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6 reasons for which you can withdraw from your EPF – like Buying House, Medical treatment, Marriage etc !

Posted on by Jagoinvestor

Yes, you read it right ! . Most of the people do not know that they can withdrawal partially from their EPF account even when they are in the job for some specific and important reasons in life like buying house, marriage and paying for education fees.

Today I am going to share with you this very hidden and not so known information about EPF partial withdrawal. EPF is an important part of most of the salaried individuals, but there is lack of awareness of how it can help you at times when you are pressed for money in life.

If you have worked for several years like 5-20 yrs already, you have accumulated a good amount in your EPF (Employee Provident Fund), but most of the people feel that its locked in and they will only be able to get it only at the time of retirement or will be able to withdraw/transfer it when they leave their job.

EPF withdrawal for house purchase, marriage or medical emergencies

6 situations when you can withdraw money from EPF account while you are working

Here are those 6 major milestones in life or reasons for which you can take out the money from EPF account

  • For Marriage Purpose of Self, Sibling and Children
  • For Education of Self + Children
  • Purchase/Construction of House or Flat
  • Repayment of Existing Home Loan
  • Repairs/Alteration of Existing House
  • For Medical Treatment

Different rules for different situations

Para 68 of Employee Provident Fund Act 1952, defines how much you can withdraw, under which condition, after how many years of service and finally how many number of times. But before you move forward, its important to understand two important terms – which are “wages” and “years in service”.

You should know these two terms because how much you can withdraw for some reason has some restrictions and defined like this  – “You can withdraw maximum 36 times your monthly wages, only after 5 yrs of service”. So you will get confused on the terms like wages and years of service .

Most of the people confuse “wages” with the monthly take home salary or gross salary and do not understand how to calculate “yrs of service” because they have changed their jobs and keep moving from one company to another and have not transferred their old EPF account to new one.

So lets understand these two critical points

What is the meaning of “Wages” ?

Wages means Basic Salary + DA (if any) . So if you are earning Rs 80,000 per month take home,. but your Basic Salary + DA is only Rs.25,000 per month and rest 55,000 is other components, then for calculation purpose – “wages” will be Rs.25,000 only and not Rs.80,000 which is generally confused with.

What is the meaning of “X yrs of Completed Service” ?

How old is EPF account is the sum total of how many years you have worked. Do not confuse it with how long are you are employed in current job.

Because Employee Provident Fund (EPF) is a centralized pension system, if you ave worked for 3 yrs , 4 yrs and 2 yrs in 3 different companies, then your EPF account would be considered as 9 yrs old, provided you have transferred your old EPF accounts to the current one.

So in this example which I just gave, even if your current job is 2 yrs old, if you have transferred your old EPF to your current one, your “yrs of service” will be 9 yrs, and then you will be eligible for many benefits which we are going to talk in this article.

Incase you have not transferred your old EPF account to current EPF account, then in that case you will be at loss, because there is no data of your past employment in the current EPF account and you suddenly might not be eligible for various withdrawal benefits, because many of them require atleast 5 or 7 yrs of service.

So the first step you should do is transfer your old EPF to your new EPF account. Incase you have been facing issues while transferring your EPF account, file a RTI now and get it done !

What is Form 31 ?

Form 31 is the main form which one has to fill and submit to employer inorder to withdraw money for various important situations mentioned above. Along with form 31, you also need to provide specific documents depending on the case. You can either ask for Form 31 from your employer or download Form 31 from EPF website.

Fill this form and submit it to your employer who will then verify it and process it. Note that you should not send it directly to EPFO office, because it has to go through your employer only. Below is the form 31 attached if you want to have a look at it.

How will you receive the money from EPFO ?

When you fill up the form 31, you need to you need to fill up your bank details and also give a cancelled cheque and once your employer and EPFO verifies it and process it, you get the money through NEFT or RTGS in your bank account.

Incase the amount is less then Rs 2,000, you also have option to get it via money order.

6 situations when you can withdraw from your EPF

Below are those 6 important reasons for which you can withdraw from your EPF , now I am going to explain each of them in detail. Here they are –

Reason #1 – Marriage for self, children and siblings

You can withdraw from your EPF account for the occasion of marriage if you have completed 7 yrs of service. The interesting part is, you can avail this facility 3 times in life (during your service) and the maximum amount you can withdraw can not be more than 50% of the “Employee share” in EPF account.

You should be clear that even Employer contributes to your EPF account and that is not considered for this withdrawal. So even if your EPF account total balance is Rs 10 lacs, that whole amount is not considered for calculation purpose, only your own contribution and interest on that amount is used for calculation purpose.

This is applicable for the marriage of

  • Self
  • Son or Daughter
  • Brother or Sister

So for an example, lets say you have been working for 10 yrs and your sister’s marriage is coming up, you can withdraw money from your EPF account for this purpose.

You will need to provide the full address of venue, marriage date in form 31, and also attach some proof of wedding like Marriage invitation or the bonafide certificate of the fees payable and give it to your employer for verification and processing.

Reason #2 – For Education of Self + Children

You can also withdraw for education expenses for self and children. This is valid only for post matriculation educational expenses. By post-matriculation, it means after 10th standard .

So if you are admitting your child to any college or university for graduation or post graduation or any other professional course, you can withdraw from your EPF account. But this can be availed only after 7 yrs of service and the maximum amount you can withdraw is 50% of your own contribution.

This can be used for maximum 3 times in your lifetime, but this 3 times also includes the “marriage” as the reason. So the point is , for Marriage or Education purpose, you can withdraw for maximum 3 times in total.

Reason #3 – Purchase/Construction of House/Land

If you are planning to buy or construct a house OR purchase a land, you are eligible to withdraw some limited money from your EPF account once in lifetime. Here are some of the rules which you need to satisfy

  • The house/land should be on your name or your spouse name or jointly in the name of you and your spouse (no other combination is allowed)
  • You should have completed 5 yrs of service.
  • If you are purchasing land, the maximum permissible amount is 24 times monthly wages.
  • If you are purchasing or constructing a house/flat , then the permissible limit is 36 times monthly wages (including the acquisition of land also)

So for example –

If you are buying a flat and your salary per month is Rs.80,000 , but your basic salary + DA (wages) is only Rs.25,000 per month, then for calculation sake, your wages is Rs 25,000. So as per rule, you can withdraw upto 36 times your monthly wage, which is 36 x Rs.25,000 = Rs.9 lacs from your EPF account.

If you do not have that much money, then you will get less than 9 lacs. This is not a small amount if you think about it. When you take the home, there are so many costs involved and one is so hard pressed for money that time, Even few lacs is a big enough help.

The property in question should be free from any dispute or emcumbrances to avail this facility (here are 20+ terms you should know about real estate). Also the property should be registered and a proof of registration must be given to get this facility.

Reason #4 – Repayment of Existing Home Loan

This one is surely going to move a lot of you readers I know :). If you have a home loan, you can even withdraw some part of your EPF money to prepay your current home loan, but for that you need to have 10 yrs of service. However you can avail this only once in your lifetime, and this one time limit is clubbed with the last reason (3rd) above.

So one can either withdraw money from EPF account for purchase/construction of house or repayment of house loan, not both !

The property must be in the name of self, spouse or jointly registered with spouse.

A lot of people have a joint home loan with father, mother, siblings – but in those cases, you wont get this benefit. The amount you can withdraw will be 36 times of your monthly wages.

The money you will get under this clause, can be taken from self contribution and employer contribution in EPF. You will need to provide the proof for house agreement, sanction of house loan and some other documents as asked by the EPFO office.

Also the money will be issued directly to the lender bank, not to you (incase you thought you can trick the EPFO and enjoy the money for some other purpose). Next, you can use the money from your self + employer contribution.

Reason #5 – Repairs/Alteration of Existing House

At times, when your house is little old (after many years), there comes a time when you want to make some alterations and changes in current house and it burns your pocket. You might want to do some construction work, or lets say change your home tiles, or add a new room in existing house.

In all these cases, you can use EPF money for this purpose. However there are few rules

  • The maximum money you can take is 12 times your monthly wages
  • The house should be more than 5 yrs old after construction completion date.
  • You should have completed 10 yrs of service
  • You can avail this facility only once
  • The house should be in the name of self, spouse or jointly with spouse

Note that this money can only come out of your own contribution, not employer’s contribution

Reason #6 – For Medical Treatments

If you have health insurance, then well and good, but if you don’t have it and if you are hospitalized or have to undergo some major surgery, you might have to shell out a lot of money, but your EPF account can be of some help to you partially.

