If asked, “Do you have a lot of knowledge about personal finance?” You would say “Yes, of course!” Now, on the next question, “Is your financial life great?” For most of you it would be “No”. We all know term plans are required, we need to start the SIPs to meet financial goals, we need to cut down on our expenses, etc etc. But, how many of us actually go ahead and implement what we all claim to know! A very small percentage!
In this article, me and Nandish will talk on how taking actions is the real thing to be done in your financial life and just by accumulating knowledge about personal finance (what most of the readers on this blog do!) does not add up much in our financial lives! . In the video above, we are sharing – how two of our clients have given a new direction to their financial lives. Watch the video above to hear some action-provoking conversations between me and Nandish. There are two domains each person has called ‘Knowledge domain’ and ‘Actions domain’ .
Knowledge Domain
This domain is filled with the knowledge aspects in your life. When you read a blog, magazine, watch a show.. etc…etc, you are increasing your knowledge domain. You knowledge expands and you know more and more things. Your clarity on various subjects increases. This part is very important because it gives you confidence and understanding along with reasoning ability. If you are following a blog from long, your knowledge domain might be very high. But guess what! Your knowledge domain has very less impact on your financial life
Action Domain
Action domain is very simple to understand. All it means is how much action you take after increasing your knowledge domain. The more proactive you are in implementing what you know; it will have direct relation with the quality of your financial life. Increasing your knowledge domain will be of little or no use if you don’t expand your action domain.
In our financial coaching program, we concentrate heavily on taking actions and moving things in our clients’s financial life. We see people have good knowledge, but the one place where they are stuck is “Actions”. Somehow they don’t move forward by implementing what they know. Take yourself, many of you know that you need to take a term plan , you need to start your SIP, you need to start exercising (that includes me as well), but we don’t Act! and that’s where our big knowledge domain is of no use! Start taking actions!
I see so many readers on this blog who keep sharing their actions and how they started their SIP’s after reading an article . How they took the term plan after reading my article on online term plan , how a lot of readers got in action and started exploring options for their health Insurance, after reading one of my recent articles on Health Insurance
Financial Life as a project
One of the biggest reasons why most of the people fail to take actions in their financial life is that they dont look at their financial life at a project which needs a completion in all areas dont take a lot of actions in their financial life .
If you are stuck in your financial life and feel that you need an extra support which helps you be in action, you can register for our paid Financial Coaching program
Conclusion
Which of the two, knowledge and action domain is important? I personally feel that action domain is much more important than knowledge domain, because once you choose to act, you are bound to learn things and find out ways of completing somethings.
Please share what actions you have taken in your financial life? Which domain is bigger in your financial life ? Also let me know how was the video and if you liked the conversation ?
Also wanted to know your opinion on “Financial Action Day”, when we celebrate a week or a month as “Action Month”, when we as a group take massive actions in our financial lives and complete the long pending tasks ! . What do you say ?
Do you know which bank in india has the highest fixed deposits interest rates ? But before that, let me ask you – Do you know what is the interest rate of your Fixed Deposit ? If it was opened a few years back, all you would have got is around 6-8% depending on the bank and tenure. But today its a different scene! . Fixed deposits interest rates are high these days and you can observe one of the other bank announcing fixed deposits interest rates revised each month and in range of 9-10% . I will show you a snapshot of various banks Fixed deposit interest rates with varying tenures.
For simplicity purpose, I have not included tenures of less than 6 months . See the graph below . Green color represents interest rates higher than or equal to 9.25% . Pink represents exact 9% . The banks mentioned in the table below are Tamilnad Mercantile Bank, State Bank of Bikaner and Jaipur, Yes Bank, Karur Vysya Bank, Kotak Mahindra Bank, Catholic Syrian Bank, IDBI Bank, United Bank of India, Lakshmi Vilas Bank, Karnataka Bank, State Bank of Travancore, Corporation Bank, Indian Overseas Bank, City Union Bank, ING Vysya Bank, Indian Bank, Central Bank of India, Federal Bank, State Bank of Mysore, Punjab National Bank, Punjab & Sind Bank, ICICI Bank, Dena Bank, Indusind Bank, Canara Bank, State Bank of Patiala, Syndicate Bank, Barclays, Axis Bank, J & K Bank, State Bank of India (SBI), Union Bank of India, Bank of Baroda, Vijaya Bank, Dhanalakshmi Bank, South Indian Bank, DBS Bank, HDFC Bank, Andhra Bank, UCO Bank, Allahabad Bank, Bank of Maharashtra, Development Credit Bank, Bank of India, HSBC, Citibank , tandard Chartered Bank , RBS Bank and Deutsche Bank . Look at the table below for the indicative interest rates for different tenures.
Note that a lot of banks offer high interest rates for special tenures like 500 days, or 555 days or 1000 days, but they have some restrictions which people dont know – some of them are
Some banks have provision, if rates increased in future, you can not apply for extention at higher rate of interest, instead you have to close that account and apply for new one.
Automatic renew not possible.
Upon maturity, you will not be able to get overdue interest.
Sometimes, you cannot premature close the deposit. however, these conditions vary from bank-to-bank.
There are some patterns we can see in area of fixed deposits . here they are
Fixed deposits with high interest rates for almost all the tenures are not the heavyweight banks, but the new generation banks, they are Tamil Nad Mercantile Bank, Karur Vyasa Bank, Kotak Mahindra Bank, Lakshmi Vilas Bank and others
Most of the banks provide 0.5% higher interest rates for senior citizens if the tenure is more than 1 yr . But if tenure if lower than 1 yr, the interest rates are same for senior citizens also . This is widely true , but some banks like Axis bank , SBI bank , ICICI Bank and HDFC Banks gives 1% higher interest to senior citizens.
