6 simple reasons why you should get serious about Savings starting today?

Think for a moment that you have 3 yrs worth of your salary in your bank account.

How does it feel?

So if you earn Rs 10 lacs a year, you have Rs 30 lacs lying in your savings (other than real estate). If you earn 20 lacs per annum, its 60 lacs!

saving money for future

But in real life, most people do not take enough effort to save more money. It’s on their wish list to “start saving from next month”, but the motivations soon fizzles out. Most of the people are so busy and stuck with various problems in life that with each day, saving money for the future remains a distant dream for many.

Are you one of them?

Life has various dynamics.

Many people are stuck in a bad job, while some people are in a bad marriage which is draining all their energy and time. Some people are running around to arrange for a house down payment, while some are wondering if they should have a second kid or not!

Life keeps throwing so many things at us, that we forget where we are headed towards and we are not able to see how our actions today will shape our future.

We keep dealing with the NOW, only to realize many years later that our FUTURE is almost there waving at us. And then suddenly we realize that we have so much to catch up in life. More health, More money and more happiness!

We start our jobs in our 20’s, then settle by the end of the ’30s, move to next level in our lives while we are in our 40’s and then in this journey we realize we are approaching our 50’s and if we have not done a good job of saving enough money then we PANIC !

And we tell ourselves – “Oops .. I could have handled my life in a better way, if only …”

As per an HSBC report, around 47% of the Indians have not yet started saving for their retirement or have stopped it after starting.

 

6 reasons why you should save money and create wealth

Today I want to do a deep conversation regarding saving money. I know you might feel, is there a lot of it to talk about that?

Today I want to make sure that this is the last article, to get serious regarding saving & investing more money in your life (I will refer to “saving and investing” as “saving” in this article henceforth).

Almost all people feel that “saving money” is only related to securing your future. The equation for them is

Save money = Lead a better life tomorrow

But there is more to it!

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Reason #1 

To secure your future

Reason #2 

To do what you love in life

Reason #3 

To spend and live a better lifestyle

Reason #4 

To be financially independent

Reason #5 

Peace of mind

Reason #6 

To pass your wealth to next generation

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There are various other angles you need to think about, and that’s what I want to discuss today. So read this article with all our eyes open!

Reason #1 – To secure your future

Let’s start with the most basic and core objective of saving money. You save money to accumulate the money and use it for your future requirements.

Let me give you a surprise – “One day, your salary will stop coming in your bank account”

There will come a time when you will be left with 40 more years of your life and there won’t be a regular salary coming into your account like it happens today. You need to create a big enough corpus, which helps you to lead a life you desire for the next few decades till you die.

You should not be worried about “death” in today’s world, It should be “living enough”.

Some people think they can avoid creating their wealth because their kids will take care of them. However, it’s up to you to decide if that’s the right approach towards life or not.

Savings and Investing definition by a 9 yrs old girl

Long back, Subra had asked a 9 yrs old kid to read a book on money and summarize what she learned about “saving and investing” and she gave a very crisp understanding about it. Please appreciate the simplicity of the girl’s thoughts.

Saving: Saving money is very important. We should save money because if one day suddenly we need money we will have it with us. If we just keep on spending all the money that we get and one day we need money we will not know what to do. I am also saving all my pocket money because I might need it in the future. I have kept it in a bank account and I get interested in that every year.

Investing: Investing makes our money grow. Just as a plant grows from a seed to a plant. When we keep our money in a savings bank we get interested but if we will invest our money in fixed deposits, shares, mutual funds, public provident funds, etc. our money will grow from a small amount to a big amount faster. Real money takes more time to grow whereas a plant grows within weeks.

Start saving some money for future

If you can’t manage to save enough money, at least start saving some money starting next month TODAY. Let me share with you some numbers on this. If a 30 yrs old person invests Rs 10,000 per month for the next 30 yrs consistently, then @12% average return over the long term, a total of approx Rs 4.4 crore can be accumulated.

How Rs 10,000 per month investment will create a big corpus of 4.4 cr in 30 yrs

I know a lot of people who can surely start with Rs 10,000 per month investment. Don’t worry if you can’t do that much?

What about Rs 5,000? Rs 2,000 ?

Anything is a good start! , upgrade later – but at least START.

Our team at Jagoinvestor helps our readers to start their SIP in mutual funds and track their goals on an ongoing basis. If you are interested to start your wealth creation journey with us, just leave your details here and a mentor from Jagoinvestor team will reach out to you in the next 24 hours

[su_button background=”#FFA52F” size=”6″ url=”https://www.jagoinvestor.com/mutual-funds” target=”blank”] Start your SIP in Mutual funds with Jagoinvestor Help [/su_button]

 

Reason #2 – To do what you love in life

Do you love what you do?

No, I am not talking about pursuing your passion for living or doing a full-time job in the area which you love. All I am saying is do you have enough time and money to do things you love for a few hours each week? Something which you truly want to do other than your regular job work?

  • Do you love traveling to new places, but you are stuck because the EMI needs to be paid first?
  • Do you love photography, but those costly lenses seem to be out of your budget?
  • Do you want to socialize more by throwing a party for your friends, but worried about how you will afford to do it?
  • Are you afraid to tell your boss that you want to go on a month-long road trip, with your best friend which was planned years back?
  • Want to go on a weekend trip with your friends, but oops. it’s out of the budget!

It’s going to be very tough to achieve all the points mentioned above if your bank balance is very low. Less money means less power with you!

While you cannot afford a lot of things, you can’t also arrange for a lot of time to do all these things, because you can’t make some tough decisions because you are so dependent on monthly paychecks.

You need two things!

You need money or time to pursue your hobbies and both of these will come only when you focus on creating wealth.

money and hobbies

I understand that you will not be able to achieve all these things right now, but If you don’t start your wealth creation right now, you will NEVER be able to achieve the above. Enough wealth in your kitty gives you that power to do things you love.

If you are so much dependent on your monthly paychecks, it’s going to be very suffocating going forward. A lot of wonderful people are dying slowly inside because they have no wealth created.

Reason #3 – To spend and live a better lifestyle

A lot of things in life do not require money. A great nap, a conversation with a good friend, a simple meal with your loved ones.

But then there are things in life which require money.

Yes, I am talking about those materialistic things.

  • A better Car
  • A better house
  • Dining in a great restaurant
  • Partying with your friends
  • Buying that gadget
  • Going on that trip
  • Redesigning your house
  • That Ladakh road Trip
  • That DSLR Camera
  • Travelling to exotic places with your family

You will spend money on various experiences and possessions, only if you have the money in the first place (not always, but most of the times), and you be able to do it only if you have money saved at your end at the first place.

Your lifestyle will improve only if you have created enough money.

While you can always take a personal loan and upgrade your car or go on that vacation and earn all the facebook likes, I am not talking that!

