Understand Good debt and Bad debt

I have mentioned in my previous post that paying off your debt is the Best investment, and as far as possible try to avoid unnecessary debt. However please note that NOT all debts are bad. Debts could be a Good debt or a Bad debt. Good debt can make you rich and Bad debt can make you poor.

Let’s try to understand difference between good debt and bad debt.

What is Good Debt?

Whenever you borrow money to buy an assets out of that money, is consider as good debt. Here after repaying this debt eventually you become the owner of that asset and asset itself is a wealth or a source of income as a result good debt can make you rich. Examples of good debt could be home loan, business loan, education loan etc.

What is Bad Debt?

Whenever you borrow money to acquire liabilities out of that money is consider as bad debt. In this case after repaying the debt though you became the owner of something, its value is declining persistently such as car loan. Other bad debt could be Holiday loan, Credit card bills and Shopping EMIs etc

Conclusion: As far as possible try to avoid bad debt, and stay away from it. You can get into good debt if you believe its principal, tenure and rate of interest are affordable.

Understand Good debt and Bad debt

I have mentioned in my previous post that paying off your debt is the Best investment, and as far as possible try to avoid unnecessary debt. However please note that NOT all debts are bad. Debts could be a Good debt or a Bad debt. Good debt can make you rich and Bad debt can make you poor.

Let’s try to understand difference between good debt and bad debt.

What is Good Debt?

Whenever you borrow money to buy an assets out of that money, is consider as good debt. Here after repaying this debt eventually you become the owner of that asset and asset itself is a wealth or a source of income as a result good debt can make you rich. Examples of good debt could be home loan, business loan, education loan etc.

What is Bad Debt?

Whenever you borrow money to acquire liabilities out of that money is consider as bad debt. In this case after repaying the debt though you became the owner of something, its value is declining persistently such as car loan. Other bad debt could be Holiday loan, Credit card bills and Shopping EMIs etc

Conclusion: As far as possible try to avoid bad debt, and stay away from it. You can get into good debt if you believe its principal, tenure and rate of interest are affordable.

Online term plan: Details & benefits

Insurance is not for you but for others. It’s for the dependants you have in your family. Just keep the previous statement in mind before you buy insurance.

Term Insurance is a form of Life Insurance which provides a stipulated cover for a certain period under contractual agreement. In simple words it’s a kind of insurance which pays to the nominee/beneficiary only if the person insured dies between the tenure. No returns are given by the insurance company if nothing unfortunate happens to you during the policy term.

A term insurance is purely a death benefit and hence is a little different from life insurance. 

Well these days’ term plans are available online in India. The most important benefit an online term plan offer is – low on cost. By selling insurance online the company saves money which they otherwise pass on to the agents/middlemen.

The e-commerce domain in India is fast picking up and so is the online insurance space, it saves time and money and more over it is hassle free.

The two main factors you may check while buying a term plan would be – how cost effective is it and the claim settlement ratio (generally should be more than 80%).

Recently Aviva India launched an online term insurance plan i-Life.  I-Life has lowest premium rates if you compare it with other online term plans. 

You can know more about Aviva i-Life here.

Online term plan: Details & benefits

Insurance is not for you but for others. It’s for the dependants you have in your family. Just keep the previous statement in mind before you buy insurance.

Term Insurance is a form of Life Insurance which provides a stipulated cover for a certain period under contractual agreement. In simple words it’s a kind of insurance which pays to the nominee/beneficiary only if the person insured dies between the tenure. No returns are given by the insurance company if nothing unfortunate happens to you during the policy term.

A term insurance is purely a death benefit and hence is a little different from life insurance. 

Well these days’ term plans are available online in India. The most important benefit an online term plan offer is – low on cost. By selling insurance online the company saves money which they otherwise pass on to the agents/middlemen.

The e-commerce domain in India is fast picking up and so is the online insurance space, it saves time and money and more over it is hassle free.

The two main factors you may check while buying a term plan would be – how cost effective is it and the claim settlement ratio (generally should be more than 80%).

Recently Aviva India launched an online term insurance plan i-Life.  I-Life has lowest premium rates if you compare it with other online term plans. 

You can know more about Aviva i-Life here.

What is inflation?

A persistent increase in the level of consumer prices is inflation. How prices rise? we all know the law of supply and demand, which briefly, states that when demand is high, prices will rise, and when supply is high, prices will drop. But there is one more reason why price rises even if supply and demand remains constant.

Decline in the purchasing power of money

How purchasing power of money is decline? Lets look at a small example.

In the beginning of mankind, there was obviously no money. Once there was a small village which had 10 people and 10 gold coins and nothing else. One day, people decided to print 10 notes of 1 rupee each for the transaction purpose. So how much one gold coin worth now?

