The biggest financial advice – Saying NO

POSTED BY manish ON January 2, 2012 COMMENTS (103)

“No” is one of the non-complicated word – Simply two letters. Yet saying “No” out loud is hard for most people. Welcome to the world of personal finance where saying NO is tough and 90% of the people reading this blog might have a messed up financial life because of a single reason that they didn’t say NO to a lot of things. Let’s start with my favourite ‘Life Insurance’. Almost everyone I have interacted with, had/have a sad story of some uncle selling him (wait wait …. the correct word is ‘forced him’) to buy a life insurance plan because he had to complete his target or his job was at danger or because he was trying to sell life time product. Saying ‘NO’ was not an option because ‘it won’t look good’ (I am sure it looks amazing right now).

“Yaar – Can you help my brother as he needs a car loan. Can you guarantee his loan, they want someone from the city itself and could you just give your PAN Card to my brother? As it is part of the procedure, kuch hota wota nahi hai ” . You can’t say NO. Months and years pass on … Friend’s brother loses job, can’t pay the EMI and obviously you are the defaulter now! Your home loan, car loan, credit card all kind of applications are getting Rejected. Either live with this situation or pay the balance Rs 4 lacs. This is the cost of avoiding a NO.

Saying No in Personal Finance

Are equity markets risky for you? And you want a equity + insurance product bundled which gives tax benefit and also gives benefit of rebalancing on its own, but you want guaranteed returns? Welcome to the world of “Highest NAV products“. Now you get highest NAV (but we will decide how the highest NAV is controlled… he ha he).

Wait… but it would be amazing if I can buy at the lowest NAV product. Arre no problem sir, jaan bhi haazir hai. Just close your eyes give me 10 min… zoom! Lowest NAV ULIP is here! Anything else? Now please don’t say NO. We did whatever you wanted, please be kind and don’t be so rude, please write a cheque. What? I can’t invest lot of money in one go… Ok then, we have a monthly investment option available. We can try every weekly too if you want.

Inventions in SIP and Insurance

There are “inventions” in SIP … SIP in Stocks (It does not work, think why) , weekly SIPs, daily SIPs, minute SIPs… we will extract the rupee cost averaging concept… Normal SIP, Flexible SIP, increasing SIP, decreasing SIP – They can read your mind.

People were scared of ‘Term Insurance plan’ about it not giving back the money paid as premiums – so let’s introduce Return of Premium Term insurance plan, now no one can say ‘NO’! We are giving insurance money if you die and your premiums back incase you live for the term of the insurance… what else you will want to say YES? Please be human and take it. I hope you are getting what I am trying to say – The more options we have, the more we believe that we need it. You need to learn to control your decisions and say ‘NO’ to most of the things. There are minimal options which you need and keep things extremely simple.

There is no reason in this whole world to have 10 insurance policies. There is no reason to have 15+ mutual funds in your portfolio. There is no reason to have try to beat the markets with direct stocks if you don’t know the rules of the game in equity markets or you are trying to learn the game of equities or have a past record of beating mutual funds or even index returns. There is no reason to have different kind of policies. There is absolutely no reason to own more than 2 credit cards.

There is no reason to have more than 2-3 Health Insurance products & overall there is no need to have savings account in so many banks unless you have extra cash to pay for the bank charges. However almost every portfolio we come across, we how there are many area’s where investors went shopping with craze at some point of their financial life . I have seen 45 insurance policies (yes , LIC policies) , 100 Mutual Funds in a portfolio (I really suspect the guy thought they are SHARES) , 12 health insurance plans , 8 credit cards with a close friend, and one of my relative with 7-10 bank accounts (with that attitude of “arre Rs 500 pada hai account me , rehne do, ja hi kya raha hai)

So what you need to do?

If you want a fairly simple financial life, all you need to have is:

  • 4-5 good equity diversified mutual funds or balanced funds
  • 1-2 term plan
  • 1 health insurance product
  • 1 credit card
  • 1-2 bank accounts
  • Financial Discipline to say ‘NO’ to what you don’t need

We said No at wrong places

Now just like we didn’t say No at wrong places, we have said NO many times at right places. When we met an agent who was not ready to share his commissions in exchange of authentic and right advice, we said NO, we don’t want you. When we meet an advisor who didn’t give us discount on his fees but was a high quality advisor, we said NO, we won’t need people like you. When we wanted to go to a workshop or seminar on finance & money and we came to know that its PAID seminar, we said – Kya faaida – NO we don’t want to come. 

I want to take this message very strongly in 2012 start and follow it though out your life – You don’t need to do a lot of advanced things in your financial life, provided you do not make a lot of mistakes and are ready to keep things simple and an attitude to say NO to fancy and complicated things in life . Thais the conclusion of this article. Also I am going to break a very good and big news to all readers in few days. Any guess ?

