      Are you convinced ?

      Manish

  29. Kautilya Singh Parmar says:

    Hey Manish,

    Thanks for this amazing article. It’s playing a big roll in my Financial Planning, Insurance and Investments.

    A million thanks to you.

    Regards,
    Kautilya

    1. manish says:

      I am glad you are getting some help πŸ™‚ .. please share some tips which you have discovered your self πŸ™‚

      Manish

  30. Rahul says:

    Good one. But i would like to bring to your notice one point regarding term insurance. 4 months back i wanted to get a term cover of Rs 50 Lakhs & i thought of taking 2 policies. But the cost works out to be much higher than taking a single term plan. This is bcoz of the discounts avaliable for >=5000000 covers.

    Try this out with the cheapest policies – Aviva, Brila Sun Life & now Ageon as well. 40 lakhs cover may be more expensive than a 50 lakhs cover. So at times it may be better to have a single policy ( in my case it saved 3 grands per annum).

    However i have a question regarding this – Which do u think is a better Insurer in terms of claims procedure & other stuff? Icici pru, Aviva, Birla or Ageon

    Reg’s
    Rahul

    1. manish says:

      Rahul

      If you are talking about iTerm plan , then yes the cover for 50 lacs would be less .

      But if you split the cover into 2 from two companies does the premium differ by that much (3k) ?

      If I check my cover of 50lacs for 25 yrs , a single premium comes to 9,486
      But if i split it in 25 25 of two cover , the total premium of two least costly premium are 10,127 ( 4,550 and 4,577 )

      So the difference of 641 .It depends on your age , cover amount , tenure . We can generalise that spliting the cover can increase the cost by 7-8% (using my example) .

      Regarding claim rejection , you have to see the report from IRDA . I am ignorant on this πŸ™‚

      Manish

  31. Nikhil says:

    As usual, Interesting Article..

    Regards
    Nikhil Shah

  32. Narinder Kumar says:

    As usual, very well written TIPS on “PERSONAL FINANCE”. All the TIPS are worth giving a thought (I would say worth “implementing them”) for one to be a satisfied investor in life.

    Kudos to you, Dear Manish.

    Regards,
    N K Rana

    1. manish says:

      Thanks Narinder

      Manish

  33. pattu says:

    “term insurance premium is fixed generally”

    Most companies don’t seem to have this in writing. (SBI life has) So we will have to assume inflation could enhance the premium.

    I don’t like two term policies because:
    1. I don’t see why I should decrease my cover a latter date. My term policy will hold until I earn and if I can afford the premium now I can certainly (hopefully!) afford the premium 30 years later (I can say this because of my govt job!) As I mentioned before the extra money is always good.

    2. I think getting two policies involves hassles even if we forget the slight increase in total premium.
    Once I declare the first policy I am obligated to disclose all details of the policy also. At my age large covers will not be given without medical tests. Therefore I maybe asked to divulge details of the tests etc. taken with the first company If I refuse, the company could simply refuse to give the policy. There is no written policy on this so the company cna do what they like.

    Also ambiguities in test results especially if there is 3-6 months gap between policies may for someone my age lead to larger premiums in the second. For example higher BP or cholesterol values.

    3. At the time of claim settlement the following documents have to submitted in orignal:
    # Duly filled Claim Intimation Form
    # Original policy document.
    # Original Death certificate issued by the requisite authority.
    # Last Attending Physician’s Certificate in original.
    # Past & Present Hospitalisation / Medical Documents.
    # Cremation / Burial Certificate.

    The family will have to get two originals soon as death occurued. How many families will do that especially if they don’t have much experiences in such matters or are not educated. Even if they are
    a grieving family will forget and they wont be able to get original documents from many sources later unless they bribe people. If they can’t they they can make only one claim. Have you considerd this possibility? I just thought of it now!!

    I think this is a serious drawback of two policies. Why should I put my family through such trouble??
    Don’t look at cost when you buy term insurance. Look at claim settlement rations, documents needed for claims, and if possible find out how long death claims take, fill a death form and instruct your family what to do upon you death, seal it an envelope and ask them to open it in the event of your death. Hopefully you will live through your policy and open it yourself (to burn it!!)

