Mutual funds in DEMAT form- Should you opt for it?

If you are holding Mutual Fund Units in the physical form, which are represented by a Statement of Account, you have an option to convert the units into dematerialised form (Most of the funds provide this option) in your demat account with any Depository Participant (DP) of NSDL or CDSL. 
Once you  mutual funds which  are in demat form, you can sell them either through stock broker through the Exchange platform (BSE Star & NSE MFSS) or through the off market mode i.e by selling/redeeming it through your Depository Participant.
For Mutual funds in demat form- Redemption request can be placed through Depository Participants & Exchange platforms like NSE MFSS/ BSE STAR platform which are available for trading of Mutual Fund Units.
In case the Investor desires to redeem units through the mutual fund, the Dematerialised units have to be converted into physical form (represented by statement of account.

Benefits that are seen in holding your MF in demat form- paperless transactions and  consolidation of all your mutual funds in a single Demat account and at units can be freely transferred to the accounts of nominees or legal heirs.

MF statement of account is actually a statement that you can demand from the MF anytime and this knocks off the need for a dematerialised form and consolidation of portfolios can be done through any web portfolio tracker like moneycontrol, valueresearchonline etc

However your transaction costs increase due to holding MF in demat form like demat fee, brokerage ,etc . SWP/STP are also not straight forward options when you hold your units in demat form.

In total, there is no concrete benefit of holding MF units in demat form.

3 simple ideas to spend less!

If you have been finding your expenses go off the roof and been wanting to bring down your spending then you may follow these simple tips.

1) Budget and track expenses-

Please budget your expenses on various heads and then start tracking every spend of yours against the budget. You may classify your spend under heads like house rent, food,clothes, medical, education, etc and track it. You can choose to use some web based tool or smart phone apps ( which are free!) to do this!.

2) Lock your credit and debit card-

Try to do all your spend through cash.The pain of withdrawing money every time and counting cash "physically" while paying can have a positive impact on your expenses.
When you swipe with a card, you actually don't feel the same "pinch" which you may feel when you spend by cash. This method will also help you avoid some impulsive spends.

3) Avoid sale or discount offers-

Always buy ' what you need' and done buy ' what you want!' if you are trying to bring down your expenses. Don't buy something just because the 'offer' is good. When you buy using an 'offer' , you actually save some money. But you may have avoided the overall spend if you didn't fall for the 'offer.'. So, evaluate the offer- Need or Want?

Happy saving!. 

#Bank charges for ATM usage?

Warning:- Please do not read this article on a "serious" note.

I found this news item this morning on proposed charges for ATM usage by banks.

Banks want to recover the cost of "additional" security and hence want to charge customers for ATM usage. if this trend is encouraged, banks will start fleecing the customers with following charges!! :-))

1) Charges for opening an account.
2) Charges for safeguarding cash in account as a % of amount in the bank account or a minimum amount if balance falls below 100000
3)Charges for using the bank premises for any transaction
4) Charges for calculating interest every half-year
5) Charges for every "login" through Internet banking as it causes a "Strain" on the IT infrastructure of banks
6) Charges for using "Debit " card as indirect cost incurred on maintaining POS terminals
7) Charges for NPAs when the bank is not able to recover from a BIG borrower
8)Charges for issuing passbook or account statements
9)Charges for talking to "telephone" banking
10) Charges for using various application forms/ pay in slips, etc as cost is involved in printing them.
11)A/ C  charges for visting an A/C branch.
12) Service charges for maintaining the ledger balances of customers!
13) Parking charges outside bank, ATM
and the list can go on.

Bottom line is, Banks should know how to manage their cost and maintain margins, If they start charging customers for their "inefficiencies"- then they will eventually "suffer"as people will start storing money in "lockers".

Private and PSU banks

With an aim  to bring down the no: of savings bank accounts that I hold, I decided to close one of my dormant SB account of mine with a leading private sector bank.
Closing down the account was very simple. I submitted a request for closure of my account at a branch near my home and a few weeks later, I received the closure confirmation and a "Manager's cheque" from my home branch in Bangalore.

I deposited this cheque with one of India's biggest PSU bank. The branch manager called me up and returned the cheque. The reason provided was that "their machine" didn't accept the cheque and they were not sure what a "Manager's cheque" was. The branch manager somehow managed to return the cheque to me without a written explanation ( I didn't persist either, quite unusual of me ).

