Author: Jagoinvestor

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“We lost 96% of our Wealth .. from RICH to Middle Class”

Posted on by Jagoinvestor

Today we are sharing a very different money story, where one of our readers is going to share his life journey of becoming a middle class from being RICH years back. Yes – you heard it right.

As per his request, we are not revealing his name and identity. I thank him to share his story with a bigger audience.

Here it goes…

How a person lost 96% of his family wealth and become middle class from being RICH

My story starts with an assumption that most of the jagoinvestor readers belong to a middle-class background or from a humble background. Most of the readers have either already moved to a level higher or are trying to move to a level of lifestyle better than what was available to them in their childhood.

My story is a complete reversal

Yes, I moved from affluent background to a mid-income kind of family (from a big city perspective and not on pan India basis)

My story is a lesson on why financial planning and diversification are important. I was born in a rich business family of a small town (population of 1 lac), my father was a well known and socially connected/respected person in society.

I still remember we used to have a car (when there were only two or three cards in the whole town), BSNL landline with a two-digit number (i.e. less than 100 connections in the whole town!). Money was the last thing to worry about in our family. Things were very smooth in my childhood, and we used to discuss how to take the next leap towards the ultra-rich families.

There was more than sufficient money, my family used to give donations to temples, hospitals, etc. I had an elder brother (1 year) and I never wore his used clothes, never used his books (same school), and never used his toys.

How we lost money

Unfortunately such was the turn of time that the business suffered three-four very bad years, which eroded the entire family wealth.

This coupled with the lavish wedding of my sister left almost nothing for us two brothers. My brother decided to join the business and I was banished to a poor software job 7 yrs back. I initially faced a lot of troubles, but gradually managed to come out of the situation and did an MBA and now I am doing well. Even the family business is doing great under my brother’s leadership.

It still gives me a nightmare, that we had a substantial loss in the family business. Probably I would have never discovered blogs like jagoinvestor and subramoney had that loss not occurred. The virtues of financial planning were learned at a great cost.

Did it impact our social life?

Not much…

One very good (some may consider it wrong) thing which my father did even when business was downhill, he never cribbed in front of society. He never let the lifestyle go down.

So society never knew that the problem is so deep. When my brother joined the business, the total net worth of our business excluding the house and gold was just ~20 lacs (We lost 96% of business value, down from 5-6 crores in real terms. note that this was many many years back) with two marriage and my MBA still pending. But still he was able to conduct business by borrowing (unsecured) and credit, only because our credit rating in the society was still AAA.

Loss in Business up to 96%

Had the society knew about this, we would be ostracized. Luckily my brother turned around the business and things became much better going ahead.

My childhood and money

My first good experience with money was when I got pocket money from my grandfather. I used to get 1 rupee a day and my brother 2 rupee, and we used to get candies from the shop. The pocket money gradually increased to Rs 30 rupee a week on Sunday, and we used to feel like Tata/Ambani on that day.

Feeling like a rich kid with lots of money

Not even a single incident I remember, when my parents refusing to give me money. Even during the bad days they maintained the lifestyle, paid for my college, held lavish wedding for my sister. I as an individual was not a spendthrift and that helped a lot.

I was educated in the best school in the nearby city, but education was just a formality since the ultimate goal was to join business. But very early in life, being from a business family, we were introduced to the importance of money very early.

My lifestyle NOW vs. THEN

Although financially I am comfortable now, there is no more that kind of luxury in my life. I am very frugal now. Here are some points which can give you all an insight into how my life has changed.

  • I live in a rented 1-bed room flat in Mumbai.
  • Consciously own no car and live a frugal lifestyle.
  • Earlier the minimum we traveled was 2AC, now the maximum I travel is 3AC
  • I avoid overseas holidays which my colleagues frequent

Although I do not complain, I wish I should have more wealth. I have done full financial planning (and also my family’s) with the help of blogs like Jagoinvestor.

Since I cannot afford the mistake which my family had done, I am completely opposite to them.

And I am seeing the good result to my net worth, with 5-7 years of job and though my salary is not high, my net worth is high. The only reason is being frugal and financial planning, avoiding toxic products like LIC policies etc. I have never touched ULIPS, endowments, FD ever in my life (totally my views)

How important is Money in life – My views!

Money is very important, as important as health. The emotional trauma of not having enough money is unbearable. When I was young money was always there and I thought it would always be there in abundance. I just have to graduate and join the business, but life had other plans for me.

After the tragic losses in business, we decided as a family that one of the brothers should find a stable job; while others will try to revive the business (which is now revived by God’s grace). All the while, I never felt the urge to study since the ultimate destination of father’s business required no qualification; I suddenly was required to study and find a decent job.

So I pulled up my socks and did engineering and MBA and landed a good job in the financial sector now.

Money is very important in life

I fantasize regaining old glory days and become a wealthy person, and I believe courtesy the financial education I may or may not live rich but I am sure I will die rich. I think if I can accumulate 5 crores (in today’s terms), it will make me feel that my future is secured.

Stupid mistakes people do in area of money

Everyone has their own way of looking at things, but having seen a lot of money in life, I think a few mistakes people do are

Mistake #1 – No financial planning, just random investing

Most of the people just randomly invest in some policies or open few FD’s without any concrete planning for future. They think life will continue in the same way like last 5-10 yrs. But life can have lots of surprises at times. One should always be 2 steps ahead and plan for their bad times. Start doing your financial planning. If you are not smart enough to do it yourself, accept it and hire a professional.

Mistake #2 – Invest/consume gold/jewellery

Do not see gold and jewelry as investments. Some of it should be just used for personal consumption, but nothing more than that. Try to invest your money in robust financial products which create wealth for you over long term.

Mistake #3 – Invest in fixed deposit

Fixed Deposits are not for investments, It’s to just park your money for 1-2 yrs and nothing more than that. If you want to create wealth, fixed deposits are not the best thing in today’s world. By the way, I am yet to meet someone who has become a millionaire by putting money in FD’s , unless you put millions in FD!.

Mistake #4 – Invest in property without proper due diligence

I can’t understand, how people invest their hard earned money in real estate without proper due diligence. There are enough cases where lakhs and crores are stuck in bad deals and people have just lost money. If its real estate, catch a lawyer, pay his professional fees and check things in detail before committing your money.

Mistake #5 – Same with stocks

It is just beyond my understanding that people think they can do stock investing and trading successfully for years and generate consistent profits. If it was so easy, everyone would be doing that by now. Leave things to professional and don’t do stock trading (unless you are really a pro and into it full time)

My father suffered from Mistake # 1. There was no financial planning done at that point in time. Most of the money was either plowed back in business or invested in PPF.

There was a belief that business would always be very good, so no land was bought and no equity investments were made. Some PPF investments were done for tax planning. Even my mother didn’t buy gold.

Such was the belief in business that no investment was made for a kid’s future education and marriage. Two-three big losses and there were no backup assets. So diversification is very important, never put all your eggs in one basket.

I also lost Rs 10 lacs recently!

I would also like to share one incident from my life where I lost money personally and learned an important lesson.

As I come from a business background, I wanted to get into some kind of business. But, I recently lost around 10 lacs in a business I started in partnership with my friend. A business plan was good but somehow it did not work out as per the plans. I learned an important lesson that “Slow and steady wins the race” .

Had I kept the money in my equity Mutual funds, they would have yielded good returns, but that’s fine. You learn from your mistakes. I took a calculated risk, hence the impact on me was less.

Don’t be afraid of making mistakes especially when you are young and have lots of time in your hand in the future.

One suggestion for your future

Manish asked me if I can share one insight I want to share with every one of you out of my years of experience and from my life.

So here it goes…

One should always have a plan B in life, like what will I do if tomorrow my company kicks me out, I have plans like starting a business, someone in IT may be looking at re-skilling or someone can survive on rent/dividend, etc.

There should be a little basket for every goal, as a plot of land for my daughter’s marriage which I will not touch, in my case, we thought that the running money in the business would be sufficient enough to meet all kinds of expenses or emergencies.

Linking assets to your financial goals

All this is a part of financial planning, so even if you are very talented today and earning much more than you require for your expense, you may feel that financial planning is for the poor or middle class,  but that thought is not right. In fact when the going is good; that’s the best time to amass assets.

A real-life example of my friend family

One of my father’s friends with a similar profile, good business which subsequently went bust had a lot of good shares like HUL, SBI at IPO pricing (imagine HUL @10 INR) and he never sold. Can you believe he gifted AUDI to his daughter only from the wealth created by equities (he showed us the Demat slip the day he sold shares)?

If you are low in wealth right now, then I have just 2 things to say

  • Be Frugal, don’t copy your friends and cousins and overspend
  • Try to increase your income, learn some extra skills, work overtime, etc…

Is your happiness linked with money?

Yes, For me it is linked; in the sense that I should be able to provide. There should always be enough money to support the family, health, education, retirement.

One should not ignore the value of good health, relationships, and friends. Even if one has all the money and there is no health or family to enjoy, then what is the use of all the wealth in this world? Given a choice, I will choose the later over money.

What money can’t buy

I feel very good after writing my story. Jagoinvester is providing a very good platform to share your life story. Even if few of the readers can take away a few lessons I will feel that the effort is worth.

What is your money story?

If you want to write your money story, Leave your details here and Jagoinvestor team will get in touch with you with the next actions.

What do you think about my money story? Did you enjoy it? Can you share your views about money and how it changed over the years?

How to sell your car for the best price? Comparision of Exchange offer, Dealer, CARS24, OLX

Posted on by Jagoinvestor

Are you looking for selling your old used car? Are you wondering how to get the best deal for your 2nd hand car?

Today I will share with you 4 different ways you can sell your second-hand car and also share the pros and cons of each option.

How to sell your second hand car in India for the best price. Here are various options

But before we move ahead, it’s important to point out that when you sell an old car, there are few things which matter and should be taken into consideration. It’s not always the money you get by selling the old car which is to be maximized. It’s not the top priority of all the people.

Yes, price matters. But then a few more things matter.

  • Sale Price
  • Convenience
  • Documentation and RC transfer
  • Safety and Security
  • How fast you can get money in your account
  • Speed of Transaction

So these are 6 things which you look at when you sell your old car. Sometimes you need money fast, sometimes your preference is the convenience it takes to sell the car.

Sometimes you are not in hurry and can run around and you want to maximize your sale price and for some people, it matters that the whole transaction should be safe and they should not get into any trouble.

There is no “best way to sell your old car”

One important point to note is that there is no single best way to sell your car. In some situations, you can get a great deal when you sell your car directly to the end-user. But in situation, it can be the dealer who can offer you the best price. Sometimes, it can be online and some times it can be in the exchange offer.

If you want to watch a video on this topic, below is a detailed step by step process I have created.

Let’s start our discussion.

Option # 1: Selling a car in Exchange Offer

When you buy a new car, you can sell your old car in an exchange offer. They buy your old car for a price and deduct that amount from your new car price. You have to just pay the balance.

However, this is not so simple. Let’s dive deeper into this

There is something called “Exchange Bonus” which most of the showrooms give you which makes the whole thing very interesting.

So apart from the old car price, you also get an exchange bonus which increases your net price of the old car. However, the exchange is not always available and depends on the new car which you are buying.

So to sum it up,

Total discount you get = Old Car Valuation + Exchange Bonus

Here is how it works

When you want to buy a new car, the car showroom will do your old car valuation first. They will screen it various parameters and then tell you how much they can offer you for your used car.

On top of this, they may have an exchange bonus also in offer. It’s mostly available for cars which are already established as brands or towards the year-end when its time to clear the old stock (the old year model) or when some new version of the existing car is going to be launched (like New Swift)

But there is a problem, the thing is that the valuation you get in exchange is generally the lowest you can get. You can get much better pricing generally if you try to sell an old car in the open market. But let’s talk about it later.

Also, know that a discount is usually available most of the time, so even if you do not sell your old car, some discount you can get just by negotiating, hence the “Exchange bonus” is not something extra you get. It’s more of a marketing gimmick or a trick to give you a special feeling.