You can withdraw money from your EPF (Provident Fund) for a medical treatment for self or anyone is family in following 3 situations (any one, not all)

(a) The hospitalization is for more than 1 month (for any reason), or
(b) major surgical operation in a hospital, or
(c) if one is suffering from T.B., leprosy, paralysis, cancer, mental derangement or heart ailment and having been granted leave by his employer for treatment of the said illness.

The best part is that you can withdraw the money anytime in your service.

There is no requirement that, you must have completed X number of years in service. Even if you have been in service for just 1 yr or 2 yrs, you can still withdraw money for medical treatment – But at the same time, the maximum money you can take is limited to 6 months wages, which is not a very big amount, but still atleast you get some help and this option is there.

This benefit can be taken anytime you want and for any number of times during your life time. So in a way, your EPF will come to your rescue in times of need, at least partially if not fully!.

But, there are few documents you will have to produce and give along with Form 31 and those are

  • A certificate from your employer which states that the Employees’ State Insurance Scheme facility and benefits thereunder are not actually available to the member or the member produces a certificate from the Employees’ State Insurance Corporation to the effect that he has ceased to be eligible for cash benefits under the Employees’ State Insurance Scheme
  • A certificate from eligible doctor stating the fact that hospitalization of one month is required or there is a requirement of a major surgical operation or certifying that one is suffering from the mentioned illness – i.e T.B, leprosy, paralysis, cancer, mental derangement or heart ailment.

All the rules mentioned in a single chart

So that was all the rules I wanted to tell you, I also want to give you a single chart which has all the above points at one place.

epf withdrawal chart for house purchase, marriage or education expenses

An example of someone with 10+ yrs of experience

To give you a more clear picture, here is a simple example which will help you understand how much a person is eligible to withdraw in money terms. I have assumed that a person has completed 10 yrs of service and his wages per month is Rs 20,000 and his current EPF balance is Rs.10 lacs.

epf withdrawal example house purchase

Conclusion

Your EPF account is primarily for your long term wealth creation, Do not use it only because the money is available through that because its a place where your money gets accumulated each month without your intervention.

However in case of crisis situations and when you are not able to arrange for money from anywhere, its a good place to chip in and withdraw the money.

Let me know if you want to share any new information or have any doubts. I would be happy to answer them incase I know more

4 kind of exclusions in your health insurance policy which are NOT covered

Posted on by Jagoinvestor

When health insurance claims are rejected, it disappoints the customer more than anything else. Its a disappointing moment for the policy holder, when his trust is lost in company and he starts feeling that he was a fool to buy the health insurance policy at the first place and waste his premium, because companies are just fraud, who wants to loot the customers, by giving silly reasons for not settling the claim.

They feel companies are coming up with unreasonable reasons to reject their claims. This situation is a big blow to customer financially, because now they have to bear all the expenses from their own pocket. This is exactly what happens with many customers who have no idea of what their health insurance policy covers and does not cover.

What does a Health Insurance Policy does not Cover ?

In almost all the cases where claims are rejected and customers are disappointed, its seen that it happens because companies reject claims based on the policy document rules and what is covered or not covered into the policy, however the customer disappointment is always there, because there was a lack of understanding of what is covered and what is not covered. There various clauses like waiting period concept or exlusion of pre-existing illness, which customers do not try to understand fully and see health insurance policy as something which will just pay their bills in any medical case. However thats not true.

In this article I want to make you aware about the 4 major clauses in almost all the health insurance policies which will help you understand how exclusions work in case of health insurance policies and when you will not be paid. This will help you and companies both to make sure you are on the same page.

What is not covered in health insurance policies

Exclusion #1 – Permanent Exclusions

Permanent exclusions are listed category of treatments, which are never covered in health insurance policy for whole life. They are excluded permanently from the ambit of the health insurance scope. These permanent exclusions are clearly mentioned in the policy document of the health insurance product under section “Permanent Exclusions”.

Even before buying the policy, you can look at the PDF document of the policy which must be there on the health insurance company website. Almost all the companies have the same list of illnesses listed under this section, however you should anyways look at it.

Here is a sample list of some of the permanent exclusion taken from Religare Care Health Insurance policy(not the full list)

  • Any condition directly or indirectly caused or associated with any sexually transmitted disease
  • AIDS
  • Any Treatment arising from or traceable to pregnancy, miscarriage, maternity, abortion or complications of any of these.
  • Any Dental treatment or surgery unless necessitated due to an injury
  • Charges incurred in connection with cost of spectacles or contact lenses, routine eye and ear examinations
  • Any treatment related to sleep disorder etc
  • Treatment of mental illness, stress , psychiatric or psychological disorders
  • Any Treatment/surgery for change of sex or gender reassignments including any complication arising out of these treatments
  • All preventive care, vaccination, including inoculation and immunizations
  • Non Allopathic treatments
  • Any Out Patient Treatment
  • Treatment received outside India (unless its part of the policy)
  • Act of self destruction or self inflicted injury , attempted suicide
  • Any Hospitalization primarily for investigation or diagnosis purpose
  • Cosmetic and aesthetic treatments
  • plus, there are many others – which you should read in policy document

Here is an exact snapshot from Bharti Axa Health Insurance page

what is not covered in health insurance policies bharti axa

Exclusion #2 – Waiting Period Concept for selected illness

Each Health insurance policy has the concept of “Waiting Period” for a selected list of illnesses, which means that for first few years(which can be anywhere between 2-3 years) will not be covered under health insurance and only after that period they will be covered. So if waiting period is 2 years in some policy, and you take the policy in year 2014, the illness covered under waiting list will be covered only after 2 yrs are over.

This is one thing which customers do not pay attention to while taking the policy and if they get hospitalized due to some illness which is not covered under waiting period, their claim is rejected and then they feel cheated and complain about the company. Here is a real life case on our forum

Here is the list of some of the illness and diseases which are part of waiting period in most of the policies

  • Arthritis , Osteoarthritis , Osteoporosis , Spinal Disorders, Joint replacement surgery
  • ENT Disorders & surgeries, Deviation, Sinusitis and related disorders
  • Cataract
  • Dilation and Curettage
  • Piles, Gastric Ulcers
  • All types of Hernia , Hydrocele
  • Internal tumors, Skin Tumors , cysts
  • Kidney Stone , Gall Blader Stone

Some policies might have the specific waiting period for senior citizens, like in case of Family First policy by Max Bupa, there are few illness which are under 2 years waiting period for senior citizens, but not for young customers.

Specific Waiting period for senior citizens

Exclusion #3 – Pre-Exisitng Illness

Another exclusion is “Pre-existing illness” in all the policy documents of all the health insurance policies. Pre-existing illness are those illnesses which are already detected for the patient. Most of the companies do not cover these pre-existing illness for starting 2-4 yrs (exact time varies from one company to another). So if someone is suffering from some respiratory illness already, then any treatments or hospitalizations which occurs due to respiratory problems will not be covered for first few yrs (the exact tenure depends on company). This is to prevent situations where a person is detected for some disease and he takes the health insurance so that he is covered for the hospitalization, this is simply not allowed and does not make any business logic. So thats the reason its said that one should take health insurance as soon as possible so that those initial few years are passed and then you are covered for wide range of illness.

Pre-existing illness in case of Senior Citizens

In case of senior citizens, pre-existing illness are excluded for rest of the life in most of the policies, because anyways there is higher probability of senior citizens getting hospitalized due to their existing illness. So if someone has undergone bypass surgery and they are senior citizen, any heart related treatments will not be covered for all life. It will be permanently excluded from the policy. Thats one big reason why I keep on saying that you should take your parents health insurance before they turn 60 yrs. There are some companies like Oriental Insurance, which does not even require medical tests for persons upto age of 60 yrs, just the declarations given in the health insurance form is enough.

Exclusion #4 – First 30-90 days waiting period

Almost all the health insurance companies do not give cover for any medical treatment for the first 30-90 days of taking the policy, except the medical expenses which result from injury (like accident). For example Religare Care have a initial 30 days waiting period, however Max Bupa Family First policy has a 90 day waiting period

Conclusion

Health Insurance is a preventive financial product, not a reactive financial product. You take health insurance to make sure that you are covered from future problems, not to deal with current medical issues. So when you are healthy, you should go for medical policy, so that you are covered for any long term medical issues. Most of the people start the procedure of buying health insurance when some illness is detected, and that’s when health insurance policy will not help you much. Instead of having wrong expectations by assuming things, better analyse and research the health insurance policy properly and deeply by reading the policy document.

Let me know if you have any experiences on this or want to share something ?

Penalty Charges on failed transactions due to insufficient balance at other banks ATM

Posted on by Jagoinvestor

Imagine this situation. You are in urgent need of cash and looking around for your bank ATM, but you are not able to locate one, but you can see other banks ATM and then finally you give up and want to withdraw the cash from other banks ATM knowing that its FREE to withdraw the money from other banks ATM (at least 3 times a month)

have you ever been charged penalty on failed transactions due to insufficient balance at other banks ATM?