One retired PSU bank executive came to my help when I was discussing about this with him. He suggested that I tell the bank manager that "Manager's cheque" was nothing but a "pay order" and he can send it for collection to the private bank in other city like he does for any "outstation cheque".

When I carried this message back to the bank, the branch manager was not enthusiastic. He was  halfheartedly willing to send my cheque for collection and he said that he will not do any follow up in case the private bank doesn't respond back to his branch.

Unwilling to let my cheque go with an ambiguous process and an unenthusiastic person, I finally  deposited the cheque with  another bank ( private) account of mine.
The whole episode left me wondering about the attitude of PSU banks in such a competitive environment and the "knowledge " levels of a branch manager ( in a metro city!)
Although PSU banks have some inherent advantages, such "excellent? customer service attitude", "knowledgeable?? managers" and "reckless lending " may eventually kill them.

After this episode, When I  see a PE of 5 or less  for a PSU bank and private sector bank having a much higher P/E number , I have definitely stopped asking "Why?"

Also read, Money with PSU banks 

Tax free bonds

After REC, PFC and IIFL ,  NTPC and HUDCO are coming up with tax free bonds.

Replicating the pros and cons from a previous article about REC bonds.


1. High post dividend tax yield is attractive.

2. Can form a good part of your debt portfolio( but make sure your portfolio doesn't already have too much long-term debt in it before you add more.)

3.The issues have good ratings from agencies Crisil, CARE and ICRA

4. Good for those who are looking for regular income vis-a vis compounded growth


1. If you are looking for compounded growth, you have to re-invest interest with great caution  Else, interest can be spent and the face value that you get back at maturity can be a very small amount ( considering inflation). Imagine the value of 1 lakh today vs 10 years later :-)
2.These are very long-term bonds and liquidity can be  limited.

NTPC tax-free bonds issue to open on December 3 State-run NTPC has come out with its public issue of tax-free secured redeemable non-convertible bonds of a face value of Rs 1,000 each in the nature of debentures having tax benefits, aggregating up to Rs 1,750 crore (Including option to retain over subscription of Rs 750 crore).

HUDCO, a public sector company is going to open its tax free bonds on December 02 of face value Rs 1000 each which is scheduled to close on January 10, 2014.

Coupon rate of 8.51%, 8.58% and 8.76% payable annually for 10 years (Series 1A), 15 years (Series 2A) and 20 years (Series 3A), respectively  for Qualified Institutional buyers (QIBs), Corporates and High Networth Individuals (HNIs) applying for bonds more than Rs. 10,00,000. Coupon rate of 8.76% , 8.83% and 9.01% payable annually for 10 years (Series 1B), 15 years (Series 2B) and 20 years (Series 3B), respectively for Retail Individual Investors (RII) applying for bonds upto Rs. 10,00,000.

#Mid career crisis

Of late, I have seen a lot of people who are completely frustrated with their jobs. Most of them are well educated and have a dream job. Money, status, global exposure.. you name it and they have that!. 

The things that makes them crib  are growing work pressure, office politics, limited scope for further growth ( as they are almost near the "top" of the pyramid), lack of "true calling" in what they do every day and so on.
A few are looking to switch jobs that can bring them at least a temporary change, some others think that a change in job will not change anything. (  Pursue an exec MBA, remain a techie or switch domain, continue to specialize or become a generalist,take a long sabbatical or move to a "temple town"- These  are most discussed options). Right from  pursuing a passion to joining some "living" courses these people try everything out. But there is no one that I seem to have found the "real" answer!.

Is this what people call mid career crisis??

While contemplating this , I found this article which reflects the same thought with a favor of fun. 

In case you have any quick fix for the problem, Please let the world  know about it !!

Tale of a switch request #poorcustomerservice #kotakAMC

Of late, I have been switching all my funds with various fund houses to "Direct"  mode.

I have been mailing my switch request forms through speed post and have had no hitches in getting the switch completed by the fund houses except for one.

I hold an investment in one of the equity funds of Kotak ( Thank God, it was only one). As usual , I sent a switch request form to CAMS ( investor service for Kotak).

Nothing happened for a long time and when I  got in touch with Kotak AMC , they requested me to resend the form to CAMS.

I did so, a week back and have'nt seen the switch happen. So, called up Kotak AMC an hour ago

Me: Hello Kotak AMC

KAMC : Yes sir

Me: My folio xx, need to know the status of switch request.

KAMC : Sir, No request is received yet.