I am talking about, the real upgrade in your lifestyle which does not increase your EMI or stress level and does not compromise your cash flows to a big extent.

wealth and freedom

It’s easy to upgrade your life from a bike to a car and a rented apartment to the first house, but then beyond that’s it’s not as simple as it was earlier. It takes a good amount of money and dedication because we get stuck with EMI’s and mid-level crisis in our 30’s

So see, what are your aspirations for yourself and your family? What kind of life are you looking forward to in the coming times? Is your wealth enough to lead you there? Are you doing enough for that?

Reason #4 – To be financially independent

Don’t confuse financial independence with retirement.

  • Retirement happens “when you don’t work anymore”
  • Financial Independence happens “when you don’t work for money anymore..”

While retirement is linked to age (which is generally around 60), financial independence is a function of wealth and not your age. Financial independence can happen even at the age of 35 (My best friend at age 32 is already financially independent)

Where do you stand in your financial independence?

Financial Independence is often referred to as financial freedom. Nandish likes to describe as “A situation where your passive income equals your desired lifestyle expenses”

For a normal investor, financial independence can happen only when you start your wealth creation journey well at the start of your life and are disciplined enough not to disturb it for a long time.

Do you always want to keep doing the same job you are doing? And wait desperately for that “salary credited” SMS at the end of the month? How dependent are you on that monthly inflow in your bank account? How will your life look like if that SMS that does not arrive (I mean the money) for the next 6 months?

Millions of people go to their jobs in the morning with different moods depending on the day. They are happiest on Friday and very sad on Sunday night. You need to seriously start investing for the goal of financial independence if this is the case with you.

Difference moods of people when they go to work on different days

You need to also reduce your dependence on your active income (salary) as you move from age 25/30 to age 45/50. You should have created enough wealth in the first 10-15 yrs of your life that some part of your expenses can be met by passive income your wealth can generate if things go wrong.

I am not saying that you should create wealth and then start the passive income right away, but you need to create that situation for yourself. It will bring peace of mind (which I am going to talk in detail next)

Reason #5 – Peace of mind

Not have enough money brings a lot of stress. If you need peace of mind, you need enough wealth on your side which can comfort you!

You will keep worrying about the future now and then and every small financial problem will give you goosebump and force you to think about your scary future.

Imagine a guy who is around 45 yrs of age, and has not to create any significant wealth to show. By this time, he should have ideally created a corpus of 1 crore, but he has just 2 lacs in an FD which might get broken if some financial emergency happens!

This is bound to cause a lot of stress.

Various thoughts will cross the mind …

  • How will I meet my financial goals?
  • What if I lose my job?
  • What if I suddenly need a lot of money?
  • What if I am not able to give my kids all the things they want?

A respectable amount of money saved at your end might not end your worries, but it will surely bring some peace of mind and lower the stress. You know you are not in that bad shape and have arrived somewhere in the middle at least.

We surveyed with as many as 2,440 investors and we found out that 40% of the investors in our survey reported that the money matters have taken away their peace of mind.

As a general rule of thumb, If you have worked for X yrs in your life, you should at least have X/2 years worth of basic expenses saved at your end. This I think is the minimum one should aim for.

Our team at Jagoinvestor helps our readers to start their SIP in mutual funds and track their goals on an ongoing basis. If you are interested to start your wealth creation journey with us, just leave your details here and a mentor from Jagoinvestor team will reach out to you in the next 24 hours

[su_button background=”#FFA52F” size=”6″ url=”https://www.jagoinvestor.com/mutual-funds” target=”blank”] Start your SIP in Mutual funds with Jagoinvestor Help [/su_button]

Reason #6 – To pass your wealth to the next generation

A lot of families struggle for money generation after generations. The grandfather worked for money all their life, then father and then the son is also doing the same.

Many people who struggle financially set a goal in life that their kids should not face the same. They want to teach them money lessons and make them responsible, but also want to leave them a house and some wealth which makes their start a little easier in life.

Is that the right approach?

It’s a debatable topic if that’s the right thing do to or not. Many people believe that they should not handover anything to kids and let them create their own life out of what they have learned. Let them see the struggles and only then they will appreciate what they earn in life.

While that’s the correct approach for many people. I am sure we have many others who will not agree with that thought process in the same way.

Anyways, coming to the point, if you create wealth in your life, you can leave some part of it for your kids so that they can pursue things they truly wanted to do and not work just for money to bring food on the table.

A lot of wonderful people are never able to do things in life which they truly want to do. They are not able to live their own life fully because of the money matters. You need to check for yourself, if passing wealth to your next generation is part of your plan or not?

What will happen if you don’t save enough money for future?

So to summarize this article, there is a great possibility that one or more things mentioned below will happen to you if you do not get serious about saving money in your life going forward.

  • You will have hard time maintaining a good standard of living
  • You will depend too much on others (your kids maybe) for money
  • You will be spending a lot of time worrying about the future and how will your life end
  • You will be too dependent on your active income and will be forced to keep working even when you don’t like it
  • It will be hard for you to focus on things you love to do because you don’t have enough money or time
  • You will find it tough to lead a better life compared to current lifestyle

Final words

If you have still not crossed the age of 45, You still have a good chance to create a respectable corpus by the time you retire, even though you have lost a lot of time for compounding. Our team can help you in getting your financial planning done if you are interested to do leave your details for a small chat!

Just make sure you do not reach your pre-retirement age of 50+ without doing anything because that’s the zone where it’s going to be very tough creating any sizable corpus.

I don’t own a flat like Techie guys – So What ?

This is a guest post which is already published on Ravi Karandeekar’s blog, which is an excellent blog when it comes to real estate (more related to Pune). Ravi discusses various projects and his experience meeting with Builders and various stories of real estate frauds etc.

not owning a house

A few days back, I read a real-life story of a female IT engineer in Pune and she shared various aspects of her life in detail, which I thought should be read by more and more people and I took permission from Mr. Ravi, if I can republish his article on this blog, which he agreed to and I am thankful to him.

Here is a great write up below.

Hi Ravi,

I regularly follow your blog and I like your sarcastic style of writing. I have read several of your articles where you have highlighted the importance of living a quality life versus living a life under pressure to own a house as soon as possible at any cost in huge debt.

I think in life we have to make certain choices where we cannot achieve what others can because our circumstances are different. Mine is another such case.

I am an IT engineer and a daughter and a wife.

I am the only child of my parents so their entire responsibility is on me.

My parents are simple middle-class people who worked hard, saved every penny so that they can give me a comfortable life and a good education.

They sacrificed nearly every personal need of theirs so that I can go to a convent school, become an engineer and have a happy childhood with all worldly comforts. Beautiful clothes, birthday gifts, toys, ice creams, picnics. Everything was for me and only me.

We lived in the heart of the city

Until I graduated we lived in the heart of Pune city in our very old ancestral rented home. They did not even buy a new flat within the city limits although they could have afforded it.

If they had bought that flat they would have had to cut out almost all the comforts from my life and quality education.

So they bought a cheap apartment on the outskirts in a pathetic locality (just as a backup) while we continued to live in our ancestral home.