Then, You go to other bank ATM and withdraw Rs 5,000, but you see the message on screen “Insufficient Balance, transaction Failed” only to realize that in a hurry, you have punched in an extra ZERO and have tried to withdraw Rs 50,000. You then ignore this minor mistake thinking that it means nothing and then finally you withdraw Rs 5,000 and leave the ATM happily!.

However, By the end of the month – when you are looking at your bank statement, you are in horror to see that there is some Rs 28 debited from your account as ATM decline charges and you are like – “What the hell is that”? You talk to customer care and come to know that there are some “ATM decline Charges due to insufficient balance”, you are not happy as you were not aware of it and customer care just has one answer – “It’s as per RBI guidelines”!

Penalty charges due to Insufficient Funds

Almost all the banks charge you a penalty charge if your transaction at other banks ATM is declined due to insufficient fund. So if you have an ICICI bank account and you are withdrawing money from HDFC or SBI ATM and if the transaction fails due to insufficient balance or fewer banknotes inside the ATM, the transaction will fail and you will be charged!

Here is a real life incident which happened with my Father, when back home, he tried to take out some money from SBI bank ATM (the account is with ICICI bank) and he was not that sure of the exact balance and he tried to take out the money 3 times in a row. We only realized about this charge when I was looking at the bank statement at the end of the month.

 

2 07/02/2011  ATM DECLINE CHG/08-JAN-11/2713 DR INR 28.00
3 07/02/2011  ATM DECLINE CHG/08-JAN-11/2713 DR INR 28.00
4 07/02/2011  ATM DECLINE CHG/08-JAN-11/2713 DR INR 28.00

How ATM decline charges are calculated?

Decline charges are the base charges + service tax! Each bank is free to define the penalty charge. So in the case of ICICI Bank (and other several banks), the penalty charges are Rs 25 per failed transaction. So when you add service tax, the final figure is Rs 28 (approx). Here are some of the bank penalty charges I found out on their websites.

ATM decline charges for insufficient balance

Is it for real that people pay penalty when there is insufficient cash in the ATM?

If it’s customer mistake, one can still understand the penalty charges, but what do you say about charges, when your transaction is declined because of the bank mistake ! , like if notes in the ATM are not sufficient? What if you are trying to withdraw Rs 5,000 but there are just Rs 100 notes in the ATM (Rs 500 are over) and the transaction failed (maximum 40 notes at a time is allowed) and you are charged for the failed transaction in other bank ATM ?

Here is one incident !

Dear Sir, I the undersigned wish to inform you that i am having saving account no. ******84712 with State Bank of India, Vadgaon Branch, Pune. When I was having balance of Rs.5106.19 (9th January 2014) in my account I went to SBI ATM at laxmi road, Pune but due to technical reason it was not in working position. So I went to opposite Bank of India, Laxmi Road ATM. When I tried to withdraw Rs.3300/- from that ATM it declined saying insufficient balance when I checked with security guard there he informed me that there are only 500 rs. notes available so you withdraw in multiples of 500 only.

So I withdrew Rs.3500/- (ATM 40091 BOI LAXMI ROAD II PUNE MHIN). When i checked today my account it is showing TO TRANSFER INSUF BAL ATM DECLINE CHARGE – ****** Transfer to ******14906 Rs.17/-. Will you please explain me the reason behind this charges.

Here is one more experience you should read where the bank had charged a customer for no mistake!

My friend once had a bad experience with SBI credit card. During some emergency, using his SBI Credit card he wanted to withdraw Rs.10000 from an SBI ATM. He entered Rs.10000 but the ATM refused to dispense that amount and gave a message that it could dispense only 40 notes at a time. Unfortunately only Rs.100 were present in the ATM (This point was not mentioned any where). So, he had to use his card thrice to get the required amount (Rs. 4000 X 2 times and Rs.2000 X 1). After he got his credit card statement, we were surprised to see that he was charged, cash withdrawal charges – 3 times (Rs.250 X 3 = Rs.750). Had the ATM been filled with Rs.1000 notes, the transaction would have been only one and my friend could have saved Rs.500. Is this ethical to charge the customers for such things? (Source)

Have you been charged for Failed ATM transaction due to insufficient balance at some other bank ATM ? Do you feel its justified?

Bank Locker Closed by bank & Struggle of claiming the locker contents back – A real Life Experience !

Posted on by Jagoinvestor

A lot of investors hold a locker facility in their bank, where they keep their valuables, jewelry and important documents. You must also be having at least 1 locker and must be rest assured that your locker will be safe and will not be touched, or looked upon by anyone else. However things can go wrong!

You might be operating your bank locker once in a while or many times in a year and in that case, everything will go well. However many people do not operate their bank lockers frequently and at times their lockers are closed for years and years. And they also forget to pay the fees for lockers, because you never realise that the time has elapsed and its time to renew the bank locker. Thats a big risk !

bank locker closed down

I will share with you some rules on how a bank can close down the inoperative bank locker when fees is not paid and even if the rent is paid to them and and we will also see a real life experience of one of the readers where his bank locker was closed down and handed over to someone else just because it was inactive for many years and then he struggled a lot to claim back his locker contents. (Read more on bank lockers safety, FD requirement, and more in this article)

Can Bank close your Bank Locker due to inactivity, even if rent is paid ?

Seems like the answer is YES.

Bank Lockes are divided into various risk categories by banks after they complete your KYC. Banks can assign you lockers which are either into “low risk” , “medium risk” or “high risk” category depending on what job/business you do, what is your age, what is your past relationship with bank, where do you live! and several other factors.

You then have to pay 3 yrs locker rental + breaking charges as security deposit at the time of getting the locker (No, FD for a big amount is not mandatory).

Now if you are into higher risk category, as per the RBI guidelines, if a bank locker is not operated for more than 1 yr, the bank can close your bank locker and take it custody back and give it to some other customer. Read the important part of the circular below 

(ii) Where the lockers have remained unoperated for more than three years for medium risk category or one year for a higher risk category, banks should immediately contact the locker-hirer and advise him to either operate the locker or surrender it. This exercise should be carried out even if the locker hirer is paying the rent regularly. Further, banks should ask the locker hirer to give in writing, the reasons why he / she did not operate the locker.

In case the locker-hirer has some genuine reasons as in the case of NRIs or persons who are out of town due to a transferable job etc., banks may allow the locker hirer to continue with the locker. In case the locker-hirer does not respond nor operate the locker, banks should consider opening the lockers after giving due notice to him. In this context, banks should incorporate a clause in the locker agreement that in case the locker remains unoperated for more than one year, the bank would have the right to cancel the allotment of the locker and open the locker, even if the rent is paid regularly.

How will it work if you do not operate your bank locker for a long time?

Step 1: If your bank locker is inactive for a very long time, and if bank wants to close it down, then first, bank will try to contact you and ask for the reason why you have not operated your bank locker for such a long time. Which tells you that you should make sure your phone number, email id and contact address is updated in bank records. If you have been moving from one house to another, you might miss the bank communication if your address is not updated.

Step 2 : You can either start operating the locker, or just miss out on communication part and then bank will close your locker and keep its valuables/belongings with them properly sealed in a bundle (dont worry, nothing will happen to it). Bank will also try to contact you again that your locker has been closed and the belongings are with them.

Step 3 : Once you realise in future that your bank locker has been seized ! , at that time, you can contact the bank, if needed file a RTI to bank asking for all the reasons and details and then take bank your valuables.

How Eshwar Claimed bank his Inoperative Bank Locker contents back from Bank

One of our reader Eshwar Molugu was shocked to find out that his bank locker was closed down and had been assigned to some other customer because of non-payment of fees and inactivity. This all happened because Eshwar visited after many years to operate his bank locker. This is when the whole problem started, he was not getting all the information properly and once he came to know that his locker belongings are there with bank, He really had a tough time to claim bank his locker contents. Here is his real story shared in his own words

My father have a locker in Canara Bank and it had been maintained from more than 10 years. We had paid the locker fee till 2009 and have all the bills related to it. After that we didn’t touch the locker till now Dec 30 2013. We didnt paid the locker fee from 2010.  But surprisingly when we went to bank today(6th Jan 2014)to enquire about the locker , Bank people said that the locker was given to some other person from 2010 onwards. And we didn’t get any notice asking us to pay the fee of locker.

My question is

  • How can they give our locker to others without prior information to us ?
  • If at all they want to give to others they should have asked/send some notice to pay the fee right ?
  • Ok… assume they have given the locker to others but what about the things inside it. Will they take all the properties inside it? Is that correct?