Me: I sent it by speed post to CAMS and the online tracker says the letter is delivered.

KAMC : Then you should ask CAMS and not us .Please call CAMS.

Me: Is this a responsible answer ?? I will withdraw my funds from your AMC.

KAMC : Ok sir, thank you.

<<end of first call>>

Second call placed to CAMS Chennai

Me: Hello CAMS

CAMS: Yes sir

Me: My Kotak folio number is ####, Please let me know status of switch request sent by post.

CAMS: We don't have access to Kotak system, Please call Kotak.

Me: Oh they asked me to call you and you are asking me to call them#%^*

CAMS; Yes sir

Me: Can you please help me

CAMS; Call Kotak, we cant help!

I had no choice but to bang my head on the phone and disconnect. 

Wonderful service for the 2.5%charge that I have paid every year to Kotak for the last several years. !!

Chennai real estate - the 'only investment' that can "never go down" ( that defies gravity!)

Statutory Warning ;- This post is written on a lighter note and readers are not expected to take anything written here seriously . ( Probably, this disclaimer should apply to all the posts :-))

If you are looking for an investment that never goes down, is secure and gives you a compounded annual growth rate of 30% or more , "Welcome to Chennai real estate".

Most of the working class in this city has seen the property rates go up at least 10 times in the last ten years. So, everyone who buys a property in Chennai feel that they have done the best investment on earth.If you try to discourage a person who is going to buy his second or third property and tell him not to "lock" 70% of  his take home salary on "EMI", you are looked down as a fool.

Equity's lackadaisical performance and the extended bull run of real estate(over the last five years) has gotten into the deep psyche of these 'investors". 

India is thickly populated, City population keeps going up, Rates have never gone down in Chennai are all regular arguments you hear. No amount of data or concepts can take away the belief (rather fact:-) that "Chennai real estate never goes down". You will feel   people more confident than Warren buffet on their investments.

I am left with only one doubt - why do corporations work with thousands of employees and struggle to make 20% profit margins.Why do banks who lend to the Chennai real estate buyers @10%  (home loan) , When they can  buy and own flats to make 30% CAGR?? 

But what are you waiting for?? In the time that you have been  reading  this article , if you had booked a piece of property in Chennai, you would have been richer by 10% :-)).

What do they mean ??? (MSF, LAF, Repo, Reverse repo and policy rate)

We have been hearing a lot about MSF, LAF, Repo these days. if you keen to know what they are , here is a quick snapshot definition for these terms. 
( Courtesy :-Economic Times)
What is marginal standing facility?
Marginal standing facility is a window for banks to borrow from Reserve Bank of India in emergency situation when inter-bank liquidity dries up completely. Banks borrow from the central bank by pledging government securities at a rate higher than the repo rate under liquidity adjustment facility or LAF in short
What is liquidity adjustment facility?
Reserve Bank of India's liquidity adjustment facility of LAF helps banks to adjust their daily liquidity mismatches. LAF has two components -- repo (repurchase agreement) and reverse repo. When banks need liquidity to meet its daily requirement, they borrow from RBI through repo. The rate at which they borrow fund is called the repo rate. When banks are flush with fund, they park with RBI through the reverse repo mechanism at reverse repo rate.
What is the policy rate?
Repo rate is considered as the policy rate as repo is the widely used instrument between banks and RBI. Earlier bank rate was considered as the benchmark but it has lost its relevance as banks seldom take refinance from RBI at bank rate. Any change in repo rate signals RBI's interest rate stance.

#NSEL E-Series redemption - in a stand still?? #delay

While the number of media reports about NSEL is quietly streaming in the media, there is not enough attention paid to the situation of about 7 lakh e-series investors.

There are articles which say that there is delay in physical delivery due the to "rush" of request, but there is lack of any concrete evidence to prove any action by NSEL.

If NSEL is doing some genuine  physical delivery ( I am sure that this is not the case), they should publish the details of physical delivery made everyday on their site.The audit certificate provided on the physical stock is of no use unless people get their money back on time.

All blogs/ new papers that promoted e-gold as an investment tool are completely silent now. ( Did they have a vested interest in promoting the product ?)

The most surprising fact is that there have been no arrests/ concrete action by any government agency which will at least bring back some faith back in out financial investment framework.

Justice delayed is justice denied.

Related news links:-

NSEL investors seek halt of delivery under e-series contract

​Investors await NSEL bullion delivery

Fixed Deposits or Debt Funds??