Most of the foreign banks like Citibank, RBS , Standard Chartered has low-interest rates in range 6-7.5% . This is unattractive during these times when other banks are giving higher rates .
Low and Medium risk appetite investors can cheer
For investors how find themselves not too comfortable with equity and for those who want to park their money for few years without taking any risk and earning some good return in range of 9-10% , Fixed deposits are very good options.
The only point is if you are in high tax bracket, most of the returns will go in tax, but for investors who are in lower tax bracket of 10% or below the permissible limits , they can look for these options without much thought . These fixed deposits were for the year 2011 , but for most part of 2012 also these bank fixed deposits interest rates will be applicable .
Many people whose income doesn’t fall under the tax slab have mostly invested in products such as FD through which they can earn interest. But can we do anything to make sure that the bank does not deduct TDS on interest earned if our total income is not taxable?
If you all don’t know then let me highlight to you that it is mandatory for banks to deduct TDS on our interest income. If our income is not taxable and we also earn interest from other financial products etc..then we will have to provide Form 15G and 15H to the bank so that bank doesn’t deduct TDS since our income is not taxable.
In this article, I will be discussing all aspects related to Form 15 and 15H.
What are Forms 15G and 15H?
Forms 15G/15H are forms that an individual can submit to ensure that the Tax Deducted at Source (TDS) is not deducted on the interest income if she/he meets the applicable conditions. Always remember, that if an individual wants to claim tax deduction through Form 15G/15H, then the individual must have a Permanent Account Number (PAN).
Form 15G is to be filled by individuals aged below 60 yrs and Form 15H is to be filled by senior citizens aged 60 yrs and above. You can click on this link if you want to download the form directly from the website. If you want to have a look at the form, click on the link below,
An Individual or HUF or trust or any other assessee
Only Indian Resident can apply
Age should be less than 60 years old
Tax calculated on their Total Income should be nil
The total interest income for the year should be less than the basic exemption limit of that year
b) For Form 15H –
A Resident Indian Individual
Age should be 60 yrs or more (senior citizen) during the year for which you are submitting the form
Tax calculated on their Total Income should be nil
Who all are not eligible to fill these forms?
The following are not eligible for submission of Form 15G/15H –
Company (Private and Public)
Partnership Firm
Non-Resident Indian (NRI)
An Individual whose estimated total income or the aggregate total income exceeds the basic exemption limit.
Can these forms be filled online or just offline?
a) Form 15G (online and offline) –
An individual can choose to submit Form 15G offline or online, depending on the facilities provided by their bank or financier. Firstly they need to check if their bank allows submission of Form 15G online. If this facility is available in their bank, they can simply log on to their internet banking account and fill up the form online. Once you have filled up the form, recheck the details, and hit submit. For your future reference, you can download the submitted form.
The other option is to fill a physical form and submit it to the bank. The forms are available in the Income Tax Portal. You can download the form and get printouts of the same. You can then submit these duly signed documents to the bank or financier where you have the savings accounts. You can also submit it at the post office or the company you work for depending on your requirement.
Currently, there are 2 banks that provide online filling of the forms. If you have an account in the below 2 banks then you log in through internet banking and fill these forms –
You can submit Form 15H online or offline mode. To submit it offline, you need to download the form from the Income Tax portal as discussed above. Once you have completed filling the form, you can submit these forms at your bank or post office or your employer (in the case of Provident fund).
If your bank or financier allows submission of Form 15H online, you can log on to your internet banking and fill up the form. You can submit the form directly using internet banking. For your future reference, you can download the submitted form.
Currently, there are 2 banks that provide online filling of the forms. If you have an account in the below 2 banks then you log in through internet banking and fill these forms –
A detailed guide on how to fill the form through SBI Internet Banking –
Different other scenarios where these forms can be utilized –
a) TDS on EPF withdrawal –
TDS is deducted on EPF balance if it is withdrawn before 5 years of continuous service. If an individual had less than 5 years of service and plans to withdraw their EPF balance of more than Rs.50,000, then they can submit Form 15G or Form15H. However, to fill this form the tax on an individual’s total income including EPF balance withdrawn should be nil.
b) TDS on income from Corporate Bonds –
If an individual holds corporate bonds, then TDS is deducted on them if their income from these bonds exceeds Rs 5,000. They can submit Form 15G or Form 15H to the issuer requesting the non-deduction of TDS.
c) TDS on post office deposits –
Post offices that are digitized also deduct TDS and accept Form 15G or Form 15H, if an individual meets the conditions applicable for submitting them.
d) TDS on Rent –
TDS is deducted on rent exceeding Rs 2.4 lakh annually. If the tax on an individual’s total income is nil, then they can submit Form 15G or Form 15H to request the tenant to not deduct TDS.
e) TDS on Insurance Commission –
TDS is deducted on insurance commission if it exceeds Rs 15000 per financial year. However, insurance agents can submit Form 15G/Form 15H for non-deduction of TDS if the tax on their total income is nil.
FAQs –
i) What will happen if I forget to submit the form on time to the bank?
If you forget to submit these forms on time then the bank will deduct the TDS. However, one can claim the deducted TDS by filing an ITR.
ii) What is the difference between Form 15G and Form 15H?
Both are self-declaration forms that an individual will have to submit to the bank once they open a fixed deposit. While Form 15G is for those who are below 60 years and come under Hindu Undivided Families (HUF), Form 15H is for everyone who is 60 years and above.
iii) Is the form provided by banks one and the same? Or is it different?
The forms which banks provide are a little different from the actual form which is available on the income tax website. However, both type of forms serves the same purpose. You can have a look at the form in the above section.
iv) Can HUF, NRIs submit Form 15G/Form15H?