That 1.5 lakh difference mattered to them. And they made a choice – Me

When I graduated eight years back we had to move out of our ancestral home.

Our backup apartment is on the 3rd floor with no lift and my mother has health issues because of which she cannot climb those 3 sets of stairs.

So eight years back, at the age of 22, I had to think about our future accommodation.

My starting salary at that time was 24K and the rent was 7.5k. My father retired around the same time with a government pension. There was not enough money to buy a new flat in the city.

I had 2 Options

So there were two options.

Option 1: Save that 7.5k of rent for my future life and let my parents stay on the 3rd floor in a sad locality.

If I save the rent money I may even be able to buy a home inside the city in 7-8 years.

Or in that money, I can have a lavish wedding.

Whatever!

My mother’s diabetes had impaired her health and climbing stairs would have been extremely difficult. She compromised saying “I won’t get out of the house much so I don’t have to climb the stairs”. From age 55 she would have been trapped in a house for months like a caged animal.

My father too was old. The neighbors were not nice. Water supply problems were there. Medical facilities, our relatives and all the other things that we were used to would have been unreachable for us.

Parents were ready (as always) to live that life as of course they don’t want their daughter to spend 7.5k every month. Our scrupulous traditional middle-class parents will never touch their daughter’s money!

Option 2: Spend the rent money, I will have fewer savings and let my parents live a decent life.

All their life they sacrificed and adjusted. Don’t they deserve a good life at least during their last years?

Importance of TIME in life! YOLO!! (You only live once)

My parents are not going to have these last (healthy) years again!! Soon they will cross mid-sixties after which they will be too old to even get out of the house.

This is the time window (55 to 65 years) when I can give them the lifestyle they deserve as the proud parents of a highly qualified daughter. So I take the decision and rent out an apartment (against my parent’s wishes).

Our backup apartment stays locked.

Eight years have passed and option 2 has worked out really really well!

How?

We live in a beautiful spot in Kothrud surrounded by greenery and beautiful bungalows.

My mother goes for walks every day since we live on the ground floor. She enjoys going to the market and being able to live a normal life.

My father is thrilled as there is a katta nearby where all the retired members like him meet in the evening.

All our relatives live nearby. We live in a 30-year-old 1 BHK and the floor tiles belong to the 70s era. But the people here are so friendly we live like one big family.

I can get a flat on rent in a high rise in a cosmopolitan atmosphere in Baner or Wakad (where I would be very happy btw ).

But here we are surrounded by Marathi families like ours. There is an excellent hospital nearby. The convenience, homeliness and the safety of the neighborhood are important to me. The society does not have amenities like swimming pool, club house but my home is filled with happiness.

My Priorities

Years passed, I got promotions and salary increased. I was easily getting a home loan. 1 BHK was a piece of cake and 2 BHK was also possible.

But turns out not buying a flat was very wise. There were many things that had to be handled first. We planned our monthly budget well, saved most of my salary, spent smartly and also had a little bit of fun.

Four years back my mother had a heart attack. Several hospitalizations and a bypass surgery set me back by around 8 lakhs.

But that was easily managed. I was never tense about money and my parents were relieved that we don’t have to borrow from anyone.

I had managed my finances so well that I gifted my mother a pair of gold earrings 2 months after the surgery for a speedy recovery!

I am happy too!. I was able to save for my own wedding. Since our wedding expenses were well within our reach we were able to enjoy it completely.

I have also been able to fulfill some of my dreams. I am passionate about travelling and I have been to my dream destinations Himachal Pradesh, Kerala, Dubai and New York.

In these eight years, I have lived a fulfilling life. Dining out in fine restaurants, going shopping in malls are some of the things we never thought we would do.

Parents/Family suffering because of loan

My folks are happy that I am able to have fun and don’t have to scrimp and save like a person in debt. I do not frown like a debt-ridden son when some unexpected expense turns up. I have seen the scenes from movies\tv serials where the son reproaches his parents when any expense comes up as he has a big loan and says “Baba atta Kasa Shakya ahe! Tumhala Kalat nahi ka loan ahe” (English meaning is – “Dad, How is it possible right now, dont you know there is  a loan”). Way to go, son!

This is what you give your parents in return for their entire life spent on you!!. Unbelievably, I have seen this scene in real life also in many homes!!!. These guys have a 2 BHK and a Sedan worth 10 lakhs but they will frown upon if their parents\wife have to have something basic.

There was a time when my parents made a choice between me and their dream home. When I grew up I made a similar choice. It’s okay if I don’t have my own flat at the age of 26 like IT engineers do.

I will have it when I am 35 or 40 years old. But these 10 years of my life were important to me.

Spending on top-notch medical treatment, living comfortably, travelling around the world, saving for my wedding, supporting my husband was my top priorities.

All the while I am saving money aside for my dream house too. I am halfway there, slowly and steadily I will get there. You must work out a plan that suits your circumstances and lives happily because you only live once.

Regards,

2 Tough Question for all readers

  • Do girls take the decision of buying a house in a more sensible way compared to guys?
  • Do males face more life issues when it comes to “home ownership”?

Disclaimer: This is a personal story and views by 1 person depending on her life, her experience, and her circumstances. Let’s not judge male/females by this one article alone.

Please share your perspective about this article and what do you feel about the issue? How is a male life different then a female when it comes to buying a flat considering how our society has shaped up to date.

I would like to hear your views and stories in the comments section.

 

17 secret tips to book cheap flight tickets in India – Save 20% or more

Today I am going to share 17 amazing tips you can use to book cheap flight tickets in India. Many of the tips I will be sharing would be already known to many people, but some tips might be new or unexplored by many.

While you might not get very big discounts using these tips, still you will be able to benefit some margin.

book cheap flight India

Make sure you read all the tips mentioned below, as some people might feel that they already know most of them so it makes no sense to look at all. I myself got to know 2-3 new things while writing this article.

#1 – Use the special debit and credit card offers

I personally never give a lot of thought to this tip earlier. I mostly used the coupons and codes mentioned on the social media or coupon sites, but there are various special offers designed especially for the debit card and credit cardholders only.

For example, if you have Kotak bank card, you should search for “Kotak offers flight tickets” on Google and you will surely get some page on the Kotak website or flight booking websites which will give you some special codes for getting additional discount.

kotak flight offers

When I went to that page on Yatra, it shows me various offers.

flight offers with various banks

If you look at the offers above, you can see that ICICI bank offer for yatra website is there with code YTICICI17, but it’s only applicable for the flight before 31st Mar and the airfare should be minimum Rs 3,500.

So I found a flight from Kolkata to Ahmedabad for 15th March and applied the coupon code and it showed me Rs 500 instant discount (It was a real discount, not cashback)

banks offer for flights booking

So whatever is your bank name, just search for “bank name + flight discounts code” and you will surely get some offer page.

You may also want to explore the special credit cards which are launched in association with the airlines (like The Jet Airways American Express card) which earns you JPMiles or frequent flyer miles.