Fixed Deposits or Debt Funds??-The main difference for a person in high income tax treatment lies in tax benefit .

1. The Return from FD is completely taxable. i.e the interest income is added the income of a person and he/she should pay tax as per their tax bracket.

2. As far as  debt funds are concerned , the returns are classified as Long capital gains for investments of over 12-months and taxed as follows.
   a.10 per cent  without indexation or
   b.20 per cent with indexation ( refer document page 97, for indexation)

1. X invests  100000 in FD on 15 Apr 2009 and Matures on 14 Apr 2010 with value 108500.Income is 8500. If X falls in 30% tax bracket , 8500 will be taxed at 30%.

2. X invests  100000 in Debt fund on 15 Apr 2009 and Matures on 14 Apr 2010 with value 108500.

Option 1
 a. Flat 10% on 8500 without indexation.
 b. From the above chart indexation is roughly 12% ( 711 vs 632) and the returns are actually negative ( So,no tax)

By in investing in end of March of an year for 370 days or so will entail a person for double indexation benefit!

All funds that are not classified as Equity or Equity balanced funds will be covered under the aforesaid tax treatment. That includes Fund of funds, Gold ETFs, Global Equity funds et all.

A few more links on the same topic for reference :-

Where to invest: Debt funds or fixed deposits? -

REC Tax free bonds "vs" REC

REC has come up with tax free bonds ( issue open until later part this month). 
8.26% for 10-year maturity, 8.71% for 15-year maturity and 8.62% for 20-year maturity.

The interest rates look very attractive for investors (esp. if you are in high income bracket,as the interest from the bonds are tax free).


1. High post dividend tax yield is attractive.

2. Can form a good part of your debt portfolio( but make sure your portfolio doesn't already have too much long-term debt in it before you add more.)

3.The issue is rated AAA by rating agencies Crisil, CARE and ICRA

4. Good for those who are looking for regular income vis-a vis compounded growth


1. If you are looking for compounded growth, you have to re-invest interest with great caution  Else, interest can be spent and the face value that you get back at maturity can be a very small amount ( considering inflation). Imagine the value of 1 lakh today vs 10 years later :-)
2.These are very long-term bonds and liquidity can be  limited.

Personally, I think that someone who trusts REC for more than 10 years would be "well off" investing in "REC" shares directly,considering the current market price-  which is below the book value. Dividend yield at current price is 4.5% -tax free :-). 

Disclosure: - I have exposure both to REC shares ( since 2008) and have subscribed to previous issues of REC tax free bonds.

Investors are advised to evaluate on their own before investing.

CMP- Current Market Price -04-Sep-2013

Fresh engineers batch 2010,2011,2012 ,2013 ! ( Hiring /Wanted)

The topic of  the post has nothing to do with the intention of this article. So, if you came into this post looking for a job, you can close this page now or else you can go ahead with this article.

Over the last decade, India became one of the largest IT service providers for the world ( Lets not talk about quality of the service now, that requires another post or one whole book rather). This made the IT service providers of various strata and tiers recruit "engineers"in masses  for providing IT related or enabled services to global clients.

Engineering colleges proliferated, campus recruitment was taken for granted . Quality of education, true engineering knowledge or skills started taking a back seat. No worries , until the "hungry" IT companies were ready to eat up a large chunk of the graduating engineers.  Students enrolled in most engineering colleges took IT jobs and "phoren" onsite opportunities for granted.( Yeah! to show off on Facebook profile and earn in some "stable" currency).

As recruitment started slowing down in 2012, the number of jobs offered by companies at campuses went down. Many placements were deferred too! Now , we have a bunch of  hopeful "engineers" left in dire. The situation may improve for these folks tomorrow. But who's to be blamed for this?. 

The passing out students cant be blamed for lack of jobs. But at least they should be blamed if  they lack basic engineering knowledge/skills or basic soft skills. Some may blame the colleges, but life is an outcome of choices you make. If your focus has been to "jump" into the "engineering" bandwagon just to land on a plum job ignoring the "quality" of the college ,Please don't blame the college. A "due diligence" on the quality of education is "our " responsibility. ( We must understand that the motto of most private colleges is to make "profits" and not to create a bunch of intellectuals).

Brushing up the skills as required by industry and willingness to try out new things , Openness to grab smaller opportunities may be a solution to the stranded engineers. Also,a positive attitude can help tide the crisis .

