Navigating the maze that is personal finance

Monday, 31 July 2017

The changing saving habits of Indians - a commentary

I was reading an article in mint about the spending habits of Indians. It talked about why Indians find it hard to spend their money. I believe that culture has a big role to play in this behavior.

We are known as savvy savers and one who would squeeze the worth out of every penny. And boy do I take pride in this comment/compliment (depending on one's point of view). In a study it was found that 75% of Americans would be unable to arrange an emergency expenditure of 500 dollars. By contrast a much higher number of Indians would be able to do so (there is no number to show here but my experience says most of those around you would somehow manage the number if required).  In other words they may live in comforts better than ours but their existence is hand to mouth.

As years are passing we are incorporating this culture of consumerism in our daily lives. Whether it is buying more clothes or changing gadgets (including mobiles, cars etc.) frequently we are more and more getting inclined towards consumerism (I have known people who have spent money on mobile equivalent of their one month salary). Though we still seek value for money / deals (data of sale season revenue of popular online sites would convince you of the same), but in my opinion this habit will not survive another generation.

There is no denying that, opening of the Indian economy in 90's changed the economic landscape of India. It brought more jobs and wealth to India and made moving the social classes upwards easy. Jared Diamond (in his book- Guns, Germs and Steel) would tell you that any culture or economy that will not adapt will ultimately perish away.

The whole point here is while it is worthwhile to spend and enjoy your money, at the same time it is worthwhile and prudent to save. A balance with culture of saving is required so that we are not engulfed in culture of spending.

Sunday, 30 July 2017

Investing in stocks and mutual funds

My dear readers

You must be wondering that till now I have mainly talked about insurance and products with fixed returns while maintaining a silence on mutual funds and stocks. I would like to justify my stand. I am not a financial advisor but a person who shares his experience with readers. All my blogs till now have been products that I have used/ using and am sure can help others understand them better. I have given solutions to problems that I have myself faced as an investor/ customer/ financial services user.

I am investing in mutual funds and stocks but despite choosing them to best of my knowledge my returns have been unsatisfactory. Till I figure it out as an investor I would keep myself away from giving any advice on these instruments.

Till then I hope I bring you the knowledge that I gain everyday as an everyday person trying to manage his finances.

Sunday, 23 July 2017

All that you need to know about Pradhan Mantri Vaya Vandana Yojana (PMVVY)

Who can enroll?
Any Indian citizen above age of 60 years can enroll for this scheme.
No upper limit for age.

What is the policy term?
The policy tenure is for 10 years.

Where to get it?
The scheme can be bought online or offline from  LIC, which is the sole operator of the scheme.

What are the returns?
There is an assured return of 8% per annum.
The policyholder can get a minimum pension of rupees 1000  per month or a maximum of rupees 5000 per month.

Mode of Pension Minimum Purchase Price Maximum,Purchase Price Minimum Pension amount Maximum Pension amount
Yearly Rs. 1,44,578/- Rs. 7,22,892/- Rs. 12,000/- Rs. 60,000/-
Half-yearly Rs. 1,47,601/- Rs. 7,38,007/- Rs. 6,000/- Rs. 30,000/-
Quarterly Rs. 1,49,068/- Rs. 7,45,342/- Rs. 3,000/- Rs. 15,000/-
Monthly Rs. 1,50,000/- Rs. 7,50,000/- Rs. 1,000/- Rs. 5,000/-

The pension is for whole family and includes policy holder, spouse and dependants.

The corporation is authorized to all for life certificate 'Jeevan praman' from time to time for further releasing pensions to policy holders account.

Mode of payment
Mode of payment can be monthly quarterly half yearly or early based on the option chosen by policy holder. The payment will be made through NEFT or Aadhar enabled payment system into the account of the policy holder.

Premature withdrawal
Premature withdrawal is allowed for treatment of any terminal or critical illness for self or spouse. 98% of the invested value ( surrender value) will be refunded in such cases at policy holders request.

Documents required for premature withdrawal:
Discharge form along with the original policy document
Proof of medical treatment of self/spouse and
Proof of age, if the age is not admitted earlier.

Death of policy holder
In case of death (including suicide as cause of death) of policy holder the invested amount would be returned in full to the nominee.

Documents for claim in case of death of policy holder
Claim forms, as prescribed by the corporation,
Original policy document,
proof of title,
proof of death,

On maturity that is after 10 years of policy completion final installment of pension along with the original amount invested would be returned to the policyholder.