1 Gold coin = 1 Rs.

Now after a year, these 10 Rs did not satisfied their needs. so they thought that printing money will solve their financial problems so they printed 10 more rupees and pushed it into the circulation. So now how much one gold coin worth?

now 1 Gold coin = 2 Rs.


Again after a year these people became greedy & similarly they  printed 10 more rupees and brought to the market.

now 1 Gold coin = 3 Rs.


In this way price of a particular product rises every year.

Moral: It is not actually the price of gold which is going high. The gold is same here (10 coins). It is actually the price of money going down. Whenever, the governments & central banks from all around the world print money, the purchasing power of money goes down & the price of the gold goes up because now more money is available to buy the same amount of gold.

What is PAN Card?

Permanent Account Number (PAN) is unique 10 digit alphanumeric combination issued to all juristic entities identifiable under the Indian Income Tax Act 1961. It is given to any Indian entity (Individual or a Company) for the purpose of filing tax. NRIs can also apply for indian PAN card. It is issued by the Indian Income Tax Department under the auspices of the Central Board for Direct Taxes (CBDT) and is almost equivalent to a national identification number. It also serves as an important ID proof.

Why do you need a PAN Card?


The primary purpose of PAN is to bring a universal identification key factor for all financial transactions and indirectly prevent tax evasion by keeping a track of monetary transactions of high net worth individuals. This number is almost mandatory for financial transactions such as opening a bank account, receiving taxable salary or professional fees, sale or purchase of assets above specified limits. The PAN is unique, national, and permanent. It is unaffected by a change of address, even between states.

Your PAN Card contains

• Your Full Name
• Your Father's full name
• Your date of birth
• Your Pan Number
• Your Signature
• Your Photo

How to apply for PAN Card?

Download Form 49A Here, Fill it along with your signature and submit is to your nearest income tax office.

You can also apply for PAN Card Online from

• NSDL Website
• UTIISL Website
• For NRIs

When to Buy a Home on Home Loan?

Buying a home on home loan for 15-25 years of tenure is the very key and important financial planning decision. Let’s try to brainstorm about when should you buy a home? Let’s see pros and cons of buying a home on home loan.


Just 3 decades back, people in India was not aware of anything called as home loan. In that era our parents and grandparents used to buy a home during the time of their retirement when they have accumulated the enough wealth. But today because of the easy availability of the home loans, many people have started buying home on home loans in the first few years of their active earning life.

Pros of buying home on home loan.


Because of Income Tax Benefits on Home Loans in India it is advisable to buy home on home loans. Under Section 80C, you can get tax deductions up to Rs.1 lakh every year on the principal amount paid. Also under Section 24(b), interest component of EMI (Rs.1.5 lakhs) is eligible for deduction from taxable income.


Taking a Joint Home Loan with parents/Siblings or spouse can give you double tax benefits.

Cons of buying home on home loan.


Your first home is not your investment even though the price of real estate goes high, however your second home could be your investment. This is because you are not going to sell your 50 Lakh value home to fund your child’s education but you may have to liquidate your 50 Lakh of Mutual funds portfolio for your child’s education.


If you are going for a home loan considering your home the biggest investment than sorry, you should build wealth first before going for a home loan.

Going for a home loan in your early 20s & 30s is a good financial decision only if you are simultaneously going to build wealth by investing in various asset classes. The TIME that you will spend behind EMIs is never going to come back and during the same time period you could build a great wealth by simply investing that money in Mutual funds via SIP.

When to Buy a Home on Home Loan?

Buying a home on home loan for 15-25 years of tenure is the very key and important financial planning decision. Let’s try to brainstorm about when should you buy a home? Let’s see pros and cons of buying a home on home loan.


Just 3 decades back, people in India was not aware of anything called as home loan. In that era our parents and grandparents used to buy a home during the time of their retirement when they have accumulated the enough wealth. But today because of the easy availability of the home loans, many people have started buying home on home loans in the first few years of their active earning life.

Pros of buying home on home loan.


Because of Income Tax Benefits on Home Loans in India it is advisable to buy home on home loans. Under Section 80C, you can get tax deductions up to Rs.1 lakh every year on the principal amount paid. Also under Section 24(b), interest component of EMI (Rs.1.5 lakhs) is eligible for deduction from taxable income.


Taking a Joint Home Loan with parents/Siblings or spouse can give you double tax benefits.

Cons of buying home on home loan.


Your first home is not your investment even though the price of real estate goes high, however your second home could be your investment. This is because you are not going to sell your 50 Lakh value home to fund your child’s education but you may have to liquidate your 50 Lakh of Mutual funds portfolio for your child’s education.