Here is a snapshot of a car seller confirming this point on Team-BHP thread (one of the best places to discuss and learn about cars)

Car Exchange is a marketing trick from showroom owners and sales people

When you sell your car in n exchange, you get high convenience and it saves you a lot of time, and that’s the reason you get lower valuation almost all the time. But if there is a good exchange bonus available, then the final deal might be ok (if not the best)

However when an exchange bonus is not available, its almost the worst pricing you get in exchange.

For example, suppose you want to buy a new car which is worth Rs 7 lacs and you want to exchange your old car. The showroom person tells you that your used car will fetch Rs 2 lacs and there is also a Rs 20,000 exchange bonus. So your total discount is Rs 2.2 lacs and you need to pay just Rs 4.8 lacs (7 – 2.2)

Pros of selling car in Exchange offer

  • It’s an extremely convenient way to get rid of your used car. All the formalities are taken care of by the showroom
  • You need less money to buy a new car. The amount you get in exchange is automatically deducted from your final price
  • It’s a safe way to sell your car, no worries of getting it misused or RC transfer
  • You get discard old car as soon as you get the delivery of your new car
  • It’s a good choice if your car is very old and not very famous
  • If good exchange bonus is available, then it can give you a very good deal overall

Cons of selling car in Exchange Offer

  • You get the lowest price for your second-hand car when you sell it in the exchange offer, especially when there is no exchange bonus
  • Not a great option if your car is not very old and is quite popular (swift, i10, Alto)
  • You can get manipulated in buying a bad option (some car which is going to get discontinued soon) by offering you a good exchange bonus which might look great.

Things to Remember

  • If your car is not very old (below 5 yrs) and it’s a popular brand, then do not sell it in the exchange offer, because you will not get a very good deal
  • You will not get any exchange bonus for newly launched cars or some car which has heavy waiting list. Do not try much
  • Do visit more than one showrooms of the same car brand to check what is the price they are offering for your old car along with the exchange bonus.
  • Do also visit a few other brands showroom just to check what valuation they are providing for your car.
  • While using this option, always make sure you are clear about the new car which you want to buy. Do not get influenced by the salesman talks about other cars and awesome deals you can get on them

Option # 2: Selling used car to local Dealers

The next option is to sell your old car to local dealers in your city. Dealer is someone who buys your old car, makes all the minor repairs, cleans it properly and sells it to another potential buyer who is looking to buy a second-hand car.

So instead of selling your car to the end person, you sell it to an intermediary who makes some money out of the whole process. Its a business and the intention is to maximize the cut from the deal.

There are two kinds of dealerships. First is the organized dealers which are quite big brands like Maruti True value and Mahindra First Choice and second is the unorganized dealers which are small local setups.

Just watch carefully and you will be able to see tons of cars lined up in a ground with a board which might say .. XYZ car dealer.

Local car dealer in your city

You can sell your car to any dealer, the price you get from a dealer is generally much better compared to the exchange offer, but you do not get any exchange bonus here. However, still, you can get a decent price.

My personal example

I recently sold my old car (I was the second owner) for Rs 91,000 to a local dealer. I had tried selling it to showroom in the exchange offer, but I was getting the valuation of only Rs 65,000 along with the exchange bonus of Rs 10,000. So in total they were offering Rs 75,000 only (this was TATA showroom)

It looks me close to 1 hour in selling the car and the local dealer went with me to his bank and did the NEFT transaction and I got the money in my account in the next 15 min only. So overall I sold my car in 90 min and got the money in my account. I got the proof of sale, and the RC transfer to a new owner is in the process now (looks like they have sold the car to someone)

I also went to Cars24 but got the pricing of Rs 85,000 only, which I declined as I had the offer of 91,000 already with a local dealer.

When to sell your car to the dealer?

So coming back to the discussion, you can some times get a very good deal with the dealer itself. Yes, its a business for them and they will not give you the real worth of the car, but your time is also important and if you are looking for a speedy fast transaction, dealers can be a good option.

This also turns out to be a great option, especially if your old car is technically working great, but from outside it seems too bad. Like if there are too many dents, scratches, etc. If your car is making too much sound etc. In this case, dealers can paint it, service it well and make it look like a new car and then sell it off at a good price and make money.

Pros of selling the old car to Dealer

  • Better pricing than exchange offer (without considering exchange bonus)
  • Very Convenient – Just take your car to them, they will inspect it and give you the quote. If everything is fine, you can sell your cars to them within hours
  • Its a great option if your car is quite popular because it’s very easy for dealers to sell them to new buyers
  • Some big dealers give you option of both cash payment or direct bank transfer.
  • Some room for negotiation (make sure you quote your expected price 50% higher than what you really need)

Cons of selling used car to dealers

  • If the dealer is not professional, it can turn out to be a bad experience
  • Often the small dealers will offer you only cash and there is no proof of sale

Important points to note 

  • Do not rush when dealing with the dealer. Take your time and enquire at 2-3 dealers.
  • Do mention to them that you are looking at other dealers
  • Always take the sale invoice and enquire with them about the RC transfer and when you will be informed about it.
  • Note that you can not fool the dealers. They are the masters of the game and they do this day in and out. It’s their full-time job. Don’t try to be smart with them. You can negotiate with them (you should), but don’t try to give them wrong information about cars and how great your car is. They can’t figure out things just by looking at the car.

Option # 3: Sell your car to CARS24 or SPINNY

In the last few years, some startups (now full-grown business model) are bringing innovation in the used car buying and selling markets. The biggest player in this market is CARS24 and a new entrant is Spinny. I have strictly chosen these two options because these websites directly buy your car from you and give you the money, without you waiting for a third buyer.

Spinny is a website where you can choose to get your car evaluated. They will come to your doorstep, inspect your car and offer you a price. If you accept it, the payment will be made instantly and they can take away the car. They sell the car to the end buyers (people who are going to use it for their own purpose)

However Cars24 is a little different. with Cars24, you need to take your car to them. They will inspect your car (takes around 1 hour) and then they will make a report which will have all the details of the car, its issues, its good points etc and they will upload that report online.

Cars24 process car buying

They have a network of dealers who are registered with them. These dealers can bid for the price and the highest bidder gets the car. Then cars24 delivers the car to that dealer and after that dealer can sell the car to the end party. Many businesses are also registered with cars24 who use the car for taxi purposes for as cabs.

Best part about CARS24

The best part about CARS24 is that its a fast and safe way to sell your car. The payment is instant (within few minutes but Rs 1,000 less) or 2 days (NEFT , but full payment)

The prices you get from Cars24 can be a good price (but not always). As I said, I got a quote of Rs 85,000 from Cars24, but I sold it to a dealer for Rs 91,000 one the same day

However, I suggest you can go with Cars24 if you are looking for a speedy and hassle-free transaction with a “not so bad” price. There are lots of people who are ready to settle for 10% less money if it comes without any issues and risk. You need to decide for yourself.

Real-life experience with CARS24

Here is one real-life experience by Mr. Atul who sold his car in Pune branch. He had some RC transfer issue which you should know about before you want to go to CARS24

I recently sold my car via cars24 Pune Kharadi branch. Let me share my experience.

I booked the appointment, got the reminder message before the appointment. I reached cars24 office on time for inspection. They did the inspection & offered me 2.05 lack. He said is the final max price.I simply said NO to that price because I know my should be around 2.15L to 2.30L.

Then the negotiation started. He came to 2.10 then followed by 2.15 then finally 2.17 L. I still said NO & came back to home. Next day I got the call from the same person he offered me 2.25L. I said yes handed over the keys on the same day. I got amount next day.

Lesson learnt – Although Cars24 executive says its the final highest price but there is certainly scope for negotiation, In fact I would recommend all cars24 customer to negotiate. You can expect 5-10% more after negotiation. They pretend that it’s the final price but it’s not true.

I sold the car in Nov 17. It’s been more than 3 months now. I have been told that RC transfer would take max 90 days. but it’s not yet transferred. Everytime I call customer care they say car is with the inventory partner only it means car is not yet sold to the end user. This is simple pathetic. I keep on calling those guys(1800112233) & send mail to [email protected] but no concrete response. Everytime I get following generic response.

“Thank you for writing to Cars24
We would like to express our deepest regret for the inconvenience caused due to delay in response. We would require some more time in order to resolve your case.
We have also sent your concern/query to the concerned department. We hope this experience will not dilute our relationship and that you will allow us to rebuild your confidence in us.
Please contact us via phone at 1800 11 22 33 or write back to us for any further assistance.
Happy to help,
Team Cars24”

I already got the money, the only concern is RC transfer. Who would be liable till RC is not yet transferred? When I asked the same question to them they say cars24 would be liable but on paper & in govt records car is on my name. Please suggest how to solve this problem.

Overall I would not recommend cars24 to anybody because of RC transfer issue. There is no timeline when car would be actually sold to the user & RC transfer would be done. customer care is really bad. No SLA or escalation matrix defined which can help customer to resolve the issue.

Pros of selling your car to Cars24

  • Very professional attitude
  • Speedy transaction (expect 2X time, which is fair)
  • Instant Payment
  • FREE and Assured RC transfer .. it’s safe
  • A good way to inspect your car even if you just want to get a valuation

Cons of selling your car to Cars24

  • Not the best price (they need to make money too …), but still better than exchange offer
  • No time to time and wait (if you agree on price, you need to sell instantly .. or at best within 24 hours)

Important points to consider when selling your car to Cars24

  • Always go to cars24 with 1-2 more offers in hand, so that you know if you want to accept their offer or not
  • Its suggest to fix small issues in car before you go to them
  • Always carry various documents which can increase your car worth like extended warranty, servicing invoices for past few months, insurance documents, warranty cards, etc.
  • It’s better to have 2-3 hours in hand when you go to Cars24. Do not go expecting that process will compete in 1 hour (especially if you are going on weekends)
  • Always negotiate. They offered me a little higher pricing (only a little).

Option #4 – Directly to end buyer by listing on various website

Another option to sell your car is directly to the end-user – someone who is going to buy the car for their own use.

If you can get an end buyer directly through your network of friends and family circle, its a great option. You can trust the person and the transaction is smooth most of the time. But most of the times it does not work that way.

So the next best option is to list your second-hand car on various online portals. You will have to get your car details, pictures etc and then the prospective buyers will contact you and then you can negotiate with them and take the conversation forward.

While there are tons of portals for selling a used cars these days, and I will list all of them here. But I will mainly talk about OLX in this section, because I have used it personally.

The best part about this way of selling your car is you can get really good price if you come across a genuine and reasonable buyer. There is no intermediary and there is no cut for anyone. It’s good for you and its good for the buyer also. You get better pricing compared to what the dealer gives you and the buyer also gets better pricing than what he would have bought it for from the dealer.

The biggest disadvantage of selling directly to the buyer

The biggest issue with this approach is that you will get a lot of junk inquiries and broken promises and conversations which will frustrate you. Lots of people will contact you and offer you lower prices. Then lots of people will start conversation and look genuine, but they will never come back.

Then there will be people who will come and look at the car, but not move ahead. So the point is that selling directly to buyer is easy, but only when you come across a nice and genuine buyer. But if you through OLX/QUIKR route, be ready to get a lot of non-serious enquires

I got 50 enquires on OLX

I had listed my car on OLX and within 24 hours, I got around 50 enquires. People were offering prices which was 50% of what I quoted (1.4 lacs). Some people called to get more information. Some people offered to bring cash (50%) and take away my car instantly. Some of them were from nearby towns (as far as 200 km). One guy came to have a look (it was a genuine buyer), but we could not agree on the price.

I am just sharing my experience here and not declaring that you always get junk leads. I have sold some other things from OLX and overall the experience was great. But some category of items like automobiles is different because there is a big market for it and risks are involved.

Apart from OLX / QUICKR, there are many other famous options and let me give you the list of these portals along with their links

[su_table url=”” responsive=”no” class=””]

Website Link
OLX https://www.olx.in/
Quikr https://www.quikr.com/
Cardekho.com https://www.cardekho.com/sell-used-car
Carwale.com https://www.carwale.com/used/sell/
Team-BHP https://classifieds.team-bhp.com/
Cartrade.com https://www.cartrade.com/sell-used-car
Auto Portal https://autoportal.com/usedcars/
Zigwheels https://www.zigwheels.com/sell-car
Droom https://droom.in/quicksell

[/su_table]

How to find the right price for your car?

