15 Best Tax Saving Options under Section 80C

Posted on December 29, 2018November 16, 2019 by Jagoinvestor

What so ever we earn, even then if our income is taxable we don’t want to pay tax on that income. We have a soft corner for our income. In this way, we tend to avoid paying taxes. We must remember that paying taxes on time signifies that you are a good citizen of your country.

As we all know the Government of India knows that we work so hard to earn this income. So in order to save more money from being taxed, the Income-tax Act 1961 section 80C allows a certain deduction to lower tax liability against taxable income.

tax benefits of 80c

Who all can claim deductions under section 80C?

An individual and HUF (Hindu undivided family) can claim all deductions under section 80C.

Most of the people are concerned about taxes, especially newly joined employees. Everyone wants to know about the deductions under various sections so that they can invest their hard earned money and save tax. To help you understand more, I have listed down what all tax savings investments come under section 80C of Income Tax Act 1961.

Tax saving investments U/S 80C

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Options #1 – Equity Linked Savings Scheme (ELSS)	Options #2 – 5 yr Tax Saving Fixed Deposits
Options #3 – Public Provident Fund(PPF)	Options #4 – Sukanya Samriddhi Yojana
Options #5 – Life Insurance Premium	Options #6 – National Savings Certificate(NSC)
Options #7 – Infrastructure Bonds	Options #8 – Tuition Fees
Options #9 – Senior Citizen Saving Schemes(SCSS)	Options #10 – Home Loan Payment
Options #11 – Registration expenses of House and Stamp duty	Options #12 – Post Office Time Deposits
Options #13 – Unit Linked Insurance Plan(ULIPs)	Options #14 – National Pension System(NPS)
Options #15 – Employees Provident Fund(EPF)

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If you are in a rush and you want to cover all the points. So, we have attached a crisp video for you below.

Options #1 – Equity Linked Savings Scheme (ELSS)

ELSSs are equity mutual fund schemes that invest in stocks. They have a mandatory lock-in period of three years. They are riskier than other options like Public Provident Fund, National Saving Certificate, etc. However, they also have the potential to offer superior returns. ELSS category has offered an average return of 18.45 percent in the last five years. Investments in ELSSs qualify for tax deduction under Section 80C of the Income Tax Act. The maximum tax deduction allowed under Section 80C is Rs 1.5 lakh.

Options #2 – 5 yr Tax Saving Fixed Deposits

Tax saving fixed deposit (FD) is a type of fixed deposit, which comes under section 80C of the Indian Income Tax Act, 1961. This kind of deposit is offered for a lock-in period of 5 years. The maximum deduction an investor can claim through it is Rs 1.5 lakh. FD gives us 100% security of capital + guaranteed return on invested amount.

The rate of interest offered by banks ranges from 7 to 9% (may vary from banks to banks). The deduction is available to individuals, members of the Hindu undivided family (HUF), senior citizens and NRIs. As it is a lock-in fund, premature withdrawal is not allowed. This deposit account can be opened as single or joint holding mode. However, in case of a joint account, the tax benefit will be availed by the first holder of the deposit.

Options #3 – Public Provident Fund(PPF)

PPF is a long-term investment option of 15 years by the Government of India with an attractive interest rate of 8%(with returns fully exempted from Tax). One can invest minimum Rs. 500 to a maximum of Rs. 1,50,000 in one financial year. Deposits can be done in a maximum of 12 transactions only. One can also enjoy loans, withdrawals, and extension of the account. Loans can be taken against the Public Provident Fund between 3rd to the 6th financial year. A partial withdrawal facility can be taken from the 7th financial year onwards. The account can be extended for a period of 5 years after maturity but in a block-in mode.

Options #4 – Sukanya Samriddhi Yojana

This scheme is one of the most popular schemes by the Government of India. The aim of this scheme is to give a better future to the girl child in terms of education and marriage expenses. This scheme was launched in 2015 as a part of the Beti Bachao and Beti Padhao campaign. Parents or guardians can open the account anytime in the name of a girl child between the birth of a girl child till she attains the age of 10 years.

Up to 50% of the deposit amount can be prematurely withdrawn once the girl reaches the age of 18 years. The interest rate on Sukanya Samriddhi Yojana is 8.1%. The investment amount is limited to a maximum of Rs.1,50,000 in a financial year. Investment, withdrawals & maturity amount are tax-free. The maturity of this account is after 21 years.