If you are going for a home loan considering your home the biggest investment than sorry, you should build wealth first before going for a home loan.

Going for a home loan in your early 20s & 30s is a good financial decision only if you are simultaneously going to build wealth by investing in various asset classes. The TIME that you will spend behind EMIs is never going to come back and during the same time period you could build a great wealth by simply investing that money in Mutual funds via SIP.

Story - Stocks are like Monkyes

How Stock Markets Work?

Once upon a time in a village, a stranger man appeared and announced to the villagers that he would buy monkeys for Rs.100 each. The villagers, seeing that there were many monkeys available around free of cost. They started catching these monkeys and were sold to this stranger at Rs.100 each. Soon supply of monkeys started to diminish and the villagers stopped their effort.

He further announced that he would now buy at Rs.200 each. This renewed the efforts of the villagers and they started catching monkeys with lots of effort.

Soon the supply diminished even further and Very soon the village became empty of monkeys. There was very hard to find even a single monkey.

The man now announced that he would buy monkeys at Rs.500! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.

In the absence of the man, the assistant told the villagers; "Look at all these monkeys in the big cage that the man has collected. I will sell them to you at Rs.350 and when the man returns from the city, you can sell them to him for Rs.500 each."

The villagers rounded up with all their savings and bought all the monkeys. Then they never saw the man nor his assistant, only monkeys everywhere!

Moral: Never overpay for any stock for more than its real Value no matter how bull the market is. Always buy stocks at discounted prices from the market. Value investing is the method to buy stocks at discounted prices than its real value.

Warren Buffett - The Greatest Stock Market Investor Of All Time!

Warren Buffett compounded money at an annual rate of 29.5 percent for over thirteen years.

Warren Buffett is an American business magnate, investor, and philanthropist. He is widely regarded as one of the most successful investors in the world. Often introduced as "legendary investor, Warren Buffett"

Warren Buffett displayed an amazing aptitude for both money and business at a very early age. At only six years old, Buffett purchased 6-packs of Coca Cola from his grandfather's grocery store for twenty five cents and resold each of the bottles for a nickel, pocketing a five cent profit. While other children his age were playing hopscotch and jacks, Warren was making money. Five years later, Buffett took his step into the world of high finance. At eleven years old, he purchased three shares of Cities Service Preferred at $38 per share.

At the age of 25, Warren began a limited stock market trading investment partnership. Warren was the general partner, and started with US$100. There were seven limited partners who contributed US$105,000 towards the stock market trading partnership.

The limited partners received 6 percent annually on their investment and 75 percent of the profits above this target amount. Warren earned the other 25 percent. Over the course of the next thirteen year period, Warren compounded money at an annual rate of 29.5 percent through stock market trading activities.

Warren Buffett was employed from 1951–54 at Buffett-Falk & Co.(Omaha) as an investment salesman. From 1954–1956 at Graham-Newman Corp.(New York) as a securities analyst. From 1956–1969 at Buffett Partnership, Ltd.(Omaha) as a general partner and From 1970 – Present at Berkshire Hathaway Inc.(Omaha) as its Chairman, CEO. In 1962, Buffett became a millionaire because of his partnerships, which in January 1962 had an excess of $7,178,500, of which over $1,025,000 belonged to Buffett.

How to learn Stock Market Investing?

Do you want to learn investing in stock market directly? Well, than here are the few useful books and websites from which you can learn the stock market investing. 

The Intelligent Investor Book by Benjamin Graham

This is the best ever book written on stock investing in the world. Warren Buffett, the world’s most successful investor has learned his value investing principles from this book only. This book is available in all the Crossword stores and you can also buy it from Amazon.com and they will deliver the book on your Indian home address. The book is written in very simple language.

Security Analysis Book by Benjamin Graham

This is another book written by Benjamin Graham about securities analysis in detail.

Moneybhai.com

Moneybhai.com is the best online Indian stock market game that tracks the real time stock prices of Indian listed companies. If you want to learn equity investing in India than this is the best website to learn Equity Investing in India. Give it a try.. It's FREE




Valueresearchonline.com is India’s independent unbiased fund rating agency. All you need to do is, visit this website and find 4 or 5 star rated mutual funds in various categories and start investing in them. Review your funds rating every 6 months and suppose if it drops to less than 4 star than its time to exit that fund and move your money to some other 4 or 5 star rated mutual funds.


See the company fundamentals, value and growth prospects before investing in any stock. Management, pledging of shares, balance sheet strength and future outlook are other important criterion. Valuation is the most important investment criterion.

What is Demat Account & How to Open a Demat Account in India?

