Chennai real estate bubble has burst

This statement may be applicable to all of the metros in Chennai, but more specific to Chennai real estate-

More than first world prices quoted for worse than fourth world infrastructure!

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The following is my short take on the current Chennai real estate scenario.

At the outset, if you make web enquiries or talk to a broker you may get a feel that the prices have not gone down. But the reality is different.Look at the following stories that I know of

1. Many apartments launched on the OMR almost /. 7 years ago are still not fully sold and they are not fully complete in terms of construction either ( in terms of the amenities promised).The prices quoted are almost 50% down if you adjust for inflation.

2. In a building that I know in Adyar, a new 2 BHK apartment (1100 sqft) is quoted at 1.8 crores for almost a year now. The rental yield for this price is 1.5% at the max. There is a big garbage dumping place and a sewage stream within smelling distance of this apartment. 4 of the 6 flats in this building are waiting for sale for more than a year now. ( For this price you may actually find apartments in New York, Singapore, Malaysia, Dubai or even some European countries!)

3.One of my friends who bought an apartment in the city for 51 lakhs ( 5 years ago) wanted to sell his apartment for 90 lakhs. Finally he had to settle in for 65 lakhs and he was lucky enough. This apartment was flooded till the first floor during the Chennai floods. After the floods, the price could have gone down further.

4.A suburb which was flooded ( built in a lake bed) like hell is seeing exodus of tenants while the owners are left with their house along with huge mortgage payments for the next 10, 15 years.

5. Couple of my friends are frustrated as the possession dates of their apartments have been pushed indefinitely ( from 2014->2015-> 2016 now)

2015 has seen the beginning of the down fall.With state elections coming up in 2016, a lot of money locked by politicians need to be taken out.This might also pull down the prices further.

The reality will get more apparent to all  in 2016! 

Oh my God! Look at these investment advices..

One of my friend called me to ask for my second opinion when he had these investment options offered to him.

First my friend was visiting his auditor ( Chartered Accountant) for some income tax advise. the Chartered Accountant suggested him to avail some good investment options from LIC ( pension plans).He also offered that it can be done through an LIC agent known to him.( His wife???)

Second my friend visited his bank to get a tax saving fixed deposit for his mom. The Manager of the PSU bank almost pleadingly forced him into buying a policy where he had to pay some amount annually for 5 years and after that he would get pension from the tenth year onward.

Last he visited a well known financial service provider for investing in an ELSS scheme.There he was lectured on the virtues of a pension policy from a private sector insurance provider.

In all of the cases, people were force selling him some insurance policies just for the sake of some hefty commission!

When the true RO (return on investment)was calculated for all of the schemes . it was less than savings bank interest currently being offered.

In none of the cases, the people selling these schemes were aware of the underlying securities in which the premium will be invested.

None of the parties who were selling these products had any true personal finance knowledge. All of them (except the Shattered accountant) were genuinely doing their job ( for what they were being paid for).

My friend at least had the guts to ask some basic questions and asked for a second opinion. if someone blindly makes an investment based on such random advises, they get tied to poor quality products due to their financial illiteracy.

God only can insure the investors from getting trapped by the insurance agents and insurance companies.

Happy New Year 2016 !

The best seller she wrote - Book review

This book is from Ravi Subramaniam who has published thrillers based on banking industry in the past.Similar to Ravi's other books the story revolves around a banking industry executive with an IIM background.

Here's an excerpt from the book , before the review 

The following are review comments provided by a publisher to a new author in the book.

"Suggested alterations to Shreya Kaushik's untitled book

a) Change Aditya's name to something more rustic . The name does not suit the character.

b) Detailing of locations in the book needs to be fleshed out. As of now it is very elementary. the average reader will have to be told what those locations stand for. Take a look at pages 4,89,112, and 165

c)The book is short. Can we look at adding another 15,000 words? We need to have a book of at least 200 pages. Readers will hesitate paying a good price for something less than that.

d)Reduce the gore in the rape scene. While it is very hard hitting, it might put off many.

There were a few more easy to manage points on the list................"

Now the review of the book on similar lines

1) For God's sake please stop using the name Aditya .The banking industry could have been left aside in this book.The theme is more towards publishing and a few Indian author's share this background. But some creativity could have been shown here instead of trying to resemble some real life authors and take some mileage out of it.