#2 – Use the wallet cash to get a further discount

I think goibibo started this and became hugely successful due to this factor. It’s one of the most trusted ways to get further discounts on flights/hotels and other bookings.

All the websites like MakeMyTrip, Goibibo, yatra have this concept of virtual wallets and you get some cash backs in this wallet which can be partially used while making the payments.

Goibibo calls it as goCash, Yatra has eCash and Makemytrip simply calls it as Wallet money. I have been an extensive user of Goibibo and no matter how great other websites offers were, after applying goCash, I always got the best price at Goibibo.

However now I get some great offers at MakeMyTrip compared to Goibibo (maybe because they are now merged).

Goibibo virtual cash called gocash

This virtual cashback can also be used for booking hotels and you keep getting this virtual cash with most of your booking. You can also get Rs 3,000 worth of goCash by downloading goibibo App from this link

My teammate Kunal uses ixigo app, and the best part about it is that they offer the cashback directly into citrus account which can also be taken back in your bank account, so it’s a real cashback in that sense.

#3 – Book within 30-90 days in advance

Expedia did a very interesting study and found out that on an average the lowest flight tickets sold was 57 days in advance. They studied various domestic flights prices and saw the trend and found out that booking a flight very early is not always the best option. There is enough time left to fill the seats so airlines are not desperate to grab more and more customers at cheap prices.

As per their study, the prices were moderate in the start, and kept on declining and somewhere around 50-60 days before the departure date, the prices started rising and then shot up during the last 2-3 weeks.

expedia study on cheapest flight

They found out that the average ticket price was $496, while the cheapest one was at $401 and that was sold around 57 days in advance.

Now, this is not a study based in India and things are different here. Also, we know that this is just the average of 100’s of data, the conclusion here is that you should neither buy the airlines tickets very early like 5-6 months (not applicable for international flights) nor too late. Ideally, if you buy it in the window of 30-90 days in advance, you should always great a very good deal.

However, this is not true for festival times and some destinations which see a rush in some particular season. Here a small infographic on this topic.

#4 – Take flights at odd hours

If you are ok travelling very late at night, then you can get a low price on flights. But this might not work when you are travelling with family or when you need to reach your destination at a particular time (like for some meeting or a seminar etc)

However, people travelling solo who do not have a fixed time to reach can explore this option.

I travel from Pune to Ahmedabad many times a year and I like to take late-night flights as they are comfortable for me and I also don’t have to face traffic 🙂 and mostly they are very cheap. Check the snapshot below

cheap flight at late night

I think the simple reason for this might be that many people do not want to reach their destinations by 1 or 2 in night and hence avoid flights at night, which means there is less demand for flights at night.

But you will not get a cheap flight if you are booking it at the last minute.

#5 – Try flexible dates

If you do not have rigid plans, you can surely look at dates which are either 1 or 2 days earlier or later than your planned date. Often, you will find out that many times you might get a cheaper option on a different date very close to your planned date.

A quick way to find this out is to the first search for your flight for the date you have planned for, and then when you try to edit the date, it will show you the calendar with the prices for various dates.

lower price for flights

Above you can see how the flight ticket for Pune to Delhi for 10th Mar shows the price as Rs 4930, but the price just 3 days before that and 2 days later is Rs 2402, which is almost 50% less.

According to many international studies on airlines prices, it’s concluded that the cheapest dates to fly are Tuesday and Wednesday, as they are weekdays and the traffic is less. So keep that in mind while travelling.

#6 – Use mobile apps for booking

If you are still using the web browser for booking fights, you are missing some awesome offers provided by various websites. From time to time websites offers some discount codes (not cash back) which will reduce your fights prices by around 5-10% at least.

I recently booked a flight from Pune to Dehradun on MakeMyTrip mobile app and used a coupon code FLTAGAIN which reduced the flight price by Rs 800. This coupon was only valid for mobile app and only for those who got the offer on email.

It surely compensated for all the convenience charges and the travel insurance charges. Here is the snapshot of the offer taken from my mobile

makemytrip mobile app offer

Here are the benefits you generally get when you book your flights from mobile apps

  • You generally get more reward points (cashback points)
  • You get exclusive discount/cashback offers
  • Airlines mobile apps also provide good discount on meals booking

#7 – Make payments by Wallets

Do you know that you can get some additional cashback when you pay from wallets like Mobikwik, paytm, freecharge, payumoney?

Yes, that’s true.

Below is an example of free charge offering 10% cashback on the base fare of jet airways flights. If you book the flight on the app or website of jet airways and make the payment using the free charge wallet, you will get the cashback provided all the terms and conditions are met.wallets offers on flights

Almost all kind of wallet companies have a dedicated page for these kinds of offers and it will share various deals for hotel booking, bus booking, flights etc..

Like Mobikwik has a dedicated offers page, and I can see that it shows a deal where you get Rs 200 cashback if you book a flight on MakeMyTrip. This is above and over the other discounts and cashback.

mobikwik cashback offers

#8 – Book two single flights from different providers

If you want to go a little extra mile and are ready to spend your “valuable” time then you can also explore booking two single flights instead of a return flight or connecting flight and maximize the cashback and discounts.

So if you are planning to go from point A -> point B and also returning back, then instead of booking A-> B return flight form a single website, you can book A->B flight from one website (and use their cashback and discounts) and book B->A from another website (use their cashback and discount offers)

While this may not give you a better deal all the times, it’s a good idea to explore especially when you are booking tickets for a higher value or international flights.

Here is an example

Imagine if a website is giving a 10% discount on tickets above Rs 5,000, with a maximum cashback of Rs 500. So if you book your return flight and total charges would be Rs 10,000, but you will get the maximum discount of Rs 500 only.

Instead of that you can book a one-way flight from one website and get Rs 500 discount and the same way you can get Rs 500 discount for other flight on another website.

The only problem in this is that you will have to enter all your details two times instead of one and the same for making payments

#9 – Book directly from the airline’s website

If you are not getting any cashbacks or discounts on the intermediary websites like paytm, makemytrip, ixigo, Expedia, goibibo etc, then it’s a good idea to check the flight rates directly on the website of the airlines. Airlines pay some commission to the middleman websites and often the prices at the airlines are a little cheaper (not much, but a little).

So first you should filter and search for the appropriate flight best suited for your requirement and then note down the flight number and timing of the flight and then head over to the airline’s website and directly book the flight from there because you might end up saving few bucks there.

Why does this happen?

Because you will save on the convenience fees as the airline’s fees are lesser than what is charged by the intermediary websites.

To check this points, I searched for one way fare from Kolkata to Ahmedabad on 3rd Mar 2017 (around 3 pm) and I found out assuming no cashback and discounts are available, would the total amount payable (just before you make the payment) is lowest at the airline’s website?

I did flight comparison on Yatra.com, Makemytrip, Paytm and Indigo website and found out that the cheapest was indeed at the indigo website

price comparison flights direct airlines website

#10 – Use incognito mode while “researching”

Most of the airlines now keep changing their flight ticket prices dynamically as per the demand and supply. This is called dynamic pricing.