When I read this on comments section, I replied Eshwar telling him that incase he has not got any communication from bank on closure of his bank locker, then its service deficiency part from bank and to get any kind of information and to speed up the process, he should clearly tell the bank that he will reach to banking ombudsman and even file a RTI to find out all the information if there is no cooperation from bank side, Eswar then went bank and did all those things and then things started moving ..

Here is what Eshwar updated some days later.

When i had raised my voice with respective words like Banking Ombudsman and RTI, the boll got rolling. They took almost a week after i spoke with them and got me with information

1) The locker is safely archived in a bundle.
2) We paid the locker breaking charges and annual fee with respect to banking rules to retrieve the items back.

Now, As i had read about the RBI Instructions regarding the breaking of lock, Here are the points i found

1) After due notice to Locker hirer clearly confirming in the notice that , they are going to break open the locker in case of no response from the locker hirer with in specified time as mentioned in notice.

2) Generally the Lockers will be break opened on presentation of two witness officers of the bank and the valuables in the lockers will be packed in a sealed cover and stapled and will be stored separably .

3) Once after arrival of locker hirer/owner of valuables its duty of the bank to hand over the valuables to owner after under going all due diligence.

So with respective to the above guidelines proposed by RBI, I questioned Bank Manager, Genearl Manager and AGM, asking them to produce me the list of items they noted down while breaking the locker. And they came with an answers like “May be the item list would be inside the packaged bundle.”

So my question is

1) “If the item list is inside the packaged bundle then i don’t have any problem, But if the bundle have no item list inside it how should i handle the situation ?”

2) I was thinking the item list is mandatory when the locker is broken. Does my thinking makes sense or does the bank doesn’t write one(item list) as such.

Currently, they are ready to give the package bundle anytime but i am waiting for your reply on the item list
Can you please respond and suggest me ASAP as i am waiting for your reply to relieve my locker.

And some days Later !

We got our bundle with all the items in it and also there was a list explaining about every item. We were completely satisfied after getting the bundle and didn’t fight further for not sending notice.

If i wouldn’t have posted my problem in jagoinvestor website I wouldn’t have known about Ombudsmen party at all. Thanks once again

What you can learn from this episode is that you should keep on operating your locker from time to time, Even if there is nothing to add/remove from your bank locker, you can casually just visit the bank locker and open and close it, just to check if everything is fine.

What learnings are you going to take from the above real life case ?

Bought Health Insurance ? Here are 4 things you should do after that !

Posted on by Jagoinvestor

Have you bought health insurance? If you answer is NO, then you are lagging way behind the crowd and the best thing for you to do, is to get health insurance cover immediately. But if you have already insured yourself, then you have reached an important milestone and are probably feeling relaxed about your financial burdens. After all, if you are hospitalized, someone else will have to foot the bill, and not you.

Congratulations!!, But now, the question is, are you a 100% ready? The process of buying health insurance is very easy – you research the best policies, buy them online or offline and then the policy documents arrive at your home, and you feel – “I have finally taken health insurance, now I am done!”.

things to do after taking health insurance

The Real test is at the time of Health Insurance Claim

However, the real test arises when you have to finally claim health insurance benefits (here are detailed rules and procedure explained). It’s not a great time for you. Someone from your family (or you) has been hospitalized because of an accident or some major illness and every one is tense. You are in a hurry and do not have the time to “think” – this haste is almost always a BAD thing.

While at the back of your mind, you know you have health insurance; there are lot of things to accomplish in a short time frame to make that insurance useful. You have to search for the right hospital and contact the insurance company/TPA. The worst possible outcome is if you are the person hospitalized, and your family has no knowledge of these matters!

So why not plan beforehand and be fully prepared for bad situations. You may think it to be a waste of time at present, but in the time of a crisis, you will be thankful you took these steps. So today, let’s see a few things you can do after taking health insurance to fully prepare yourself for a crisis situation.

4 things to do after taking Health Insurance

1. Visit nearby hospitals

Imagine a situation where something bad has happened. You will probably be in a rush – you will call someone close and ask for good hospitals, maybe spend a few minutes thinking which ones are better and then head towards it. There is no TIME and your priority is on getting admitted somewhere first!. Even if it’s a planned hospitalization, your time for research is limited and there might be many surprises, which crop up at the last moment.

The best time to research hospitals to visit (in event of an emergency) is right NOW. You have all the time in the world at the moment. You can read all the reviews on internet, visit the hospital, make inquires related to charges and facilities, compare hospitals with each other, and finally jot down hospital names which are more preferred to others. You might realize that for OPD, Hospital A is better than B, C and D. You might come to know that Hospital C takes care of senior patients much better than others. You might realize that Hospital D is cost effective on its final bill amount, even though others give the feeling of being cheaper.

This will take you few hours or days, but if you have already done this, at the time of an emergency you will be a 100% mentally focused on the situation without having to worry about the logistics of treatment. Click Here to read some health insurance myths which you thought were true

2. Keep Health Cards in your Wallet and scanned version in Mobile

If you ask me how much time it takes to do this step, it takes exactly 1 hour. You open your mail where you have got the e-version of health cards, load it on a pen drive, go to the market to get a color Xerox, laminate the copy, cut it to match the size of a debit card and put it back in wallet – AND You are done.

If you already have the e-version of health cards in your email, put them in your mobile in images form (so that you don’t have to search your emails at the time of emergency). If you have the actual health cards in physical card format, it is very handy to have it ready with you. You can also keep a scanned copy of health insurance cards on your Google drive or Dropbox account, so that you can access them from anywhere if needed.

3. Keep emergency contacts on phone

In times of emergency, every minute counts. Why rely on Justdial or Google at the last minute – all you need to do is to save numbers of nearby hospitals (including alternate numbers) to your contacts list. The numbers can easily be found through Justdial or from the hospital’s website. Saving the numbers in your email (as drafts) is a good idea too.

Add these numbers to the list of contacts in your family’s phones as well. And while you are at it, keep a printed copy of this data in a common area that all family members have access to.

4. Keep a “emergency folder” for health insurance

I am willing to bet, that in the event of an emergency, your family members will not be able to access your health insurance policy, health cards, emergency contact numbers of the health insurance company, phone number for hospitals nearby or your other identity documents – especially not in a 5 minute time frame.

Why not make it easy for them to do this by preparing an “emergency folder” for health insurance. Keep a folder which has your health insurance policy document copy, your health card copy, a paper which has emergency contact numbers such as the doctor’s phone number, hospital phone numbers, TPA contact numbers, Health Insurance company customer care numbers, and a “guidance sheet” which sets out, step by step, all that needs to be done in case of an emergency or even planned hospitalization. I am so happy to share with you all, that we just completed our online investors bootcamp> last week batch and they all had awesome time arranging their documents, they felt so relaxed when they reported it on our bootcamp facebook group.

Note: Even if you have health insurance from your employer and not your own policy, these steps still apply to you. Follow them.

The Biggest reason Why you will not be able to save enough for your retirement ?

Posted on by Jagoinvestor

2014 has started, and I wish you all a Happy New Year!. We are into the 4th week of our Investors Bootcamp and I recently brought up a very important point there, which was, “What is the that one thing which stops you from saving for retirement?”.

When I dove into this topic and heard the responses from some of our Plan F participants (senior participants), I came across a simple reason, which can really destroy someone’s hopes for a comfortable retired life.

worried for retirement india
I was late to realise that I was very late

When I ask someone, “Have you starting saving some money for your retirement ?”, I hear a “NO” and the justification for it is – “I still have a lot of time, so why hurry? I am just 26 right now”.

I say – “Fair Enough, makes sense”

And then I put this question to the same person 5 years later, and the answer is – “I still have lots of time, so why hurry? I am just 31 years old”.

I still say – “Makes sense, at least for now”.

But you know what? There comes a time, where you suddenly realize that “Oh my god, its a bit late now”, because all the time you were thinking – “I will do it later” and never realize that its getting late. Remember, “Someday” is code for “Never”. When you have 30-35 years in hand for a goal like retirement, that goal is so distant that you feel it is idiotic to plan for it right away.

You feel, “let the right time come”, but you do not know what the right time is going to be. Is it when only 20 years are left? Or is it when 10 years are left? Or when only 5 years are left?

This is exactly the same situation as when you have to provide tax investment proofs to your employer. When you have 20 days in hand, you feel there is a lot of time. Then 10 days pass and you feel “It’s just few hours of work, I will do it very soon”.

This procrastination continues, and you keep convincing yourself that whatever time is left is more than ENOUGH. Then suddenly, when there is “just enough time left”, something else comes up unexpectedly – some important work surfaces, or you have to go somewhere, or you catch fever and you eventually miss the deadline. Now you are thinking, “I should have started early; I lost time, thinking there is enough time ahead”.