 

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103 replies on this article “The biggest financial advice – Saying NO”

  1. Harpreet says:

    I just said NO to the ICICI Pinnacle scheme. I just want to them for some other purpose and due to some reason disclosed that I am interested in Mutual funds only (no insurance). They started explaining about this “Pinnacle” plan and I was thinking why are they trying to explain me (may be cause I am a NRI) insurance+investment when I have already told them that this is NOT what I needed. Anyways,when they were done, I told them that I will get back to them. I went out, called them and said NO. Now I know this was a good financial decision

    1. Harpreet

      Good to hear that .. this was the best investment you did 🙂 ..

  2. DK Bhardwaj says:

    Dear Mr Akhtar;

    Let’s not malign the industry without knowing the facts. The consumer is as much at fault. I would suggest if you could please manage to read an article in Premium Magazine few months back with a title Mis-selling whom to blame.

    In my view it was a well balanced article attributing blame on all i.e.IRDA, Insurers, selling team and clients as well.

    Very recently, I was a witness to a conversation between a client ( fortunately the parent too was present) and an advisor. It was obvious the youngman had come at the behest of his father. The starting line was,” give me in brief about the policy and meet after 2 days to collect the cheque.” The agent was flabbergasted for he was ready with his lap top, literature and aegerness to explain after ascertaining the need of young man. The son left in no time. The father commented,” Look at him, he has all the time for partying, spend all time at car dealer or electronic stores but not for a long serious commitment like this.” He even consoled the agent if his son would keep his words for next appointment.

    Sadly, Jago Investor is, unfortunately busy bashing insurance sector and not focusing on pitfalls created by IRDA for the industry at large. As SEBI killed MF industry, IRDA is all set to do the same to insurance sector.

    Jago Investor should learn from UTI with their weekly article dealing with educating the clients, both for MFs and insurance without showing any bias. Even ICICI comes out periodically to educate masses.

    Hope it carries some message for readers of Jago Investor which to my mind is basically catering to arouse emotions of illiterate or semi literate masses on the subject of finance and insurance though at times some good suggestions do fall in the way. May be due to inadvertent intentions.

    DK Bhardwa

    1. Satya says:

      @DK Bharadwaj – SEBI killed MF Industry??? thats news to me … since i redeemed a good amount at the beginning of the last year for a tidy profit. Yes, they made it more investor friendly, by stopping sales load. I am continuing with SIP. I am now convinced that you are a ULIP salesman. I dont expect objectivity from you, but it is too much that you conveniently blame the buyer!! Dhirendra Kumar of Value Research is a much respected person in the MF industry and he continues to berate the ULIP industry. In fact, had SEBI not stepped in, the ULIPs would have continued swindling (yes, it is that) innocent investors with more and more innovative products. Of course, I as a victim of a clever ULIP ploy will continue to call them thieves!!!

      1. DK Bhardwaj says:

        Your views are respected. You and me buying MFs does not make a difference to the industry at large. We got to have a look at sales figures and number of investors dwindling which makes the true picture. Mr Dhirender of Value Research is again a person who talks of MFs, reasons best known to him. I am talking of statistics. The industry provided opportunity to huge number of unemployed youths to make a living. With no commissions accruing to them, why should they venture out in field to procure business. There is no charity Sir. If commission did not bring about loss of business to industry of MFs why has SEBI started with monetary compensation with each investment. For your information, people who continue with MFS is meagre compared to ULIPs because of freedom to stop anytime exists with MFs and a fixed minimum period clause with ULIPs which forces people to continue to invest and becomes habit forming towards savings. More importantly, ULIPs provide higher value of the two, Fund Value or Insurance cover in case of eventuality. One never knows when a truck would hit from behind. Secondly we all know our Date of Birth but NOT DATE OF EXPIRY. We have a responsibility towards our families and ULIPs protect that aspect which MFs do not. Many years ago, India Today carried out an article at length about MFs and ULIPs and ULIps were the winner after about 8 years of regular investment.

        Investment is a long term strategy, any short term measure is speculation.
        At the end of the day, we all to individual views and strategies but on a note of caution, statistics prove not views on internet.

        Thank you.

  3. S S says:

    Happy new year. Your hatred with LIC continues. I guess it takes some common sense to know where to say “NO”. For sure our hesitation and careless attitude plays a role in messed up portfolio. 7-8 insurance policies, 4-5 health insurance, savings accounts-half a dozen, and countless fds, picture of a screwed potfolio. I wonder how can one remember premium/withdrawal dates?

    1. DK Bhardwaj says:

      Dear SS;

      It is not the number of policies which is worrisome but taking a call without understanding the product. The world body, LIMRA has viewed that a average a person must have 7 policies maturing at different times depending on goals set while buying. Yes, I agree that Manish has bias against regular insurance plans, reasons best known to him or his research which is contrary to thinking of wizards in the field. SS, please accept that large number of FDs and Health Plans ( I would not agree though) are largely due to circumstances. I may have spare money today for an FD and it gets repeated, hence the reason for multi FDs. and MFs. As far as reminder of premium and maturity dates, companies and agents are supposed to advise provided one has not changed the contact details or if has, should ahve informed the agency. Now, with internet it is so much easier.