HUF can submit Form 15G if it meets the conditions but Form 15H is only for individuals. NRIs cannot submit Form 15G or Form 15H. These can only be submitted by resident Indians.
v) Do I need to submit Form 15G/ Form 15H at all the branches of the bank?
Yes, you must submit one at each branch of the bank from which you receive interest income though TDS is deducted only when total interest earned from all branches exceeds Rs 10,000.
vi) Does filing Form 15G/Form15H mean my interest income is not taxable?
Form 15G/Form 15H is only a declaration that no TDS should be deducted on your interest income since the tax on your total income is nil. Interest income from fixed deposits, recurring deposits, and corporate bonds is always taxable.
vii) Will my interest income become tax-free if I submit Form 15G/Form15H?
Interest income from fixed deposits and recurring deposits is taxable. For senior citizens deduction of Rs.50,000 is available under section 80TTB for the interest income from fixed deposits/post office deposits/deposits held in a co-operative society. You should submit this form only if the tax on your total income is zero along with other conditions.
viii) I have submitted Form 15G and Form 15H but I also have taxable income, What should I do?
You must inform your bank that the tax on your total income is not zero. The bank will make changes and deduct TDS accordingly. You should report the entire interest income in your tax return and pay tax on it as applicable.
ix) Do I have to submit this form to the income tax department?
You don’t need to submit these forms directly to the income tax department. Just submit them to the deductor, and they will prepare and submit these forms to the income tax department. At times these forms can also be filled and submitted in the bank.
x) Is there any time limit for submitting these forms?
There is no time limit or due date for submitting Form 15G/15H to the bank. However, it is advisable to submit it at the beginning of the financial year (i.e. Apr 01) or as and when the new deposit is created.
xi) What is the time limit during which these forms are valid?
Forms 15G/15H are valid for one financial year ending on Mar 31 of every year. So, you will have to submit these forms every year if you are eligible. Submitting them as soon as the financial year starts will ensure that no deduction is done on any interest income earned.
xii) Is there any other way NRIs can refrain from TDS deduction as they are not eligible for Form 15G and 15H?
For any NRI, whose TDS is more than his/her tax liability, such excess tax can be claimed as a refund from the Indian Tax Department (ITD) by filing the Return of Income in the particular Financial Year. Such excess TDS results in loss to NRI due to the time interval between the tax deducted and refund of such excess tax, which may take generally 1 to 2 years.
In order to address the above situation, a procedure has been prescribed under the Act, whereby NRI recipient of income can apply online to ITD (in a prescribed format) along with the relevant supporting documents to issue a Tax Exemption Certificate (TEC) authorizing the payer of income (who deducts tax) to deduct tax at a lower rate or Nil rate, as the case may be.
In the case of NRIs, whose actual tax liability is lower than the rate of tax prescribed under the Act, it is beneficial to obtain a TEC. An NRI should apply for TEC under few situations listed below –
Procedure – The Jurisdictional Assessing Officer (from the International taxation ward of the ITD) of an NRI generally issues a TEC between 2 to 4 weeks from the date of application.
Validity – TEC is normally valid for the period for which such TEC is obtained (i.e. a Financial Year) and for the specific income as stated in the TEC.
Filing Return of Income – NRI who has obtained the TEC has to compulsorily file his Return of Income in India for that Financial Year.
xiii) How can an individual make use of these forms?
These forms can be used only if the tax calculated on the individual’s total income is nil for the financial year. Both forms – Form 15G and Form 15H – have a validity of one financial year. That is why either of them is required to be submitted at least once every financial year. Forms 15G and 15H are basically submitted to save TDS on interest income.
For example, Banks deduct TDS on FDs when interest income is more than Rs 10,000 in a financial year. But if the total income is below the taxable limit, then Form 15G and Form 15H have to be submitted to the bank requesting them not to deduct any TDS on the interest.
Points to Remember –
An individual can only submit Form 15G/15H to a bank with a valid PAN, if an individual doesn’t have a valid PAN then, the tax will be deducted at 20%.
It is advisable to submit a copy of the PAN card with the cover letter.
The individual should make sure he/she receives an acknowledgement while submitting Form 15G/15H. This acknowledgement can be kept for future reference.
Acknowledgement of submission of PAN details is useful if a dispute with the bank arises.
The individual will need to submit the details of the Form 15G/15H submitted by him/her to other banks as well as the interest income amount mentioned in these forms.
As the individual has submitted his/her PAN, the respective assessing officer will have access to all the information submitted by the individual to other banks and will cross check if there is any incorrect information submitted by the individual or not.
There is a provision for imprisonment for a minimum of three months if an individual is found to have provided incorrect information in the declaration forms.
A short video on How to Fill these Forms –
a) Form 15G –
b) Form 15H –
Conclusion –
So this was all that I wanted to share in this article. If you have any queries then you can post them in the comments section.
Do you know what your money personality is? Now you must be thinking what is the meaning of “Money Personality”? Let me give you a hint! . Ajay earns a lot of money, but his financial life is not that great, the main reason is that he is too conservative with his investments and all his money lies in Fixed Deposits and Cash in the Bank, that’s all. This happens due to his internal design of being a “Saver”. His life is all about saving and only saving and there comes his money personality. Let’s explore more on this.
Money Personality
We have identified that each one of us have a money personality which we develop during our life and all our actions are driven by our money personality, even our financial life is driven by it and the product we choose, the way we look at each and every aspect is result of what money personality we have. Over the last few years, when we interacted with dozens of clients and thousands of readers like you, we identified that each one of us can be categorised in following money personalities which we will discuss today.
Spenders
Savers
Avoiders
Saints
Watch the following video which Me and Nandish has recoreded for you all .