2) Will someone who has good writing talent and confident, with a decent background stoop so low for getting a book published ??? or to win a chairman's medal at IIM ( I don't know, The plot seems to be too weak)

3)The story can actually be written on the back of a bus ticket.( that's the reason for not talking about the story in this review) But did the author make it to 350+ pages because of the fact that readers need value for money. oh..my God. The story line is very much predictable once you read the back cover. Sanjay's conspiracy plot doesn't fly beyond a point and his ultimate motive is not very convincing..

4)All of these writers with a banking background seem to rely more on "Steamy" scenes in their book.Should really try to come out of this typecast and write something neat.

5)References to ebola, iphone backup, etc seem highly unconnected to me. Not enough research has been done to get into some interesting aspects that can keep the reader hooked.

The only thing that I liked in the book was the fact - " Indian MNC banks have to simply comply to the orders of HQ and cant quite stand to any decision made by them.( ref. closure of national bank -wealth management division in India ). Probably this is the reason that a lot of high profile bankers find time to write and eventually become full time authors.

In short , a below average book with a weak plot and a very very thin story line written with a lot of words!

I am reviewing ‘The Bestseller She Wrote’ by Ravi Subramanian as a part of the biggest Book Review Program for Indian Bloggers. Participate now to get free books!

Cash back offers ! Not so transparent!

I am not a great fan of cash back offers. But during this year, I made some purchases online for which some cash back offers available.

1. The first purchase was on Amazon for a cash back tie up offer with SBI cards. The offer was about 5% cash back and the cash back was to be credited my my card account after a certain period.

I did this purchase in may and I was supposed to get this cash back by a certain date in August. When I checked my account after the stated date, there was no cash back,. 

I wrote a mail to both of them and my cash back got processed in a couple of days.

2.The second purchase was on Makemytrip with an Amex card. Here a cash back was promised within a certain time frame. Got an SMS stating that cash back has been processed. But there was no real cash back in my card account for 15 days after the SMS.

I wrote to the card company and got the cash back into my card account.

You may ask, so what?

Is this a standard industry practice that cash backs are offered only to those who "remember and ask"?. How many people will track down the cash backs due to them after 30-90 days of their purchase?

Why cash backs aren't offered instantly?

Please track down your cash back offers until you get the "cash" into your account.!

What do I see in the real world? # retirement planning

When you read a lot of material on retirement planning, financial independence,personal finance, etc- You actually end up being scared ( At times, Your fear is used to sell unnecessary products to you),

Not deviating from the topic , the intention of the post is not to say whether you have to do your retirement planning or not!. But to present some real life cases of retired people that I have seen in my circle..( No inferences or lessons learnt at the end..:-) )

 1. Mr. R

 Mr. R was working in a industrial estate in late 90s. He had migrated to metro city for a living. His salary was low and was only enough for a hand to mouth existence. So, there was no question of making any investment. 

During the recession of late 90's , he lost his job ( around 50 years of age). There was no real "financial settlement" from the company when he was laid off.

His son was around 18 years of age at that time and managed to get government job  which coincided with Mr. R's job loss. Mr R has been doing some odd jobs from then on. But his Son continues to do well and supports his father.

Mrs & Mr. R continue to live with their son. 

 2. Mr. S

Mr. S is 96 years old now. He retired almost 4 decades earlier. Didn't have any real savings at the time of retirement ( No house, No financial asset). But he is well supported and taken care of by his children ( who are actually senior citizens now!),

Mr. S depends on  his children and grandchildren for his small indulgences.

Mr. S continues to live with his son.

 3. Mr .L

Mr. L worked in private sector. He got an house constructed during the fag end of his career. The retirement settlement that he got was only enough to pay for the home loan and pay off wedding loans (daughter).

Mr.L continues to live in the house built by him. His children continue to pay a token pension for Mrs & Mr L month on month. 

 4 .Mr. N

Mr. N worked for the government and had built an house in a suburban area during his mid age. His investments were primarily in FDs and in Post office instruments.His retirement benefits also went into Post office instruments.

Mr. N gets an inflation indexed pension from the government. Mrs. & Mr . N live using the pension (Manage to save some portion of it) and they are not really dependent on their children for their basic needs.

5. Mr . P

Mr. P worked in a senior position in a private sector. Had purchased a few plots and some blue chip shares ( they were not blue chips when he bought them) apart from his primary residence with the savings. ( Mrs. P was also employed). With the Equity/real estate boom of 2002-2008, his net worth shot up and was able to make some decent profit .

Mrs & Mr.P comfortably live in a suburban villa. Mr. P continues to hold some of the investment he made during the mid 90s.