When you are selling to the end buyer, the biggest problem is the PRICE. Your price should be realistic and fair. It should be a price which makes you (seller) and buyer both happy.

Note that when you sell your car to dealer, he is going to make some profits (around 10-15%) on that and sell it to the end buyer. So you are also not getting the best price and the buyer is also not getting the best price.

Right price for your old car

 

If you quote your car at a price that is somewhere between what you are getting to the dealer and what the buyer is paying to dealer, then its a win-win situation and you both benefit.

So the best way to find the realistic price of your old car is as follows

  • Go to meet 2 dealers with your car and check the valuation of your car
  • Negotiate with them the best price they are ready to offer and take an average of that
  • Inflate the amount by 15%. This is roughly the price at which the dealer is going to sell your car to someone else
  • So if you get an average price of 4 lacs from the dealer, you can assume that he sell this car to another prospective buyer at 4.6 lacs (15% margin). He will quote the car at 4.8 lacs, and then sell it at 4.6 lacs finally
  • So now you know that the reasonable price at which you should sell the car is anywhere from 4.3 lacs – 4.5 lacs.
  • This way, you also get higher price and the buyer also gets it at cheaper price compared to a dealer.
  • You can also visit few dealers (without your car) and show interest to buy the car (your model, KM driven), you will get a rough idea of what is the selling price going on for a car similar to yours.

Bonus Tip : Always quote your expected car price 20% higher than your expected price (the price at which you will be ready to sell). On OLX, people always bargain, no matter what. So if you quote it your expected price, you will get mad looking at how people bargain.

Make sure you complete the documentation

One headache when you deal with the direct buyer is that you need to make sure that the car is transferred to the new owner. The RTO related works are to be completed. Never sell the car without making sure that the documentation is complete. Else in case of any accidents or criminal cases where a car is involved, you will be considered as the owner because the RC book has your name on it.

I think if you are getting a good price (not the highest) and you come across a genuine nice buyer, it’s better to close the deal rather than trying to maximize the deal and lose the good buyer in process.

It also makes sense to tell the buyer that you will help in RTO work. It helps in selling the car faster and also you can be convinced that the documentation work will happen properly.

Pros of selling your car directly to end buyer

  • Possibility of fetching the best value for your car
  • If your car is great and popular, you will close the deal faster
  • Minor issues with a car may go unnoticed as buyers don’t have full knowledge sometimes

Cons of selling your car directly to end buyer

  • Can take too much time as lots of junk inquiries come
  • Too many followups may be required
  • Takes too much time and effort

Important points to remember while selling the car to direct buyer

  • Always ask the buyer to carry their ID proofs like Adhaar card or PAN card with them.
  • Do not hand over your car (or 2 wheeler) for a test drive without taking their ID Proofs. Always accompany them when they do the test drive
  • It’s better to enquire on phone with the candidate if they are end buyer or a dealer. There are too many dealers on olx and quikr now a days
  • Do not handover the car unless the full payment is done and you see the amount credited by logging into your bank account (not by looking at the SMS .. there are frauds going on where you receive fake SMS of amount credited)
  • It’s better to take a small token from the potential buyer to lock the deal (even a small amount like Rs 500 is ok to test his genuineness)

Which is the best way to sell the used car?

By now, you must have understood that it depends from case to case and there is no single way that every car owner can follow. To summarize things, here is a table which will guide you on which option you should follow and how these options are different one various parameters

[su_table url=”” responsive=”no” class=””]

Criteria Exchange Offer To Dealer Direct to Buyer Cars24/Spinny
Sale Price
Convenience
Ease of RC transfer
Safety and Security
How quick you get money
Speed of Transaction

[/su_table]

Documents checklist for selling your car

Make sure you take extra care of the documentation part when selling your car to someone. While it’s not an exhaustive list, here are some most important documents required to sell the car

Mandatory Documents

  • RC (registration certificate)
  • PUC
  • Insurance Invoice
  • 3 copies Form 28 (with 3 imprints of chassis)
  • 2 copies of Form 29
  • 2 copies of Form 30
  • Pan Card and Address Proof
  • 2 Photographs

There may be many more documents required if its the case of interstate sale, and insurance transfer and things like that.

7 steps to follow when you want to sell your old car

We have discussed different ways to sell your car and what are the important points to consider. But now let’s look at some of the steps you can take and process you should follow to sell your car the best price and without any hassles

  1. Do all the minor fixes – If your car has some minor issues like some dents, scratches, paints coming off, make sound, or things like these. It makes sense to get them fixed first. You can choose to get things fixed at a local service station if you do not want to spend a lot
  2. Clean the car before selling – It strongly suggested that you clean the car properly and make it look very good. These things matter a lot. The first impression which the potential buyer gets by looking at the car changes the way they feel about the other aspects of the car. Always remember, a clean car makes less sound, and drives move smoothly. It’s totally worth to go for a professional clean up if your car is a little expensive one. However, if your car is too old and in bad shape, no amount of fixes and cleanup will help in increasing the price.
  3. Post good photos online if you are listing it – If you are listing your car at some portal, make sure you click good pictures from all angles and give all the required information along with details
  4. Have 3-4 offers in hand – Make sure you find out the valuation of your car in exchange offer (if you are planning to buy a new car), with dealers (one branded dealer like true value and 1-2 local dealer). It’s suggested that you take a day off for this. Start from the morning.. Go to a showroom and then dealers .. and finally go to Cars24 to find out their pricing
  5. Give higher expected price – If you are ready to sell your car for 2 lacs, then start from 3 lacs expected price. Don’t worry about embarrassment. Its a game of maximizing the price, everyone plays it. Quote 3 lacs, show surprise if the other party offer 2.1 lacs, negotiate it for 2.4 lacs at least and then finally accept what you get (if it’s fair)
  6. Carry your documents – Carry a copy of your PAN, Adhaar card or another address proof and photos (just in case)
  7. Make sure the documentation is complete – Whatever channel you sell your car, always make sure that the documentation is complete in next 30-40 days. Prefer the payment to be done online so that the payment can be tracked back if required and always take SALE proof. If you are selling it to direct buyer, its worth to get it done on a Rs 100 stamp paper.

Some Real-Life Experience (and Tips)

This section is empty right now. When you add your experience in the comments section below, I will add your experience here in this section.

Do please contribute here in the comments section to enrich this article for others benefit

10 uncomfortable truths about your job no one wants to admit

Posted on by Jagoinvestor

Today you are going to read 10 truths about your job and why you should accept them and act upon them as soon as possible. We all start our jobs with big dreams and future, but somewhere we are so lost in our daily routine that we do not observe some important things.

10 uncomfortable truths about your job no one wants to admit

This is a guest article by Mr. Hory Sankar Mukerjee, who has been working in the industry for the last 15 years. He has worked with banks, FMCG, media and Information Technology companies. He currently trains people. He is an author for Oxford University Press. He blogs, trains and loves to travel.

So let’s see some lessons which you should keep in mind. Detailed description of these 10 points is done later.

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Lesson #1 

Jobs are a transactional relationship between you & employer

 Lesson #2 

Hiring and firing are two sides of the same coin
Lesson #3

You may need to a plan B anytime, be ready with it

 Lesson #4

Promotions stagnate at one point, hence invest in yourself
Lesson #5

Start investing your money – Don’t depend on your active income forever

 Lesson #6

Don’t get ‘caged’, ‘institutionalized or ‘comfortable at your workplace
Lesson #7

Work on a second income, while working in your current job

 Lesson #8

There is a life beyond the job
Lesson #9

Live within your salary

 Lesson #10

The biggest lesson – Understand how companies work!

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Lesson #1 – Jobs are a transactional relationship between you & employer

If you ask, ‘why did your organization hire you?’ The answer is obvious. You were probably the best choice, the right fit and there was work for you in the organization. It also implied that the organization where you are currently working has hired your ‘skills’ and have agreed to remunerate you for your ‘time’ and ‘skills’ in exchange for money.

Another hypothetical but obvious logical question, therefore, is: What happens if the organization, ‘does not need your skill set, or you, or your time’? You simply get ‘FIRED’.

[clickToTweet tweet=”Love your job but don’t love your company, because you may not know when your company stops loving you” quote=” Love your job but don’t love your company, because you may not know when your company stops loving you” theme=”style2″]

Relationships in and with organizations are transactional. You can be fired for anything. (E.g.: Global unrest because of North Korea firing a nuclear missile on USJ). Jobs are about: ‘give and take’. You give your time and skills and they give you money in exchange. The day they do not need you, they will not keep you.

Implication #1: Never ever get emotionally attached to your organization.

Lesson #2 – Hiring and firing are two sides of the same coin

You have been hired and you can also be fired. While this was not so common, while my/your parents were working in the government sector, this is true today, especially for private-sector employees.

If your arguments are otherwise and you feel, my sector or my company is the safest, you need to re-think.

Take this example – Teaching is considered to be one of the safest professions. Unfortunately in my career, I have come across many educational institutes, which have fired people on a days’ notice. Across my experience in multiple industries, hiring and firing is just another process for the organization.

The trauma is for the person and his family who have been fired. Firing can cut across industries, roles, skills, technology, and jobs. Firing does not need a reason. Therefore there is no need to ‘feel secure’.

Implication #2: Just as you have been hired, you can be fired. Be ready.

Lesson #3: You may need to a plan B anytime, be ready with it

Jobs, like life, is very capable of throwing ‘surprises’. We may like some of them but would love to dislike most of them. In ‘jobs’ that we are in, we also need to mitigate the ‘uncertainty/unpleasant surprises’. We, therefore, need a Plan B.

Plan B is a plan that you keep close to your chest, (a ‘good’ hidden agenda) while playing a game of cards or a plan which helps the hero of a movie escape in case the rogues have understood your earlier plan. That is your ‘escape route’.

Do you have a plan B for your job loss?

While in a job be ready with your Plan B. It could be teaching, opening a road side restaurant, wedding photography or a rental income. It could also being an entrepreneur, life coach, and writer, encouraging your spouse to work or selling homemade pickles online.

Your Plan B essentially has the power to bring ‘food back to the table’ in case you face the risk of losing your job. It is also capable of taking care of your ‘needs’ during an emergency.

Implication # 3: Ask yourself ‘what is your plan B’? Have you started working on it? Do you have something to fall back upon if you lose your job today?

Lesson #4: Promotions stagnate at one point, hence invest in yourself

Wouldn’t it be great if our employers had granted us lifelong employment, secured jobs, yearly growths, and lifelong benefits? We all love ‘risk-free’ and ‘guaranteed returns’ like our love for FDs, KVPs, PPFs, LICs, and NSCs. However, returns from these like any other investments are either not guaranteed nor risk-free.

[clickToTweet tweet=”There is only 1 investment that gives ‘guaranteed and risk-free’ returns: ‘INVESTING IN YOURSELF'” quote=” There is only 1 investment that gives ‘guaranteed and risk-free’ returns: ‘INVESTING IN YOURSELF'” theme=”style6″]

Any investments that you do on yourself, like walking, hitting the gym, learning new technologies, not eating junk, staying healthy, getting up early, quit smoking, getting certified, learning to cook, getting back to the college to earn a higher degree, learning about stocks and mutual funds, pay you in the long run. Some other day this skill comes very handily.

Let me give you an example

The global head of an organization met me for a coffee and told me about his interest to do a doctorate. I asked him, ‘what motivated him to do that?’ He said, ‘I do not see a future for myself anymore here. Our organization is getting top-heavy.

Promotions are stagnating.

However since I am extremely interested in teaching, (Plan B) I want to quickly pursue it and move into teaching.’ After a year or two, I saw him getting registered into a doctoral program and working seriously on it.’

Implication #4: While you are in the job, do not stop investing in yourself. What is that you wanted to learn and you could not do it? Get back and re-start investing in yourself. This could be your Plan B.

Lesson #5: Start investing your money – Don’t depend on your active income forever

Would you not love it, if your employer kept paying you even after you left the company? Wow…I would love to die to join such a company.

But it never happens.

The money that you earn not only takes care of your today but also takes care of your tomorrow when you stop earning. (Retirement)

Earning is essential but not sufficient. It loses value. Start investing. Investing helps to save you from the rainy days of your future. Saving and investing, therefore, are not one and the same.