You wait for the “Right Time”

Unsurprisingly, you repeat this behavior when planning for your long-term goals, especially ones like retirement. We put off thinking about it because the retirement event is so distant in the future that it sounds comical to even plan for it now. So, we wait for the “right time”, but never declare that “right time” to ourselves – it’s just a concept in our head that never gets real.

Ask any 25, 30, 35 or 40 year old about their retirement, and they will say – “I still have enough time ahead”, let me think about other important things right now”. Then they turn 45 years old, things get serious and they “start” considering doing something about saving enough money. This is the first time, they realize – “I think its high time now, I should make a start towards my retirement planning”. Again 2-4 years pass, they are now touching 50 years, and then the PANIC mode kicks in, because they can see very clearly that they will run out of money in their retirement.

It suddenly becomes clear to them that time has flown and that the “right moment” to start saving money for their retirement was years ago. They have taken care of most goals in their life, but they have forgotten to protect their own retired living. All the time when they could have really taken risks and could have grown their wealth has passed. Now they just want their money to be safe and this is obviously a situation where you can only get sub-optimal returns.

At this point they have no choice but to live out a life of regret. Even if they do not wish to depend on their kids, they still have to.

30-30 rule to retirement

In my 2nd book – “How to be your own financial planner in 10 steps”, there is a full chapter on retirement. While writing that chapter, I was stuck at one place where I had to show the reader, the flaws in their default thinking about retirement planning and explain to them that they should start planning while they were young. After a lot of thinking, I came up with a rule called “30-30 rule of Retirement Planning”.

The rule states that an average person works for 30 years and then, after retirement, lives for another 30 years (just a benchmark number). Imagine you are 30 years old. You will work for next 30 years (till you are 60) and then you will live for another 30 years (till the age of 90). For the first 30 years, you will earn and consume the money. For the next 30 years you will not earn, but will still consume money.

Right now, I imagine you are earning, but it is still tough to run your life – there is no surplus money left, you are still not able to achieve so many things. If this is the situation right now when you are “making money”, what about those 30 years, when you will not earn a penny?

You earn for next 60 yrs, not just 30 yrs

I know all this sounds terrifying, but you have to realize that, at any cost, you have to earn for the next 60 years of your life (30 years of working life + 30 years of retirement).

So now lets look at your 60 years in two segments of 30 years each – the first 30 years is PHASE A (earning and consuming) and next 30 years is PHASE B (not earning, but still consuming).

Now Map each year of this Phase A with Phase B and what you earn in this year X (2014), some part of this money has to be saved for the respective X + 30 year (2014 + 30 = 2044). What you earn in year 2015 has to feed you in 2015 and 2045 (+30 years). Only if you save each year, will you be able to fund the companion future year, which will be exactly after 30 years.

Look at things like these.

30-30 rule of retirement

(Image comes from – “How to be your own Financial Planner in 10 steps” book)

So it’s very clear that if you lose the next 10 years, then the pressure of retirement saving will build up on the next 20 years of your life. If you lose 20 years of your working life and do not save anything for retirement, then the last 10 years have to shoulder that burden and you will have a punishing time ahead.

Benjamin Franklin once said – “You may delay, but time will not”. You are probably heading for disaster if you are living in this myth that you will save a lot later when the time comes. It never happens.

So sow some seeds right now for your retirement. Buy a piece of land, start planning for a second home which you will use to get rental income, start transferring at least 10% of your income each month solely for the goal of retirement, build an additional skill so that you can earn more in the future, marry a working spouse and don’t blow your money each weekend on that movie which you knew was not worth it! Start taking small steps

You have to ensure that by the time you turn 40, you should have at least a small retirement corpus – this should be your first milestone.

Are you all set to save enough for your retirement corpus? Are you sure you will not get trapped in this “right time” thing ?

How Wrong CIBIL report’s have harassed & destroyed many investors life?

Posted on by Jagoinvestor

A few years back, India was introduced to the world of “Credit Bureaus” and “Credit Scores”. Credit Bureaus track an individual’s credit history and create a report from that data. So all your financial history including credit cards, loans, the timeliness and regularity of your repayments and the number of times you have sought credit, is captured in this single report, and based on all this information a score is generated. This data is shared with lenders on request and subsequently used by them to make a lending decision.

CIBIL report Errors

On paper, this idea looks great because the system ensures that there is extensive record keeping for all individuals and the data can help lenders and banks make effective lending decisions. So far, the intention was good and admittedly with our huge population and fragile systems, there were bound to be a few hiccups along the way.

But it would seem that the amount of confusion created by the Credit Bureaus has reached unreasonable proportions.

Wrong Credit reports and how they are messing up financial lives of many

From the last 3-4 years, I have been hearing horror stories about how various financial lives have been destroyed as a result of wrong credit reports and mismatches in data. Banks are now mostly reliant on CIBIL reports for processing loan requests – they look at the CIBIL report and take the decision. But how does one guarantee that each and every bit of data recorded in the credit report is a 100% CORRECT?

There have been tons of instances where the report was wrong or had incorrect information and ultimately the consumer had to suffer a lot because of it.

  • Imagine a student who is looking for education loan and his father has applied for education loan, but bank is not ready to give loan because there is no Credit history ?
  • Imagine a family has made the down payment for their dream home and have applied for home loan , but it gets rejected because their CIBIL report has an entry for a credit card due which they have closed 8 yrs back and now neither they are getting loan , nor the builder is co-operating with them
  • Imagine a guy who is in need of personal loan, and if fully eligible for it, but could not get it just because his report has data of some one else whose name is close enough and the system has made the error ?
  • Imagine a guy following up with banks to update his data with CIBIL, then going back to CIBIL to know the status, asking 100 times about it, still not getting any clue on what is the status and finally he feels helpless and sorry for the whole system

Wrong Data in Reports

One of the biggest issues with present credit reports is the inaccuracy of data. Mostly this happens because the report is pulling data from multiple sources that might have incorrect data themselves or because of name mismatches. Even though this is a system fault but the end result is that the investor suffers.

I want to share Prabhat’s story on how his life was impacted due to wrong data in his CIBIL report.

Hi Manish,

Am a real victim of this “CIBIL”. Two years back i requested for a report. The report was full or errors- be it my name, identity, address, accounts etc. I raised a dispute form then. Since then, in that report, my name has changed thrice, my addresses have changed, my contact nos have changed. They apologised and said that corrections have been made. Recently i applied for a loan and again got rejected. When inquired and got the CIR, my data was merging with some other “Prabhat”. To confirm my doubts, i even called that person and highlighted all this in my next mail to cibil. But to no avail. You would always get a prototype reply- “We cant change data on your own and pls contact credit institution for modification”.

Ridiculous, is’nt it? First of all you sweat to get your issues registered (if only you get a great guy who happens to read your mail/ talk to you over phone by luck). Then follow the same to make them understand what is apparent to even a layman. in my case the other “Prabhat’s” pan no is different, dob is different, address and other things are also different but even then the data got merged and when i raised this, they are passing the buck onto credit institutions.

This is clearly not any fault of credit ins but of this cibil only. To be more precise- in their system of extracting data which they are not accepting. Sometimes, after negotiating so many mails and conversation with their executives, i really feel that this is being run by a bunch of nerds who would not listen or not understand your concerns. I have not taken a single penny as a loan in my whole life and now not getting loan just because of this cibil.

I want to knock the doors of law, to claim a heavy compensation- can you suggest me how and where can i lodge my complaint. I have all the evidences in black n white.

Prabhat

Here is another case of spelling mismatch

I got my CIBIL report recently. My Name is CHANDRA SEKHAR SHARMA but the name that I have found on the report is CHANDRA SEKHAR S V. It is not a spelling mistake as CHANDRA SEKHAR S V is a different person at all. But all my credit cards are listed against this name and one loan which is taken by MR CHANDRA SEKHAR S V is also showing here. So it is overall one report mixed up with two person’s information. In other word CIBIL is selling one report to 2 person.

I am going to report this dispute to CIBIL. But it is raising lot of question on CIBIL.
This CREDIT score concept hold good and easy to maintain in country like USA. They are having SSN concept where they are uniquely identifying each individual. But in our country we still to have such concept until UIN /adhar effective completely. Till then we have to face such situation .