1. Spenders
The first money personality is “Spenders”. People who fall in this category have an attitude that “Life happens now”. They will spend their money all over which makes them feel that they are “living” the life. They will buy expensive gadgets, eat out at expensive places and will make sure that they are not at all compromising on enjoyment. The behaviour also affects their financial life; their savings are not as much as it can be because most of the leftover money at the end of the month is saved. The simple rule of Savings = Income – Expenses is applicable for these people. Most of these people dont have much left in their bank account by the end of the month and they wonder “Where does it all go? ” .
2. Savers
The next personality is that of the “Savers”. These people believe that life is all about saving and for being prepared for the future. They are not exactly misers, but they appear like misers to others. Whatever can save money for them looks attractive to them. This behaviour also enters their financial life and they invest in anything which claims to save money to them. You can also attach the word “Safety” with these people. They invest in Fixed Deposits , Reccuring deposits , bonds , debentures and other investments which are safe avenues. These people like to buy stuff if it claims to save money to them .
3. Avoiders
The third and an interesting category are of “Avoiders”. These people are great avoiders, when it comes to taking actions, they will not spend or save, and instead they will just avoid the situation and find all the reasons in life for delaying things and avoiding it. They read, talk and learn about everything, but don’t apply it to their life in any way. I personally think that a lot of us are like that. There are even many readers here who are learning things from months/years, but still they have not done anything with their learnings, they just read and feel happy that they know something good, but where is the action?
4. Saints
The last category is really a different one and often forgotten, that is of “Saints”. A person who belongs to this category feels that money is an unimportant thing in life. His beliefs would be “Money is not important thing in life”, “More money is more trouble”, “Life is all about being Happy and content” and “You just need bare minimum and satisfaction to lead a happy life”. While that all is fine, these people over react and don’t give much importance to money in life. Most of the people who talk like this are those who really can’t make a lot of money and deep down they themselves are worrying for money, but they make sure they show themselves as not-interested-in-money kind of individuals.
Conclusion
So which money personality is better than the other and how to make change in your personality? First thing is that there is nothing bad or good about having one of these money personalities. These personalities get into us because of various reasons in life and it’s not that easy to change them. What’s important is that you need to be aware about your personality and how it’s affecting your financial life. Try to find out how your money personality can help in having a financial life which you desire.
What do you think about these personalities and which one are you ?
What is the equity and debt exposure of your portfolio? How many different companies have you invested in through mutual funds? And do you know of any tool with great UI and simple features that can help you analyse your mutual funds and stocks in detail? If you wondered that there is no such website which can do such analysis and that too for FREE, I am happy to introduce you to moneysights.com. It does it all that for you and much more…
From a few months, I am in touch with moneysight’s team. At that time they were still building their product and were trying to solve some key issues which investors face today and I knew from beginning that users will like their product when it goes live. Just a month or so back when their product was in beta mode, all the Jagoinvestor readers on email (see sidebar for subscription link) received the beta invitation from moneysights and they got a chance to use their tool exclusively and in advance than others.
The reason why I want to know about moneysights is because they aim to solve 3 key problems that is faced by common investors in India. These problems have played a crucial role in ensuring that Mutual Funds & Direct Equity investments remain under-penetrated as fas as mass market retail investors are concerned. I have described these problems below from Mutual Funds point of view –
Problem 1 : Choice & Suitability
There are 4,000+ of Mutual Fund schemes in the India today. If one includes the variations & scheme options like Growth, Dividend, etc. These schemes are broadly classified in 10+ types like Equity, Debt, Balanced, MIPs, ELSS etc. Most of the average retail investors don’t understand or demand so much of choice and option. A large number of schemes not only adds confusion to the decision-making process but also often results in postponing our investment decisions (i.e. taking actions).
If the quantity of schemes in the market is the first problem, then knowing the suitability of the scheme to an individual is another problem to be cleared? Not every scheme is suitable to every type of investor. An ICICI Prudential Discovery or IDFC Premier Equity may have given great returns & hence they command a 5-STAR return rating but how many of us know that both of them primarily invest in stocks which most often may not be Large-cap stable businesses. And hence they may not be suitable for someone who is risk-averse or someone who is just beginning to invest. Wouldn’t investing purely on return ratings may bring-in a surprise to the investor when the markets go into a downward trend?
Problem 2 : Construction of Mutual funds portfolio
Reading my previous posts on how to create a Mutual Fund Portfolio or How many funds are ideal to have in a Portfolio, you would have realized that diversification in the Portfolio is very important. But then, why how does one construct a diversified portfolio of 4-5 different Mutual Fund schemes. There is so much information needed to construct a diversified portfolio that it’s definitely a cumbersome task to construct one manually.
For example having a HDFC Top 200 & a Birla Sun Life Frontline Equity isn’t diversification but duplication. They are 2 similar funds & having both of them doesn’t make sense in a diversified portfolio. Look at this jagoinvestor forum question of mutual funds portfolio review and moneysights helping him.
Problem 3 : Tracking of Mutual funds portfolio
After someone invests in a set of Mutual Funds, is there a way to track, monitor & manage the Portfolio in a seamless manner? Most websites do offer tracking services. But then, again people like Venshu had asked about how to get annualized returns so as to compare portfolio performance, sector allocation, etc. so that one can get actionable insights to manage the Portfolio on an ongoing basis that minimizes portfolio risks & optimizes returns. I have used their tracking tool myself and it looks simple and good to me.