When I started working in 2003, had I invested Rs 1000 a month, in Franklin India Bluechip Fund, the fund value today, would have been Rs 5.4 lakhs. Unfortunately I did not.

I did invest. But the investments were in ‘stupid financial products’. Choose the right products. When you need term insurance, do not buy a traditional life insurance policy. When you do not have the expertise to invest in stocks, invest in mutual funds.

When you do not need a house, do not take a loan to buy it, especially when you are young. There is no dearth of financial products. But choose the right ones, which you understand.

Lead a frugal life.

Frugality is not depriving yourself.

Frugality is living simple and with a minimal. Many rich people are known for their frugal lifestyle. Frugality has its own advantages. The best of course is to ‘achieve financial freedom’.

Showing off could be deadly. Make a list of things ‘you have bought’, which you never made use of. It will throw a lot of surprises.  Remember that an elephant has two sets of teeth. One is for eating and the other for a ‘show-off’. It gets ‘killed’ for the one it shows off.

On a thumb rule, invest (not save) what you spend.

personal finance equation

Implication #5: Saving money is useless unless you invest it. Even more useless, is to save in the wrong set of products. The most ‘useless’ thing, is planning to invest after you have spent. Trust me you will never be able to.

Lesson #6: Don’t get ‘caged’, ‘institutionalized or ‘comfortable at your workplace

Three things that kill employee’s morale, growth and prospects of doing great. First is getting caged, second is getting institutionalized and third the idea of being comfortable at work. Let us understand them.

Caged: ‘Who will hire me after 10 years in the banking industry? I am lost and I cannot get out of this mess. Even if I want to, my family problems are not allowing me to.’

Institutionalized: ‘I am so comfortable with this place that I do not feel like changing. This company gives me respect and I am happy. Everyone knows me in this company. Let it go on. I am planning to retire from this place.’

Comfortable: ‘This place gives me peace. I am happy doing whatever I am doing. I do not want to change. It is the same soup everywhere. Why do you want to change, when things are so good here?’

Getting caged, institutionalized and being comfortable is when we set boundaries to ourselves. We are unwilling to try new things, find new solutions or unwilling to look beyond the ordinary.

Remember that the relationship with the organization is transactional. The day they do not need us, we are all gone.

Physical boundaries, mental and emotional boundaries tie us up.

A couple of my colleague’s hometown is in Kolkata. They intend to settle in Kolkata, post-retirement, however, they have bought homes in Gurgaon, where they currently work. Some of them are getting better opportunities in other cities of India, are unable to move, because of their emotional attachment to their newly-bought houses. (And the banks’ love for their home loan interests.)

Implication #6: Set yourself free. Do not get attached to your organization and look beyond the boundaries. Any change will initially bring discomfort and then things will settle down. You will then start enjoying it.

Lesson #7: Work on a second income, while working in your current job

My father retired from the Indian Army without a job in hand. In those days, getting a job was difficult. One day while he was worried, my mom said, ‘Why are you worried? You should not be. I have mine and that will be good enough till the time you do not find another one.’ This comforted my father. However, within 3-4 months, he got a new one.

The lesson to be learned is that, a second income is not bad. It gives you a cushion. This is very true especially for people with non-working spouses. Second income, gives you some extra luxury, some extra investments, and faster financial freedom.

Remember not to splurge the extra income that you generate, but invest a significant part of it. Also, ensure not to overburden yourself with that ‘extra work’. It should be something that you would enjoy doing.

Manish has already written on some nice ideas to create a second income, go read it and get some fresh ideas to work on

Implication #7: A second income is great. It gives you comfort, extra savings and after all a place to fall back upon in cases of emergency. In a world of uncertainty, this is surely a cushion.

Lesson #8: There is a life beyond the job

The work that you do was there before you joined the organisation. The work will be there after you leave. Work will never get over. Therefore there is no reason to panic. It is not a sprint, but a marathon. Have a life beyond the office. Spend some time with your GF, spouse, family or children.

They are the ones who will support and cushion you in your bad times. Spend some time in a week doing charitable work, teaching the poor, helping your wife cook or taking your old parents for a walk.

work life balance

It will help you learn ‘life skills ’and make you more ‘humane’. Someone had asked Dalai Lama, what surprises him the most. He said, ‘Man…Because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health.

And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived.”

Implication #8: Family is equally and more important than your job. Your work can wait. The time that you did not see your child grow up, will never come back.

Lesson #9: Live within your salary

Jobs and salaries do not imply living beyond your means. It gives you a right to spend, but not the authority to splurge. It is not only about you, but the ecosystem supported by your salary- Spouse, child, parents, grandparents, maid, milkman and the driver.

It also does not authorize taking more loans because the banks are willing. It also does not authorize purchasing five shirts or trousers, when you already have ten. Living a life, ‘paycheck to paycheck’ is risky and unworthy. It disturbs the ecosystem surviving on you.

Keep it simple – One house, one car, one bank account, a few shirts and trousers, one credit card, one debit card, one health, and one term insurance. Spend all the remaining time that you are left with into something more meaningful.

Every Diwali, when the newspapers are filled with offers and bargains, ensure that you are not the ones jumping in to buy. When you buy at a discount, you save, 50 percent, but when you choose not to respond or buy, you save, 100%. Ask, ‘Is it really needed?’

Implication #9: Debts are needed but not at the cost of destroying our mental peace.

Lesson #10: The biggest lesson – Understand how companies work!

The day Cyrus Mistry was fired, I learned the biggest lesson of my life. If a person of his stature can be fired, we are no one at our jobs? For the organization, we are dispensable.

If we feel that we are ‘assets’ for the organization we work with, the organization may think of us as an ‘ass’ (minus the ‘et’). After all, organizations are run by people. People change and so does their culture, values, and priorities.

Implication #10: Stop treating yourself or pretend to treat yourself as an asset and make sure you understand the realities of working with an organization.

Can you add another point?

I would like to know if you have any more point from your side? Can you add the 11th point in the comments section?

Also share with us, if you liked this article?

12 things about Budget 2018 which is related to middle class

Posted on by Jagoinvestor

This was the last budget of BJP govt before the next elections and it was expected that they would announce some very good changes in budget which will be for middle class. From last many years, the tax slab rates have not seen any major changes (except few small changes) . The 80C limit and housing loan interest deducted limits were revised few years back, but still the common man expected some really good news.

While the budget was very good for farmers and rural sectors in general and also for senior citizens, it was extremely disappointing for middle class who are mainly into jobs.

On twitter, I asked about people opinion on the budget and as expected, most of the people were not happy about it.

budget 2018 poll

12 Things related to the middle class in 2018 BUDGET :

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1. No change in Tax Slabs 2. Standard Deduction of Rs 40,000
3. Long Term Capital gain Tax on Equity Gains at 10% 4. Dividend Distribution tax of 10% on Equity
5. Increase in Health and Education Cess to 3% to 4% 6. No tax on interest from Deposits up to Rs 50,000 for senior citizens
7. No TDS for deposits for Senior Citizens up Rs 50,000 8. Health Insurance deduction increased from 30,000 to 50,000 for senior citizens
9. Increase in limits for critical illness treatments 10. Corporate tax @25% for companies with turnover of less than 250 crores
11. EPF contribution of new women workers capped at 8% 12. Health Insurance Scheme for 5 lacs sum assured for majority

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1. No change in Tax Slabs

One of the biggest disappointments for everyone in this budget was that the tax slabs were not changed at all. In media we keep hearing on how the minimum limit for taxation should be raised from 2.5 lacs to 5 lacs, but it was not even raised to 3 lacs.

Below are the slabs.

So you will still pay the taxes as per old slab rates only.

2. Standard Deduction of Rs 40,000

There is a standard deduction of Rs 40,000 allowed in this budget, which means that you can now reduce your taxable salary by Rs 40,000 directly along with other deductions and benefits. But this only looks great on paper, because the transport allowance of Rs 19,200 and medical reimbursement of Rs 15,000 are now removed as benefits.

So earlier anyways one was able to claim around Rs 34,200 ,so the added advantage is only for Rs 5,800 more.

You will only save a little headache of providing the medical bills which you used to do for claiming Rs 15,000 (a lot of people used to provide fake bills). So now the process will be simple

3. Long Term Capital gain Tax on Equity Gains at 10%

The biggest news in this budget was the reintroduction of 10% tax on long term capital gains on equity without Indexation benefits. Let me touch base on this a bit as this is very important to understand, however I will make another details article soon on this.

Till now, if you held equity stocks or equity mutual funds for more than 1 yr, then all the profits you made were tax free when you sold them. However now you will have to pay 10% tax on the profits on profits above Rs 1 lac.

However this will only apply on the profits made after 31st Jan 2018 and if you sell your holdings after 31st Mar 2018. All the gains you have made till 31st Jan 2018, are protected and now they will be considered as your cost price.

So if you had bought a stock or equity mutual funds for Rs 1 lacs in May 2017, and its value on 31st Jan 2018 was 1.2 lacs, then you do not pay any tax on this profit of Rs 20,000 . Now your cost price will become 1.2 lacs .

Now if you sell it in let’s say Dec 2018 for Rs 1.5 lacs , then your capital gains will be 1.5 lacs – 1.2 lacs = Rs 30,000 (not 50k).

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Particulars Before Budget After Budget
Buy Date : 1st June 2016 Rs 5,00,000 Rs 5,00,000
Sell Date : 1st July 2019 Rs 10,00,000 Rs 10,00,000
Price on 31st Jan 2018 Rs 7,00,000 Rs 7,00,000
Purchase Price Considered Rs 5,00,000 Rs 7,00,000
Capital Gains Rs 5,00,000 Rs 3,00,000
Capital Gains Exempted Rs 5,00,000 (100%) Rs 1,00,000 (as per new rule)
Capital Gains which will be taxes Rs 0 Rs 2,00,000
Tax Rate NIL 10%
Tax Payable NIL Rs 20,000

[/su_table]

Note that the capital tax gains will come into picture only when you sell your holdings and the tax will be applicable only on the profits above Rs 1 lac.

Capital gains on equity was already there before 2004, At that time it was 20% on profits with indexation or 10% without indexation. Now they are reintroduced.

Note that if you sell your holdings before 31st March 2018, the old rules still apply. This new rules are only going to be in picture if you sell after 1st April, 2018.

What should you do?

Nothing!

Dont get too emotional about the tax part. I know people hate paying tax in any form, and especially when it comes as a surprise. But the truth is that the capital gains tax was there before 2004. Its not reintroduced. You should feel happy that for 13 yrs, there was no taxes on equity gains and those of you who have made great returns in past decade enjoyed it tax free.

Also, the capital gains tax on equity is one of the lowest in India at 10% . Most of the other countries tax it at anywhere from 15-35% . So we are not in bad shape.

Equities are still one of the best asset classes, and now lets focus on your wealth creation over long term. The fundamentals are still strong and the equity is set to give great returns over long term. Even with this 10% tax, equities are the best thing to invest in (for long term)

4. Dividend Distribution tax of 10% on Equity

Before of the LTCG on equity , now the dividends from equity mutual funds and stocks will also be taxed at 10%. However this will at source. Which means that it will get deducted by the company itself and you will get the dividend post deduction of 10% . You will not be paying any tax at your end, so there is no headache of all that calculation and CA work

For example, if the company announces Rs 10 dividend per share/unit and you are suppose to get Rs 10,000 dividend , then you will get Rs 9,000 and Rs 1,000 will be paid to govt directly by the company.

This applies to both dividend and dividend reinvestment option in mutual funds.

The dividend distribution tax and treatment for debt mutual funds is still the same. No changes in that.

5. Increase in Health and Education Cess to 3% to 4%

The cess was increased from 3% to 4% in this budget.

Cess is something which you pay extra on the income tax. So if you are in 20% income tax bracket, then you will pay 4% more on 20% , which will make your income tax rate as 20.8% .

If your income tax amount comes to Rs 20,000 per year, then your cess will be 4% of Rs 20,000 = Rs 800.

With 1% increase in cess, you will pay Rs 200 more now (if your income tax is 20,000). This will increase your tax burden by a very marginal amount.