We shall overcome some day!

Money with PSU banks!

The NPAs of  our esteemed PSU banks are continuously on the rise. As the economy is turning down, the "true" picture is emerging.

While PSU do a fantastic scrutiny while providing loans to the normal public ( a typical home loan approval by a PSU bank takes 5X time when compared to  private banks), the PSU banks seems to be succumbing  with bad loans to "Powerful" folks.

While NPAs to a certain degree are normal in banking business, when it swells beyond a point, it is an indirect punishment to  the depositors and  other honest borrowers who pay back loans on time.

Last week, I was having a chat with a retired PSU bank executive. He had lot of tales on how the bank higher ups forced their subordinates in providing some loans to unworthy creditors. This was all the more evident when they had some superiors who had "bought" their top positions instead of "earning" them. This was one of the ways that they could get a "pay back" on their investment to get into a "posting". Sounds scary. 

Thank God that not everyone is the system is corrupt or else no one would trust our banks. But the increasing NPA trend  looks terrible  and hope we see an end to this trend.

While we cannot do much about this , the one thing that we can definitely do is "punish non-performers"

 Pull out all your money from banks that cannot control their NPAs! 

how safe are bank deposits?

IT express highway! - water woes.

OMR, as it is called was promoted as the "destination" for IT companies in Chennai in early 2000's. No doubt, this promise has turned true to some extent in attracting IT companies on the corridor.

 Ramesh, was one of the those who decided to live and work on the corridor. He bought an house , five years ago. For the last five years, one of the major problems for him has been the increasing maintenance bill. The bill has been swelling primarily  due to the growing "water supply" bill from the tankers. Most of the stretch lacks potable water ( underground water is too salty to be used for any purpose!) and so, fetching water through tanks ( owned by local politicians)is the only option for most of the flats. 

A couple of years ago, when the zone was reclassified into "City limits", residents  rejoiced considering the fact that now the municipality will take care of fixing the water woes. In reality, the panchayat water connection which was available earlier, completely stopped and the reliance on water tankers went up from 70% to 100%. Ramesh almost shells out Rs 10,000 for water almost every month now.( The amount usually goes higher up in summer). 

When the residents association of the flat represented their woes to local counsellor  ( elected representative of the ward), he demanded Rs 1 lakh a month to ensure corporation water supply ( for the 300 flat complex
). When another resident managed to get an appointment with the chairman of the "Water Board", the interview turned futile as the "Chairman" asked him , "Who asked you to buy an house knowing that there is NO water". The resident could do nothing except to shoot back a question "Who asked you to provide the approval , when water was not available". 
Net result:- Residents keep paying the exorbitant water bills apart from paying their EMIs. Traffic problems and incomplete flats are other issues on the road that require another post to elaborate. 
Whenever, government promotes a place as the next destination and the real estate prices shoot up- the middle class/ working class are definitely not the real beneficiaries!
Lesson :-Ensure  basic infrastructure  availability before you buy a flat ( easier said than done :-) )

NSEL/FT/MCX crisis

There has been a stream of articles on the financial papers/blogs about the FT/NSEL fiasco in the last week.
While a very few had forewarned investors about the fiasco, now everyone writes as though that this fiasco was bound to happen.
Blogs/ Papers which had recommended investment in e-series ( e-gold) ,etc are silent on the topic now.

Lessons from the fiasco~

1. Financial experts ( so called!) make more noise than sense most of the times.
2. No one can predict the future accurately ( at least some astrologers can :-))
3. Please understand the investment and risks associated very clearly before you put in your money.

The rule of "Buyer beware" applies to all investment products too.

Dividend yield stocks

There is a very good article about investing in dividend yield stocks in "investment world" section of Business  line.

The article clearly talks about the relative safety of investing in such stocks in current volatile times.

Note :- Please use your discretion before you decide to invest in any of the recommended stocks.

Photo courtesy:-

Spot the difference

I guess the difference is that ~ the first one "stops somewhere". :-)

House - Rent Vs Buy - Calculator ( Biased or Fraudulent!)

I found this " Home- Rent vs Buy" calculator on a famous property website.

 I gave the following input to check the site's recommendation.

Results from the website:-

At the first glance of the result , you will feel that only a foolish person would live on rent and the output says that you tend to gain in crores when you buy a house at the "inflated" prices.