Some more good features
Some of you who would have registered on moneysights.com may be able to relate to what i’m talking here. However, if you have not tried it yet, let me summarize quickly on what stood out for me –
1. Fund’s Performance Report Card
Moneysights allows you to get more information about a specific mutual fund scheme in a quick & simple way. Just go to the Find Mutual Funds section where you can search or browse for specific Mutual Fund schemes. Opening the detail page of a Mutual Fund scheme like HDFC Equity Fund would allow you to see –
A unique way of portraying Fund’s Performance through Fund’s Performance Report Card – also notice the no-use of financial jargon
Performance Comparison with fund’s benchmark, SENSEX or NIFTY – notice the lack of importance to NAV & prominence to performance chart w.r.t. various benchmarks
Return Comparison with SENSEX, NIFTY, Category Average, etc. in tabular format during different time periods
How much your money would have grown had you chosen to invest in this scheme – notice the actual amount of dividend you would have earned
Mutual Fund Category Performance comparison within different time-frames
Portfolio composition of the scheme in terms of asset class, market capitalization, sector exposure & underlying stocks
So, all the information you require for knowing how good or bad a Mutual Fund scheme is available within a single-page interface.
2. Portfolio Health
Now this is another valuable feature. Many a times, readers have posted questions on forum about specific funds that they have invested in. Questions like shall I stay invested in (say) a Reliance Vision Fund or Sundaram SMILE Fund which probably used to be good performers at some point in time but are not the best ones today. Does it make sense to redeem & divert the investment in some other fund in similar category? Portfolio Health answers this.
The way I understand moneysights is doing is they find a scheme which belongs to same category as you have & check if there is a scheme which has performed better – i.e. taken lesser risk but has offered more returns. If they are able to find a better option, they show these options. Let me know what you feel about this in comments section.
3. Get a Portfolio
This is going to be useful for readers who want to start their investments from a scratch all over again or re-align their portfolio to their risk appetite. All you have to do is select a risk profile you can identify with & moneysights displays a portfolio of Mutual Funds which is appropriate to the risk profile selected along with how much exposure you should take in a specific scheme. I personally spoke to moneysight’s team & they mentioned that they give more importance to downside protection capability while choosing the funds & portfolio is constructed following best practices of portfolio management that control portfolio concentration risks. They also recommend funds which have proven history of performance & have a minimum AUM under their belt.
If you play around with this engine you would notice that higher your risk score more is the allocation to Equity. You would also notice that the resulting portfolio is always diversified across schemes, fund houses, sectors & stocks. They also show portfolio’s break-up & its past performance against SENSEX & NIFTY that help you understand why the portfolio is being recommended to you & how it’s good.
Other Small but Significant Features that you may like –
While the above 3 stood out for me, you may also like the many things they do differently like –
Letting you enter the amount of Investment & SIP day for accurately tracking your SIP investments.
Annualized returns of the schemes you invest in as well as the Portfolio when your investments are more than 1 year old – a very handy feature for readers who have been looking for XIRR returns.
Dividends that you may have received for your investments.
Updating missed SIP details – You can also update if you missed investing in a specific month for one of your SIPs. Doesn’t it happen sometimes intentionally or unintentionally with us?
By allowing you to redeem Mutual Funds partially or fully, they also let you build history of your booked past profits/losses.
Wishlists for moneysights
There are some of the things which I would personally like to see in future releases . They are
An advanced comparision tool which can show the past performance of the current portfolio
Comparision of two or more mutual funds/indexes in much more detail.
I wish if a user can create his own strategies and run it over the portfolio and see how the strategy would preform over long term.
I also wish if there was a download your Portfolio report in xls and PDF format which I can download and keep it for my record from time to time or just offline viewing . That report can give the overall Report in nice format which is just awesome to look at and worth showoff .
Area’s of Improvement
For most of the return analysis and comparision , it can be done only for the last 5 yrs , I hope if it can be maximum possible .
Their UI is great and neat , but I still feel there are much more things on UI than required and some of them can be displayed on demand (on a click) . What do others think ?
Conclusion
To conclude, if you have feel that you can relate to even 1 of the above problems that I mentioned at the beginning of the post, you would agree after using moneysights that it’s an answer to those problems. I would love to know your opinion on this. Please share it in comments section.
I will teach you how stock scams work today and for that Let me declare something – “After years of study and hard work, I have come up with a strategy which can predict stock markets movement with almost 100% accuracy. Each month I can tell you which way market will move in next 30 days, it can be UP or DOWN and I can guarantee that. If someone needs to see the performance, I can give a free 6 tips trial.” Now what will be someone’s reaction on hearing this? Most probably, some of you will get excited and interested in getting these free tips, at least to check if I am saying truth or not! . Right now I have a big subscriber base with more than 10,000 people (11.5k to be precise) whom I can reach by email. Let’s see how I can create a stock tip scam –
Here is how we will build a scenario wherein you are Ajay who is extremely interested in knowing about the tops which are almost 100% accurate. Ajay is bearing some disbelief in his mind, but due to the trust factor in the given tips he thinks ‘Let’s see what tips Manish gives, they are free anyway and by reading his tips I am not losing anything’.
I start sending you exactly one tip each month and it starts this way:
Tip #1 (May) : Markets are headed UP
Reaction : Markets really went UP in the month of May. Ajay feels good, but still he is confused if its just luck or did It really went up based on my tip . Ajay anyways wanted to just check the tip and how it turns out . He is a bit impressed and he has made up his mind to act upon the tips if 3 consecutive tips work.
Tip #2 (June) : Markets are headed UP
Reaction : Markets after a bit of volatility finally went up and the tip was a success again! Markets are up by great extent, but Ajay feels like a fool to be so fearful and not act on it. But his confidence has started building up. If the next tip also works, Ajay will invest some money for sure based on the tip!
Tip #3 (July) : Markets are headed DOWN
Reaction : Crash! A huge sell off came in the month of July and the 3rd tip in a row was correct. Ajay starts feeling “Oh my god! Looks like Manish really have come up with something amazing which can predict markets” Ajay makes up his mind to “try” next 3 tips and see how it performs!