Before 1995, the shares (Stocks) in India were traded in the physical form. But after 1995, the government of India and SEBI has digitalized everything. And this new digital form of the shares is known as Dematerialization (Short form "Demat"). So now, you can not buy, sell or transfer shares in India without Demat accounts. You can open Demat account with anyone. It may be your bank, private broker or independent brokerage service. But without demat account you can not trade shares.

Now a days, online demat accounts available in the market so that you can buy and sell shares online with a single click. You will need to submit PAN Card, Passport/Driving License, Residential proof along with a demat application form to open demat account with your bank or some other brokerage service.

Following are the few best demat services  in India.

• ICICI Direct
• Kotak Securities
• SBI
• Sharekhan
• Motiwal Oswal
• Angel Broking
• India Bulls
• HDFC Securities
• Reliance Money
• And many others…

Points to be noted before choosing a Demat Service

• See the Brokerage rates – 0.50% or less for delivery base and 0.10% or less for trading is the best brokerage rate.
• See for the online demat services 
• Services which provide online trading terminals are good
• See customer reviews online before going for demat services

Direct Equity Investing - Is it For you?

People may think why not direct equity investing rather than investing in mutual funds? Why to pay 1.5% annual fund management fees to the fund managers?


Well, let me ask you the simple question.


What is the P/E or PEG ratio of Reliance Industries right now? And weather its over valued, under valued or fairly valued? If you don’t know the answer of this simple question than well, direct equity investing is not for you. You will surely burn your money in direct equity investing. To save that 1.5% annual fund management fee, you will surely do a large disaster with your money.



Many people also plan to invest in equity by following the advise of their friends/broker/brother-in-law. Well, this is not the right kind of equity investing.


Direct equity investing demands lots of time investment on daily/regular basis to research the markets and the best scripts in the market. If you are not going to invest this much time in the market than direct equity investing is not for you. You can’t build fortunes in direct equity investing by following your brother-inlaw's advise.

• Returns generated by professional direct equity investing and mutual funds are exactly the same.
• If you are going to invest in equity by following the advise of your friend/broker/brother-in-law than direct equity investing is not for you.
• Mutual funds have a team of research analysts who take highly informed decisions on behalf of you.
• Only go for direct equity investing if you are willing to invest 1-2 hours a day for equity market research

How to Invest in Indian Mutual Funds?

There are three ways to invest in Indian Mutual Funds.

• Buy Mutual Fund units directly from the fund house
• Invest in Mutual Funds via Online Demat account
• You can either visit the website of any mutual fund house and download the form and fill it with required documents and submit it to your nearest fund house office.

Simplest way to invest in mutual funds is from your online demat account. ICICIDirect.com, Shrekhan.com, HDFC Securities etc gives this facility. Many other online demat services in India also gives the same service. The best thing about investing through online demat account is that, you don't have to do any paperwork as everything is online. While in case of buying mutual fund units directly from the fund house, you will have to submit all the physical documents and lots of paperwork.

NRIs & Mutual Funds

• NRIs can also invest in Indian mutual funds. However, according to SEC, the NRIs living in America can't invest in Indian mutual funds of US origin say HSBC, Fidelity & Templeton.
• All the other Indian origin mutual funds are open for NRIs.

List of Demart provider in India

• Icicidirect.com 
• Sharekhan.com
• Reliencemoney.com 
• HdfcSecurities.com 
• Indiabull.com
• MotilalOswal.com
• Kotaksecurities.com
• etc..

How to Choose Best Mutual Funds in India?

There are so many mutual funds available in the Indian market since 2000 than finding a best mutual fund in any category itself is a job. And in today’s world it is really difficult to believe someone.

But well, there is one easiest way to choose best mutual funds in India in every category. It will take just 1 minute to find a best mutual fund in any category. Here is how?

Valueresearchonline.com

Valueresearchonline.com is India’s independent unbiased fund rating agency. All you need to do is, visit this website and find 4 or 5 star rated mutual funds in various categories and start investing in them. Review your funds rating every 6 months and suppose if it drops to less than 4 star than its time to exit that fund and move your money to some other 4 or 5 star rated mutual funds. Finding best mutual funds from the market without the need of anyone is this much easy. Dhirendra Kumar is the CEO of Valueresearchonline.com. You can see him frequently on NDTV Profit, CNBC etc. You can also read his articles on his website Valueresearchonline.com

IPO (Initial Public Offerings ) – Good or Bad?

An initial public offering (IPO) is the first sale of stock by a company to the public. It's hard enough to analyze the stock of an established company. An IPO company is even trickier to analyze since there won't be a lot of historical information however you can always check CRISIL IPO Grading.