The reality is that

1. The calculator is silent about what would you do with the "down payment" money if you are not buying a house.

2. The calculator is also silent on what will you do with the differential EMI money ( EMI- Rent, if  you stay on rent)

The fundamental assumption behind the calculation is not transparent and the intention of the site is clearly to sell you the over inflated property.

After reading the post, if you are not able to get the correct calculation for  " Rent Vs Buy" decision, a primary school maths book can provide you greater assistance.!

Happy Renting!!

Is it a wise decision to buy or rent a home?, inflated real estate prices in India  India housing bubble, rent to price ratio, will the bubble burst, when will real estate prices come down in India?

Book review : Salvation of a Saint

"Salvation of a saint" by Keigo Higashino (Translated by Alexander. O.Smith With Elye.J . Alexander) is a crime thriller fiction.

In 2011, “The Devotion of Suspect X”  by the same author was acclaimed as “stunning,” “brilliant,” and “ingenious.” Character  Manabu Yukawa–Detective Galileo–returns in this novel too.

The storyline of the novel goes like this~
Yoshitaka, a rich person and CEO of a company dies while his wife is away. The arsenic in his coffee seems to be the reason for his death. Ayane, his wife and Hiromi, his secret lover are the suspects. The lead detective, Tokyo Police Detective Kusanagi, seems to fall into the charm of Ayane. Utsumi, Kusanagi's assistant is sure that Ayane is the culprit although there is no concrete evidence. Physics professor Manabu Yukawa also joins the investigation team.

While Kusanagi  investigates in his own style, Utsumi relies on her intuition. Professor Manabu Yuakama swings from one side to another and never loses track. All finer aspects around the poison in the coffee cup is analysed thoroughly by the detectives.

The kettle in which the coffee was made, the mineral water bottles in the refrigerator and the water filter angle are all analysed thoroughly by the detectives. Readers with a scientific bent of mind would definitely find the unveiling of the mystery interesting.

Ex-lovers, the wife and the pregnant girl friend of Yoshitaka are all interrogated thoroughly too.

How the mystery unfolds forms the rest of the story.

The author specifically needs to be lauded for perfect characterization. Yoshitaka's " business like" character of treating women like a " Baby machine", Ayanes'  " Charming and emotionally composed" nature , Utsumi's intuitive nature are all well elaborated by  the author.

The story line is wafer thin and keeps the readers interest glued for some time. The plot is unraveled nicely. But as the novel moves forward, the question in the readers mind is not , " Who is the culprit?", but it is about " How did the person commit the crime?".

The "flower plant watering" tin is an obvious clue that is thrown open by the author at the early stage of the novel. Regular readers of crime fiction or people with good guesses can never miss such obvious clues about the murder. More details disclosed in this review would essentially kill the "only" surprise element in the novel.

Even in the end, when the plot is disclosed, most of the readers may be left unconvinced.

Since the plot is wafer thin, many impatient readers may jump the gun to last pages of the novel.

Japanese names also create a different feeling to the reader. If you are not used to such names, the reader may take some time to get used to character names like Hiromi Wakayama, Toshitaka Mashiba, Ayane Mashiba, Tatsuhiko, Manaby Yukawa , Kusanagi and so forth.

The book is overall a good read. This book would keep you glued , if you are  a person who is " keen to know the details".

This review is a part of the biggest Book Review Program for Indian Bloggers. Participate now to get free books!

The bubble graph

Source : Wikipedia

The aforesaid chart is  a very good representation of most of the bubbles.

I would really like to map the real estate trend in India to this chart. But unfortunately the data available  is not reliable!

Read this for a more elaborate understanding of bubble and behavioral finance.

Mutual Fund - Direct investing - Make use of it!

"Effective 1 January, all asset management companies (AMCs) launched direct plans of all their open-ended MF schemes, a move which was made mandatory by the capital markets regulator, Securities and Exchange Board of India (Sebi), through a circular issued in September."

So, are you still investing through your broker initiated portfolios?

Is there a need to switch to "direct" schemes?

Read the detailed article here. For those who don't have the time, here's the relevant portion which states the benefit in % for direct schemes. This amount may sound trivial but may add up to a huge saving over a period of time.  Please mind the impact of capital gains tax before you do the switch. ( Also note :-you will loose out on STT for switch out from regular plan as in case of normal sale)

According to figures provided to us by Outlook Asia Capital, equity funds have shown a difference of about 0.58% on an annualized basis between the net asset values (NAVs) of direct and normal plans, as on 11 January. We have taken the annualized figures here as the total expense ratio (TER) figures of MF schemes are also annualized. Liquid funds have shown a far lower difference of about 0.05%, so far.