Tip #4 (Aug) : Markets are headed UP
Reaction : With all the excitement, Ajay has invested Rs 10,000 in the markets to see if he can make some quick bucks! However, Markets are headed down in the starting of the month and all the TV channels are confirming that next Crash is on the way. Ajay is a bit nervous and secretly praying for the tip to work somehow. He wants market to go UP as per the tip. Everybody around him has already sold off and decided to sell of all the stocks, but you are on the other side. You are praying, literally! And here it comes, markets make a turn up side and it makes one of the sharpest come back in 1 week. Ajay is now in profit and he feels like a winner. Ajay’s confidence in my tips is becoming stronger, but still he is not ready to take BIG risks, he needs to solid confirmation that the tips will fall true no matter what, which is about to come .He will invest 40k in the next tip of mine.
Tip #5 (Sept) : Markets are headed DOWN
Reaction : Ajay thinks that he should liquidate all the investments in direct stocks and even his mutual funds. His friends do not think alike and suggest him that he should not go with the tip, but Ajay wants to confirm the tips and wants to see the affect on his investments in real time 🙂 Markets move downside and he is now confirmed that there is really some kind of mega-research done by Manish to come up with the tips using his secret-strategy. Ajay can now visualize how he can become a millionaire soon by subscribing to the tips for next 1-2 yrs. He is just can’t wait for the last tip to show its magic!
Tip #6 (Oct) : Markets are headed DOWN
Reaction : Ajay is totally with the tips now and has decided to use this last one to make some quick bucks, he does some short selling and buys some puts options by finding out how to make money in falling markets. With his confidence in the free tips, he does not lose focus and waits for the tips to turn correct. Markets fall as per the tip and due to his decisions, Ajay has made some amazing money this time. He is clear that he wants these tips at any cost now!
Free tips are over now.
Free tips are over now .
Taking money from the targets – How Stock Scams unfold
Tips are over now, Ajay and many others like Ajay has experienced the amazing tips which really worked. They all get a mail after few days from me.
Hi, you might have already got 6 free tips from me each month, we give only one tip each month, but it’s bound to work. It’s based on our strategy which is based on years of research. If you want to continue getting the tips further. It would cost Rs 50,000 for 1 year subscription. You can expect the same accuracy like you saw in last 6 months.
Disclaimer: The tips are highly accurate and we make sure they are accurate, but we can’t promise it and can’t guarantee it legally. Risk is yours
Ajay is so much impressed with my tips performance and so much drowned in greed, that he subscribes to my offer and pays 2 lacs for the secret tips subscription. The tips start coming from next month. But there is some issue this time! . Somehow, not all the tips are working this time. Some tips work, some does not. It’s not at all accurate like it was before. In reality all the tips are just random tips and Ajay is totally frustrated. He has lost a lot of money because he invested big money each time, thinking it would work!
The truth is Ajay fall prey to a stock scam. Now let me share how all this works.
How this scam works
At this moment I have around 10k or more email subscribers and I can send emails to this 10,000 group. I divide this group of 10,000 readers into 2 parts A and B, I send a tip “BUY” to A group and tip “SELL” to B group. One of them will be true for sure. After month is over, I see which tip was correct. If A group was correct, I discard group B and only have people in group A as my final group. This group will be the group which got “correct” tip.
Now I do the same thing again, I divide them in group A and B with 2,500 members each and send “BUY” and “SELL” tip to them. Now again, markets will move UP or DOWN and one of those groups will be right at the end of the month. I again discard the group which got wrong tip. This way I continue doing it for 6 times and at the end I have small group of 156 people who was right all the 6 times and Ajay accidently belonged to his group.
Targets paying for the subscription
Now you can imagine how many people will fall prey to these scams? Even if 20% of the people fall in the trap and are ready to pay Rs 50,00o, it would be Rs 10 lacs in total! Here you can clearly see that out of 10,000 there will always be a group of 156 people who will always get “accurate” tips and the beauty of this strategy is that people who were discarded only get one wrong tip, and after that wrong tip, they don’t get any more tips.
There are many tip providers in real life who claim to give you 90-95% accurate tips with free 1 week trial, If you are getting a lot of right tips, you might be that lucky small group which is their “TARGET” as seen above in the chart. Don’t fall prey to these stock scams. Beware!
Do you have any idea how many Insurance companies are providing online term plans in India at the moment ? There are total 7 Insurance providers have launched their online term plans and the premiums are highly competitive .
Online Term insurance Plan in India
Aegon Religare was the first company to come up with their iTerm plan which was the cheapest term plan of that time , after that ICICI came up with iProtect . There was a huge response for these policies for cheaper premiums , but both the companies didn’t meet the customer service expectations of customers. A lot of readers even on this blog bought policies from Aegon Religare and ICICI , but faced horrible service when it came to getting policies on time , communication with customer care and its officials , mess of documents etc . A lot of readers suggested that they will never recommend other to go for it.
On the other hand there were customers who didnt face any issue and they got their policies on time . They are recommending others to go for it . However their numbers are smaller than those who faced bad experience. Bad customer service is not desirable by any customer , but I think we can see it improving over time with increased competition and with more better processes . Right now seven companies have come up with online term insurance plans and I am sure more companies are in process of launching it soon . I am not sure if LIC would join them in launching the online term plan , because their offline network is so big and dependent on non-term plans
How Online term insurance plan works
Step 1 : Offline
You go online and calculate your premium , then you start the process of buying the policy and submit your name, age , tenure , sum assured and medical information which affect your premium . After all this you get a premium quote and you pay it online . Most of the people take the premium amount very seriously and believe that its final premium , where as it’s not the case .