Gap in Communication from Banks

The other problem is gap in communication with banks . The whole system is not efficient enough for speedy updates. Given huge banking system and widespread network, its bound to have communication gap. Here is one instance where Subhajit was marked as Defaulter by CIBIL , just because SBI didnt update some data from their side on a loan closed years back

I took a loan from SBI in 2004 and closed it in dec 2012. Now at present when i applied for another loan to some other bank, CIBIL marked me as a defaulter as they did not get any updates from SBI on the closure details. I contacted Chief Manager of the SBI branch from where I took the loan and asked her to send out an email to CIBIL ([email protected]), mentioning all my details and report that the loan account is closed now. Even after this was done, CIBIL is still saying that they might take 30 days untill the credit institution reverts back with their response. I dont understand whether CIBIL has a huge miscommunication between their call center folks and the email department. what do i do now?? i wanted to escalate this to the highest authority in CIBIL but i dont have any contact information for the same.

Regards,
Subhajit

Here is another case of Vijay

Hi Manish

In my report, the SBI card which I used to have was mentioned as “WRITTEN-OFF” and the Days Past Due section also had a number 120 put for the last several months ending in Sep-2006. This was definitely wrong info since I had checked with SBI in 2006 and they had informed me that there was no due from me at the time of closing the card. So I contacted SBI and they informed me that it was a mistake from their end and that they have corrected it in the latest update to CIBIL.

Then I informed CIBIL about the mail from SBI and asked them to confirm if the erroneous entries have been removed. CIBIL gives me a very vague answer stating the SBI card account is closed as per instruction. But I want to know if the word “WRITTEN OFF” has been removed from my report and if the Days Past Due section have been set to 0. I have sent them at least 3 mails asking for precise info on the above two queries. But they continue to give me very generic and vague answer.
Please let me know if there is any escalation mechanism when CIBIL gives vague responses.

Also in the score section, there is a line which states “*One or More Trades with Suit Filed Status in the Past 24 Months*”. I asked them for an explanation on what the above line meant. But they have not given any explanation. It sounds like some company has filed a suit against me in the last 2 years. I am not aware of any such suit. I am not able to get CIBIL to explain the line or tell me which company has filed the suit. I am at my wits end to get a proper response from CIBIL. Any help is appreciated.

Regards

Vijay

Using CIBIL report as a weapon

Some banks have also started using CIBIL report and its impact as a weapon against investors. They have started talking in the language of – “Do this, else your credit history will … ” (here is the proof).

Here is a what happened with Ravi

I was using a credit card from ICICI bank and I used it for about 6 months, in between I forgot to pay the due amount for one month and in the next month statement I found additional 6000+ Rs to be paid as late fees + interest + taxes that I refused to pay and deposited the amount that I was expected to pay. And after this I traveled abroad for 1.3 years and on my return from there I was called up by bank and asked to deposit 31 000 Rs against that, here again I refused to pay initially and asked them since I have not used this amount why should I pay this much. But later one gentle man from the same bank called me and said that if I will not deposit the same amount it will affect my credit history and I will not be able to get any loan in future. Hence I deposited all the stated outstanding amount at once.

But now when I applied for car loan , my loan request got rejected by the AXIS bank due to that credit card credit-history. I also approached ICICI bank for same and they immediately issued me the NOC with 0 Rs outstanding for me.and also requested them to get my name cleared from CIBIL, for this they told me that your name is already updated in CIBIL for 0 balance. I forwarded the same email to AXIS bank but still they are not ready to issue me the loan saying that I have paid the money lately after 1 year. Hence I am very anxious about it now that without doing any fault from my side I am becoming a victim here.

Your rights incase you are suffering because of Credit Beureu mistakes ?

A lot of investors who are affected by this CIBIL menace and mistakes from the banks side just feel angry, but they let things go and do not force a resolution. But you need to know that no one has any right to play with your financial life and if someone has, then they need to pay for it. If you have been facing an issue because of CIBIL or the bank and it has impacted you financially or mentally, you should always reach out to the consumer court or banking ombudsman. There have been many cases where customers have got some compensation. The only catch is that you need to be committed to pursue the case and have patience.

Here is one instance where a person was awarded compensation because was mistekenly marked as “defaulter” by the bank and suffered due to this

City residents continue to be hassled by the ‘CIBIL defaulter’ tag over minor disputes with banks. Now, a Sector-39 resident received justice from the UT Consumer Disputes Redressal Forum after a private sector bank had labelled him a defaulter and sent his name to Credit Information Bureau India Limited (CIBIL), an all-India data bank which carries credit history of all commercial and consumer borrowers.

The Chandigarh Consumer Disputes Redressal Forum has directed the bank to pay Rs 10,000 to the harried complainant, and Rs 5,000 as cost of litigation.

The order was issued by the Forum following a complaint filed by Bhajan Palm who told the forum that in 2003, he took a personal loan of Rs 66,000 from the bank, and repaid it in equal monthly installments.

Here is another instance where HSBC was fined for adding the name of a person to defaulter list without strong reason

Hongkong and Shanghai Banking Corporation (HSBC) has been ordered by a consumer forum here to pay Rs 20,000 as compensation to one of its credit card holders for adding his name in CIBIL’s defaulters list even though he had paid all his dues.

While awarding the amount to the HSBC credit card holder, the New Delhi District Consumer Disputes Redressal Forum said the Bank should have “gracefully” accepted its fault instead of adopting an “obstructionist attitude” by seeking rejection of his complaint.

You can read some more cases here or here .

Below is a 2 part video series from MoneyLife Foundation on “How to file effective complaints and win your battles in Consumer Courts”

Can you share any experience of yours on CIBIL mistakes or any struggle you faced ?

Also let me remind you of the ‘Oh my God’ offer coming on 7th Jan 2014, which you will not like to miss at any cost. Its one of its kind of offer coming soon !

5 awesome ideas which can transform your financial life

Posted on by Jagoinvestor

2014 has already started and you must be feeling reinvigorated – just as you were when 2013 started :). How then do you expect 2014 to be different from 2013? Let me explain a bit. When we get on call with some of our clients, we ask them –

“Do you want your next 5 yrs of financial life, like your past 5 yrs ?”.

Naturally, We get an emphatic “NO” and horrified looks (though we cant see them). Now ask yourself the same question and I am confident, for most people the answer would be the same. If your financial life is all messed up, I am sure you must have thought to correct it in this New Year. Let me help you a bit and give you 5 suggestions that you can implement and improve your financial life by leaps and bounds. It will start small, but things will improve steadily.

Here are those 5 ideas, which you should look at. Trust me, these are proven to succeed for most people we work with and even ourselves.

improve financial life

Idea #1 – Help others in their financial life

I can proudly say today, that all my knowledge and understanding of personal finance has come from (and only from) solving other people’s queries on this blog and our Q&A forum. Of course, some part of my knowledge has also evolved by writing these articles. I write the articles and they elicit variety of questions in comments section. I then reply back to those who commented and try to solve their problem. It really takes a lot of time and effort from my side to do this, but in the process, I learn a lot. If I do not know the answer, I ensure I find it out by researching it on the Internet, or come up with an answer through disciplined thought and introspection.

This helps me learn new things and also it feels nice to be able to help someone – after all, I love bonding with people and I hunger to be able to “give” back to our community! Conversations in the comments section between me, and the person asking the question, allow both of us to come out with better knowledge of the topic. What’s more, it really feels amazing to realize that one’s help has contributed to someone’s decision-making process.

I occasionally get into face-to-face conversations with people who seek my help regarding personal finance, and I do my best in helping them. Over time, this has created a wealth of information and knowledge inside me. Heck – I wrote two books too on money just by helping others !

So if you want to learn about personal finance, I can tell you with 100% confidence, that there is no better way than helping someone else on personal finance and answering their queries. You might feel – “but I do not know much myself”. The truth is, even if you do not know the full answer, making an attempt to help someone and contributing a bit extra helps you realize that personal finance is more about common sense and less about expertise.

You can anytime go to our Jagoinvestor Q&A forum, where dozens of personal finance questions are asked each day and hundreds of investors just like you are helping out with all the knowledge they possess. So just pick a question and reply with an answer. You must have surely learnt a lot from this blog and other resources and I know you are 100% capable of giving suggestions to others. I know you might be scared at times, thinking how it would look if you do not give the right answers or best answers to someone. But do not try to give the “perfect answer” – just give an answer with a full commitment to help someone. You will find that not only is your effort genuinely appreciated, but you will also feel amazing yourself and will make a friend and learn in the process. Alternatively, you can also reply to the comments that are posted on the articles from time to time.

I strongly recommend reading this book this book called “Go-Giver”, which will truly transform your way of looking at life and help you in your professional life.

Idea #2 – Write all your financial details at one place

When someone wants to work with us on his/her financial life, One of the first things they have to do is, fill up a detailed datasheet we give to them to capture all their financial details. This is what most of the financial planners will do as initial steps. Now most people react by thinking – “Oh no, I am not filling up a lengthy excel spreadsheet” and some people ask us – “Do I really need to fill this up?”