Documents required on maturity
Discharge form along with the original policy document 
Proof of age, if the age is not admitted earlier

Where a policyholder dies after the maturity of the policy but the proceeds and benefit of his policy has not been made to him because of his death, in such a case, his nominee shall be entitled to the proceed and benefit of his policy.

A facility for loan on the amount invested is also available after 3 years. Loan upto 75% of purchase price shall be allowed (to meet the liquidity needs). Loan interest (presently @10% per annum) shall be recovered from the pension installments and loan to be recovered from outstanding proceeds at the time of exit.

Cancellation of policy
If it is found that the policy holder is un-insurable due to terms and conditions of policy then the policy would be cancelled and surrender value will be paid as on the date of such cancellation.

Tax treatment
The proceeds from the policy are taxable in the hands of the policyholder commensurate with their  tax bracket. It is however exempted from GST.

Free look period
If a policyholder is not satisfied with the  the policy, he/she may return the policy to the corporation within 15 days (30 days if this policy is purchased online) from the date of receipt of the policy stating the reason of objections. The amount to be refunded within free look period shall be the purchase price deposited by the policyholder after deducting the charges for Stamp duty and pension paid, if any.

Grievance Redressal Mechanism
(taken directly from policy document)

The Corporation has Grievance Redressal Officers at Branch/Divisional/Zonal/Central Office to redressgrievances of customers. For ensuring quick redressalof customer grievances LIC has introduced Customer friendly Integrated Complaint ManagementSystem through their Customer Portal (website) which is, where a registered policyholder can directly register complaint / grievance and track its status. Customers can also contact at e-mail for redressal of  any grievances.

In case the customer is not satisfied with the response or does not receive a response from LIC within 15 days, then the customer may approach the Grievance Cell of the IRDA through any of the following modes:

• Calling Toll Free Number 155255 / 18004254732 (i.e. IRDAI Grievance Call Centre)
• Sending an email to
• Register the complaint online at
• Address for sending the complaint through courier/letter:
Consumer Affairs Department, Insurance
Regulatory and Development Authority of India,
9th Floor, United India Towers, Basheerbagh,
Hyderabad – 500 029, Andhra Pradesh.
• Sending the complaint by Fax to 040-66789768

Claimants not satisfied with the decision of death claim repudiation have the option of referring their cases for review to Zonal Office Claims Dispute Redressal Committee or Central Office Claims Dispute Redressal Committee. A retired High Court / District Court Judge is member of each of the Claims Dispute Redressal Committees. For redressal of Claims related grievances, claimants can also approach Insurance Ombudsman who provides for low cost and speedy arbitration to customers.

Thursday, 20 July 2017

Pradhan Mantri Suraksha Bima Yojna (PMSBY) - How to download your insurance certificate and everything else

What is Pradhan Mantri Suraksha Bima Yojna (PMSBY)?

Pradhan Mantri Suraksha Bima Yojna is a long awaited social security scheme launched in 2015 to provide accident/ disability insurance to masses at nominal premium. And when I say nominal it is actually nominal - Rs. 12/year for a cover of Rs. 2 lakh.

Though one may think that the sum assured is too low, one cannot but not only acknowledge the nominal premium one will have to pay to get this benefit but also the affordability of such premium by masses. It is a step towards providing financial social security to masses.

Who can enroll?
Any Indian citizen who had completed 18 yes of age and is below 70 yrs.

What are the benefits?
In case of death of policy holder or case where severe disability occurs the nominee or the policy holder will get Rs.2 lakh as lump sum. In case of disability due to any cause leading to loss of a limb or eye the policy holder will get Rs. 1 lakh.

Where to buy?
It can be bought at any bank of pay office where you have a savings bank account.

How is the premium paid?
The premium is auto debited from the bank account to which it is linked. Cash cannot be given to pay premium, hence having a bank account is mandatory to avail this facility. The premium is paid yearly once and gives a cover for that year. In case of multiple accounts only one account can be used the avail this facility.

Termination of policy
On attaining the age of 70 years. If there is not sufficient balance in the account during auto debit, the policy will be suspended till premium is paid.

At the time of claim, the death certificate ( by nominee) or disability certificate (by policy holder) should be produced at the branch where insurance premium is paid along with duly filled form.

How can you download the insurance certificate once you have enrolled to Pradhan Mantri Suraksha Bima Yojna? 

Downloading the Pradhan Mantri Suraksha Bima Yojna insurance certificate for your ICICI bank account:
Step 1: Go to

Step 2: Click on ‘Download your policy now’ for Pradhan Mantri Suraksha Bima Yojna (PMSBY).

Step 3: You will be taken to the ICICI Lombard web page where you have to enter your account number and date of birth. Click on search to download your insurance certificate.