Step 2 : Online
After you have paid the premium, there are few things which are yet to be completed . You will get a mail from company or get a call from company that some representative of company will come to your residence and collect the important documents , the documents are also required for KYC . As per your age and given information , the insurer can decide if you will have to appear for medical test or not . If there is anything wrong in medical examination which can affect the premium (increase companies risk of insuring you) , then they can increase the premium (loading) . You can then decide to continue with them by paying the additional premium or cancel the policy .
Update – Apart from Kotak epreffered, Aviva ilife , Metlife metprotect, ICICI iProtect, IndiaFirst anytime Plan, Aegon Religare iTerm and Future Generali Smart Life there are 3 more online term insurance plans introdued in the market which are HDFC Click2Protect, DLF Pramerica – UProtect and Edelweiss Tokia – Life Protection
Comments ? Do you believe in online term plans ? What can motivate you to buy life term insurance online ?
Are free advises costly ? A lot of people in their early life get lots of advice from friends , family and relatives regarding money and other area’s of life . Some of those advises are great, but some are disastrous and you might have the “why did I take that advice ?” kind of feeling . Subra has done a post on worst investment advice and I really liked the sharing which happened there . I think a lot of readers here will relate to those worst advises, because the same thing might have happened to many of them . Lets look at some of the worst advises people have got (i am copying it from the comments section on his blog) . Please share your worst advice in comments section here , It would be worth reading and learning for others !
Ashok say –
Making me buy LICs Jeevan Shree in 2001 (36000 premium per year for 12 years). If I had invested the same 3000/- in a monthly SIP in HDFC Equity fund, I could have afforded a BMW now
Bigtimeloser says –
my worst investment advice was people asking me to do engineering. I had to take it up because i knew nothing about anything else.. Coming from a rural background with a good +2 score I had to do what everybody else was doing..
Iarab says
In 2004, I have been sold a ULIP (Rs. 10,000 annual premium), with an asset allocation of 50% each in ‘Liquid’ and ‘defensive’ schemes. I have been told that ‘liquid’ means ‘money is readily available’ & ‘defensive’ means ‘you will not incur any loss’. The result, after 7 years now, is that I am yet to recover my principal invested (Rs. 70,000), where as my ‘financial advisor(!)’ has graduated from a second hand Bajaj Chetak to Santro i10!
Krish says
One guy from the brokerage firm roped me into F&Os. Rosy picture was portrayed that I can earn thousand(s) a day. The lure was somuch that I borrowed money to trade in F&Os. After first three days I realised that it is gambling and addictive. My risk appetite graph was always up on each passing day to reduce loss and ever hopeful of making the kill. The reality dawn after a month into the trading and losing all the borrowed capital. More than losing money, the mental tension was too much to bear.
Jayant says
“Buy LIC, buy PPF. They are safe investments”. This is when I just started earning at age of 21. If I had started SIP that time, by this time I could have god good corpus. I did not know what seems safe is how badly it is being eaten by Inflation. How I rue !
Vimod says
I have been saddled with a lot of useless endowment policies and whole life plans from LIC of india. I pay a premium of Rs 1.4 lakhs per year as premium for the above insurance policies for a total coverage of Rs 18 lakhs. I will be surrendering
most of it in six months. I try to educate people about buying term insurance policies and not to trust these LIC agents blindly.
Rakesh says
My broker made me buy lokesh machines in Nov,2007. He said that the Big Bull RJ is going to buy/increase his stakes in this company. The price then was 140 and now its 40. I wonder will it even reach that levels ever again ?????????
SS Says
I got an advice to buy a ULIP from a so called friend-expert. What did I do…got rid of advice, got rid of friend (so-called) and got rid of ULIPs forver. i hate ULIps for personal reasons: I lost my friend (i dumped him), I realised he was an idiot and I was in no mood to take free financial advises from an idiot friend (most dangerous thing in finance).
Do you know of any stock in India which has not moved in last 10 yrs ? Hindustan Unilever is one of them ! . Successful investors like Warren Buffett always advocate the importance of investing in stocks for the long term and not just getting in and out of the stock. But more than investing and holding for a stock for the long term, it is important to zero down on the right stock. Or you might even hold a stock for more than ten years and still make very low returns.
Let us take the example of Hindustan Unilever Ltd (HUL), a company which used to be the largest company as per market capitalization in India, at a certain point of time. But in the last 10 years the price of the HUL stock hasn’t gone anywhere. The stock price touched an all time high of Rs 314.123(adjusted for bonus) on February 25, 2000. This price was never beaten until September 24, 2010, when the stock closed at Rs 314.65. On November 9,2010, the stock closed at an all time high of Rs 318.9. This price was again overtaken in early January (January 5,2011) when the stock closed at an all time high of Rs 325.65. Currently the stock is moving in the range of Rs 300-310.
So the point is that if you were a long term investor in HUL and had invested in the stock in Feb 2000, and held on diligently for 11 odd years, you would still not have made any money on the stock. What HUL tells us is that the buy and hold strategy may not always work.
HUL and the Hindu rate of growth
Raj Krishna, an economist, coined the expression “hindu” rate of growth, to express the slow rate of growth in socialist India, when India used to grow by around 3% every year. Krishna was not a great fan of the socialistic model of development being followed in Nehruvian India. He was a believer in free markets. So looking at this secular trend, year on year, and wanting to take a dig at Nehruvian socialism, which he felt was not working, he came up with an antonym for the word secular (Nehru’s other pet peeve), and so called this growth, the “hindu” rate of growth.
HUL has signified this “hindu-rate” of growth over the last decade. Let us look at some numbers here. The annual sales growth of HUL over the last decade sales have risen at the rate of 6.2% every year to Rs 19,987.1 crore. Profits have grown even slower at the rate of 5.8% every year to Rs 2306.6 crore.