6. No tax on interest from Deposits up to Rs 50,000 for senior citizens

This budget has given a lot of benefits for senior citizens.

One big benefit is that now there won’t be any tax on interest on all the deposits and bank interest up to Rs 50,000 for senior citizens. This will include interest of saving bank account, fixed deposits and recurring deposits.

7. No TDS for deposits for Senior Citizens up Rs 50,000

Now there won’t be any TDS deductions for interest from deposits (fixed deposits and recurring deposits) upto Rs 50,000. Till now the TDS was deducted as per provisions of section 194A , if the interest was above Rs 10,000 , but now it will be Rs 50,000 limit.

8. Health Insurance deduction increased from 30,000 to 50,000 for senior citizens

Under section 80D, there was an exemption of up to 30,000 per year for health insurance premiums for senior citizens, but now it has been increased up to Rs 50,000 . It’s a major relief because for senior citizens the health insurance premiums are very high and in most cases, it’s more than 40-50k anyways.

9. Increase in limits for critical illness treatments

There is an increase in the deduction limit for medical expenditure for certain illness up to Rs 1 lac for all senior citizens under section 80DDB . So in a particular year, if a senior citizen spends money on treatment of these illness, they can claim deduction on up to Rs 1 lac.

Here is the list of all illness covered under Sec 80DDB

  • Dementia
  • Dystonia Musculorum Deformans
  • Motor Neuron Disease
  • Ataxia
  • Chorea
  • Hemiballismus
  • Aphasia
  • Parkinsons Disease
  • Malignant Cancers
  • Full Blown Acquired Immuno-Deficiency Syndrome (AIDS)
  • Chronic Renal failure
  • Hematological disorders
  • Hemophilia
  • Thalassaemia

Increase in deduction limit for medical expenditure for certain critical illness from Rs. 60,000 (in case of senior citizens) and from Rs. 80,000 (in case of very senior citizens) to Rs. 1 lakh for all senior citizens, under section 80DDB.

10. Corporate tax @25% for companies with turnover of less than 250 crores

Those of you who are running any companies, the good news is that the tax rate will be 25% now instead of 30%, provided your turnover is less than Rs 250 crores yearly.

11. EPF contribution of new women workers capped at 8%

Now all the new women how will join the workforce for the first time, their EPF will be deducted @8% only instead of 12% for the first 3 yrs, also the govt will now provide 12% from their side also. It’s still not clear if the employer contribution will also be extra other than govt contribution.

12. Health Insurance Scheme for 5 lacs sum assured for majority

Another big news was that now govt is bringing a health insurance scheme for masses, where each family will be entitled for Rs 5 lac sum assured each year. But this will be mostly for weaker section of society and I don’t think any of our readers will be eligible for this.

There are no details about this scheme right now in budget and no allocations is made for this. I would rather wait for more details before commenting on this more. However if successfully implemented it would be wonderful for our country.

Let us know what do you think about the budget? What is one major disappointment and one great thing about the budget for you?

“I created 1.5 crores in last 7 yrs” – here is an Inspiring Money Story !

Posted on by Jagoinvestor

This time we are going to share money story of another reader of ours (Name not disclosed as per request). This person is from Bangalore, belonging to the middle class and is now working in the US from the last 2.5 years. He is a regular reader of this blog and agreed to share his money story with a bigger audience.

Money Story from India

Over to him…

When I was Growing Up

Born and Bought up in Bangalore, I have spent ~30 years of my life in Bangalore and 4 outside of India. Yes, I have seen Bangalore go from a quaint friendly place where I could cycle 20 km in 30 odd mins through peak traffic, be out any time of the night, ask strangers for help to the current madness on the streets.

My parents were both employed in Banks. My sister and I were never left wanting for anything that would enrich our lives. Looking back; there are things that are more evident to me now with some wisdom that I have gained.

My dad standing in ration line 20 odd years ago for necessities like sugar, our first vehicle – A Luna if anyone remembers, the frown and anger (a reflection of his inability to shell out more cash ) when I asked for something by the month end.

Our Financial life improved with new Pay Scales

Things improved significantly around 10 years back when with new pay scales and an open economy, and a mortgage that was paid off, my parent had more disposable income and could get us (almost) anything we wanted – All I wanted was 500 INR per month pocket money when I was in engineering.

dreaming of money

We did have a very sheltered life though. My parent’s primary focus was to get us educated and to ensure there are no stones unturned in giving us a quality education

I completed my BE in Computers Science and after 3 years of work experience, completed MBA from a top 3 business school in India

The Financial Struggle – Money Matters

Unfortunately, like most Indian families, this education never covered financial education. While it’s easy to now look back and fathom what my parents underwent financially when we were growing up – I still remember an incidence when I was in high school and I wanted a quiz book which costed around 5 INR (yes, 5 INR . Not a typo).

My father had told me he can only get that after a week (payday) and I had thrown a fit calling him names (I was a mean teenager). That night, when I was miserable for shouting at my father, I walked towards his bedroom to apologize and I could hear him almost apologizing (sobbing) and informing my mother that he couldn’t get what was necessary for me.

This incident for some reason stuck with me through.

Parents financial struggle for children

I have seen poverty up close through my relatives and some of my friends (while we were relatively bit better). When I was in 5th, I realized that a friend of mine wasn’t able to pay his school fees for the month. It was Rs 30 per month (I studied in a small govt aided Kannada school) and I had asked my mom to pay his fees which she graciously did until he completed his schooling!. Experiences like these made me dread having less money than what was necessary to sustain and to some extent experience life

No money matters discussed openly!

Money matters were never openly discussed and this translated into my spending habits in my initial working years. I was making around 25k take home a month ( a princely amount on 2007 ) and I just burnt through all this – Food, gifts for friends. Zero savings except for a ULIP plan of 60k per year and a couple of LIC plans based on relatives recommendation.

Fair to say that when I wanted to complete my post-graduation, I had to borrow the ~15 lacs for my MBA from banks and relatives and also withdrew the 1 lac I had in PPF

3 years of work and negative 16 lacs to show for it!

Then my financial life took a new and positive direction

During MBA, thankfully, I ran into some good, positive money minded individuals, courses, blogs (Jago investor and Subra money for example) which opened my eyes towards my financial fallacies.

27 year old, out of MBA school and 20 lacs in debt, with a salary of ~1 lac per month, I ensured that I paid off the debt in 2-2.5 years ( I had a consulting stint for 6 months in Canada that helped). My parents btw thought I had gone cuckoo in trying to repay my loans early and selling off my non-performing ULIPS and LIC plans (at a loss).

Now, 7 years later, with 7 more years of work experience, I have more than ~1.5 crores in assets. I don’t own any real estate and am looking for the best investment. I am not in love with Bangalore anymore, as I used to and the area I would like to stay is way-way-way beyond my reach.

Here is my current breakup

[su_table url=”” responsive=”no” class=””]

My savings Amount
401(K) (retirement saving in the US) $55000 (Rs 33 Lacs)
Mutual funds (in the US) $35000 (Rs 21 Lacs)
Liquid cash (in the US) $50000 (Rs 30 Lacs)
Mutual Funds in India Rs 55 Lacs
Stocks in India Rs 3 Lacs
PPF Rs 21 Lacs
Fixed Deposits Rs 10 Lacs
Total Rs 1.73 Crores

[/su_table]

Let me share how I started my savings

Once I started saving money, they were always in small amounts. The guideline was to keep aside 15-20 % take home income into savings right away. This was apart from the mandatory cuts like PF from pre-tax income. Just think that your take home is 15% less and stretch the rest of the money for your needs. Else, your monetary demands will always stretch to match the supply.

I was surprised at how quickly they all add up. Investing in PPF is a good example.

It’s surprising to see that I have 20 lac in that debt-like instrument. Or the mutual fund which was mainly based on small SIPs of around 20-25 k per month, to begin with. With the way markets have behaved over the past years, they quickly grew and have resulted in the current amount.

Over a long-term, a small investment on a regular basis can create huge wealth .. below is one small example of it.

I have learned that the difficult part is to start and I maintain disciple in investing systematically. Once you do that, they give you some surprising results.

My next 6 yrs plan

I intend to not touch my Indian mutual funds, invest another 50 lacs there over the next 6 years and just let it marinate and grow over the next 20-25 years when I retire.

These numbers indicate that I am potentially ahead of some peers in the income and asset curve in the same age range

Money for me now is a means of where I want to be in 20 years from now while enjoying life on the way and being able to help everyone who matters to me. I hope I am able to use money as a tool to enrich not just my life but many others – Next stop, for now, is a small home of my own.

How important is money in life?

Currently, Money is a contributing factor for peace of mind.

I’m glad that I can provide for my family, spend some good amount, have a security blanket in case of emergencies, help my family and potentially don’t have to worry about money when I retire.

It’s not the end at all but is a means to achieve my goals. I know people romanticize having less money, but having stared at poverty up close in many cases, I can tell for sure that it’s always better to have enough money to ensure peace of mind. At the same time, the definition of “enough money” keeps changing. In college, 500 INR per month was enough money.

First job – 7000 per month for the first 6 months was enough for me to live like a king. My salary jumped to 25k per month and 3 years later and I thought I ruled the world. This is how I felt!

How happy one feels when one gets the salary first time in life

Now, with 15x – 20x that income, I am still not sure if it’s enough money (especially as I plan my retirement and my child’s education 15 years from now). I am still trying to find my answers there. My wife calls me a compulsive worrier and over thinker and maybe that’s true.

I started educating others on money

When I meet my friends with less money than me or family members with less money, my first thought is how to help – not necessarily financially, but in terms of education. But it’s not always easy. I tried educating my uncle on how his LIC policies are a bad investment and he can look at markets and MFs as he’s retiring 20 years from now and I was snubbed as a know it all in some circles.

I also donate at least 10k a month or two into micro ventures such as https://www.rangde.org/ to ensure I can contribute some way and make a difference in some small way. One of my goal, when I retire, is to ensure I have enough money to generously help those in real need

Don’t make stupid mistakes when it comes to money

When I see my cousins burning through their money in their 20s with no investment or investing in something just for the sake of 80C, friends buying the latest gadget (iPhone upgrades every year ! ), spending insane money on cars, to me it looks like people are finding happiness through small things which is never-ending.

There will always be the next thing that money can buy. I don’t want to judge anyone. Maybe they know something I don’t. But I find this very running after materialist things/brands and spending without a thought about the future very concerning

My younger cousins make fun of me (all in good humor) for not wearing branded clothes. But I am glad in the “cheaper” clothes that keep me comfortable and have never understood why I should pay 5k for a pair of Nike floaters

I am glad to share my story

After I shared my story with all readers on Jagoinvestor platform, it bought back so many memories – I’m literally in tears thinking about what our parents had to go through to get us this life that we now take for granted. I feel lucky to have such parents and in general to have been bought up in an environment that could get me to where currently I am.

Thank you for giving me an opportunity to share my experience with you ! and I request all readers to share their own money stories with all of us, there is so much to learn and know how others have lived their financial life and think about money matters.

What is your money story?

If you want to write your money story, Leave your details here and Jagoinvestor team will get in touch with you with next actions.

What do you think about my money story? Did you enjoy it? Can you share your views about money and how it changed over the years?

5 reasons why people avoid retirement planning and die poor?

Posted on by Jagoinvestor

From last 8 yrs, I have been talking and dealing with investors & I can see some progress on how people see their retirement these days. They have got more “serious” about retirement planning.

Almost all the clients we have, for them retirement is a big goal and their focus on it is worth appreciation. But that’s a very small number, few hundred may be.

If we talk at the mass level (All India level), there is almost no seriousness for retirement planning. At the mass level, people are very short sighted and plan for their short term goals, but not “long term goals”

Retirement Planning

5 reasons why investors don’t plan for their retirement?

What about you?

Have you started your retirement planning?

Is some money being invested for retirement goal each month?

By “Retirement planning”, I mean a well thought investment plan (it might not be written) for your future. Are you consciously thinking about create a big enough corpus at your 60, which will support you for next 30-40 yrs?

Please do not confuse “retirement planning” with buying some random policy for your 80C deduction, which had a word “retirement” in the name. It’s mostly a well marketed product sold to you on the name of retirement.