Options #5 – Life Insurance Premium

The life insurance premium is a payment made to secure our life. It is paid in the name of the taxpayer or the taxpayer’s wife and children. It is an eligible tax-saving payment under Section 80C. The deduction is valid only if the premium is less than 10% of the sum assured. One can get deductions up to 1.5lakhs a year.

Options #6 – National Savings Certificate(NSC)

NSC is a savings bond that encourages subscribers (mainly small to mid-income investors) to invest while saving on income tax. This investment is mainly a savings scheme for resident individuals only. Hence, Hindu Undivided Family (HUF), Trusts and NRIs cannot invest in this scheme. Indian individuals can buy it from the nearest post office in an individuals name (for a minor) or with another adult( as a joint account). This investment comes with 2 fixed maturity periods – 5 years and 10 years.

The minimum investment amount is Rs 100 with no maximum limit. Investments of up to Rs 1.5 lakhs in this scheme are allowed as a deduction under Section 80C of the Income Tax Act. The interest rate is fixed which 7.6% to 8.5% annually is currently. Many investors take loans on this certificate from the banks. The NSC can be transferred from one individual to another if the certificate holder intends to transfer.

National Saving Certificate

Options #7 – Infrastructure Bonds

A bond is an instrument to borrow money. Basically, they are borrowings that are to be invested in government-funded infrastructure projects within a country. They are issued by governments or government authorized Infrastructure companies or Non- Banking Financial Companies. Infrastructure bonds are not available all the time.

Whenever the government needs some money then they issue these bonds to raise money from the common people. An Indian resident(not minor) and HUF can invest in this bond with a maturity period of 10-15 years with an option of buy-back after a lock-in of 5 years.

These bonds are listed on Bombay Stock Exchange(BSE) and National Stock Exchange(NSE).Investments up to Rs. 20000 are eligible for income tax deduction under Section 80CCF of the Income Tax Act(this is over 1.5 lakhs of deduction available under section 80C).

Options #8 – Tuition Fees

Under section 80C, the government of India allows tax exemption on the tuition fees paid by the individual for their children. To be more precise the deduction is available only on the tuition fees part of the total fees paid. Other components of fees such as development fees, transport fees are not eligible for deduction u/s 80C. The deduction can be claimed for only 2 children.

For e.g, If a person has 4 children and father is the only earning member in the family whose income is taxable then he can claim an exemption for only 2 children and not 4 children. But if both the parents are working and both of there income is taxable then they both can claim and get an exemption for all the 4 children. Adopted Children’s school fees are also eligible for deduction.

Options #9 – Senior Citizen Saving Schemes(SCSS)

SCSS is a savings scheme for a senior citizen who falls under the age group of 60 years and above. Those senior citizens who are at the age of 55 years or more but less than 60 years (who have retired on superannuation or under VRS) can also avail of this scheme, within one month of receipt of retirement benefits and the amount should not exceed the number of retirement benefits.

The senior citizen can visit the nearest post office to avail of this scheme. A joint account can be opened with a spouse or husband only( with the first depositor as the investor). The account can be transferred from one post office to another.

There can be only one deposit in the account in multiple of INR.1000/- maximum not exceeding Rs 15 lakh. The current interest rate is 8.7% per annum. Maturity period is for 5 years. After maturity, the account can be extended for three years more (by giving an application in the prescribed format).

In such cases, the account can be closed at any time after the expiry of one year of extension without any deduction. TDS is deducted at source on interest if the interest amount is more than INR 10,000/- p.a. Nomination facility is available at the time of opening the account and also after opening the account.

Options #10 – Home Loan Payment

One can claim deductions on principal repayment for the home loan. The exemption is available up to Rs. 1,50,000 within the overall limit of section 80C.
Conditions for claiming the deduction are as follows-

The home loan must be for the purchase or construction of a new house property.
The property must not be sold in five years from the time one takes possession

Options #11 – Registration expenses of House and Stamp duty

Registration expenses of house and Stamp Duty charges and other expenses related directly to the transfer of house are also allowed as a deduction under Section 80C, subject to a maximum deduction amount of Rs. 1.5 lakhs. One should claim these expenses in the same year one makes the payment on them.

Options #12 – Post Office Time Deposits

The post office time deposit is a post office scheme. An individual and minor(for 10 years and above) can open an account here. Minor after attaining majority has to apply for conversion of the account in his/her name. A joint account can be opened by two adults. A single account can be transferred into joint and vice-versa. Nomination facility is available at the time of opening and also after the opening of an account.