The does not inspire confidence among investors, given that the rate of inflation during that period was at similar levels. So in real terms there has been very little or even no growth in profits and sales. Hence the stock price has been flat.
The main business is facing tremendous competition
Soaps and detergents has been the main stay of the company over the years, and still contributes nearly 75% of the revenues. The company has very little pricing power in this category, given the increased competition that it has been facing. With a slowdown hitting United States, P&G has become aggressive in India. Media reports suggest that P&G is looking to launch its toothpaste brand Crest in India. That should heat up things for Close Up, HUL’s premier toothpaste brand. The cash rich ITC is gradually building businesses similar to that of HUL.
Over and above that there are newer players like Ghadi detergent and older players like Nirma in the lower segment of the market, which have been giving HUL a huge run for its money. To counter this competition HUL has had to constantly resort to price cuts to keep the revenues going in this segment. This is likely to continue in the days to come leading to a very limited pricing power in its premier business. At the same time it needs to keep its advertising expenses high in order to generate a high brand awareness of its products and hope of increasing sales.
New Businesses not contributing enough
During its glory days, HUL’s strategy was to constantly jack up margins. The management graduates who run the company probably forgot a basic lesson in economics. When a company makes ‘abnormal profits’, new competitors enter the arena and drive away margins.
The margins also came from deteriorating the quality of their products. What did not help was the power brand strategy the company decided to follow 10 years back, where in the focus was on 30 odd ‘Power Brands’. The ‘power brand’ strategy prompted HUL to withdraw from a large number of small markets. This has given an opportunity to many small players in the market. Some of these brands like Ghadi detergent are now seriously challenging HUL.
To its credit the company has tried to get into new businesses like selling water filters (Pureit). But these businesses will still take sometime to grow. Also the competition in this market has started to heat up with Tatas announcing their entry with Swach.
What do the analysts say?
HUL recently declared its results for the quarter ending March 31, 2011. While it managed to increase sales by around 14% to Rs 5,022.6 crore. But even with this increase in sales the net profit went down by 2.1% to Rs 569.2 crore. Analysts covering the company came out with reports saying that the results beat their expectations, which is basically a polite way of saying that results were not as bad as we expected them to be.
Given these reasons, those investors who are still invested in HUL, its time they sold out. This stocks is an excellent example of what John Maynard Keynes, the famous economist, said a long time back, “in the long run we are all dead”.
This is a guest post by Sujata Chhaper and the author can be reached at [email protected]
Which one among Reality sector and Banking sector has given more returns in last 5 yrs and 10 yrs with lump sum and SIP way of investing ? Have you ever tried to find out which sectors among indian indices are doing well and which are not ? In this data-oriented article will take you into the world of different sectoral indexes on Nifty, like Bank Nifty , CNX IT , CNX Pharma , NCX FMCG and some more like those . We will see their performances compared with each other with graphs. Note that I have also taken NIFTY as one of the index to compare it with a broader index even though it’s not a sector specific .
Which sectors ?
In this study you will come to know about lump sum and SIP performance of various sectors for 5 yrs and 10 yrs time frame. I have taken the raw data from NSE website and done all the number crunching and graphing to come out with charts which shows you how money has grown in various sectors . I have taken 6 sectors ( Nifty , Bank Nifty , Energy , Pharma , FMCG) for 10 yrs time frame and 8 sectors for 5 yrs time frame (6 mentioned earlier + Reality + Infra ) . We will see the results of 4 different scenarios and will see major learnings from those .
10 yrs performance [Lumpsum Investment]
The chart below shows the sectoral performance + Nifty for a lump sum investment of Rs 1 lac in last 10 yrs .
Observations
Bank Nifty was the clear out performer among all giving a 12x return in just 10 yrs . That’s very good return . Energy sector came second and FMCG and IT sector gave the least returns out of all .
Bank Nifty has given 3x return after the crash of 2008-09 . Look at the big spike upwards . Till the crash Energy sector was performing same to same as Bank Nifty , but after the crash, performance of Energy sector deteriorated and it didn’t match up with Bank Nifty.
10 yrs performance [Daily SIP Investment]
The chart below shows the sectoral performance + Nifty for a daily SIP investment of Rs 1,000 in last 10 yrs .
Observations
The most insight full thing you can see here is that all the sectors other than Bank Nifty has given very close return if one had done SIP regularly . This shows both, the power and weakness of SIP . You can get more returns out of bad sector and less return from the strong sector .
IT sector performed very badly after the crash , but in the recent bull run , it has performed very well and gave superior upside .
10 yrs CAGR returns for lump sum and SIP investments
The following chart gives you CAGR return of last 10 yrs for both lump sum and SIP . Note that the values are approx only .
5 yrs performance [Lumpsum Investment]
Now we will look at 5 yrs performance of various indices . The chart below shows the sectoral performance + Nifty for a lump sum investment of Rs 1 lac in last 5 yrs .
Observations
Bank Nifty still leads the pack , the other sectors too performed good and are marginally poor . Nifty , Pharma and Energy come next best .
Reality sector was one of the best performers till 2007 , but then its performance went down and its gave a very high negative return on CAGR basis . When other indices gave above 10% returns on average, Reality index averaged -20% CAGR return .
Energy index has not made much movement in last 2 yrs from 2009 – 2011 , whereas Bank Nifty has doubled .
5 yrs performance [Daily SIP Investment]
Observations
On 5 yrs SIP basis , IT sector has clearly outperformed other sectors and it was very consistent in that . Bank Nifty comes second.
Reality and Infra sector has performed badly and given close to ZERO return in last 5 yrs .
5 yrs CAGR returns for lump sum and SIP investments
The following chart gives you CAGR return of last 5 yrs for both lump sum and SIP . Note that the values are approx only .
Please share what other information were looking from an article like this . Share your comments about the article .