We tell them very calmly – “Yes, in 2 days, and ONLY then do we move ahead”

4-5 days PASS and we remind them once again about it.

It is only then that we finally get a mail saying that the datasheet is filled and we also get from them something like this –

“Hi Manish & Nandish

Please find attached the datasheet in this mail. My Apologies for sending it late. But let me share with you something about filling up the datasheet. I never knew about my own financial life before I filled this datasheet (here is ZIP version). I mean, I always thought I know everything and all the things are inside my head, I know the details. But in reality, I was so much cut off from my financial life.

I had to find out so many things while filling up this datasheet. For the first time, I seriously looked at my policies, where are my mutual funds, what is their worth exactly. I have discovered how much is my EPF worth and had to discuss a lot with my spouse and few things from other family members. I discussed about my expenses with my spouse and we released so many tiny things we can change and improve. We never realize these things in daily life, because we are just not in touch with whats going on with our expenses. Money just comes in my account and goes off here and there.

We also for the first time, really talked about our long term goals, had to think about the numbers and discussed a bit about which one are more important the others. I felt a bit worried on how will I fill all this , but once I started it, me and wife got involved in it and really liked it. For the first time I feel I know where do I stand in my financial life and have some sense of what all we want from our financial life. This datasheet filling exercise was a short but amazing journey in itself. Thanks a lot Manish and Nandish”

Nandish and I often talk about this and we have now realized that just putting all your financial data in one place is a wonderful way to improve your financial life because you really get in touch with your finances and start thinking about them seriously. For almost 90% of people who do this, it’s their first time taking some time off to focus on their financial life. What was previously a fuzzy area for them suddenly becomes clear and obvious. Just noting down your financial data in one place solves so many queries you had earlier.

So next Sunday (or whenever you can take out some time), allocate 3-4 hours for your financial life and just open a blank excel sheet and put down all your income/expenses, policies details, mutual fund data, Fixed/recurring deposits data, loans details, long and short term goals and everything else you can imagine, and see the magic. You will thank us. Let me make your job easy and share with you this ready made excel datasheet (here is ZIP version) , you can download it and you can fill it up. This is the same datasheet we send to our clients.

Idea #3 – Slow down and make some strategy 

Most investors are just moving with the flow of life. They get up, go to work, they earn, they spend and if something is left, they spend it again. If after all this, if still some money remains, it stays in their saving bank account, and is usually consumed for some useless reason – which looks reasonable and important at that point of time, but makes no sense in long term.

Nandish had recorded this wonderful audio on “slowing down” which talks about why you should step back for a moment and not be hasty with your personal finances It explains why you should “Slow down” and lower your pace in financial life and ask yourself where you are headed.

Listen to the “Slow Down” Audio below

Most people do not even know which direction they are going in their financial life and where they want to be in the next 5 years. In our Investors’ boot camp (next batch starts 20th Jan), we do an awesome exercise for one week, just to make you think what you want in your financial life and to get you in touch with your financial life.

So your current task is to apply some brakes on your momentum and investigate your own financial life. Ponder over few things and find out what is important for you. It is all about getting clarity and coming out from a state of confusion!

Idea #4 – Write down your past 5 yrs history on Paper

Investors keep on doing random things in their financial life for years, sometime with a rational mind and sometimes without much thinking. It would be a good idea to capture for the last 5 years – the major decisions you took in your financial life and the reasoning behind it. For example, you may have bought some policy after meeting an agent, or bought a property, or broken a Fixed deposit, or added major expenses in your life etc. Make a list of all those decisions over the last 5 years, and write down in detail, the reasoning behind those decisions. What made you do take the steps you did?

Do you still feel you did it for the correct reason? Do you feel you were right? Looking back at it, was it the right decision?

When you do this, you will be clearer about your own thinking and how you feel about a lot of things. Maybe you realize that you did something just to look good in front of someone. Maybe you find out that you focus too much on the short term and do not look at things from a long-term perspective. Maybe you will find out that you compromise on your long-term wealth creation just to fund some short-term happiness.

To give you a flavor of how people feel after writing down their history and all they have done in their financial life in past, here is an experience of one of the members of our Investors bootcamp

“I felt many emotions while filling out these questions – pride, great joy, regret & sadness. I saw how I had grown from a child to an adult as an investor and kept coming back to document what I missed. As the picture emerged, it was so interesting to see the patterns emerge and to find blind spots that would probably be immediately evident to someone else. It took me a long time to answer the second question. I was worried, but to document exactly what was worrying me took time. Now that I have it on paper, it feels a lot less worrying! I’m excited to see what the boot camp holds and am looking forward for the next week.”

So start this exercise the moment you complete this article.

Idea #5 – Get accountable to someone in your financial life

In his book – “11 principles to achieve financial freedom” , Nandish talks about Level 1, Level 2 and Level 3 promises.

Level 1 promises are “professional promises”, which you fulfill and complete at any cost and ensure they are never left pending. You bring work home, stay up late, but complete those tasks. You are fully committed to your level 1 promise.

Level 2 promises are ones that are made to our families and we keep them sometimes and do not keep them sometimes. We are somewhat committed to those level 2 promises, but not fully.

Level 3 promises are those promises, which we make to ourselves.

We excel at not completing these Level 3 promises! We surpass others in forgetting those promises and on no occasion do we display the level of commitment we do with Level 1 and Level 2 promises. Waking up early to exercise falls in this level 3 promise. Starting a “SIP” also falls under level 3 promises. And, most importantly, all Personal Finance actions fall into Level 3.

 

Level One  Professional promises  You keep them always
Level Two  Promises made to family members  You keep them at times
Level Three  Promises made with self  You break them all the time

 

Ask yourself, how long has it been since you promised yourself to start that recurring deposit, write your budget, start your SIP or write a will? You will realize you are worse than you imagine :). This happens because you are not accountable to anyone. No one will complain, if you don’t do things and leave them incomplete. You can always rationalize your behavior and you will surely not “Punish” yourself – and that’s the weak point.

Your life goes on, and you give a clean-chit to yourself every time you break a promise made to yourself, citing reasons beyond your control. But this errant behavior is costing you your future. This small thing can jeopardize the happiness of your family some day, can make your retired life a nightmare and can mean your kids get a mediocre education because you were not able to accumulate enough wealth to pay their fees in the future.

This is more serious than you think, but you will realize it only later.

Be Accountable to Someone

The only way to improve it is to be accountable to someone about your promises and actions. Hire a professional Mentor who keeps track of your financial life and your promises, and to whom you report your actions.

A lot of people look at a financial planner as someone who will give “advice”, but not as someone who will help them track where they are headed, who will ask them – “Tell me, what did you achieve this month?” and someone who says things like – “Can you tell me, the reason you failed to change your bank account nomination which you promised to complete by this month? Didn’t you get 2 hours out of your schedule?”

The mentor can also be your family member or spouse if you want. Declare your actions and deadlines to your family. Do whatever it takes, but ensure you are answerable to someone, if only to some extent.

Importance of “Accountability” in your financial life

Let me also share with you, the “Accountability” feature of our Online Investors bootcamp. At the bootcamp, each week you declare your weekly action and what you are going to complete in coming 4-5 days and then you go back and do those things. You have to report things back on Friday and share with us your progress. If you do not complete it, you are asked questions and reasons for not doing your tasks.

Now someone will not shoot you or put you behind bars for not doing what you promised, but when you see others declaring proudly how they completed their tasks and see them feeling euphoric about it, you feel bad for not keeping your words and feel ‘left out’. These group dynamics work for participants and they complete things most of the times. We have seen it working in Batch 1 and Batch 2 of our bootcamp. A little work each week improves your financial life, and at the end of 6 weeks, you move to the next level and realize – “Wow! I have finally done so many things which I was only thinking about all this time”

Now it need not be only at the investors bootcamp – you can report to your spouse, your friend, your Facebook friends (if you are okay declaring your actions) or else, you can pay a professional financial planner and take his help. Anything that helps you is a “great” option. There are no rules.

So bring some accountability structure in your financial life and you will surely see the results.

Conclusion

You really need to design your financial life based on these 5 ideas . Do not just read them, but really practice them and see the effect.

List of awesome projects lined up in 2014 on Jagoinvestor

Posted on by Jagoinvestor

Hi All readers, Wishing you and your family a very Happy and Prosperous New Year! We take this opportunity to thank you for being an integral part of our community. Year 2013 was a great year for us and we will continue to serve investors community in the similar fashion. We take this opportunity to share some of the highlights of the year 2013 and also wanted to share what you can expect from us in the New Year.