    2. SS

      How is this article related to LIC 🙂 .. Its a general suggestion .. nothing related to LIC

      Manish

  4. arjun says:

    An excellent article as always.However , there is a saying which was drummed into our heads in medical school – The eyes don’t see what the brain does not know ! Hence , financial education is the need of the hour to avoid situations where people collect LIC policies and MFs like shares.I was guilty of not knowing what I needed when I was duped into buying an ICICI ULIP in 2009 – I went to the bank to enquire about MF – I had only just heard about mutual funds and did not do my homework well.The RM managed to convince me that the ULIP he was selling was a type of MF.However,since that unfortunate episode,I have been trying to upgrade my financial knowledge through blogs like yours and http://www.subramoney.com/ and hopefully the same pitfall should not happen again – touchwood!

    1. Arjun

      Good to hear about your experience till now .. What are you going with the ULIP at the moment ?

      Manish

      1. arjun says:

        I am pretty much stuck with the ULIP at the moment as cancellation charges are quite high.I might give it up after a couple of years.

        1. Arjun

          How does it help you to give it up after few year ? have you compared the two cases of surrendering now and surrendering later ? Which one has a better prospects ?

          Manish

  5. jina shah says:

    Dear sir i would like know which term insurance is good for me. age 43 to age 70
    sum aus. is 50 lacs. please advice me i will go with lic or a private co.

    1. Jina

      There cant be a suggestion done like htis .. you have to decide your trust level .. I am totally fine with pvt companies , are you ? There are options like Aviva Ilife , Kotak epreffered and many others

      Manish

  6. jina shah says:

    very nice topic sir. have great start of new year.

  7. Gull khan says:

    Manish

    Happy new year.
    Wishes wishes..

    1. Gull

      Thanks .. happy new year to you too

      Manish

  8. KRANTIVIR RAJPUT says:

    Manish & Team…

    First of all a very happy new year.
    Excellent article..once again . I have gained immense knowledge….and after reading ur blog i am able to cross question technically to telle-callers who now bang the phone after my questions…..good work.

    1. Krantivir

      Good to hear that 🙂 … keep make those guys bang the phones 🙂 . love it

      Manish

  9. Saurav Sinha says:

    Happy New Year Manish to you, JI team & fellow readers …

    Good article to start with .. Any plans of entering into Politics?? 😀

    1. Saurav

      Happy new year to you .. Why do you want us to enter into politics ?

      Manish

      1. Saurav Sinha says:

        Coz U’ve a large vote-bank … just kidding yaar … but whatever U r planning, its 100% sure to benefit many ….

  10. Satya says:

    Manish – Excellent advice … Unfortunately, I am guilty of investing in the HDFC ULIP (Double benefit – no less!!). But mine was a case of “kuladi pe pair de maara hai”!!! I actually compared b/w multiple ULIPs, asked a lot of tough questions to the ULIP salesmen and then went ahead and invested (or should I say donated!) in HDFC ULIP … I lost heavily ….

    First up, for the first few months, there was a huge premium redirection fee (i hear this is removed now).

    Then, on probing and writing nasty emails, involving IRDA, I came to know that Double benefit is nothing but forcing me to buy waiver of premium rider. During the sales cycle, I had asked this question specifically and the HDFC sales guy had given a vague answer.

    Now, every month I when I get 2 sms’s reminding me of the ULIP investment, I kick myself!!!

    Should I continue investing in this? I have put in 3.1 lakhs so far and the current value is less than 2.8 lakhs. Or should I just withdraw …

    I have promised myself never to invest in any ULIP now .. And I also have a good advisor to whom I dont mind paying charges ..
    Satya

    1. DK Bhardwaj says:

      Dear Satya;

      You will get many answers to your predicament. Let me give a shot. Firstly, any investment in market viz; ULIPS, MFs, Shares etc are a long term investments. Today, globally a big melt down is felt, you would not be fair to be excluded from the aftermath. Did Tsunami differentiate between A and B? It swept all. One needs to respect that ULIPs can’t be construed to be a short term plan and it is an investment and not speculation, a term you may be getting confused with. And very importantly, it provides a life cover and higher value is payable i.e. Fund Value or Sum Assured which is not the case with any other investment vehicle.

      The illustration gives all charges levied and permits return of policy without obligation within 15 days of receipt, a very fair game.

      So let us not blame the product but your personal judgement.

      1. Satya says:

        DK – You almost sound like the HDFC Life guy!!! But, I did say that my judgement could have been better. It is a fact, though, that the product sucks. There is no doubt about that. I talked abt the current valuation, but the scenario was not different in last Jan as well when I was just breaking even … And the investment started in Nov-06. Now if some guy tells that this horizon is not long enough, then I should doubt his judgement …

        Also, the policy document never mentioned anything about the waiver of premium charge. The statements had just one head called “Charges”. I had to send nasty emails before actually getting a response about the charge breakup. And then I noticed this and got in touch with IRDA etc ..