So when you search for a particular flight on a particular day, and then keep researching about it for next 20-30 min, the airlines and the intermediary websites understand that there is a demand for a particular flight and if you spend too much time just researching, they know that your chances of buying a flight ticket are high now

Flights prices changing with dynamic pricing strategy

And suddenly you will find that when you go to book the ticket, the prices go up dynamically ! . There are technical things like web cookies which track and remember what you are searching for, so as a precaution it helps if you use incognito mode while browsing.

Also, note that this might be more applicable when you are using the mobile apps for booking because the websites know who exactly is doing it (you register your email/phone in-app)

#11 – Use Student & Senior Citizen Discount if applicable

Some airlines allow students and senior citizens some basic discount on the base fare, it’s a small discount like 8-10%, but still saves you some money. If you are travelling with your children or parents, you might want to check if you can get some further discounts.

However, these discounts are applicable only on the airline’s websites. For example, Spicejet has an 8% discount on base fare for students. Here is a snapshot

students discount flight

Do read the terms and conditions for this student and senior citizen discount offers as they might not be applicable on some dates or routes.

#12 – Use hand-baggage-only fare tickets

If you are travelling solo and don’t have much luggage, choose the hand-baggage only option while choosing the flight. Airlines expenses increase if the flight is heavy and hence they give incentive to you if you carry less stuff

#13 – Check out for coupons and offers

Something which everyone can do is search for offers while booking for the flights. Almost all the times there are various websites which offer different types of discount or cashback for booking flights.

Sometimes you will find offers for booking both way flights, or for international flights and sometimes it’s based on the total ticket price (like “applicable only if tickets prices are above Rs 8,000”)

It never hurts to spend a few minutes to look at the offer pages of websites like Makemytrip, goibibo, Yatra, Cleartrip and other websites.

You can also try to search for flights coupons on various coupon websites. Make coupons website offer their own cashback to you additionally as they get some commission from the aggregator websites.

#14 – Put the alerts for price decline

Google Flights give you an option to track the prices of a particular flight and will email you from time to time when the prices change. So if you have a lot of time left and can wait for the booking, better wait and track the prices.

Google flight alerts

Just make sure that you should be clear when you will book the flights, else it might happen that you just keep prices to fall down and never book it and then pay a lot towards the end).

#15 – Subscribe to the Airfare Newsletter

Various airlines and intermediary sites keep sending various offers from time to time, you can subscribe to their newsletters if you don’t mind constant emails on offers. I will surely help someone who travels a lot.

airlines newsletters

#16 – Book now, Pay Later

Some websites like goibibo and Yatra have introduced options to book the flight without paying the money (it’s like blocking the seats). You can block it and pay it later after a few days.

So if you are not sure about your schedule or plans, just block the seats and pay when your plans are confirmed OR if you are not getting cheaper flights later:).

block your flight price

The cancellation and rescheduling charges are very high anyways.

#17 – Don’t be loyal to one website itself

If you are loyal to one website (intermediary) or an airline, then you might be missing some good offers from other websites. I know some people feel it’s not worthwhile to spend a lot of time trying to save few bucks, in which case it’s ok to be loyal, but otherwise, you can quickly surf 3-4 options and then choose the best option.

However … Here are the precautions

While I have talked about various things you can do to book the cheap flight tickets in India, there are a few points I want to make.

  • If you feel you are getting a good deal already, just try a bit to improve it and book it. Don’t get paranoid trying to bring the price down. While it’s great to get some discounts, you should check for yourself if it’s really worth your time.
  • If you like to eat every time you are on the plane (like me), it makes sense to prebook the meal, What you can get at Rs 300 in-flight without booking is available for Rs 250 or Rs 200 if you pre-book it. So if you are already clear that you will be eating, why not save that money.
  • If you are looking for cheap international flights, some of these points might not be applicable, but still, you should try most of these as it would be great to save money because of high prices for international flights to US and European countries.
  • Make sure you consider the full cost going from point A -> B. If you choose a cheaper ticket which has a 6 hours overlay in a city in between, please understand that you will also spend on food, lounge or some entertainment etc. It should not happen that to save Rs 200, you have spent Rs 500 in between. People don’t consider these points while searching for the cheap tickets
  • Also, consider your time worthwhile finding low-cost tickets. If your time is highly valuable and you can spend 2 hours in something valuable like writing a book, or solving some important thing worth something, then don’t waste your energy and time waiting for the connecting flight just because you are saving few hundred rupees

In the end, you want some more information on this topic, you can look at this infographic which will give you some more understanding about how airlines work and where they spend etc.

Let me know if I missed some points or some trick?

2 reasons why you should stop investing in Fixed Deposits immediately?

Today we will discuss why you need to stop investing in bank fixed deposits.

I know you are a bit shocked by this statement, but my only attempt is to give you some understanding of why banks fixed deposits are not the best financial products in these times for your long term wealth creation. There are other better alternatives today if your focus is assurity of returns, near inflation returns and convenience of investing

You can either read the article or just watch this 10 min video below where I have share why you should avoid investing in fixed deposits.

Why we create Fixed Deposits?

Since our childhood, I think most of us have only heard about Fixed deposits and PPF as investment products. We saw our parents talking about fixed deposits all the time. They broke “FD” when they needed sudden money.

And FD’s become were like the default financial product for most of us and when we started earning, we just created fixed deposits because that’s all we knew about.

On top of it, the fixed deposits come with assured returns of 7-8% (though the FD rates are going down and down these days). Also, almost all the banks offer the online fixed deposits creation (not breaking it) and that fact also adds to our love to creating fixed deposits whenever we need to park our money for some months/years

But, now there is a great alternative for fixed deposits called Debt Mutual Funds. This article will focus more on fixed deposits disadvantage and we will touch upon debt mutual funds to some level, but this is not a deep tutorial on debt funds

TWO big problems with fixed deposits

The 2 biggest issues which make fixed deposits very lousy products for our long term wealth creation are as follows

a) High Tax on FD – Fixed Deposits do not have any special taxation benefits. If you are into a 30% tax bracket, you will have to pay the tax on the interest you earn in a year as per your tax slab.

So if you create a Rs 10 lacs FD and you earn Rs 80,000 in interest (@8%) then you pay Rs 24,000 as the tax if you fall in the highest tax bracket. That’s not the case with Debt mutual funds. While debt mutual funds are not tax-free, their taxation is much better compared to a fixed deposit.

The video below explains how fixed deposits taxation is different compared to debt mutual funds.

b) No real returns – While you get an 8% return on fixed deposits, it’s just artificial .. because, after inflation and taxes, you are just left with a negative real return of 1-2%. So while you Rs 100 become Rs 108 after a year, you are not able to purchase the same thing after a year because it would not cost Rs 100, but Rs 110 by now (On an average)

Now, let’s look at debt funds and what they are and how they compare with fixed deposits

What are Debt Mutual Funds?