CRISIL IPO Grading is designed to provide investors an independent, reliable and consistent assessment of the fundamentals of new public issues. It includes an assessment of business and financial prospects, management quality and corporate governance.

IPO may be good in you stay invested for a long time horizon. Also check Lock-in period and Flipping rules of IPO. Flipping is reselling a hot IPO stock in the first few days to earn a quick profit.

Be careful before jumping into IPO, because investing is not just about doubling your money but its about multiplying your money and you can’t multiply your money in the stock market without investing for a long time horizon say 10,15 or 20 years or even more…

See Standard & Poor’s CRISIL IPO Ratings before investing in any IPOs.

CRISIL IPO Grading Scale–

5/5 – Strong Fundamentals

4/5 – Above Average Fundamentals

3/5 – Average Fundamentals

2/5 – Below Average Fundamentals

1/5 – Poor Fundamentals

• Invest in IPOs only if you think that the company is fundamentally strong and you are willing to stay invested for a long time horizon (> 5 years)
• Check the CRISIL IPO rating before investing
• CRISIL IPO Grade 3 or more is the good indicator to invest in IPO.
• Most of the government PSUs have 4+ CRISIL grading.

Systematic Investment Planning

The Power of SIP – Always invest via SIP

SIP (Systematic Investment Plan) is the most powerful way of invest in equity via mutual funds and build wealth over the period of time.

SIP works like this – when the market is up, you will buy less units (automatically) and when the market is down you will buy more units (automatically). Over the time, this strategy will dramatically reduce your overall entry price in the market and gives your excellent returns.

In the real life people do exactly reverse means when the market is up, they run to buy stocks and the market is down, they sell their stocks and run away from the market.

SIP develops patience and systematic discipline in your investments and build huge wealth over time.


Start monthly but REGULAR SIP in equity diversified mutual funds since the first day of your active earning life and do this SIP for 10,15,20 or even 25 years or even more and see how wealthy you will become.

The compound interest is so powerful over the time that it will multiply your money in a breath taking manner.

NFOs (New fund offers) - A Risky Bet

Beware NFO Lovers!!

Most of the people in India are NFO lovers. Yes, I call them NFO lovers because they simply can't resist their temptation to invest in NFOs (New fund offers) by mutual funds. I have seen people who have invested in dozens of NFOs available in the market.

Here are the Top 2 reasons why people invest in NFOs. 

• This is because people think that NFOs are cheap because they have NAV of Rs.10 per unit.
• It's the normal human psychology that it loves to try something new and this psychology also reflects while investing.

Are NFOs really cheap?

Nope. Even though the NFOs have Rs.10 per unit NAV price, the underlying market is same stretched or contracted. Second thing is that, Unit price (NAV) does not have to do anything with MF returns.

Suppose if Fund A has NAV of Rs.10 and Fund B has NAV of Rs.1000 having identical portfolios and after one year suppose both the funds will generate 10% return, the NAV of fund A will be Rs.11 per unit and fund B will be Rs.1100 per unit.

NFOs don’t have any past proven record of good performance and that's why they should be avoided. A smart investor is one who invests in mutual funds having past proven record of more than 5 years of good performance.

What is ELSS?

• ELSS - Equity Linked Saving Scheme: Its a Tax saving tool.
• The only difference between an ELSS and a diversified Equity scheme is that ELSS have a mandatory lock in period of three years.
• ELSS enable tax benefits under section 80C upto Rs. 100000/-.
• Systematic Investment Plan(SIP) is an effective way of investing in ELSS.
• ELSS can be Growth or Dividend based in which Dividend is further divided into Dividend Re-investment and Dividend Redeemed.
• ELSS give higher returns compared to PPF or NSC.

Mutual Funds Portfolio Building

Mutual funds in India are so much professionally managed, highly regulated by SEBI and cost effective (Entry & Exit loads are 0%) that you don’t need to invest in any financial products except Term Insurance & PPF to do effective financial planning. Virtually all the varieties of mutual funds are available in the market such as equity, debt, gold, gilt, Index…etc..

Many financially unaware Indians invest in insurance cum investment products like ULIPs , money back policies, whole life insurance plans and child future plans or retirement plans thinking that they will fulfill their two needs – Insurance & Investment. But well, Term Insurance + Mutual Funds + PPF is most cost effective and powerful financial combination that no insurance cum investment product can beat.

Mutual funds have 0% entry load and 0% exit load after 365 days and just 1.5 % annual fund management charge which is reasonable while insurance cum investment products charge you anywhere between 20-100% premium allocation charge and lots of exit/withdrawal charges and long lock-in periods. So avoid these combined financial products. Invest in mutual funds via SIP regularly for long term and build enormous wealth for your retirement and for your child’s future.