    Even if by some remote chance the said documents are available one insurer can consult the other before settlement. There is nothing illegal about this. They can investigate what they want. This may result in delay

    I had my doubts earlier but now when I was writhing this, I am now clear I will not take two policies.

    1. manish says:

      Thanks Pattu

      We have some things to learn here from you and some other important points to look at .

      First I had no idea of claim settlement documents required . Are you sure of this? If answer is Yes , then i am wondering that there are enough number of people who hold more than one policy , how will it work for them . Also if a person wants to take a second policy later , he has the same issues like what you explained . I guess we need more confirmation on this point from some one in Insurance sector πŸ™‚ . Guru, are you listening ?

      Also for people who are 35+ age , they have better idea of their future , their job stability etc than a 25 yrs old , so 35+ yrs old can better go for one policy , The reason I say that you might want to decrease your cover later is that even your salary , Investment corpus will be growing and responsibilites will be clearing off one by one .. There may be some cases where one wants to decrease .

      What do you feel about this ?

      Manish

  34. Praful says:

    I have read ur links which u have attached with the Gold ETF pt. (4 reasons to invest in GOLD, and it’s comments) from this i got the conclusion that it is not advisable to invest in for long term as it has lot of charges it is so ?

    1. manish says:

      No not all all ..

      The charges are regular charges for Demat account and the transaction charges while buying the ETF’s .. Why did you think that ?

      Manish

  35. Praful says:

    Hi
    Here is ur another awesome article as usual. all the points u have mentioned are really good and one should follow those to make his life painless/comfortable. the points 8,9,10,11 i liked most. I think the 11th Pt is more important for all youngsters 90 % young people (mostly single) spend first after that if money remained then they will think to invest. One doubt about the Gold ETF If i want to buy a gold for my marriage after 3 yrs. so is it advisable to invest in gold ETF through SIP?

    1. manish says:

      thank Praful

      All you should be concerned is the price of Gold now and at the time of using it . So the main question is wheather to buy gold or not .. and NOT the confusion between Gold Etf and physical gold ? Why are you confused .. you first tell your concern about going with Gold Etf

      Manish

  36. Arjun says:

    Hi,
    Great tips indeed and my favorite one is #9 . An eye opener to lot of people who compare their returns with others and loose sleep over it. πŸ™‚

    1. manish says:

      Nice .. really amazed to see that you have liked the 9th one most .. You are different and Smart πŸ˜‰

      Manish

  37. Vivek Rastogi says:

    13. Equity for Long term , Debt for Short term – My favorite point.

    I want to buy a flat but 6. Control your Credit taking Habit is not allowing me.

    I will wait and then will get it in future from the returns of Equity.

    1. manish says:

      Nice

      Better go for a small flat for now for living purpose . Need is first , desire is next .

      Manish

  38. pattu says:

    Dear Manish,
    Reg. two term insurance policies. Maybe you could mention two things are important
    !) Both companies should know about the other policy.
    2) Its important to get a signed acknowledgment of the above declaration from both companies
    This plus total and complete honesty while taking policies help in claim settlement

    Personally I am not fan of two polices the premium for the insurance I need is presently 3-4% of my gross salary. Premiums may increase every year by lest say 5% but since my salary also increases at worst the premium will be 4-5% Since its a necessary expense I don’t mind. Also there’s no such thing as too much money. So if I die in the last few years of my employable years I am sure my family wouldn’t mind a little extra money in addition to my retirement corpus. So a single policy suits me fine

    1. manish says:

      Pattu

      The two points you mentioned are good .

      I am not sure about why dont like 2 term insurance ? Explain with example . Also the term insurance premium is fixed genereally . Why did you say that it will increase by 5% every year . If you have 1 policy with premium 10k , I guess breaking it into 2 will increase the premium by 400-500 more .

      Manish

  39. karthik says:

    Hi Manish,

    Good Article. All the points are good but my favorite is 10. I bought a house 3 years back (Bad idea..:)) and took an insurance along with it, which was pushed by UTI bank. paid 72000 rs for that one time, which was added to my loan amount.