There is a big myth among investors community that mutual funds always mean risky investments because they are linked with the stock market, however, it’s far from the truth.

Debt mutual funds are a good alternative to fixed deposits. Debt mutual funds are financial products offered by AMC’s which pool the money from investors and invest in highly secured instruments like govt bonds, certificate of deposits, and other highly secured bonds in which a single investor cant invest on its own.

As an example, here is a sample top holding of a “Birla Short term fund” as per their factsheet

debt fund portfolio

If you have done your mutual funds KYC, then investing and redeeming from debt mutual funds is online and very easy.

Debt funds also offer indexation benefits which means that you only pay tax when you redeem them unlike fixed deposits and you also pay tax on a lower rate (generally 20% after indexation). Below is a comparison by Economic times article on the taxation aspect of fixed deposits vs. a debt fund

comparison between a fixed deposit and debt fund taxation

When do Fixed Deposits make sense?

Fixed deposits can still be considered when you want to park your money for a short term period like 1 yr or 6 months and don’t want to go with mutual funds and also dont care about that extra 1-2% return. I think those investors who are trying to save money for the first time can look at fixed deposits or recurring deposits as open to start with.

SIP in Debt funds

If you are looking for an alternative of a recurring deposit, then SIP in debt mutual funds are the best option. The best part is that you can also top up your additional investments whenever you want unlike an RD in the bank.

Don’t use fixed deposits for long term wealth creation

While investing in a fixed deposit for a short term period is still ok, it’s strictly a no-no if you are investing for long term financial goals like retirement or children’s education or something. The positives of fixed deposits over long term are just a few compared to the negatives. Fixed deposits or recurring deposits are tools to just “save the money” and not wealth creation.

At best they can preserve your money purchasing power, but cant create big wealth for you (after adjusting for inflation and taxes)

So try learn more about debt funds, they are not at all that scary and much more easier to invest and maintain then you imagine. If you are looking to try out your debt mutual funds investments, our team can talk to you and help you save your money in debt mutual funds, Just fill up this form and we will call you

Let us know if you want to know anything about this topic ? Please post your comments and thoughts if any..

How Rs 3,700 crore online fraud happened with with 7 lacs investors !

A new online fraud worth Rs 3,700 crores has been busted recently by Uttar Pradesh special task force. Around 7 lacs people have been cheated in the name of ‘Earn Rs 5 per click’ investment scheme.

This was a classic example of a very smart online fraud structure where you first make a lump sum investment in the company scheme, and you get a chance to earn a daily income by liking facebook pages. You can also add people under you (more money comes in the company) and you get benefits from that.

Structure wise it’s very similar to speakasia where you earned money by taking the survey’s and here you get it by click on the pages.

A company was set up with the name of “Ablaze Info” whose board of directors named Anubhav Mittal, Shreedhar Prasad, and Mahesh Dayal are arrested. They had set up various websites to dupe people like socialtrade.biz, freehub.com, intmaart.com, frenzzup.com.

How this scheme worked?

There were 4 schemes where you had to pay a joining fee ranging from Rs 5750 to Rs 57,500 and you got X number of clicks each day which assured you get Rs 5 for each click, making sure you get a monthly income.

social trade online fraud

There was also a bonus for adding more people under you (2 people) and some more benefits apart from that. It was a classic case, where few people join the scheme, get the assured income for 1-2 months and by then they bring more people by word of mouth, who bring more money in a company which makes sure that the fraud company has more money to pay everyone …

This continues for a few months/years and once there are thousands of people at the bottom who brought millions in the company, that’s the time when the company either runs away with all the money or they are caught by the law as it happened in this case.

Members trying to add other members

Every MLM scheme works on the basis of referrals and most of the people were trying to add others under them to get the bonus and added benefits which come out of referrals.

People started approaching their friends and other relatives to join this “business” and you can see in the video below how one of the people who was part of this is explaining the business model and is so convinced about it himself.

Why most people get duped in these kinds of fraud schemes?

You will find a lot of people who still believe in this kind of schemes mostly because they are not duped themselves and have experienced earning income consistently from these companies, but that is true for a small minority of people who join this fraud business early, because that’s the time when the company properly pays money without fail

The problem happens when the user base is quite big (in this case, 7 lacs) and then it becomes almost impossible to sustain the madness. Here is how the MLM business looks like

In the video below you can see how this one guy is so convinced about the authenticity of this social trade business and feels that the crackdown on the company because govt can’t sees poor people earning lots of money.

Do you know anyone who was cheated by Social trade company? What do you think about these kinds of MLM schemes?

99% mutual fund investors do not understand these 3 critical points for long term success

Are you investing in equity mutual funds or planning to invest?

GREAT!

While you might have done your research and reading about investing in a mutual fund, but I am sure you still do not have 100% clear idea about what does it mean to invest in a mutual fund. In this article, my attempt is to make you understand what exactly you should be expecting out of your investments in equity mutual funds.

Points to know before investing in equity mutual funds

A lot of investors are approached by advisors and agents who sell equity mutual funds to them in the name of “high returns”. But investors are not informed about the risks associated with it. Because of this most of the investors redeem their investments if markets fall or if the returns are not that great after a year or so and hence lose out on getting the benefits of mutual funds over the long term.

This happens because in investors’ mind a mutual fund is all about “getting high returns”.

So it’s very important to clear all the wrong notions about equity mutual funds and set a clear understanding of them in your mind so that you get the best out of your mutual fund’s investments.

What are Equity Mutual Funds?

This article is all about “Equity Mutual Funds” and not any kind of mutual fund. One of the biggest myths is that

Mutual Funds = Stock Market

NO!

There is various kind of mutual funds, ranging from super safe mutual funds (like liquid mutual funds or debt mutual funds) to high risky funds (like mid-cap funds and equity mutual funds). Below is a

Types of various mutual funds in India

3 important points to know before you invest in equity mutual funds

So in this article, I am listing various important points you should know if you are investing in equity mutual funds or planning to do the same.

#1 – You are investing in diversified businesses

Investing in an equity mutual fund is not like putting money in a fixed deposit or real estate. When you invest in an equity mutual fund, it invests your money in a portfolio of companies.

Equity Mutual funds are a way to invest in a number of stocks using one single investment and get it managed by an experienced and well-qualified fund manager.

For example, Birla Sun Life Frontline Equity had 80 stocks in its portfolio as on 30th Dec 2016, as per the money control website. This means that if you are investing in these mutual funds, you are actually investing in 80 companies.

You own 80 businesses

Your returns or loss depends on 80 different company’s performance over time. Think about it.

Below is a partial list of companies in the fund.

mutual fund portfolio sample

Now when you know that you are actually invested in 80 different companies, it’s important to know that returns from your mutual funds actually come from the returns from these companies stocks performance over time, it’s the average of these companies.

Below is a very good video, where it’s explained how business create wealth over the long term in Indian context

#2 – You are investing for long term

No business earns exceptional returns over the short term. Now as you know that you are actually investing in a business when you are investing in equity mutual funds, that too in multiple companies, the great returns will come over the long term.