Principles of Mutual Funds Investing.

• Never invest in NFOs
• Invest in 3-4 Equity Diversified mutual funds
• Don't be collector of mutual funds. Never collect more than 4 equity mutual funds, 2 debt funds and 1 ELSS.
• Invest via SIP
• Avoid Sector/thematic funds.
• 1-2 Debt funds are enough
• 1 ELSS (Equity Linked Saving Scheme) is enough.
• Invest in mutual funds having past record of proven performance of at least 5 years.
• Invest more in largecap funds if you want stable portfolio
• Invest more in mid & small cap funds if you want aggression in your portfolio.

Asset Allocation

In layman's language, asset allocation means putting all of your eggs in different baskets. Here eggs means money and baskets means different asset classes. Asset allocation is very important in financial planning because various asset classes perform differently in different market conditions.

Risk is directly proportional to returns. Where there is high risk there is high return and where there is low risk return is also low. Equity has high risk hence can expect high return. Deft fund like Saving account, PPF etc have zero risk hence returns are also low.

Here is the Rule of Thumb for asset allocation.

100 – your Age = % Equity Allocation of your portfolio

Thus, if your age is 25 years than you should invest 75% in Equity in 25% in debt while if your age is 50 years than you should invest 50% in Equity and 50% in Debt.

Many people started investing lots of money in gold after 2003-2010 gold rally. But remember that, equity is the  only asset class which can give you highest returns than any other asset class in the long run. So don’t ignore the importance of equity in your portfolio & never invest more than 10% of your net worth in Gold.

• If you are in age 20s & early 30s, when you don't have much dependents and retirement is still far away, you should invest 100% in equity & 0% in debt to build enormous wealth.
• Remember, equity is the most powerful asset class to build wealth if you start early and stay invested for more than 10 years of time horizon.
• Many financial advisors advise people to invest 100% in debt after retirement (60 years) but I personally believe that, one should invest in equities even after retirement.

What is Hyperinflation?

Do you know that What is Hyperinflation? Well, hyperinflation means excessive inflation in very short period of time. Almost all countries across the globe facing the challenge of Inflation.


A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money is inflation.

How prices rise? we all know the law of supply and demand, which briefly, states that when demand is high, prices will rise, and when supply is high, prices will drop.


How purchasing power of money is decline? When the government prints money out of thin air to solve the financial problems of the nation, the purchasing power of the money goes down markedly.

It is the Zimbabwe Hyperinflation in 2009. You can see the 100 Billion Zimbabwe dollar bank note. And you can buy just 3 eggs from it.

Printing money is not the solution of financial problems. Today governments & central banks around the world are printing money out of thin air to solve the financial problems of the nation. But well, this will cause hyperinflation.

PPF (Public Provident Fund)

PPF is one of the best tax saving financial product in India. The  minimum limit is Rs.500 per annum and maximum limit of PPF is Rs.70,000 per annum which is tax free under section 80C and not only this but it also gives you 8% annual compounded returns which is best in India. Please note PPF has a long lock-in period of 15 years with intermittent partial withdrawals.

Why to open a PPF account even if you don’t need it?

• Many investors are reluctant to invest in PPF becuase has a long lock-in period of 15 years. Though it has intermittent partial withdrawals feature still it discourages many investors.
• Well, PPF is not ment for short term. Definitely PPF can't help you in near future but think long term. Think after 10-12 years. After 10-12 years, you can put your money in PPF account and in next 3-5 years it will be matured and whole the maturity amount will be tax-free and you earn compound interest of 8%.
• And it just costs Rs.500 per year for account to be active. So even if you are not going to invest lots of money in PPF right now, open the PPF accounts in name of all your family members including your minor children. So that in the future you can get this benefit.
• Open the PPF account in the name of all your family members at the interval of 2-3 years so that after 10-12 yrs , you have each PPF account maturing in a period gap of 2-3 yrs and you can use it as a investment product which gives 8% assured tax free return.

How to open PPF account in India?

• You can open PPF account with any nationalized bank as well at your local post-office branches.
• The commonest bank to open PPF account in India is SBI. Visit your nearest SBI branch, fill the PPF form and submit identity documents and submit them and get your PPF passbook. It’s that much easy.
• PPF is not for NRIs

Update on PPF : PPF to fetch better returns now?

Mutual Funds in India

Mutual funds are the best and most cost-effective financial products to build wealth in India.
Mutual funds are available in all the varieties means equity, debt, gold, exchange traded funds, gilt…etc..
You don’t even need to invest in government bonds and bank fixed deposits because gilt funds and debt funds are available in the Indian market.
Mutual funds (Equity & Debt) are the best financial products available in India to build some serious wealth.