Now, let’s see some of the top most reasons why people don’t invest for their retirement seriously!

Reason #1 – It’s a “Selfish” Goal

I recently attended a session where the speaker asked this question – “Which is the most important financial goal of your life?”

To this, there were many answers like ..

  • Retirement
  • Children Education
  • Buying a House
  • Getting Debt free
  • Stating own business
  • Daughter Marriage

But the trend was clear… “Retirement” was not in majority.

The group age range was between 30 – 50 yrs. The speaker was silent for a moment, but then he said something which really hit me.

“Most of the people know deep down that Retirement is their biggest goal, but they refrain to accept it because it’s a SELFISH Goal”

Planning for Retirement is a “selfish goal”

Yes, retirement is about you and your requirement. Your retirement is the most costly financial goal and long duration goal, which will have to be provided for not just years, but DECADES.

It feels very odd to openly accept this and say this, especially in a society where we are always taught to first provide for others and think of others needs. We are taught from childhood that we should not think about yourself, we should not be self centered, we should think about others, we should think of others before thinking about yourself.

“Others” here can be our parents, children, friends, relatives, husband, wife or anyone else.

Retirement is a selfish financial goal

It’s a taboo to tell someone that “I want to first think about my own happiness and requirement at the cost of others”. You suddenly become “self-centered” and “rude”.

This is one major reason why a lot of people think of their own retirement at the end, only when other goals are planned for.

I think this is changing slowly and the way people are prioritizing things is slowly taking a new shape. I can now see a trend, where people have started giving importance to their own dreams and desires, compared to our parent’s generation.

While, you plan for important financial goals of your life, like buying a house, your kid’s education, children marriage etc, you need to give first priority to your own retirement.

It does not make sense to not plan for your own retirement, at the cost of other goals.

Reason #2 – Because it’s too early to plan

Imagine you are 30 yrs old.

It’s been just few years since you started your career. The top most thing in your mind right now is “how to buy the house?” and how to get the better pay package in the next job?

You are so engrossed into the hustles and bustles of life, and suddenly something says to you “Are you saving for your retirement?”

“Dude, I am just 30” – You feel !

Let’s be honest, it’s very tough to get serious about retirement at such a young age.

Some days back, we did a small survey with 379 people where we asked them what was the biggest reason why they did not consider retirement planning as their #1 goal in life, and the top most reason they choose was “It’s too early to plan for it”, the average age of this group was 30.4 yrs.

Which clearly shows that people are 30 are avoiding retirement planning because they feel it’s too far in future to even think about it.

retirement planning survey

But there is a problem…

Most of the youngsters never get out of that “I am still young” mode for decades. And one day when they hit 40-45, they feel they made a mistake of not starting early. Some people realize this at 50.

And then by that time, it’s very late.

So even though your retirement is very far away, you need to get this once and for all that you would need a big sum of money at the end, and early you start, better it is. You might not give high priority to retirement saving in the start, but start with something at least and increase the allocation later in life as you move from 30 to 40 .. and so on.

Reason #3 – They are not able to visualize the “Retirement” goal

We all are very bad at predicting how our lives will turn out to be after 10 or 20 yrs old. Just think about your past for a moment. 10 yrs back, did you have even a slight idea of how your life would have been today?

Not at all!

So it’s tough to predict how good or bad the future will be.

This is the reason, why most of the people do not plan for retirement. They are not able to visualize how serious it is to plan for retirement and how tough it will get if they do not have enough retirement corpus.

Most of the people who earn sufficient money right now never realize that one day the SMS – “Your salary XXXX  amount has been credited in your account” will permanently stop and they will be left with another approx 40 yrs to be alive.

Thinking about your retirement

Your health will not be at the best level and your kids may not be in position to take care of you in the same way you imagine them to take care of you. They will be busy and struggling with their own life issues.

It’s not easy to look far ahead in future and visualize it especially when you have a very active income right now. Just like its very tough to image how it feels to be hungry, when you are easily getting 3 meals each day.

There are various examples of successful people who died poor and struggled in their retirement life. If you do not have enough money in your retirement, you do not have power with you. People do not treat you well, and that’s the harsh reality of life.

Don’t be that guy !

Subra has written a great piece called “Retirement Failure”, where he talks about how a retirement life looks like, if you do not have enough money at retirement. He is one of the best authors and writers on the topic of retirement, so you can trust him 🙂

So start getting serious about future and plan for the D-Day !

Reason #4 – Not able to save enough money

People also don’t save for retirement for the simple reason that they just don’t have any surplus left at the end of month. It’s fairly logical!

Incomes are not increasing, while expenses are growing like amoeba in all directions. It’s getting tough to save in today’s times especially if you are single earning member in family with 5-6 people in a big city.

It’s true that you are not able to save much, but that’s something to get altered to and act on it, rather than hide behind that fact and just let years pass by.

Just because you were not able to save enough for future, no one is going to give you money at your retirement.

So take charge of your future now, and act on it. Work on your income, work on your expenses and make a start. Start saving with Rs 1,000 a month first, then Rs 2,000 and eventually go up and up.

Even if you are able to save Rs 5,000 or Rs 10,000 a month at minimum, a good retirement corpus can be generated. You will not be a RICH guy, but you will have something to fall back on at least.

What can you do with Rs 10,000 per month?

Below is a graph which shows you the power of investing Rs 10,000 per month on a regular basis for next 30 yrs. You can create close to 4 crore at retirement if you are a 30 yr old person.

Wealth creation for retirement

It can be a slow start, but that’s OK.

If you want to talk to our team for your retirement planning, just leave your details on this page and our team will call you to discuss about your retirement planning.

Reason #5 – They see their kids as retirement corpus

I am not giving my own comments on this point, it has to be written by you.

Yes, I do not want to give my comments on this point because it’s such a sensitive topic that various people will have very different style of thinking on this topic.

From my side, I can only say that I can see lots of people in big cities these days who are very clear that they do not want to depend on their children for anything. They want to give the best to their kids and raise them as amazing people, but then they do not expect anything back from them.

But from the small city I have come from (and many of you) , it’s almost a crime to think like that. Most of the people really see their children as “Budhape ka Sahara” and literally expect them to take care of them “because” they have also raised them and spend on them all their life, so it’s now their turn to return back.

How do you see the relationship with your kids?

Few months back, we did one online survey on this website to understand how do people see their relationship with their children. 49% participants in that survey choose the option which said “Give and Take Relationship”, where as only 21% felt that it’s only a “Give Relationship”.

are children retirement plan for parents?

I can’t comment if it’s right or wrong, but would like to know from everyone, what they feel about this point? Please expand this 5th point in comment section and have some fruitful discussion.

A software guy left his job to be self employed – His complete story

Posted on by Jagoinvestor

One of our readers, Anjan had shared his experience of leaving his salaried job last year to become self-employed. He wrote a detailed experience of his journey on one of the posts so I am reproducing his message in the form of the article here. (note that this was shared last year, but I am posting it now)

Over to Anjan experience sharing below…

I want to start off by saying that I was really inspired by that one article of yours (I am talking about Manish Article) where you wrote your experience about how you quit your job at Yahoo and finally decided to follow your dream against all odds and opposition.

Quit job in India - Real life experience

I left my software job at 27

Ever since the day I read that, I knew I had to get started on my dream and drew up an action plan to free myself from this IT job which I considered as nothing more than slavery from Day 1.

So last month, I successfully quit my job at the age of 27.

How my frugal nature helped me

I was always very frugal by nature even from back in my college days when I used to do odd online jobs that didn’t pay much but I ensured I saved every penny I possibly could. I built up sizeable savings which netted me a few thousands of rupees as interest every month.

I guess that habit carried over to my professional life when I got a job. I started saving almost 95-98% of my monthly income and managed my expenses as much as possible from the interest income.

My salary was a meager 35k, so it wasn’t easy but where there is a will, there is a way.

I was fed up of boring work and Politics

So after working 5 years during which I cursed my company and boss every single day, I finally had enough of the BS and dropped the resignation notice on them out of the blue. I got the topmost rating in 4 out of 5 years of my stay there.

So they were surprised by my decision especially at a time when media is reporting massive job cuts in IT due to US Visa issues and automation.

office politics

Having to do 12 hours of boring donkey work everyday, having to work on weekends/holidays thanks to impossibly tight deadlines without any extra pay, having to beg for 5 days leave to go on a vacation once a year, having to tolerate their politics and favoritism which denied me opportunities I deserved was killing my soul from within and I was dying a little with every passing day.

Even on holidays/vacations, there was an expectation to be available on phone for support.

I started acquiring new skills and planned my exit

I just knew life couldn’t go like this forever. So I made plans to become self-employed late last year. I started acquiring new skillsets through sleepless nights and sheer hard work to switch over to freelancing with the aim to open a small business a few years later.

Once I felt ready and confident, I quit.

After being self-employed for just over a month, it feels amazing. It’s hard work without a doubt and there have been many sleepless nights to deliver projects on time but the sense of freedom is just indescribable.

There is truly something to be said for working for yourself. The best thing is my salary is not fixed anymore. The harder I work, the more I earn, so there is an incentive to work hard and increase income.

Why I planned it NOW and not in the future?

Age is an important factor. I have reached an age where I knew my parents would start badgering me for marriage within the next couple of years. So I knew it’s now or never. I had to act and I knew I had to stick to my plan no matter what may come or else it will be too late.

The fact that I love to travel was perhaps my biggest motivation to become self-employed as employers would never give you more than 5 days’ leave even if you beg. I am the kind of guy who loves to go on month-long tours.

My next plan?

Thanks to my frugal nature, I saved up enough money during my employment to last many years even if I stop working today. I plan to increase my savings to an amount that would last a lifetime by the time I reach 30.

So a few years of sheer hard work is ahead of me but for now, I am enjoying my new found freedom even though I am working super hard.

Conclusion

Congratulations to Anjan for this new journey in life and best of luck to him. I hope reading his experience would be helpful for those who need some motivation to leave their jobs to break the monotony and explore their full potential.

Let us know if you have any more ideas or points to share?

Are you ready to deal with a job loss?

Posted on by Jagoinvestor

Job loss is a scary situation because it’s a big disruption in your life. If you lose your job, you need to suddenly look for another job quickly because you have to meet your household expenses and also deal with the emotional crisis.

In case of a layoff, you also lose self-confidence and start doubting yourself and keep wondering what the future is going to be now. Look at these news headlines which talk about so many job losses in India. While all the sectors have layoffs, these headlines are more from the IT sector.

layoff headlines india

Are you prepared enough for a job loss?

Have you ever thought about this situation? Have you ever visualized about losing the job?

We all are so confident subconsciously that something like a job loss is never going to happen with us. We hear that it has happened in someone else life, but we consider ourselves so lucky for no reason.

Our lives are smooth and our planning for the future is perfect, but it’s critical to check if you can take the bad news of job loss? Is your financial life strong enough to handle that situation?

Have you ever thought about this?

Have you ever thought about how you will be paying your EMI’s, your kid’s school fees, rent, various other household expenses and how you will deal with stress and the insecurity which will come with the job loss. If we pick the software industry, there is enough bad news coming in from the last many years.

The industry is going through tough times (and even good times) and it’s not very uncommon to hear that thousands of employees got a pink slip and lost their jobs!

If we talk about you, are you skilled enough to find a new job in the same industry with the same pay package? Can you afford a lower salary? Do you have enough savings to deal with the stress of living without a paycheck for the next 6 months?

I found some real-life experience of people who are sharing about their job loss and how they felt about it. Please read them to understand how it feels and what it means.

Story #1 – How Ganesh felt when he lost the job in a startup

Below is an experience of Mr. Ganesh who shares how he lost the job and had to face issues in his life.

Real life example of job loss in India

Story #2 – How a software engineer felt after a job loss

Here is another experience of a quora user who worked for Symantec and lost a job when his wife was 5 months pregnant.

Another example of a software engineer loosing job at IT company in India

How to prepare for bad times?

We don’t wear a helmet while driving because we want the accident to happen. We wear it so to make sure we are protected if something goes bad accidentally.

In the same way, we should design our lives in such a way that even if we lose our jobs, the impact is limited and the emotional and financial loss is in control.