Downloading the Pradhan Mantri Suraksha Bima Yojna insurance certificate for your HDFC bank account:
Step 1: Go to

Step 2: Choose the bank as 'HDFC' and enter your bank account number and IFSC code.

Step 3: Follow the  next steps to download your insurance certificate.

This site allows you to download the Pradhan Mantri Suraksha Bima Yojna insurance certificate for other banks like Syndicate bank, Vijaya bank as well.

Downloading the Pradhan Mantri Suraksha Bima Yojna insurance certificate for your Citibank account:
Step 1: Go to

Step 2: Choose the bank as 'Citibank NA' and enter the other details.

Step 3: Click on 'Search' and follow the  next steps to download your insurance certificate.

This site allows you to download the Pradhan Mantri Suraksha Bima Yojna insurance certificate for other banks like Yes bank, J&K bank as well. 

Tuesday, 18 July 2017

Sovereign gold bonds: What you need to know

As Indians we are perpetually attracted to gold. Traditionally it is bought either in the form of jewellery or in form of gold coins and is considered safe haven for money to be utilized in times of need. To quench this thirst, Indian government has come up with sovereign gold bonds which allows not only holding gold in a safer form but also unlike the traditional form of holding gold, pays you an interest in the gold bought under the scheme. This year 2 tranches are already out, one in  April 2017 and other in July 2017. Let us see what exactly are these bonds.

What are gold bonds?
These are bonds issued by government whose value is related to market price of gold. Since they are sovereign backed, they are guaranteed. Gold here is held in demat or paper form. Value and maturity of these bonds are also linked to gold prices. At the time of issue the value of gold is based on previous week’s average of gold price and then given at discount.

What are the advantages of gold bonds?
Being backed by government the invested amount and interest is guaranteed by government. The value of the bond may go up or down depending on price of gold however.
  • Since they are in paper or demat form, they are much safer to hold than physical gold. 
  • These bonds can be used as collateral for loans.
  • One doesn't have to worry about the purity of gold.
  • There is a nomination facility available.

Who can buy these bonds?
Any of the following can buy:
  • Any resident Indian in individual capacity.
  • Any adult on behalf of minor child.
  • Any person jointly with other person.
  • Also trusts, institutions, University etc. can buy.

How much can be bought?
A min of 2 gm, then in multiples of 1 up to a maximum of 4 kg per fiscal year per person and 20 kg for trusts and similar entities notified by the government from time to time can be bought under the scheme.

What are the documents required?
ID documents ( pan,Aadhaar, voter ID, passport) for completion of KYC norms are required along with duly filled application.
For minors bank account number may be considered valid for KYC verification.

Where to buy?
It can be bought online, on NSE, in post offices, banks or any other such designated/ authorized place by RBI. On allotment holding certificates will be emailed to holders and bonds will be credited to their demat accounts. The receiving offices (where bonds are bought) are supposed to cater to all customer needs of premature withdrawal or updation of records or anything till the bond matures.

What is the interest paid?
2.5 % interest per annum is paid half yearly on bond value (initial buy value). It may change as announced by government.

What is the lock in period and withdrawal conditions?
These bonds have maturity at 8 yrs, the last interest with maturity value will be credited to registered account number. If traded before maturity but after 3 yrs then capital gains (indexation) tax is applicable on these bonds. Premature redemption is allowed after 5 yrs. They are tradable on stock exchange (only those that are held in demat form are eligible for trading, after notification for trading is received from RBI).

What is the maturity value?
The bond matures after 8yrs with interest and is paid at market value of gold at that time.
There is no TDS on interest paid to subscriber. There is no capital gain tax on maturity.
If bonds are traded before maturity then tax after indexation will be applicable to them.

ETF vs bonds?
Each of these options have there pros and cons. Before deciding on the option that best suits your need make sure to assess your future needs and liquidity potential of these instruments in mind.
ETFs have better liquidity as they can be liquidated easily, there is no lock in and no cap on the amount that can be invested as against bonds. As against bonds you have to pay a nominal amount to keep ETF in your portfolio which brings down the value of investment. ETFs cannot be used as collaterals while gold bonds can be. You earn an interest on the value you invested in bonds as against ETFs which are linked to market gold prices.

Jewellery vs bonds?
If gold is bought only for the purpose of investment then this should be your least favored option (if you are a female investor I will not dare to talk you away from this option; if you are a male don’t forget to discuss this with your better half before cutting off this option).
  • Making charges can be as high
  • No guarantee of purity
  • Resale value less than the price at which it is bought

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