No need to invest in child future plans offered by insurance companies. Only 2-3 equity diversified mutual funds are enough to build enough wealth for your child’s future and for your retirement.
Start investing in equity diversified mutual funds as early as possible via SIP. Many people have a false belief that, mutual funds are costly and they will invest in equity by themselves. But well, mutual funds are so much professionally managed that its hard to beat the returns generated by them unless you have extremes levels of expertise in direct equity investing.

• Mutual funds have 0% Entry load & 0% Exit load after 365 days of investing.
• No other financial product is as cheap as  mutual funds.
• MFs charge 1.5% Fund management fees every year
• All the insurance cum investment products offered by insurance companies are HIGHLY OPAQUE mutual funds which charge 20-100% entry loads by various charges so avoid them anyhow.
• Exit from any insurance cum investment product and start SIP in mutual funds.

Online Term Insurance Plans in India

Online term insurance plans are the new generation concept in India. You dont have to worry for taking online insurace because all insurance companies and their policies in india are requlated by IRDA (Insurance regulatory authority of India) just be honest and provide all information correctly. You just need the internet connection and a credit card to pay online and buy term online insurance policy. You may have to go medical checkup depending upon age, insurance company and for any medical concerns. Dont worry its conducted at your home at your convinent time.






Advantages of Online Term Insurance

• Cheap: The main advantage of online term insurance plan is that, as they are online, the insurance companies don’t have to pay agent commissions and that’s why they pass on this benefit on you. And thus, the annual premiums of online term insurance plans is much lower than the traditional offline term plans.
• Wide Availability: Another advantage of these plans is that, you can buy them from any city of India. All you need is the internet connection and a credit card to pay premiums.

Online Term Insurance Plans in India
1. ICICI iProtect
2. AEGON Religare – iTerm
3. Kotak ePreferred
4. Metlife Metprotect
5. AVIVA iLife
6. Many others...

Online Term Insurance Plans in India

Online term insurance plans are the new generation concept in India. You dont have to worry for taking online insurace because all insurance companies and their policies in india are requlated by IRDA (Insurance regulatory authority of India) just be honest and provide all information correctly. You just need the internet connection and a credit card to pay online and buy term online insurance policy. You may have to go medical checkup depending upon age, insurance company and for any medical concerns. Dont worry its conducted at your home at your convinent time.






Advantages of Online Term Insurance

• Cheap: The main advantage of online term insurance plan is that, as they are online, the insurance companies don’t have to pay agent commissions and that’s why they pass on this benefit on you. And thus, the annual premiums of online term insurance plans is much lower than the traditional offline term plans.
• Wide Availability: Another advantage of these plans is that, you can buy them from any city of India. All you need is the internet connection and a credit card to pay premiums.

Online Term Insurance Plans in India
1. ICICI iProtect
2. AEGON Religare – iTerm
3. Kotak ePreferred
4. Metlife Metprotect
5. AVIVA iLife
6. Many others...

Pure Term Life Insurance

Pure term life insurance is the BEST insurance product available in India as it covers your life at very cheap cost. Ideally one need life cover of 10 times of their annual salary which only term insurance can provide you. One should divide their life cover in more than one term insurance plans. Say if your insurance need is Rs.50 lakhs than buy 2 term insurance plans of 25-25 lakh each.

This has two advantages.

• You will diversify the risk of rejection by dividing your life cover in 2 term insurance plans.
• During your retirement/old age when your dependents become financially free and you become liability free, you can discontinue 1 term insurance plans and reduce your life cover and premiums also. If you have invested in just 1 term insurance plans than this won't be possible.

Also please note that insurance is not about money, so never think of returns from insurance and avoid investment in any insurance cum investment product.

Buy term and invest the difference

Remember Insurance and investment are two different things. Term insurance is available at very lower premiums which will provide you high life cover and the difference of premium you can invest in mutual fund. Insurance cum investment products will give you just 5 to 10 times life cover than the annual premium which is very small in comparison to term insurance plans.

All the insurance cum investment financial products in India are very costly and should be avoided. Remember that, you need a pure term life insurance policy to cover your life, mutual funds to build a wealth and PPF to save lots of tax under section 80c.

Pure Term Life Insurance

Pure term life insurance is the BEST insurance product available in India as it covers your life at very cheap cost. Ideally one need life cover of 10 times of their annual salary which only term insurance can provide you. One should divide their life cover in more than one term insurance plans. Say if your insurance need is Rs.50 lakhs than buy 2 term insurance plans of 25-25 lakh each.

This has two advantages.