        And the fund performance has been below par … There is no body that monitors fund performance across ULIPs (like you have for MFs) …

        So, the fact is ULIPs have been devised by clever and devious minds to make a fast buck at the expense of gullible investors. It is nothing short of daylight robbery. You can also see all the objections that SEBI raised off late saying ULIPs should come under the purview of SEBI as they are investing in the stock market. When this happened, IRDA woke up and put in a few more rules tightening the screws on ULIPs.

        Bottom line, while my judgement was not on the spot, the product also was awful.
        Satya

        1. KRANTIVIR RAJPUT says:

          @ SATYA. Kudos to identifying DK Bharadwaj as a ULIP Salesperson!! Good answer when he said “SEBI is killing MF industry” (hahaha….)

          1. dk bhardwaj says:

            Dear Mr Krantivir;

            My observation was for both MFs and ULIPs which have gone on down slide because of regulators undue interference. If you read Monday report in financial sections, both these products have had a great fall in terms of numbers and monetary values thus impacting adversely the investor, companies and national exchequer.

            Further, it is irrelevant to pass a judgment about who is selling what because the blog is open to all and free for discussion and to share views and experiences. For your personal information, I deliver talks and write as well on financial matters of various types.

            Thank you.

    2. Satya

      Its not always the returns of the policy , but also how much comfortable you are with the policy and the way it works ! .. You should consider that very strongly else you will not be able to justify it in long term .. So if you are not too much happy with your relation with the ULIP , better not show too much of your love to it .. better stop paying further premium and redirect it to some thing which you understand well and can also connect to

      Manish

      1. Daniel Madre says:

        Satya

        My guess is that this waiver of premium rider is that in case of event, the nominee gets the Risk cover amount immediately and the insurance company continous to pay the premium on your behalf and the Fund value is given to nominee on maturity. So check the charges for this rider and if it is minimal, take a breath !

        You could have gone for lower premium and topped up during the crashes instead of going for maybe 50k per year. Now whether to discontinue, my advise is don’t because there would be minimal, maybe less than 2% charges of premium.

        Your fund seems to have the potential beccause the difference between the current value and the actual amount is very less, if you deduct various charges and mortality charges and then consider the fund value against actual investment, it may be better. and finally returns for the last 4/5 years have been stagnant for most of the funds because of market condition.

        Also check in which funds your ULIP PLAN is investing. See their Performances for last three years and since they were launched. If required you may switch between these funds.

        🙂
        Daniel Madre

      2. DK Bhardwaj says:

        Dear Manish;

        I think Satya is comparing MFs with ULIPs. One is not aware of age to appreciate mortality charges etc. Also, ULIPSs are one product where insured can redirect or change the investment strategy at will. Yes, it is a tricky situation but one can’t expect all benefits all the time. I am sure if the markets were booming this kind of repulse would not be visible.

        1. Yea agree with you that ULIP rules can be changed by the insurer at his own terms later .

          What do you think should be Satya’s action then ?

          Manish

  11. Deepa says:

    Thanks !!
    Looking forward to many more such insightful articles.

    1. Deepa

      Thanks .. you will surely get more of it

      Manish

  12. chandrakant says:

    Excellent!
    NO is very IMP

    1. Chandrakant

      Indeed !

      Manish

  13. Rakesh says:

    Manish,

    Excellent post, what a way to start 2012.
    Keep up the good work.
    As for the big news………
    With the wealth of knowledge in financial planning and various posts written over the last 3 years, you could well compile them into a book.

    Rakesh

    1. Rakesh

      Thanks for your comment . Regarding the big news .. Was it your guess or you heard it somewhere ?

      Manish

      1. Rakesh says:

        A hunch….. Are there any prizes for guessing?

  14. Abhay says:

    Hi Manish,
    I am not clear why we should have at-least one credit card. Also, little curious why personal accident policy could not find place in the list ? 🙂

    Abhay

    1. Abhay

      Credit cards are the best way for a person to build a credit history in India .. even though one does not need a cc , he can go for it for this reason

      Manish

  15. DK Bhardwaj says:

    Dear Sir;

    I do not miss out on your mails. I respond only when I see something amiss or grossly overstated like in this article of “NO”. Last I wrote was about Highest NAV Plans and very graciously, you accepted my views.

    I wonder if you are aware that global statistics show that a mere 4% people on an average continue with Term Plans and MFs for the term chosen and so is the history of any investment where there is no compulsion. I bet majorly motor insurance is done by virtue of legal hassles and penalties involved. How many of us take a home policy, a dismal low figure that too irregular.

    Life Insurance is a growing need for many factors involved. In the initial years of earning, one may not be able to afford large premium but as one grows in profession and family responsibilities, the requirements increase, hence additions of new plans for various phases of life.