I know losing a job is not a great thing. Most of the wake up when they actually lose the job and start thing on what to do.

Don’t be that guy!

While you can’t stop someone from fire us, you always have control over what you can do to face that situation. So let’s talk about a few things you can and should do today to be ready for that scenario.

Action #1 – Have 6 months worth expenses in an emergency fund

When you lose the job, the immediate question which comes to your mind is – “How will I pay my bills?”

You have EMI’s, household expenses and many more things to deal with. You already know how messy it can get. I don’t want to get into details of it, but you need to pay all the bills. At best you will be able to stop a few things for a while, but how long?

Impact of job loss on your financial life

You should have enough liquid money with you which can last for a few months. It’s like the emergency fuel (6-month expenses) you need in your car to reach the petrol station (new job).

One more reason why you need to have enough emergency funds with you is that it gives you more power to choose your next job.

If you do not have money at your end to last another month, you are too scared. It’s a panic situation which forces you to choose any job which comes next. It’s like being desperate for marriage and then saying YES to the first person you meet. Not a good thing for the long term.

Action for you: Just multiply your expenses by 6 and keep that amount invested somewhere which can be available at short notice (like few days). The focus has to be more on availability and not returns. You can choose a debt mutual fund or a simple fixed deposit for this.

Action #2 – Don’t have a neck to neck expenses

A good habit for any investor is to make sure that their income is 1.5 times of their expenses. You should not be living a life where every penny you earn is getting spent.

I know it’s easier said than done for many people, but at least start taking action towards this.

There are two benefits here.

Benefit #1 – You will have good surplus each month which you can invest in for the future. It keeps you worry-free and you also can save good amount.

Benefit #2 – When you lose your job someday, you at least have an option to take up a job that is paying you less. Imagine you are earning Rs 1 lac per month. In case your expenses are neck to neck, you will not be able to accept a job that is offering you Rs 80,000 a month. Can you?

I strongly suggest that your total expenses (including EMI and everything) should not cross 60% of your income. It’s a good habit to practice in your financial life.

Action for you: Find out the ratio between your income and expenses. How much are you saving each month right now? If it’s less than 40%, focus your energy on earning more income. If not immediately, give yourself 2-3 yrs of time when you will increase your income to the next level.

Action #3 – Be awesome in what you do

Don’t be mediocre in what you do. Don’t be average in what you do.

Are you a java developer? Then be the one who knows everything inside out and make sure you are among the top 5% in the entire world

Are you a marketing guy? Then make sure you are the one who can really transform the marketing of a company if you take that task in your hand.

Are you a chef? Then make sure you are worth inviting to master chef show!

Whatever you are doing right now in your life, just make sure you are ONE OF THE BEST.

Be awesome in what you do

I am not saying that you should do something extra ordinary in life, but whatever you are doing, strive to be one of the best in that field.

If you focus on this, then you probably will never lose your job. And even if you do, you will quickly get another, And if you don’t get another job quickly, you will at least be calmer and composed than others who know that it’s just a matter of time. Your panic level will be low.

Action for you: Make a list of things you need to do to go to the next level in your profession. List down which are the training you need to attend, list down which all certifications you need to complete. List down if you need to change your job to learn new skills? List down if you want to ask for help from someone more awesome than you. List down all the points and complete that in the next 12 months.

Action #4 – Start saving money and build a good portfolio

There is this concept of human capital and money capital.

Human capital is our ability to work and earn money, it’s about the potential and how much you will bring in the future.

Money capital is your portfolio which gets build over time, you keep earning money and save from it and start increasing your money capital.

When we start our career, we are high on human capital and zero on money capital. When we retire, we have money capital and very low human capital (maximum cases).

Start building a good portfolio

Focus on investing and saving money from a long term perspective. It’s better to lose a job with 50 lacs lying in your mutual funds and deposits in the bank. It’s a much better panic situation compared to just having some money in your bank account.

I know it’s very tough to have any portfolio at the start of the career but do whatever best you can do. Focus on creating your first 1 lac, then first 10 lacs, then first 50 lacs.

But at least take actions to reach there.

If you have good amount in your portfolio it feels safe. You can fall back on something which can last you for many years in the worst case. Imagine not having much in your portfolio and losing a job. Even Rs 10,000 invested per month can give you 25 lacs in 10 yrs if done in the proper way.

Saving money for future

So ask yourself, if you have enough money capital as per your situation? Have you built and saved your money capital or not?

In the case of job loss, most of the people who are in extreme panic are those who have no sufficient money capital and human capital. Even if you save 10% of your money income on a consistent basis over your working life, it’s going to be a very huge amount. But most of the people even fail there.

Action for you: First slow down. Then see how much is your monthly surplus each month? Are you investing that money on a regular basis? If not, it’s time for you to start your SIP (our team will help you in building wealth in a systematic manner).

Don’t make these 5 mistakes at your work

Let’s quickly look at a few points which lead to a job loss. Many people just do wrong things at work and expect to never get fired. If the points below are true for you, its time you relook at your approach and take corrective steps.

  • Not updated yourself as per job requirement – Are you still acting as if you are in 2007? Are you refusing to learn new skills that are required in your job? Are you into that comfort zone? If yes, it’s a signal that you may lose your job because you are getting stale day by day.
  • Not able to work with others – Are you a team person? Any work is done by a group of people and not a single guy. Make sure you know how to have good relations with your teammates and work with others. If you are not a team guy, you might not be part of the team soon.
  • Failure to do your work – This is a no brainer. Are you consistently failing in the work assigned to you? Are you not able to complete it in a given time and with the expected results? Get more trained, ask for help from others if that’s the case. It’s ok to fail once in a while, but if it’s happening very frequently you are on a list of non-performers and you might get a pink slip very soon.
  • Failure to take initiative – Are you just doing what you are supposed to do? That’s all? Are you taking new initiatives yourself and showing that eagerness to go out of your way and surprise your employer? Remember, the pyramid is smaller at the top and you want to move to the top like many others. You will be the first tree to get cut if things get ugly.
  • Failure to demonstrate productivity – Are you busy or productive? A lot of people do lots of things at work only to produce very little at the end of the day. Make sure you are doing more and highly useful productive work. Also, make sure you show that to your employer. Get it noticed and recorded.

I hope I was able to reignite your thoughts on these points. Do let me know how many marks out of 100 will you give to yourself on preparedness for job loss?

If you are 100% prepared and ready to cope up with it, you score 100/100, else 0/100 at the extreme end. I would like to hear about this from you and what you are going to do about it.

Buying Term Insurance Plan? Here are 20 Critical things to keep in mind

Posted on by Jagoinvestor

If you are planning to buy a term insurance plan in coming weeks, then you are at the right place, because today I will share dozens of points which any term plan buyer should know before they buy the cover.

So, if you have no idea of how does term insurance work, and if you have asked yourself – “Which term plan should I buy?”, then you are at the right place today.

Most of the buyers who are new to term insurance plans do not understand various critical facts and points which they should consider while they are buying the policy and because of that, I came up with this checklist which will help you.

Let look at each point in detail.

buy term plan checklist

1. Earlier you buy a term insurance plan, better it is

There is no minimum or maximum age for term insurance. Earlier you purchase the policy better it is.

Do not be very late because as time passes, your premium amount will also increase depending on your age and also if you develop any illness or disease, it will get tougher to get the policy later. So once you are clear that you require a certain amount of life cover, go ahead and complete the action within a few months.

2. Buy the term insurance policy only till your retirement age

Till what age should you buy a term plan? Should a 30 yrs old guy buy a term plan up to 80 yrs? The answer is NO.

You should not buy it for the longest tenure possible because you only need life insurance policy till your retirement and not beyond that. This is because not many family members will be financially dependent on you beyond your retirement age.

When we are young, we have more financial responsibilities, and hence it makes sense to take a big cover. But as our age increases, our assets will grow and at the same time, we will be moving towards the retirement age, at which point we no longer remain provider for our families.

3. Don’t get mislead by “per day premium” marketing gimmick

A lot of insurance companies have started to advertise their term insurance plans by sharing the cost per day basis, like for example – “Buy 1 crore term plan just for Rs 25/day”. However, note that these numbers might be applicable only for a certain age group and tenure of the policy.

Like it might happen that the advertised premium per day is only for the clients around 25 yrs and for a policy of 40 yrs.

cheap term plan premium

Your case will be different and the premiums might differ for you, so don’t get trapped by the lure of cheaper premiums.

4. Don’t buy single premium policies

At times, you have to choose between single premiums vs. regular premium while purchasing a life insurance policy. A lot of people think that just because they can afford to pay a onetime premium, it makes sense, but it’s not true.

Other than some cases, it does not make much sense to pay a one-time premium (single premium) while buying a term plan. The best option which will work for most people is the yearly premium. So if your agent is trying to explain to you how a one-time payment will help you save the cost, run away and don’t fall for it.

5. Take an increase in premiums in a positive manner

This is a big one which is critical to understand.

When you buy a term plan (or even health insurance), sometimes your premiums can increase after your medicals are done and you may be asked to pay an extra premium. This increase in premium is due to health issues and it’s very valid to ask you to pay this extra premium.

Most of the buyers are very critical of the premium increase and choose to not move ahead or postpone their decision of buying the plan.

However you should understand that the premiums increase is a natural thing to happen if you are of the high-risk category (like a smoker, alcoholic or if some past illness). It’s actually a good thing that the company is beforehand checking the facts and still offering you the plan, though at a little high premium which is very fair from their point of view.

If you are still not clear on this, you should learn how insurance companies work and what is their model?

At that point, rather than postponing the decision, the best thing is to go ahead and buy the policy.

6. Don’t get over-excited by term insurance riders

“Riders” are great add on with a term insurance plan, but only if you really require them or if they are specific to your case. Don’t add them just because it’s available and gives you a sense of more security. I mean if you do a lot of travel and are most of the time in your case, the risk of dying in an accident is higher for you, so in that case, you can add an accidental rider. Here are various types of term plan riders

  • Accidental Death Rider
  • Permanent & Partial Disability
  • Critical Illness
  • Waiver of Premium
  • Income Benefit Rider

In the same way, if you feel that you want to cover the risk of some critical illness in the future and don’t want to buy a separate policy, then you can add critical cover. But don’t add any term insurance riders for the sake of it.

7. Buy the basic version of the term insurance plan

A term plan comes into various flavors nowadays. The most basic one is the one which pays you a lump sum on death. However, there are other variations now which also gives you income for 10/20 yrs along with the main cover, or pays only the income for the next 10/20 yrs and a small lump sum at the time of claim.

I think one should just choose the base policy in most of the cases. Most of the other options are designed for very specific situations and they are not “better” or “bad” compared to the base policy. To check this, you can go to any term insurance premium calculator and find out the premium with rider and without a rider.

8. Tell them if you are smoker/alcoholic

One of the worst things you can do while purchasing any life insurance plan is to hide the fact that you are a smoker or consume alcohol. Please don’t hide it. There is nothing like a best term insurance plan for smokers in India at the moment.

Your premium calculation happens based on this critical information and if you hide these facts, then you are actually breaching the contract with the company and almost always your claim will be rejected at the end. Also, don’t think that just because you smoke just once in a while does not make you a non-smoker.

Below is some data from economic times on the rising number of claim rejections because of the hiding of information.

Claim rejections in life insurance

If you smoke (even though every fewer number of times), you are a smoker in the eyes of the life insurance company. Same is the case with those who take alcohol.

Make sure you fill your own form because there have been cases when an agent just mentions the policyholder as non-smoker or non-alcoholic to make sure the policy is easily issued.

9. Don’t hide your health information

Another grave mistake done by policy buyers is to hide any critical health information while purchasing the policy. If you have any health issues or have gone through any major operations/surgeries then you should clearly communicate that to the insurance company. One of the reasons for term insurance claim rejection is hiding important facts while purchasing the policy.

Please don’t wait for the insurance form to ask you the exact details.

An insurance policy is actually a proposal from your end in the eyes of law where you have to disclose all the facts and the company will accept your case or reject it. So the bonus of providing all the information is on you.