Book review: FK Knows by Shailendra Singh

Shailendra Singh, the author has attempted to provide a self help book with an indigenous flavour( to be specific- I would say in "Punjabi" flavour. If you have had a few Punjabi friends, you would know what I mean).

If you have read books like " The Monk who sold his Ferrari", " 5- point someone" - you wouldn't find the concept of this book entirely new. The difference of the book lies in the way in which the concepts have been presented.

Shailendra Singh (the back cover of the book states that he is a uber successful entrepreneur although this is the first time I am hearing his name) in this book tries to help the readers on the following :

1. Finding yourself (because you are probably lost)
2. Following your heart a.k.a live for yourself and not for others
3. Achieving your goals
4. Living life every moment as it comes by

The book has around some 70 odd chapters and the author recommends that the readers take long breaks between chapters. He also states that the logic contained in his book might disrupt your pre-conditioned assumptions about the world.

Why I would probably agree to the author's first statement, I don't see anything that is " path-breaking" in this book which is told for the "first time". 

The way the book unfolds is a bit unique. The language, dialect used to get into the story line is also interesting. (You may call it the "theme" line if you want since this is not a story book).

The author talks about his own story of having had a "successful" life till his forties. The loss of his father coupled with degradation of his own health makes him realise the void in his life and he is not really happy. The author out of his experience states that one should be living his own life by following one's heart. 

The examples quoted would be quite relatable to most of Indian readers. This is because our lives are driven mostly by our parents decision than our own. The author wants the reader to take control of ones life, make a "to do" list and then go towards achieving the list. The author also provides a few examples from his own "to do" list. 

There are many books, movies, articles that tell you to " follow your heart". If you have already realised that and expect further more from this book, you may be a bit disappointed. The author talks about his experience of reliving his life by visiting all the places from his place of birth to figure out his happiest moments. This way to figure out passion may or may not necessarily work out for you. 

After talking about the main message of "finding yourself" and " follow your heart", the author jumps on to random topics of self help and provides you enough gyaan with smaller chapters till the end. I feel that the book loses its steam half way and becomes a bit monotonous after the first few chapters. The language used gets repetitive and there is an overdose of the word "FK" which may actually tire some readers.

Probably, young readers might find the language and style used very interesting till the very end. This book makes a good one time read. For young readers this book can be like a good bhangra song played on the dance floor by a DJ. This book might help you pep up your spirits. Definitely a good attempt by a first time author.

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Punishing non-performers.

When you deposit your money with a bank, you presume it would be safely returned to you. How many times do you check whether your money is put to good use by the bank?.

You may ask " why is it important to do that?'. It is really important because, the bank may go bankrupt if it is doing some irresponsible lending. This can lead to loss of your deposit ( I am not in for arguments like government will back it up, deposit insurance,etc,etc as it is not good for the economy in the long run)

So, it is very important to punish the non-performing banks by withdrawing your deposits from them or at least making a conscious decision of making no further deposit with a non-performer.

Look at the NPAs ( Non Performing Assets- bad loans) of the banks, if they are continuously on the raise ( when compared to industry standards and other banks), you should start treating your bank as a non-performer.

If you do not do this, it helps the people of the following kind

"Those who take loan with political pressure and don't pay back, helps the real estate guys who can keep the prices high funded by bank loans and never bother to pay them soon, helps the industrialist who run a show business and do not care to pay even their employees."

So, you are helping these guys when you don't punish non-performers. Next time, when you see an article about you bank's NPA - " ACT ON IT". Punish the non-performers.

Healthcare - one coin, two sides.

One of my friend's dad was admitted to a "posh" hospital  for treatment . The treatment went on for 3 months and climaxed with a surgery. The " Surgery package" ( surgery + 4 days in critical care+ 3 days ICU) was priced at 7.5 lakhs. This was to be  prepaid before the surgery.

My friend paid the amount and the surgery was done. After two days in critical care, my friend's dad passed away. Logically, you would expect a refund of money from the hospital as the ' package' was  prepaid  7 days. 
When my friend reached out to the hospital cash counter for a refund, it turned out to be an anti-climax. They had an ad hoc bill for 4.5 lakhs. He was also told that he cannot take away the mortal remains of his father unless he paid the full  amount. After a lot of "negotiations", the amount was reduced to 1.5 lakhs and the "deal" came to an end.