    As far as forced selling is concerned, well, answer is simple, if a seller is on mercy and gratis of friends/relatives, one must be on guard. I do not think any insurance company sets targets. On the contrary, one is supposed to raise the bar for one’s personal growth and acceptance in the market. How many people in the country know about MDRT, COT, TOT, LIMRA Awards or education like LUTCF, CFP etc to help them gauge the attributes of an Advisor and approach them with due weightage. I wish your articulated attempt was more towards educating rather than branding without authenticity. I would blame IRDA, who did not learn a lesson from SEBI while curtailing the commission structure. Both industries have suffered immensely so have people attached with the industry. If I may ask you, which shopkeeper declares the margin he is making but insurance sector and mutual fund industry must announce. There is an old adage which says,” Never ask a woman her age and a man his earnings.” IRDA and SEBI flouted both and results are visible.

    So is the case with number of bank accounts, there can be professional compulsions, easiness to operate, family being able to use a closer home bank and host of other issues though one should keep the number of accounts to minimum to avoid keeping a minimum balance in many accounts.

    As for Mutual Funds, largely the population is less literate on the subject of choosing a right mix and type of MF to be selected. No one can deny, cost averaging provides best results, be it ULIPs or MFs. The number increases as you grow and new products come and also for reason of change in risk profile.

    The basic trouble in our psyche is that we start looking at other’s earnings and want to eat out of that. In advanced countries, people pay for advice unlike in India where CHAI AND RAI are freely available.

    Would request you to please take a course which is balanced and towards education and advising people at large to learn to pay for services rather than cribbing.

    Regards.

    DK Bhardwaj

    1. DK Bhardwaj

      What you said was mostly true for very rare cases and may be 1% of the investors .. What I wrote was applicable for majority of the people .. so What I said does not apply for those 1% people regarding whom you are mentioning .

      Manish

      1. DK Bhardwaj says:

        Sir, your advocating to go for Term Plan and MF combination is contradiction in itself. If a mere 4% clients/customers continue with Term Plans and may be a little higher percentage with opted tenure of MFs, then where is the rationale. It means sooner or later majority would be without cover and regular investments. A catastrophic situation. Human nature does need some control to be exercised or else we would come back to times of Hippie Cult a la Dev Anand Hare Rama Hare Krishna movie when young generation was immensely influenced by the Cult.

        So there is a need for educating ( Some insurers and MF companies are attempting to do that though in a limited manner.

        IRDA and SEBI must instruct respective agencies to set aside a minimum fixed percentage of their budgets for educating the populace towards family security and methods to increase wealth in a legal manner.

        Regards.

        DK Bhardwaj

        1. DK

          I didnt understand properly why you say that i am contradicting myself ?

          Manish

    2. Daniel Madre says:

      Dear Manish,
      I would like to join here, though I agree with most of the things you have mentioned above , I find it strange when you say it relates to only 1% ofthe insvestors. may be the terms like MDRT, COT, TOT, LIMRA etc are known only in advisory parlance. The points put forth by DKM definetly affect a large number of Investors. The key is to distinguish between need to know and good to know information. What differences does it make if the Advisor discloses his commission or not ?. We don’t ask at any of the shops to disclose their commission product wise. Do we ?Misselling is a double edge sword. Often people don’t read or cross check with the official site. education or awarness are essential. Not all online term plans are same? In ICICI’s i-care term plan there is no medical examination for customers who are up to 50 yrs old. who is responsible for the unknown health condition the person may be having. Will the company later on say that you have not disclosed this ? Should I decide YES or NO in this case ?

      My guess is that you may be starting an Academy or something like that .

      Regards,
      Daniel

      1. DK Bhardwaj says:

        Dear Mr Daniel;

        I appreciate your views where in both sides need to share the blame. i will like to give an analogy. Consider, a family goes to buy a car/ TV, there is a big discussion and choice from all members but when one buys an insurance, how many of us consult family members. How much are happily wanting to devote to understand the nitty gritty and need to buy the product. Very few and far in between. The concern remains PAY BACK, TAX REBATE and disdain towards the agent as though he is being done a favour. On the contrary, he does a big favour by visiting you and explaining.

        As for terms like MDRT etc, how many investors even enquire from the advisor of his educational qualifications and achievements in the field and time spent in the company being represented by him/her. Not realising, it is a very long time relationship and must start on sound footing and mutual respect.

        There are many flaws in the role played by IRDA and SEBI and insurers as well. It can be a long discussion and continue till cows come home.

      2. Daniel

        You took 1% very very seriously .. what if I would have said 5% , thats 1 in 20 ?

        All i meant was that MOST of the people stuff their portfolio because of emotions and pressure and mostly without giving second thoughts .. thats all i wanted to say .. What DK Bhardwaj said was applicable to small number of people (not exactly 1% , we dont know the number , but its really small size compared to total) ..