10. Don’t hide your family health history

Even your family health history matters. If your parents or siblings have some illness, then even that should be shared by you. Please don’t hide it because even that information impacts your premium.

Many people think that just because their parents had diabetes, it does not matter at all. That’s not true.

11. Don’t take small insurance cover (like 10-20 lacs)

Do you know that the average sum assured per India is in the range of Rs 90,000 to 1 lac only? Indians on average are highly uninsured, however, that’s mostly true for those who do not have term plans. But even those who have term plan try to cut the corners and eventually take less term insurance cover.

The most favorite number nowadays is Rs 1 crore. I see most of the people just taking a 1 crore term insurance plan thinking that it’s the right number. No, it’s not the case.

life insurance formula

With the rising costs and lots of aspirations, Rs 1 crore might not be enough for most of the families all their life. I suggest you should take a good enough cover which gives you enough peace of mind.

Make sure you add up all your liabilities, 300 times of your monthly expenses and some more amount which can help your family reach your other financial goals and take at least that much cover.

If your life insurance requirement is Rs 1.3 crore, better than a 1.5 crore and not 1 crore.

12. Don’t overanalyze and delay your decision

Do you see that ad these days on TV where a lady shouts on her dead husband for forgetting to buy the life insurance even though they had decided to take it

“Kya, tum term insurance Lena bhul gaye, ab Ghar ka kharcha Kaise chalega”?

One of the biggest issues with most of the potential policy buyers is that they want to buy the best term insurance policy and don’t want to make any mistake. They are aware that they need a life cover, they also start searching for the policy, do the term insurance comparison, but then start to over-analyze the policy, its features, the premium comparison and what no.

Finally, they just don’t take any decision because of the analysis paralysis. They postpone the decision and think that they will “soon” buy it.

Don’t do this

But a decent term plan asap. Do some study, but don’t get into that zone where you are just stuck because of small points. It’s better to have a good term cover with any company, rather than having no cover trying to search for the best company.

13. Don’t forget adding nominee name

While filling the insurance form, make sure you carefully put the nominee name. But who can be a nominee in insurance? Ideally, it should be wife, children or someone whom you want to pass the term plan money. But try to avoid very old people as the nominee (in general).

Also make sure you mention this fact in your WILL too, or if you are not going to create a WILL right now, you can take the life insurance policy under MWP Act, so that your nominee will be the final person (it can only be wife and kids if you add MWP) who gets the money.

If you have bought the term plan long back and now your preference has changed, it’s better to change the nominee name.

14. Don’t take more than 1-2 policy

You should ideally have 1 term plan policy in your life insurance portfolio, the max can be 2 policies. But nothing more than that.

I have seen some people dividing their 2 crores of the cover into 4 policies of 50 lacs each with 4 different companies and it’s a little bit of stretch. In almost all cases, 1 single policy of a big amount is good enough.

However, if you still feel that you want to break it into two policies, that’s the maximum you should do. Also, some people who are buying another term plan after a couple of years should not note this point that they should eventually not have more than 2 policies.

15. Disclose the old insurance policy

When you buy any life insurance policy, it’s mandatory as per their rules to disclose the old insurance policy you already have. In most the cases, when people buy a term plan for the first time, they already have a couple of traditional insurance plans, but they fail to declare that.

I suggest you don’t do that because as per life insurance policies, a company should know how much coverage you already have and only based on that they will offer you additional cover.

One should disclose old insurance policy while purchasing new insurance policy

If you have already bought a term plan without mentioning your old policies, you should reach the customer care of your term plan company and share with them about your old policies.

16. Be open to try online brokers

There are various online brokers which are building a long term business in the insurance space and provide various extra benefits to their customers like fast service, claim settlement assistance without you (customer) incurring extra cost, because they get compensated by the insurer (without putting any additional cost on your pocket).

The premium for you is the same if you buy it from the company directly only or through these brokers. These brokers give you various options to choose from and help you buy the policy which you want.

You can approach these brokers if you really feel they will add value to your transaction. I am not saying that online brokers are the only way to buy. If you are very critical of them or are old fashioned, then you can directly reach to company or your neighborhood broker.

17. Check the policy papers once you get it

One of the things which you should immediately do after receiving the policy is to check all the fine points and a copy of your medical examination. Nowadays, the policy papers have your medical records.

Kindly go through each point and make sure things like your age, name, blood group, address and other important things are mentioned correctly.

There have been cases, where the information has been wrong. If things are wrong, you can reach out to their company customer care to get it corrected.

18. Don’t fall for “10 times of Income” marketing

Almost all the call center marketing people try to sell you the cover equal to 10 times your yearly income. This often is a very simplified way of finding your life insurance coverage.

A better way to find out your coverage is to find out 300 times your monthly expenses and add up your outstanding liabilities to it. In the end, you can include 30-40 lacs more into the final number to take care of your other financial goals in future like kid’s education, etc.

For example, a guy with monthly expenses of Rs 50,000 per month and with 60 lacs of the outstanding loan will need 300 x 50,000 + 60 lacs = 2.1 crores at the minimum. So he can take a 2.5 crore term plan for himself.

However much life insurance you should take is a function of your expenses and liabilities and not your income. What if a person earns 6 lacs a month, but a modest Rs 50,000 month expenses with no liability?’

How to calculate life insurance cover value?

The “10 times of your income” marketing will say that he should buy a 6 crore term plan, whereas his right number would be in the range of 1.5 to 2 crore only.

19. Choose a strong and good brand while choosing Insurer

There are 24 life insurance companies in India (the year 2017) right now. Do you think each of them are equal in terms of surviving, claim settlement experience (not ratio), dealing with clients, depth of medical examinations, integrity in conducting business and what not?

Here are the list of all the life insurance companies in India as of 2017.

  • AEGON Life Insurance
  • Aviva Life Insurance
  • Bajaj Allianz Life Insurance
  • Bharti AXA Life Insurance
  • Birla Sun Life Insurance
  • Canara HSBC OBC Life Insurance
  • DHFL Pramerica Life Insurance
  • Edelweiss Tokio Life Insurance
  • Exide Life Insurance
  • Future Generali India Life Insurance
  • HDFC Standard Life Insurance
  • ICICI Prudential Life Insurance
  • IDBI Federal Life Insurance
  • IndiaFirst Life Insurance Company Ltd – India First
  • Kotak Life Insurance
  • Life Insurance Corporation of India (LIC)
  • Max Newyork Life Insurance
  • PNB MetLife Insurance
  • Reliance Life Insurance
  • Sahara Life Insurance
  • SBI Life Insurance
  • Shriram Life Insurance
  • Star Union Dai-ichi Life Insurance
  • Tata AIA Life Insurance

When you choose a life insurance company, you should make sure you choose the one which has a strong presence, along with a good brand (not the biggest). Read reviews online and check their data and read about them.

20. Communicate to your family that you bought a term plan

You should share about buying the term plan with your family immediately along with the policy papers and the contact number of the insurer.

You can also write down the claim process on paper and keep that at a safe location and share it with family. I know it’s not an easy conversation to do even though it’s a logical thing to do. But at least communicate with your family about the important things they should be aware about.

20 things to know before buying a term plan

Steps to follow while buying the term insurance plan online

  • Understand your requirement first, find out how much insurance cover you are looking for
  • Go to various term insurance premium calculators on the web, and see what is the premium amount
  • If the premium is within your budget, then apply for the term plan
  • Make the initial premium payment and start the documentation
  • Medicals will be arranged for you by the term plan company which you should complete on time
  • Once everything is fine, your policy will be issued.

Let us know if you still have any queries?

7 alarming signals that you will not retire RICH in future

Posted on by Jagoinvestor

Will you become RICH in the future?

I know it’s your aim and you want to become rich, but there might be many things you are doing which are increasing your chances of remaining poor or middle class going forward. These are clear indications or signals that you might not become RICH and it’s time to do something about it.

Will you retire Rich or Poor?

I want you to read each point I am going to talk below and check if it’s applicable for you or not. Rather than an intimidating article, I want you to see this article as a wakeup call for yourself and redesign your financial life.

Signal #1 – Your Focus is not on increasing your income

Is your focus on increasing your current income? Do you think about it, fantasize about it and try to take any action? No, it’s fine if you are not succeeding right now, but the main question is – “Is it on the conscious checklist that you need to increase your income?”

Not increasing their income was one of the top most regret of most of the people in our survey

A lot of investors are just going with the flow of life and treat their income increase as fate. They feel they do not have much control over it and hence don’t do anything about it.

Given the way expenses are increasing these days, it’s almost a given that you will not be able to create wealth if you do not work towards an increase in your income.

Signal #2 – You depend too much on credit cards and loans

Are credit cards and personal loans your lifeline?

Are you consuming most of the things like Car, Bike, Vacations, Mobile on EMI? If that’s the case, you are in the EMI trap already and coming out of it is not easy.

Time will keep passing and it will be difficult for you to get out of it. This is a big signal that there is something seriously wrong in your way of life. Other than a home loan and the Education loan, or any emergency personal loan, if you have made taking loans and swiping your credit card every now and then for trivial things, it’s a big signal that you will not end RICH

Signal #3 – You are unable to save anything from last many years

Past performance is not an indicator of future, BUT past indicator is at least signal of what can happen in the future. If you are unable to save much from your salary from the last many years, it’s something to worry about.

There is a great chance that what has happened in past will continue unless you give it a direction yourself.

[clickToTweet tweet=”Once you reach #retirement, your income will stop, but your expenses will not. ” quote=”Once you Retire, your income will stop, but your expenses will not, That’s the reason you should start your retirement planning”]

It’s time to meet a good advisor and work on your financial life. Either you seriously need to work on your income potential or take some drastic steps to reduce your expenses.

There is huge number of investors who think that – “From next year, I will start saving” and this is not happening from the last many years. It’s a signal that you might not get RICH in the coming decades.

Signal #4 – You are already very late in saving

Just because you are late, does not mean that things can’t change now, but the effort you will have to put in will be a lot now. It’s like a game of cricket. If you have to chase a big score and you have lost some wickets before 25 yrs and have not made many runs, now you need to show the extraordinary game to win the match. The run rate required will be quite high.

Let’s take an example of 3 people who started saving at 30 yrs of age, 40 yrs of age and 45 yrs of age and they all want to retire at 60 with Rs 10 crore corpus.

The one who starts saving at 30 yrs, will have to save Rs 35,000 per month throughout his life. However, the one who was late by 10 yrs will have to now save Rs 1.15 lacs, around 3 times more.

And the one who is late by further 5 yrs (at 45 yrs) will have to save Rs 2.25 lacs (almost 7-8 times more).

late investing example

In the same way, in your financial life, if you have lost a good chunk of time already, you will have to save much more and take more risks to reach the goal of wealth creation.

I anyone wants to start their wealth creation, then you can open a FREE mutual fund account with Jagoinvestor.

Signal #5 – Every month-end is a struggle

If every month end a struggle for you financially?

If it’s happening from the last many years, you need to understand that this is not a good sign for the future. You first need to get into a situation, where your month-end is not a struggle, then at the next stage you need to move to a stage where you save some month each month and finally, you need to work towards a situation that you save substantial money each month.

Signal #6 – If your job opportunities are very limited

Are you into a business or a job where it’s very tough to survive to find another job easily? In short, are employed in a sector that does not have enough opportunities? If that’s the case, and if you rank yourself “average”, then you might find it tough to search for other jobs that pay better salaries.

Also if your skillset is limited, your main challenge is of “survival” and that’s not a great aim to have.

Signal #7 – You seek too much “safety” in your investments

Finally, if you are an investor who does not want to take enough risk with their investments, means they just want to get predictable near inflation returns, then it means you are a Fixed deposit or PPF lover. Nothing wrong in that, because it’s your design internally and you have got developed as that kind of investor, but you need to be clear that you are earning only near inflation returns.

Check out the video below where I talk about why investors should avoid fixed deposits for long term investments.

If you invest in FD’s or equivalent products, your corpus will become bigger and bigger in number over the years, but it will not increase your purchasing power. Unless you invest very huge amounts, the corpus you will create will not be enough to be called RICH in the future.

How many signals are present in your financial life?

Out of these signals which we discussed above, how many are true for you? What are your thoughts on the points above? Can you share them in the comments section?