    Iam not bothered by wheather it is the good or bad policy or if I was taken for a ride by UTI. That is a sepearate debate. But what riles me the most is that I dont even know what all the policy covers. I was searching recently for the policy document and found out that the policy holder is UTI bank and I just got a one page document.

    I also got sold out on couple of LIC policies earlier on.

    I guess that it is the tution fees (albeit an expensive one) I paid. Now Iam so cynical, i even check pricing of each item in the grocery store. I jump out of the window if some utters the word ULIP. πŸ™‚

    1. manish says:

      Better you contact UTI and get clarification about all the cases . Ask them “what happens if” type questions .

      Good that you are looking closely for whatever you buy .Just dont loose your sleep over it πŸ˜‰

      Manish

  40. Swathi says:

    Good points Manish. I liked #7 and #8 which I have to start doing. You can add some more :
    1.Plan for retirement ( assuming your children will not take care of you )
    2.Take health insurance ( you can club this with #1)
    and lastly spread the knowledge of financial planning to everyone

    1. manish says:

      Hehe

      1st point was hilarious πŸ™‚ . “Assuming your Children will not take care of you” .. Good one .

      Manish

  41. Anup says:

    Hello Manish,

    I have been reading your most of the recent blogs with keen interest. You have putforth all the concerns in easy way.

    I liked point 8 and 11 from this blog.

    @point 8 – Individuals don’t feel it necessary to ‘reveal’ there investments to their sibblings (I don’t know why… but most of them hide). So investment of such individuals are not utilized well after they are gone.

    @point 11 – From my personal experience – Till my marriage happened, i never thought of saving some money for my near future. Always spent money on eatings for myself and family members.

    But now I have started taking keen interest in my financial planning. Kudos to your blogs.

    Thanks,
    Anup

    1. manish says:

      Thanks Anup

      Congratulations on understanding that you should take keen interest in Financial Planning , the roap map ahead should be easy now . We are all here to make it happen , To learn and grow with each other . So you are a new reader , look at archive page : https://www.jagoinvestor.com/archives to find out other topics .

      Which article was your most favorite till now

      Manish

      1. Anup says:

        My most favorite blog of yours’ is:

        Why Endowment policy must be avoided: https://www.jagoinvestor.com/2008/10/why-endowment-policy-are-never-best_08.html

        The real eye-opener for any level of investor.

        ~Anup

        1. manish says:

          ok

          Nice to know that , you should also look at couple of posts on SIP like Magic of SIP . that would give you better perspective of SIP

          https://www.jagoinvestor.com/2009/03/sip-magic-part-1.html
          https://www.jagoinvestor.com/2009/03/magic-of-sip-part-2.html

  42. Sidd says:

    Good article.

    My observations

    2 .Invest in Tax Saving Products for long term goals
    Are there any tax saving products for NRIs ?

    4. Investing in GOLD ETF’s instead of physical GOLD
    Buying GOLD ETFs instead of physical GOLD, Still not convinced from the article why is it better. Is it true — Are all GOLD ETFs price action is 100% dependent to Gold price or only some part of it ?, I found some discussion regarding this here http://in.answers.yahoo.com/question/index?qid=20091104030116AAIUwZK

    8. Share your Financials with Family
    Its a great idea to start with. However I have seen grown up children taking advantage of financial situation of parents and ultimately stealing or spoiling it. However sharing everything with your partner is good.

    1. manish says:

      There are mixed information about where can NRI invest for tax saving , Please start a thread on forum to get more info on this https://www.jagoinvestor.com/forum

      Regarding GOLD etf’s what is your confusion exactly , tell me in details . Gold ETF’s are tradable instruments , so if gold is trading at Rs X in market , then ETF’s would be anyways near that price , Its generally real time only .. Why is that a concern . explain .