Some companies will not do great, some of them will do average and some of them will grow exceptionally. And when you do the average, you will get very good returns.

The best part is that the chances of great returns are much higher because you are diversified across various sectors, companies, management, and size.

76 times return in 20 yrs period

Let’s talk about a Franklin India Bluechip Fund which started in 1993. It’s been 23 yrs now since inception.

Over the first 20 yrs (from 1993 to 2014) the fund has given 76 times return. It turns out to be 24% CAGR return and by any standard its mind-boggling returns, especially because it’s for 20 yrs compounded.

franklin India bluechip fund returns

10 lacs invested became 7.6 crores.

If this same 10 lacs was invested in Fixed Deposits, then in 20 yrs it would have grown to 67 lacs.

So its 67 lacs vs 760 lacs.

Sadly, investors don’t wait in mutual funds

Sadly, this 76 times returns do not reflect in most of the investor’s portfolios because investors don’t think long term and think short term. If for some years, the fund does not perform well, they want to move to something else which gives them awesome returns.

Businesses go through various cycles (success and failure, good and bad). So you need to wait for a very long term to see some amazing returns.

If you are right now invested in equity mutual funds, it’s very important to understand that you will not get great returns over the short term (2-5 yrs). Trust your mutual funds and keep investing and over time you will reap the benefits.

There are various mutual funds that are 10+ yrs old and most of them have created big wealth for their dedicated and committed investors.

#3 – You are going to face volatility

“Mutual Funds investments are subject to market risk, please read the offer document carefully before investing”

You will hear this line often in the mutual fund’s advertisements on TV. A lot of first-time investors who do not understand equity investments think that “Market Risk” here means that their money is at risk and they can lose all their money by investing in the stock market or mutual funds.

Mutual Funds are Volatile

That might be true with one particular low-quality stock. But with mutual funds, it’s far from truth. Dozens of quality stocks portfolio which is monitored regularly can bring in some ups and downs in the short term, but your money will not be lost at all.

All you can expect is VOLATILITY with your mutual fund’s investments. Your investment value can go up one day and then down one day, and then again down another day and again down 2nd day and then boom… UP on the third day and then again down and again up and up and up …

mutual funds volatility

I hope you got the point.

But you need to understand a very important thing. Volatility is an inherent part of mutual funds investments as it’s investing in stocks, but it’s more of short term phenomena. You need to sit tight and look at the long term trend and how it moves.

Example of HDFC Top 200 fund

HDFC top 200 is one of the most well-known equity mutual funds which has created great wealth for its investors. Its NAV rose from Rs 10 to Rs 372 in 20 yrs.

It’s a great return over the long term, but the journey was not simple. Its NAV went up first, then came down and then again up and down. See the ups and downs in the below chart for 20 yrs

hdfc top 200 fund returns

Did you notice how tough it would be for someone to not exit and stay invested?

If deep down the fund value is growing. This can be measured by check how the moving average is trending. If you do the average of 2 months NAV and then 3 months and 5 months and keep increasing it, you will see the trend is up and that’s what is the most important take for an investor.

Let’s see how the moving average trend looks like for this same fund over 20 yrs period

hdfc top 200 long term trend

Don’t look at the fund performance and NAV movement every day or month

The volatility in the stock market will keep hitting your emotions and tell you – “Hey, it’s better to sell your funds and be safe”. The biggest problem with mutual funds is that its NAV is available on the daily basis.

What would happen if you were allowed to see your mutual funds NAV and its performance only after a period of 5 yrs? What if an investor who had invested in HDFC top 200 long back in 1996 was able to find out how its fund had performed every 5 yrs?

Below I have plotted the NAV data for the month of Oct for 1996, 2001,2006,2011 and 2016. See how it looks like

hdfc top 200 fund returns in 5 yrs

This tells us that if we stay with our funds (provided they are chosen properly and reviewed from time to time) can help us grow a massive amount of wealth.

So stop looking at your mutual fund’s performance in short terms like 3 months or even a year.

3 more critical information you should know

Mutual Funds investments are highly liquid – If you redeem your mutual funds, you can get back your money in 3-4 business days in case of equity mutual funds. In case of liquid funds its just 1 day, so for short term requirements you can keep some money in liquid funds, but most of your long term goals related investments should be in equity mutual funds

Post-tax returns on mutual funds are better – As of now, the long term capital gains in equity are tax-free, which means that after 1 yr of investments, any profits are not taxable. So this is another advantage of investing in equity funds

You can change your investments any time – Other than tax saving mutual funds, almost all the mutual funds can be switched to other mutual funds if you want. So if your fund does not perform well, you can switch it anytime to another fund

I hope you got some great insights into your equity mutual funds investments and how you should behave as a mutual fund’s investors. It’s very different from investing in Fixed Deposits or PPF or any other kind of investors and your expectations should be very different.
Let me know if you have any more points to discuss or ask in the comments section.

Buying your first car? Here is the data of 451 buyers for you to decide!

No, I am not sharing my personal opinion here in this article.

I am actually telling you about 451 people who have shared their personal data with us in a survey we conducted some time back and we are presenting you the data in this article. That data will help you know how others think and what are their numbers and that way you take a decision for yourself.

buying car india

You mainly have to decide following 3 things when you buy your first car

  • Should I buy a brand new car or a 2nd hand car?
  • How much should I spend on my first car?
  • How much loan should I take?

451 people shared their data about their car ownership

We asked few questions in our car survey like their first car value (when they bought it), their per month income when they bought it, If it was a brand new car or a 2nd hand one, what was the % of loan they took, and some more questions regarding what they feel about the car.

I will share all that data in this article.

Point #1 – Should I buy a brand new car or a 2nd hand car?

Most of the people who buy their first car, generally go for a brand new car, however, some people also prefer to buy a 2nd hand car to start with and then upgrade it later to a new car in the future.

In my own case, I bought the 2nd hand car because I wanted to make sure that I am aware that I make a rough use for all my belongings and its better to first buy a 2nd hand car. Also, I had my budget constraints.

80% of buyers prefer buying a new car

Around 80% of the survey takers, shared that their first car was a brand new car, whereas 20% bought a 2nd hand car as their first car. The average cost for a brand new car was close to 6.78 lacs and in the case of 2nd hand car, it was close to 3.05 lacs.

brand new vs 2nd hand car (Average Value = 6.78 Lacs) (Average Value = 3.05 Lacs)

Pros buying New Car

  • The special feeling of ownership with pride
  • The latest technology, with current features
  • Peace of mind, as you know there are no issues with car

Cons of Buying New Car

  • Much Expensive compared to a used car
  • Much higher depreciation (Try to sell it in 6 months and see the price you get)
  • Takes away a good part of your wealth
  • More pressure on your cash flow if taken on Loan

Pros buying used Car

  • Cheaper and Most of the times can be bought without a loan
  • Low Insurance premium
  • Lower depreciation
  • Better resale value (buy for 3 lacs and sell again in 2-3 yrs)

Cons of buying used Car

  • Old Technology and features
  • Difficult to trace the history and find the legality
  • High maintenance costs
  • Inferior feeling in front of peers who own better cars)

For those who are interested in new vs used car debate can check this detailed article on Team-BHP

For how many years are you planning to own the car?