On hearing this story, we easily start blaming the government for not providing quality healthcare to the citizens, donations paid to medical colleges, tales of heart less doctors et all . But a near term solution is definitely not in light.

Here comes the other tale.( where we ignore the right treatment because it's so "clean & economical" )

Mr.X is a distant relative of mine. He is a qualified pediatrician. Believes in ethics and provides prudent advice.

He never recommends any medicine unless essential, refrains from using injections ( unless necessary) and gives away sample medicines for free, etc. I have no doubts on his capability. But his career has been less lucrative because of his simple and straight forward approach. At least from my assessment, people are not so comfortable consulting a doctor who turns you off  with no/minimal medicine!. Hospitals which employ him , turn this person  out when they find that he doesn't meet their "targets" for scans and X-rays.

But this person runs a peaceful life  ( of course, with patronage of some prudent patients), Since his needs are limited. ( No greed , so low need :-)) 

I feel that people too need a change of attitude towards " What a good treatment is".

Healthcare - Same coin - Two sides :-)

Bumper money - How long does it last?

   ET carried an articled on "Contrasting fortunes of farmers selling land in cities" a few days back. This article captured the current state of people who had sold their land a few years ago and made a  few crores.

While a few had invested the money prudently in some money making assets, many of them had blown of the entire cash. Extravagant living, alcohol addiction and over confidence due to sudden inflow of cash , have led many into complete bankruptcy.Many who lost their money are now jobless and see no future at all.

"Getting the money you want" is just the first step. Preserving it prudently for the rest of life is another ball game all together. Money, either earned through hard work or through a lottery need to be treated with respect. It doesn't mean complete abstinence from luxury but use of some wisdom  in the way money is dealt with.

" Sustaining what you get" is the next big step after the first big step of " Getting what you want". ( a.k.a "Yogam" and "Kshemam" as quoted on our ancient language)

So, money management skills come handy even after you earn what you want.

crores, crorepathi, how to earn a crore, crorepathi to bikari, crores, karodpathi

Chanakya's New Manifesto - Book review

To start with ~This book (Chanakya's new manifesto to resolve the crisis within India) is not a novel. It is an answer to the question,"What would Chanakya do if confronted with the various crisis that beset contemporary India ?" - " Of course, from the author's point of view".

Pavan.K. Varma, the author who is an ex Indian foreign service officer, picks up five main areas that are to be addressed to resolve India's modern day problems. The author talks about governance, democracy, corruption, security and building an inclusive society. Chanakya's new manifesto, as laid down by the author is classified into the five topics stated above. It is a proposed blue print for change. The underlined assumption is that " we cannot continue as we are and must gather the resolve to bring in effective governance, a true democracy, a corruption free state, a security conscious nation and an inclusive society. If we fail, India may never succeed. Our future is at stake. "

The author starts each chapter with a quote from the Artha Shastra, walks through the history and current state of India ( related to the topic under discussion) and then provides "what should be done now", in very clearly jotted down bullet points.

If you ask me to pick one best suggestion that is stated in the book, I would pick up the following without any doubt.
"Point 2.8 under Democracy - The current practice which allows parties not to identify donors contributing less than Rs 20000 must be scrapped. This is the principal (but not only) channel for parties to collect vast amounts of undeclared funds. Every paisa given as a donation to political parties must be accounted for and transacted through auditable and transparent bank transactions"

When suggesting things on governance, the author feels that each coalition like UPA or NDA must publicly announce a common governance agenda, with indicative time frame for specific deliverables. Pavan . K. Varma's book Chanakya’ new manifesto also prescribes setting up a five member Governance Appraisal Panel (GAP) which will independently evaluate the performance of the government and submit annual report to the President of India.

The author has boldly expressed his views in all of the chapters either be expressing views on the need to support the Jan Lokpal bill or condemning the dynasty rule in the country, the author is pretty straightforward.

This book is more for a serious read and not one of those kinds with which you plan to pass time. Even if atleast 50 % of the prescribed actions in the book are attempted to be implemented, then it would take India a long way in the path of development.

So, if you read this book, it is not enough to treat the content lightly but we need to try to convert some of the ideas into action. It is possible only if all the citizens (atleast the educated ones), act in cohesion, unison and wisdom to bring about the much needed change that India needs.

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