      Sharing your info with Children does not mean tell the account passwords . just let them know that you have insurance and tell them where are docs , tell them how you are investing and for which goals . Just share more details with your spouse

      Manish

      1. pravin says:

        Investigate the Gold ETF in question. For example if you buy start tracks GLD in the US stock exchanges, it is not a one to one ETF unlike the Benchmark Gold bees in india.ensure that the custodian is trust worthy (bank of nova scotia for BM). and there is indeed 1 to 1 correspondence between the gold in the custodian’s vault and the units alloted to you.any fractional reserve scheme based Gold etf can cause grief because of counterparty risk.

        people buy physical gold not only for marriages etc.but also as protection against paper (fiat) money.it is the ultimate isurance against economic disaster.so gold etfs should be carefully monitored because it is dependent on govt policies (govt can easily confiscate it -if things become ugly).
        i may sound paranoid here,but history teaches us to be always alert.roosevelt had actually confiscated all US citizens gold from 1945-1973.
        so there, understand what gold represents.its not just a piece of paper.

  43. Vishu says:

    Hi Manish…good Article as usual..My fav is Point 8. everyone thinks he/she is not going to die.
    In general if any family member say this to parents or older ppl to share this info, Older ppl think otherwise. its difficult to amke them understand you know.
    Well I already saved my Details in a Document and it is saved on my husband Email id , but he also says this is not required and I overdo stuff…
    But Still I understand the importance of “Share your Financials with Family”.
    Keep posting… πŸ™‚

    1. manish says:

      Ya Vaishali

      I can understand this . Parents will still not understand this , but its great that you understand πŸ™‚

      Saving your docs detals in your spouse email is a nice tip .

      Manish

  44. Siva says:

    Every tip here makes real sense at somepoint in our life. My favourite is tip # 10 “Investigate everything before you Buy it ” is really a good one which many of them miss or they investigate later (including myself).

    1. manish says:

      Yup .. i can understand , this is common problem . You must be realising that every min of time spent on investigating the product will save you an Hour of frustration later πŸ™‚

      So this point applies to you ? What product did you buy ? ULIP ?

      Manish

  45. Yogesh Tiwari says:

    Implementing point#8 right now. You are so very right on that…I m going to create an excel with all my investment details, account usernames/passwords, cash in bank account and also, I m going to club all my financial statements in one file.

    On the lighter note….Should I keep a few signed blank cheques too? Maybe this ll save my loved one from trouble of claiming cash from my bank account or can misuse them otherwise….LOL.

    Regards
    Yogesh Tiwari

    1. manish says:

      Yogesh

      Better tell your password verbally to your loved ones and better you encript it (like putting it in reverse order or anything else which is easy to decript and tell that to your family) .

      Putting empty password can be a security problem and you should make sure you know what are the affects .

      Why do you want to put empty signed cheques ? Anyways after you the accounts will be accessible by your nominee . Make sure you put someone as your nominee .

      Manish

  46. Guru says:

    Excellent Article Manish!… I guess readers will find this article useful as a Financial Resolution for 2010!! πŸ™‚

    1. manish says:

      Yeah .. Resolution for 2010 can be a good title .. good one

  47. Guru says:

    # 1: Find a right Financial Advisor
    # 1: Read JagoInvestor πŸ˜‰

    1. manish says:

      Find a Right FA is good one .. but mainly i was talking about things which they can take care of themselves πŸ™‚

      Manish

  48. Amit Kumar says:

    Hey Manish 17 is a strange number to stop at. We till now had 7, 9,11 or 21 tips :D.
    you can add some more points:
    1. If “it appears to good to be true” then probably it is not – for e.g: Look at the daily advertisement of real estate companies giving 12% – 15% assured returns.
    2. Learn simple maths – B’coz in financial world What you see is not what you get πŸ™‚
    for e.g. – Look @ my latest article @ http://www.finwinonline.com/2009/12/12.html which tells you why opting for a 12% discount on upfront payment plan for your dream home may be costlier than Construction Linked Plan?

    And my favorite goes to 8 – b’coz if you don’t follow point no. 8 – all the rest becomes useless as most of us do all the other 16 points to make our family secure with or without us :).

    1. manish says:

      We stop at 17 , Jagoinvestor is different , we dont follow others πŸ˜‰

      1. that was a really nice one .. I should have included that πŸ™‚

      2. nice .. good one

      Manish

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