        Dont you agree with that ?

        Manish

        1. Daniel Madre says:

          Manish,

          Ok, even if 20% of the people give second thought Pressure and emotions are not the only factor another factor is PAYBACK which Mr. DK Bhardwaj rightly brought up. Investors are often interested in knowing how many months premium they are getting back. Insurance advisors both private as well as govt has to go through this ordeal. This bargain affects service level. The mindset of the investor is blocked. Infact it is sometimes the otherway round, where the advisor does not have a say. Advisors now I think may have to play a dual role, both as an advisor and to certain extent as a financial planner. He should explain the pros and cons and leave it to the customer to decide and then it is the customer’s paying and risk bearing capacity that will be the deciding factor. Its a tight rope walk, he may end up loosing few potential customer or it may not make business sense but he was transparent and respectable.

          You have not answered my question about the impact of no medical test for icare term plan ?

          Regards,
          Daniel Madre

          1. Daniel

            Then may be we are talking the same thing .. I am also advocating that people have to get out of that habit of saying YES to everything out of fear or greed and take decisions based on reasonsing .. I think you are also saying same thing .

            Regarding No medical tests in Icare .. What are your thoughts on that .. because as my info , its more of how company underwriting norms and how they want to see an average case to be .. Their pricing part must have already factored in the health issues and mostly thats the reason their premiums are higher than others .

            Manish

  16. haque says:

    great article. i have said NO to all the things u had mentioned. Now my friends and family see me as different to the normal crowd. i have no loans, one credit card, rental house, term insurance, NO ULIPS or pay back schemes, and SIP in mutual funds, stocks and the occasional gold bar.
    thanks for educating us my friend. My new year resolution is to pass on the knowledge to my near and dear ones.

    1. Haque

      Good to hear that .. keep going like this 🙂

      Manish

  17. DUREJA says:

    Hi Manish,

    Saying NO is an apt article for the current times especially for the younger generation. Congrats and thanks .

    WOSHING YOU AND ALL READERS – A VERY HAPPY NEW YEAR 2012

    Dureja BK

    1. Dureja

      Thanks .. Happy new year to you

  18. natarajan says:

    Normally my wife used to say a BIG “NO” to everything, and one of my family friends used to jocularly tell my wife when we go for shopping together, madam, the product “NO” will not be available, hence don’t ask for that, Your article is really an eye opener for people who are either “cat on the wall” situation or even to anyone who is unable to take a concrete decision.

    1. Natarajan

      Thanks 🙂 . Keep reading !

      Manish

  19. Deiva says:

    Nice article again… Though i get to repeat the same word in mind after reading every article here, i thought to pen it down and update my experience of NOs and YES.

    When i joined the job, I was kinda forced by colleague to buy an ULIP (got no knowledge at that point of time) and shelled out 30000 over 3 years to pay the premium and stopped paying premium as the policy allowed for the same. Now the worth of policy is around 20k and I need to return the policy to get the money back. Since the NAV of this ULIP depends on stock market i am thinking of keeping it for some more time. But i completely understand the emphasis placed by you on finance – DO IT NOW. So i am in a kind of oscillation as i am okay with bearing the extra losses..(Another typical human behaviour as i had already 10k..what with another thousand?)

    Now coming to the NO parts for the last 2 years i have gained some finanical knowledge and saying NO to most of the uncles or family friends who force me on insurance. But still some of them are pushing me and i am still in the learning curve of how to avoid…

    After reading jagoinvestr.com and meeting you in person once, I understand the following is suitable for me

    1.) Term insurance – My employer already has a group term insurance policy for me and there are no financial dependents on me now. So still should i take a term insurance policy in person? I am thinking NO but what do u think?

    2.) Accidental Coverage Plan / Hospitalization (Health Insurance) – The employer already has coverage under such plans, but still do u recommended taking one on our own?

    Wish a you great year ahead
    Deiva

    1. Deiva

      1. If you are planning to be with the same employer for life and the sufficient for you , then well and good . But what if your cover is not enough or if you go to some other employer tomm , say after 5 yrs , then the premiums will be applicable for that age .

      2. Same thing as above

      Manish

      1. Deiva says:

        Thanks for your suggestions Manish…..

        I guess one of the comments was close about you writing a book… All the best for the same and looking forward to it…

        Deiva

  20. Abhinav Gulechha says:

    Hi Manish

    Excellent article…bulls eye!!!

    Your article touches upon a very important point, of not succumbing to the pressures of investing in unreasonable products, and keeping an eye on the financial goals.

    Especially the point you made, that 4-5 MFs, one health insurance product etc. was very apt, and which I use to always advise my friend…bottomline always is…Keep it simple!