If you are planning to own a car for just 1-3 yrs, it’s better to go for a used car. However, if you have a view of 5-6 yrs or more, then better go for a new car.

Also if you are tight on your budget and still want to buy a car, you can explore the used cars and after a few years you can upgrade to a better car. However, if have the capacity of buying a new car, you should go for one.

Below is a short video which shows you what all to check if you are planning to buy a used car

Point #2 – How much should I spend on my first car?

Now comes the next important point, which is how much should I spend on the car you are buying. A person earning Rs 10 lacs a year can buy a car costing Rs 5 lacs also and 20 lacs also if they want. However what is the right amount to spend on your car purchase?

This will depend on many factors like

  • Do you want to take a loan or not?
  • If you want to take a loan, how much EMI do you want to pay each month?
  • Is “Car” mere a machine that moves you from point A to point B, or is it much more for you?
  • What is the role of the car in your life?
  • How passionate you are about driving, fancy cars etc

How many times of your income should your car cost?

A good way to look at the potential car value you should buy is the X times of your monthly income. If a person thinks that he should not spend more 6 times his monthly income on the car and if he earns Rs 80,000 per month, then he should buy a car worth not more than 4.8 lacs.

If he feels it should be 10X, then not more than 8 lacs should be spent on the car. However the problem is no one really thinks this way when it comes to decision making, so let’s see what were the actual numbers for various groups!

As per our survey data, those who bought a brand new car, for them this ratio was 9.7 on average (their car value was 9.7 times their monthly income)

And for those who bought a 2nd hand car, it was 6.4

Ratio of car value vs monthly income

Your Salary and what you feel “car” is?

What will be your car value will surely be

We also calculated the same ratio for those whose monthly salary was above 1 lac and below 1 lacs.

Ratio of car price and salary based on salary

If you see the whole data above , you will figure out that if you are buying a brand new car, or if your salary is above 1 lacs per month or if for you a car is much more than a machine which takes you from point A – B, then you ideal money to be spent on your car is anywhere from 9-12 times your current monthly income, else if none of the above is true, then you can go with 5-7 times of your monthly income.

It’s just a benchmark and a rough direction based on what hundreds of people do.

Point #3 – How much loan should I take?

Do you know that as per our survey 75% of the people who bought a 2nd hand car, did not take any loan?

Only 1 out of 4 people took a loan which was on average half the value of the car (to be exact, it was 52%).

However, when it came to those who bought a new car, 69% of them took a car loan and their average loan was 2/3rd value of the car price (rest 1/3 was down payment)

The amount of loan you take will depend on the price of the car, your capacity to pay the downpayment, your views about debt in life. I personally think a person should have the capacity to pay for full car value and only in extreme cases one should go for a car loan as its a depreciating asset anyways.

Burdening yourself with more EMI does not fit my philosophy that too for a car. This is truer if you still don’t own a home or if you have not yet started investments for your long term wealth creation.

Below is a detailed information salary-wise and also thinking wise.

car loan for first car

You will find two kinds of car buyers. One who feels that car is nothing more than a utility which does a job of taking you from point A -> point B. They are not that passionate about cars in general and view the car as just another possession.

Where as on the other hand, there are people who feel CAR is an important part of life. There are various life moments that are linked to your car. Your exotic vacations, long drives and many events in life will not be possible  (most of the times an expensive one).

Who is right or wrong?

None of the groups are wrong or right, its a view and everyone has the freedom to express what they feel about cars.

Coming back to car loan, I feel you should first try to avoid the car loan totally if possible for you, and if not, then you should take less than 50% loan only.

Otherwise, a big chunk of your monthly salary will go into paying your car EMI and your wealth creation might take a hit due to that.

Let us know what you feel about this topic in below comments section.

Basics of Income Tax explained for Beginners [VIDEO Inside]

This is a guest post by one of our readers and our financial planning client Mr. Rahul Udare from Mumbai.

He is CA by profession, and he has created a 45 min excellent video for beginners on the topic of Income Tax. This video below will help anyone understand various things related to income tax and returns and how everything works.

Basics of Income Tax – 45 min Video Contents

Thanks to Rahul Udare

Rahul contacted us a few months back and expressed his interest to do something for investors and we really thank him for that.

Please give your feedback about this video and what else you expect in future from him.

Customers can refuse to pay “Service Charge” at Restaurants – Govt

Govt has clarified that the “service charge” is optional and customers can refuse to pay that if they feel like.

For some years, most of the restaurants and hotels have started charging “Service Charge” along with the other taxes in their bills and us customers due to lack of understanding feel obligated to pay it.

However, the govt has issued a notification today which clearly mentions that if the customer is not satisfied with the experience at the hotel or restaurant, they can choose to not pay it. Below is the video clip of this news

Govt Notification

“A number of complaints from consumers have been received that hotels and restaurants are following the practice of charging ‘service charge’ in the range of 5-20%, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him,” the ministry said in the notification below

Note that the Hotel Association of India has themselves clarified this point.

Service charge is not mandatory to pay in hotels and restaurants

Why do restaurants charge “Service Charge”?

For those who don’t know this, the service charge was mainly introduced to replace the tips given to the workers (waiters etc), so instead of your giving the tips, the restaurants charge a fixed charge (5% – 20%) and its distribution among the employees.

However, there is no strong proof that most of the restaurant owners actually distribute it among employees. Also irrespective of the service and experience, the customers pay this service charge.

But now after this clarification has come, you can freely tell the restaurant that you will not pay this charge if you didn’t have a good experience at the hotel or restaurant.

An important point to Note

  • Service Charge goes to restaurant kitty
  • Service tax goes to Govt
  • Service Charge can be added to the bill only if its mentioned in the menu
  • Service charge is not mandatory to be paid if you don’t want to pay it

What are your views about this topic and notification?

 

I got a fake phone call from “RBI” and I recorded the audio !

I got a fraud call recently and I was able to record it.

The person at the other end was posing as RBI officer and said that because I have not linked my Adhaar card with my bank account, they are getting closed and if I want to save them from not getting blocked, I will to do some verification on the phone call.

Watch the video below which as my recording!


 

Never reveal your critical information on a phone call

Never share the following things ever on a phone call with anyone

  • Account Number
  • Debit Card Number
  • Expiry Date
  • CVV number

If you listen to the audio, you will realize that the person on the other side many times told me that the CVV number and account number is my personal information should not be shared with anyone. They do this to give a feeling that we can trust them and they are really some official people.

However, these people do not realize that their way of speaking and the language is such that it’s hard to believe that they are really some authorized person.

Please share if you have ever got any fraud call like this?