The account can be transferred from one post office to another. The Interest is payable annually but calculated quarterly. One can make a minimum investment of Rs 200 with no maximum limit. The investment under 5 Years Time Deposit qualifies for the benefit of Section 80C of the Income Tax Act, 1961.
The interest rates increase year after year –

1 year A/c is 6.9%
2 year A/c is 7%
3 year A/c is 7.2%
4 year A/c is 7.8% (interest rates as on 01.10.2018)

Options #13 – Unit Linked Insurance Plan(ULIPs)

ULIPs stands for Unit-Linked Insurance Plans. It is a combination of insurance and investment. Here policyholder pays a premium monthly or annually. In this plan, a small amount of the premium goes to secure life insurance and rest of the money is invested just like a mutual fund does. ULIP offers investors to invest in equity and debt. Life insurance ULIP must be kept in force for 2 years to claim deduction u/s 80C.

Options #14 – National Pension System(NPS)

The NPS is a pension scheme by the Indian Government which allows the unorganized sector and working professionals to have a pension after retirement. This can be opened by any Indian citizen aged between 18 and 60. No limit on maximum contribution.

The interest rate varies between 12% – 14%. Partly withdrawals are allowed only after 15 years but under special conditions. Investments of up to Rs. 50,000 can be used to avail tax deductions under Section 80CCD. This limit of 80CCD is deductible over and above the maximum limit of section 80C (Rs.1.5lacs).

Options #15 – Employees Provident Fund(EPF)

EPF is a retirement scheme which is available to all salaried employees. 12% of basic salary + DA, is deducted by an employer and deposited in the EPF or other recognized provident funds. Any employee with a basic salary of 15000 per month can open the EPF account.

The interest rate payable is 8.55%. The basic requirement of this scheme is that both the employer and employee will have to contribute a minimum of 12% basic pay+D.A. The entire PF balance with interest is tax-free if it is withdrawn after 5 years of continuous service.

Case Study – Radha recently started working in an organization. She wanted to have a better life after retirement. So she decided to save more for her future and requested her employer to deduct more 8% from her basic pay in terms of EPF. So all together Radha invested 20 % of her basic pay every month for her better and secure future in EPF. This phenomena of voluntarily investing more in EPF is called VPF (Voluntary Provident Fund).

CONCLUSION :

So, by now you all have come to know the various options to save your hard-earned money from getting taxed. Rather than just sticking to one option, don’t you think you should invest a little-little in few options so that you can get good interest rates and lump sum amount after maturity.

Please let us know your views about this article. If you have any doubts or query, leave in the comment section.

4 Steps to check your Aadhaar authentication history online (VIDEO INSIDE)

Posted on September 19, 2018January 11, 2019 by Jagoinvestor

Do you know where was your aadhaar number used for various purposes in the past?

Aadhaar has now become a central part of our life and it’s integrated with so many services. You have your critical information linked to aadhaar, and if you allow a service to authentic yourself using aadhaar number, it fetches your data and uses it.

While it has made life easy and simple, it also opens up to the chances of data leak and someone else using your aadhaar to authenticate for some service.

UIDAI has come up with a service where you can check Aadhaar Authentication History online. Below is a quick video which shows you how you can do it.

The main objective or purpose of this authentication process is to verify the identity of a person and to avoid the fraudulent cases. It helps the service provider to identify whether the person who is requesting for the service is trustworthy or not.

How does the process of authentication work?

When you submit your Aadhaar card at anywhere as an identity proof, that service provider asks you either to submit a copy of your Aadhaar card or sometimes he may ask for your bio-metric details like fingerprint or IRIS.

These details are then submitted to the CIDR of UIDAI i.e. Aadhaar verification department. This request can be initiated through any devise like laptops/desktops or mobiles. CIDR then cross checks this information with the details on UIDAI.

If your details match then the service provider will approve your request.

Aadhaar authentication can be done on the basis of 3 means –

Bio-metric details – Finger print and IRIS
Demographic details – Name, age, gender, DOB etc.
One time password – on registered mobile number

Any service provider where you submit your Aadhaar card as an ID proof can request CIDR for this authentication.

4 steps to check your UIDAI authentication history?

Let’s see these steps briefly –

Step #1: Go to the website of UIDAI or you can click here, and then click on “Aadhaar authentication history”

Aadhaar authentication

Step #2 – Enter your Aadhaar number and security code and click on generate OTP.

Step #3 – Now select the type of authentication history which you want to check. Then select the time period and how many entries you want to check (You can select maximum 50 entries). Finally enter the OTP you received on your registered mobile number after step 2 and click on submit.

Aadhaar authentication

Step #4 – This is the last step of this process where you can see the list of all the entries of authentication process.