    However, it needs to be appreciated that the trend is now changing..the ordinary consumer is getting smart and tries to understand who is selling what: however, due to lack of adequate regulation and push for fee based financial planning advice, he/she does not find much avenues for unbiased advice (take this you walk on the road and there are one or the other distribution house, or an agent’s office, but harder to locate a fee based financial advisor)…

    With firms like JagoInvestor launching its paid services, there is a definite reason for investors to say YES to access credible advice:)

    Thanks, excellent and focussed article..

    Abhinav

    1. Abhinav

      Thanks for your appreciation . We will surely try to live by the expectations 🙂

      Manish

  21. Siva Mohan says:

    Hi Manish,

    Thank you very much for enlightening us with excellent articles week in week out. I am a great fan of your blog and recommended/forced many of my friends to read each & every article.

    I am eagerly waiting for the review of ‘HDFC Life Click2Protect’ term plan. With new plan launched every month, I just cannot fix my mind on one and buy it. I am covered with Health Insurance and planned to buy a Accidental Insurance policy as well. So, I am not looking out for an riders. Could you please recommend one?

    Thanks,
    Siva Mohan

    1. Siva Mohan

      All the online term plans are same … Just go for any and dont wait for one ..

      Manish

  22. Deven Shah says:

    Hi Manish,

    Nice one.

    Best wishes!
    Deven

  23. Vicky Nimbalkar says:

    This articles reminds me of my brother faced problem because of being Guaranteer for his friends brother, who took personal loan. But things gets sorted out easily.

    Good Article.

  24. Mithlesh says:

    Hey Manish!!

    happy new year and an excellent yet practical article for all of us to follow. :)- cheers!

    1. Thanks Mithlesh 🙂

  25. Sushil says:

    Excellent Article….you are right that saying NO is sometimes necessary but we say NO at wrong time to wrong person

  26. Ashish Patel says:

    Manish Happy new year,Hope people do understand the power of simplicity .
    Its quite loaded in its self,Great post

  27. meena says:

    manish this is question not to u this reply is for people who are accessing my system remotely

  28. meena says:

    if i had my own earnings definatetly i would have taken insurance atleast if i would earned 3000 from home based job i would have put insurance i asm asking my brother to give some money i am not given

    1. Meena

      What is your question ?

  29. UMESH says:

    YES MANISH, I WAS LUCKY ENOUGH TO COME ACROSS YOUR BLOGS TWO YEARS AGO, IT WAS JUST THE BEGINNING OF MY FINANCIAL LIFE. SO I LEARNED MANY THINGS FROM YOUR BLOG. THANK YOU. AND AS THE PROVERB GOES “YOU CANT MAKE EVERYBODY HAPPY,SO LEARN TO SAY NO WHEN YOU REALLY WANT TO SAY NO”

    1. Umesh

      Good to hear that you learned that soon..

      Manish

  30. Mahesh Mane says:

    Hi Manish,

    Happy New Year. No Guess but waiting for that good & big news. Thanks.

    1. Mahesh

      Happy new year to you also 🙂

      Manish

  31. TS Ashok says:

    Hi,

    I am Ashok and working as a part time Insu.Agent(Bajaj All..). As I am reader of this blog, thus I am recommending only Term products where i am getting the answers like this.. 1. No boss. Your making losses to me. No No.. 2 (For very few people after getting convinced by hearing my explanations..)Yes..But No with your company. I need to put my money only in Government companies(!!) like LIC. Thanks for info..

    What a sad thought..

    1. TS Ashok

      I am sure with the kind of segment you interact , the literacy level in money is really low ..

      1. Akhtar says:

        Manish Chauhan ,TS Ashok

        The response no 2 as mentioned by TS Ashok may proved to be wise decision. Because
        1> People who really understand the real requirement of term insurance and ready to spend money on it have only one objective. That is SETTLEMENT of claim if arises. (Not only the mental satisfaction that I have X lacs term so I am not under insured/I am planning everything right financial/what a smart moving in financial life) He will not bothered for paying even double the premium. So claim settlement history is very crucial in this case. Here LIC is getting an edge in spite their British era premium chart.
        2> The company (Bajaj All..) earned lots of bad impression in 2005-2008 with intentional mis-selling of its ULIPs as market was in upswing. (Why I used the term “intentional”? Remember their agents? I even met one who can’t read English script and showing me their (BA) brochures. Put apart wives of Bosses in office or ultra-smart bank-workers. Those experiences are countless so I am skipping. However it is upto BA and their peer who have to face the consequences of playing with common mans faith. It is not our (Jagoinvestor community) duty to facelift them.
        3> “Claim rejection” is the only key to success/survival. This kind of policy passes in private cos very easily in one single morning meeting over cups supplied from CCD. Same day instruction will be emailed to concerned. After that it does not matter how honestly you filled the form. When the amount is near crore, they will anyhow prove any mis-statement because that will earn a fat bonus for expert hired for this. Go to your agent then the answer definitely is: Aare ins co is here to do business yaar…..thori na tere family ko support karne ke liye. Thinking of ombudsman then? Great, register your nominee (guardian in case of minor) in a good Law institute form now on!!
        In case of LIC the same can not happen. Reason are there but it happens very slowly. So CHANCES are there your claim may not get rejected.