Year 2013 Flashback

  • Book “How to be your own Financial Planner in 10 steps” Launched and it has simplified financial planning profession to a great extent. With the help of this book you can actually be your own financial planner – Written by Manish Chauhan (Buy)
  • Book “11 Principles to achieve financial freedom launched”, this book is a gem. It is written in story format, it talks about financial coaching and principles of financial freedom  – written by Nandish Desai (Buy)
  • We Redesigned our Q&A forum page (it has more than 6000+ members and 7000+ questions – ask your questions now. It is like a one BIG magic box which contains all kinds of personal finance questions and solutions.
  • We also had an opportunity to work with a few investors one-on-one. We work with limited number of investors in a month and In this year we have completed close to 250+ financial planning clients. We now have clients in more than 30+ countries. (look at our services page)
  • In this year we launched our most innovative project till date called 100moneyactions.com, which has helped more than 300+ investors and the number is growing every month. This program is magical, if you complete all the 100 actions it will surely help you to take your financial life to the next level. (check out)
  • We Published close to 600+ articles till date. It is always fun sharing personal finance knowledge with committed investor’s community. We are happy to make a difference in so many people’s financial lives. (here is the list)
  • We started something very interesting on facebook. Yes, we have designed a magical 6 week program that takes place on facebook closed group. And in 2013 from 2 boot camps 80+ investors graduated from our Investors Bootcamp. We really want every reader of jagoinvestor to go through boot camp participation where you get a chance to learn from other investors.
  • We could only do one workshop in 2013. 55+ members attended our Mumbai Workshop for Investors. In our workshops we generate high level of commitment in investors and it helps people to design their financial life.
  • Helped Asset Management Company, DSP Blackrock with Plan F show on personal finance from start to end (watch all 10 episodes). In this show all the case studies were from jagoinvestor community and we also got an opportunity to learn a lot of things.
  • A  book called “How to Grow Your Business as a Financial Advisor” by Nandish Desai launched for financial advisor. This is India’s book on practice building for financial advisors. Many of you may not be knowing that we have a blog called jagoadvisor.com where we share our business experiences with advisors community – (Buy the book)
  • Conducted several Online and Offline training programs for Financial Advisors & Planners in Mumbai. The workshop for financial advisors was high on value and we got great feedback from those who participated.

Our Major Projects and Offerings in 2014

  • A irresistible “Oh My God” Offer for all Investors on 7th Jan – Check your mail box on 7th of Jan at 10 am. We have designed a very special offer for all our readers who have been with us from a long time. This offer is a difference making offer as it will provide you with some powerful tools by which you can start your 2014 with a BANG. Most people have fitness on their new year resolution list but this year we want our readers to place personal finance on top most priority. See that you do not miss this opportunity as it will only be available once in a year. I think this will be the best way to start your 2014 journey as an investor.

  • Investors Workshops in Different Cities – Every once in a while we get mails from different people asking for our investor workshop. We plan to tour 4-5 cities in India and want to conduct our flagship workshop for investors. We might also conduct some workshops outside of India as Indian investors are spread all across. We will need your encouragement and support to spread a word about these events – more details will come soon this year. If you are interested for this workshop , please register here
  • Something special for women investors – In the year 2013 we created one video course and some audio for women investors and it is our dream to do something special for women investors. This may be in form of some workshop or some online program but we will see that it truly helps women investors. We will need a lot of support from each one of you to make our dream a reality. Let’s get together and help more and more women in managing their money effectively.
  • A new website Advisor Hub – This is a project we have been working from last 1 year and it is now in its final stage of completion. This website will encourage quality advice and will help both advisor and investors community. All we can say right now is it will be a game changer in the world of personal finance.
  • Jagoinvestor PRO to be launched – In the year 2014 we plan to bring some new features and awesome things on Jagoinvestor which will help you more and more in your financial life. We are working on a whole new kind of model that will help investors to take their financial life to the next level.
  • Some New Books on personal finance – Looking at the great response of our books written with CNBC TV18 our publisher wants more from us. I and Nandish will be writing a few more books on personal finance in this year (some more awesome topics that will help investors to live a great financial life)
  • Business Workshop in different metros – We plan to train more and more financial advisors in India through our training programs and we would love our workshop conversation to reach more and more people. In the year 2014 we are also going to conduct leadership workshop for one Religious organization. Imagine I and Nandish leading 2 day program for 60+ Swamiji’s. This is one assignment that we are truly excited about.

Our 2014 is going to be all about service. We will stick to our commitment of serving investors and advisors community. We will continue to innovate, we will continue to make personal finance fun for people and every action that we will take will make a positive difference in society. Thank you once again for being our strength for all your love and constant encouragement. Don’t forget to benefit from OMG offer on 7th of Jan.

Review of iWish Recurring Deposit from ICICI Bank

Posted on by Jagoinvestor

Around December last year, ICICI Bank launched a flexible Recurring Deposit scheme called “iWish”. Customers with an ICICI savings account and who have access to Internet banking can use the iWish facility. Here’s how

  • Login to the iWish section in your ICICI saving bank account
  • Define a goal (like buying a laptop, vacation, down-payment on a house, etc.)
  • Define the amount and tenure
  • Make the starting contribution and the iWish goal starts

After this point, you are free to deposit additional money in your iWish account anytime you have surplus funds. Also, you can clearly see how much of goal is completed in % terms at any stage of the process. Interest rates on the iWish scheme range between 7.75% and 8.5%. Rates depend on the tenure of your goal – which can be between 6 months and 10 yrs.

ICICI iWish scheme Interest rates and Penalty rates
Source Page
Where iWish really innovates, is by bringing a social networking aspect into the picture. Users have the ability to share their goals (and the money required to achieve them) on their Facebook account and friends and family can then contribute money to the goal if they wish. By getting users to make a public declaration of their goal, the scheme hopes to prompt greater accountability in individual financial decisions.

To learn more about ICICI iWish Scheme, please watch the video below.

How its different from normal Recurring Deposit ?

Compared to a standard Recurring Deposit, the iWish scheme does not make it compulsory for users to make payments on a fixed date and also gives them the power to categorize savings into goals – which is a more human way to visualize and save your money.

Personally, I see iWish as a mechanism to define goals and save for them through Recurring Deposits. While standard Recurring Deposits just help save money for an unlabeled goal, iWish helps you define and prioritize your goals – helping you decide which goal to save for first. It also helps build a focused saving approach as once someone defines a goal, they are more likely to be serious about achieving it.

The scheme is clearly going to benefit the young generation, who are new to investing. For a generation who rely a lot on visual stimuli, the ability to see defined goals and a visual image of progress towards that goal (e.g. 34% of your ‘new car’ goal has been achieved) is a huge plus.

Fine Prints and things to know

While, on the whole, the iWish Scheme is good, there are few things one should be aware of to avoid a mismatch with expectations.

  • One can create maximum of 10 goals (wishes) and the maximum goal amount can be Rs 10 lacs
  • The minimum installment amount per month has to be Rs 500
  • If you want to withdraw the money on maturity or even before maturity, you need to open a request online for that.
  • There is no compulsion of making payments each month, so you can skip the installments if you want

Disadvantage of iWish from ICICI

By now, you must be wondering what the downsides of the iWish scheme are? Simply put, it is the problem of “manual intervention”.

I am convinced that it takes a great degree of resolve and discipline to properly manage one’s personal finance and investments. Unless the saving process is automated, people are tempted to be a little relaxed about saving in every period. While iWish touts its ‘flexibility’ as an innovative feature, in real life it might not help, as people are more likely to stop ‘voluntarily’ paying into their goals after 2-3 contributions.

With a traditional recurring deposit, the process of investing is compulsory and forced on you and in essence, you are compelled to make payments on a fixed date. Furthermore, the knowledge that there is an auto-debit leads you to ensure the monies are there in the account on the designated date. All this means that over 1-2 years, the Recurring Deposit really works and creates the money pool you need. While iWish is a fancy product, I do not see it as an improvement over the traditional Recurring Deposit.

Only in selected conditions and situations, iWish seems to work better than normal Recurring Deposit. An example would be when the investor’s income is not stable (one does not know if the bank account will really have the required balance on a certain date). For all other cases, I would prefer using traditional Recurring Deposits. Choose a goal, fix the amount, divide it by number of months and just start the RD for that amount. That should get the job done without needing my involvement every month.

What’s your verdict about iWish Feature and its utility? Do you think it’s any better than traditional Recurring Deposits?

UPDATE : Just realised later and came to know that you can have funds debited from your account automatically just like traditional RD, but it was kind of hidden and I never realised it . So mainly iWish has both, traditional RD features and innovative flexible way to accumulate your money and hence is better than what I have projected above.