Aadhaar authentication

Do let us know if you liked this information and if it helped you !

How to Lock and Unlock Biometrics details in Your Aadhaar Card?

Posted on October 9, 2018November 18, 2019 by Jagoinvestor

Aadhaar card is becoming the most important documents for any individual in India. Isn’t it very critical to secure crucial details from hackers who might try to steal your data? Some months back, even MS Dhoni’s Aadhaar data was leaked.

So today we will talk on how you can secure your Aadhaar card bio-metric details and prevent others to access your data, and also how to unlock it back later.

secure Aadhaar card

Why unlock your Aadhaar card details?

At the time of applying for Aadhaar card, you gave your photo, fingerprints and iris details (eye scan) which is called biometric details.

Nowadays, every organization like phone companies, financial organizations have come up with the concept of e-KYC, where they will just enter your 12 digit Aadhaar number into their Aadhaar-based authentication system instead of asking for all your details when you want to open an account, and it will access all your information like name, date of birth, address etc. from the Aadhaar database.

Details of information captured in Aadhaar:

Photo
Signature
Full name
Address
Mobile number
Date of birth
Education
Bio-metric
Bank details etc.

If you lock your bio-metric details then no one will have the authority to use it without your permission. Not even any government institution. If you want to perform e-KYC then you can unlock it for 10 minutes, after that it will lock again automatically.

This locking and unlocking can be done only through online and your mobile number or mail ID must be registered in your Aadhaar.

How to Lock your Aadhaar card Details?

Open the official website of UIDAI.
Click on Lock/Unlock Biometric given under Aadhaar services as per the screenshot below

Lock unlock Aadhaar details

Read the details given above the page so that you come to know about the facility in detail.
Fill your Aadhaar number and the security code and click on Send OTP.
Enter the OTP you received on your registered mobile number and press enter.
Then click on Enable locking option.
Your Aadhaar bio-metric details are safe now.

How to Unlock your Aadhaar Details?

Unlocking Aadhaar details gives you two options which are unlocking on a temporary basis and on a permanent basis. Here are the steps to unlock.

Visit the official website of Aadhaar card i.e. UIDAI
Click on Lock/Unlock bio-metrics.
Enter your Aadhaar number and security code and click on Send OTP
Enter the OTP received.
Now if you want to unlock your details for temporary then click on “Unlock It”.
And if you want to Unlock your details permanently then uncheck the checkbox of “Lock” and click on “Disable Locking”

Why do we need to safeguard our Aadhaar details?

It is of utmost importance to secure yourAadhaar card details. Let us know why we need to secure our Aadhaar details.

As we all know that Aadhaar card is becoming the Unique identification and in future every legal procedure will be Aadhaar verified. This means that if someone has your Aadhaar details then he/she can take advantage of your details and misuse your Aadhaar card.
Various companies have taken contracts of issuing Aadhaar cards. So they had taken the biometric details of every person who enrolled for Aadhaar card through these companies. Now as these companies have your details there is a possibility that they may misuse these details for their own purpose.
The experts have said that the details provided in the Aadhaar card should be secured so that no one can take advantage of any other person’s personal details.
This newly introduced safety feature can help you to secure your details and only you have the authority to unlock the details whenever you wanted. No other person, company or bank has permission to use these details without your permission.

For this, your registered mobile number must be in use because the OTP required will be sent on the registered number.

You can click on this video given below to see the feature.

What if I happen if my mobile number or E-mail ID is not registered?

As per our conversation with the Aadhaar customer care executive on their contact No. 1947, if you don’t have your registered mobile number or E-mail ID in use, you cannot go further for the online procedure to update or Lock/Unlock your details.

In that case, you have to visit the Aadhaar center with the Xerox copy of your Aadhaar, fill the required details and submit it.

To search the nearby Aadhaar center you can visit this link. Or you can download & fill the form by yourself, attach the copy of your Aadhaar and send it by post on the address given on the form.

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

Posted on March 9, 2018November 6, 2019 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 February 27, 2018November 19, 2019 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

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
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.
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
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
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)
Carry your documents – Carry a copy of your PAN, Adhaar card or another address proof and photos (just in case)
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 February 9, 2018November 6, 2019 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.

[su_table responsive=”yes” alternate=”no”]

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!

[/su_table]

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 February 2, 2018July 22, 2019 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 :

[su_table responsive=”yes” alternate=”no”]

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).

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

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 January 17, 2018January 11, 2019 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

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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 December 19, 2017March 1, 2019 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”

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.

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.

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.

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.

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”.

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 November 20, 2018November 18, 2019 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?