        1. Akhtar

          Thanks for your comment . have you seen enough cases like these ?

          Manish

          1. Akhtar says:

            Thanks for reply Manish,
            Yes those are case based. That happened to my co-workers, seniors. Among them 7 was ULIP mis-selling and 2 extreme sad case of term plan claim rejection (both were senior executive in my company. By the way we are working in nonfinancial manufacturing sector (750 engineering grads total employee, 80% of them is financially literate and 50% of them are financially experienced since pre 90s era) . Experience combined with experience always have edge over mere literacy. That is true for both finance and non finance sector.
            However I asked them (ULIP cases obviously) to share there experience on internet but all of them seemed not interested. They gave me a feel that apart from getting facts quickly and financial transaction internet has no worth to them. Of two cases of term policy both persons had parallel LIC term policy in place (which delivered) as well as company also compensated adequately.

            Thanks to you and this site for all the good work so far. This is the first site I came accross to expose financila tricks used by mis-sellers in financial world.

            1. ok , glad you share the experience .. any idea what was teh reason they gave for rejecting the claim for term insurance, it cant happen that they say “We will not give the claim, without any reason”. The family might know of the exact reason . Can you find it out ?

              Manish

  32. UMESH says:

    there will b no new year resolution than this to learn to say NO. many time its true that we cant resist to say OK. it is not YES but we dont want to hurt the feelings. after some days it will be ourturnand we will find nobody around to offer a shoulder. so thank you Manish for great beginning. WISH YOU all HAPPY “NO” YEAR

    1. Umesh

      Thanks .. I hope you are already practicing this in your life 🙂

      Manish

  33. ANIL KUMAR KAPILA says:

    I like this-
    So what you need to do?
    If you want a fairly simple financial life, all you need to have is:
    4-5 good equity diversified mutual funds or balanced funds
    1-2 term plan
    1 health insurance product
    1 credit card
    1-2 bank accounts
    Financial Discipline to say ‘NO’ to what you don’t need

  34. Jagbir says:

    very good article on really important thing. Avoidance of purchasing wrong product is itself a good investment for you and your money. Now I am in position to say No on anybody’s face if I don’t understand things but few years back when one of our family friend persuaded us to take crappy child insurance product and he pressurize by involving my parents etc. I had no way other than to burn the money.
    Isn’t exercising is a good thing? for your health and regular exercise of saying NO for your wealth?

    Jagbir

    1. Jagbir

      Can you explain a little bit on how they pressurized you through parents ? I am, not able to understand the scenario on why you were not able to say “NO , its a wrong product , I dont get anything out of it”

      Manish

      1. Jagbir says:

        Manish

        At that time I didn’t have enough financial knowledge to classify the product as bad. The person first contacted me repeatedly then due to my lukewarm responses, came with family for a visit to our house to make it happen and talked to parents and assured that the product is really good for child and can be surrendered at any time in case you don’t like it even after purchasing it. I didn’t have dare to say NO despite my apprehensions that its a miss-selling. Later we came to know that person roamed to many of our relatives/friends and sold such products. anyhow, just after paying 1st premium, I just stopped premiums and thought it as a gift to that person and closed the matter but respect for that person has been permanently lost. I guess the episode is more harmful for him than me. I can earn my money back but is it possible to earn that respect back?

        Jagbir

        1. Jagbir

          Ya .. i can understand

          This is KGGK – kahani ghar ghar ki !

          Manish

          1. Chander Goyal says:

            yes It is story of my house too!!!

            1. Chander

              Story of almost every house actually 🙂

  35. Anirudh says:

    Getting married 😛

  36. Ashish says:

    Manish,
    “The more options we have, the more we believe that we need it.”
    This is a very interesting concept and works two ways. We do sometimes succumb to this option game. You have three products and though you don’t need them you may pick up cheapest just because its cheaper than the other two.

    There is an interesting theory – when the number of options go beyond certain limit people chose none. This was evident in some stores which stocked numerous brands of a single product (and people get confused and chose none). In-fact the stores abroad like Aldi succeeded because they did not give amazing choices in terms of brands, size, quantity of the product. As an example you may get only two three brands of oil and in two three convenient packaging.

    Was just reminded of that after reading this statement.

    Nice article. Not worth saying ‘no’ for reading it. 🙂

    1. Ashish

      Yea.. there is whole lot of theory on CHOICES 🙂 . read sheena iyenger book “The art of choosing” .. a little slow and bore and has good insight on this topic

      Manish

  37. Nilesh says:

    Hi Manish,

    Good start with nice article. This one article contains 360 deg information of managing individual’s basic financial life 🙂

    Keep posting such mind opening article throughout this year ….

  38. Arun says:

    One more “accomplish things” month? 🙂

    1. Arun

      How is it related to this one ?

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