• You will diversify the risk of rejection by dividing your life cover in 2 term insurance plans.
• During your retirement/old age when your dependents become financially free and you become liability free, you can discontinue 1 term insurance plans and reduce your life cover and premiums also. If you have invested in just 1 term insurance plans than this won't be possible.

Also please note that insurance is not about money, so never think of returns from insurance and avoid investment in any insurance cum investment product.

Buy term and invest the difference

Remember Insurance and investment are two different things. Term insurance is available at very lower premiums which will provide you high life cover and the difference of premium you can invest in mutual fund. Insurance cum investment products will give you just 5 to 10 times life cover than the annual premium which is very small in comparison to term insurance plans.

All the insurance cum investment financial products in India are very costly and should be avoided. Remember that, you need a pure term life insurance policy to cover your life, mutual funds to build a wealth and PPF to save lots of tax under section 80c.

The Simple & Most Powerful Financial Planning Formula

Term Insurance + Mutual Funds (Equity & Debt) + PPF


The most simple and the most powerful financial planning formula to build wealth , save tax and cover your life (insurance) is,


Term Insurance + Mutual Funds (Equity & Debt) + PPF


No other financial product is as cheap and as effective than the above simple combination. Term insurance will provide you adequate Life cover. PPF will save your tax and Mutual fund can build enormous wealth for you in the long run.

Importance of Term Insurance


One is never sure about life. We often come across people claiming that nothing is going to happen to them; that they are too young to pass away. But do they really know what the future holds for them? Individuals need to insure themselves to secure the future of those who are dependant on them; especially if they happen to be to only earners in thire family. You wouldn’t want your family to go through hardships or rely on others/relatives, etc. This, in fact, is the MAIN reason why one should buy an insurance policy! Also TAX saving is the another added advantage of term insurance.


Public Provident Fund

PPF is one of the best tax saving financial product in India. The mimium limit of PPF is Rs.500 and maximum limit of PPF is Rs.70,000 per annum which is tax free under section 80C and not only this but it also gives you 8% annual compounded returns which is best in India.




Mutual funds 

Mutual funds in India are so much professionally managed, highly regulated by SEBI and cost effective (Entry & Exit loads are 0% after 365 days).No need to learn direct equity investing now a days. Equity mutual funds will do all the job for you. Equity multual fund can build enormous wealth for you in the long run that you can fulfill all of your and your child’s financial goals. 

The Simple & Most Powerful Financial Planning Formula

Term Insurance + Mutual Funds (Equity & Debt) + PPF


The most simple and the most powerful financial planning formula to build wealth , save tax and cover your life (insurance) is,


Term Insurance + Mutual Funds (Equity & Debt) + PPF


No other financial product is as cheap and as effective than the above simple combination. Term insurance will provide you adequate Life cover. PPF will save your tax and Mutual fund can build enormous wealth for you in the long run.

Importance of Term Insurance


One is never sure about life. We often come across people claiming that nothing is going to happen to them; that they are too young to pass away. But do they really know what the future holds for them? Individuals need to insure themselves to secure the future of those who are dependant on them; especially if they happen to be to only earners in thire family. You wouldn’t want your family to go through hardships or rely on others/relatives, etc. This, in fact, is the MAIN reason why one should buy an insurance policy! Also TAX saving is the another added advantage of term insurance.


Public Provident Fund

PPF is one of the best tax saving financial product in India. The mimium limit of PPF is Rs.500 and maximum limit of PPF is Rs.70,000 per annum which is tax free under section 80C and not only this but it also gives you 8% annual compounded returns which is best in India.




Mutual funds 

Mutual funds in India are so much professionally managed, highly regulated by SEBI and cost effective (Entry & Exit loads are 0% after 365 days).No need to learn direct equity investing now a days. Equity mutual funds will do all the job for you. Equity multual fund can build enormous wealth for you in the long run that you can fulfill all of your and your child’s financial goals. 

Stay away from Insurance agent

The only job of insurance agent is to sell the financial products of the company for which he is working. After all insurance companies are not here to do charity they are here to do business. Term insurance is the only best product being sold by insurance companies.

Insurance agent will try to sell only those products in which he will get highest commission. Once I requested for insurance on a reputed insurance company website following day I got call from a agent. The first question he asked me was how much you can invest? Though my requirement was insurance, he never spoken about term insurance.

Why insurance agents are reluctant to sell term insurance is because they will not get much commission on it. Insurance agents are so experts, they will explain you a product in such a way that you will be convinced that you are buying a good product though you are buying a product in which insurance agent will get more commission.

Don't get fooled by below mentioned phrases of Insurance agent.

• Whole life plan is the best product for you.
• You will not get any returns in term insurance.
• ULIPs will double your money in 3 years.
• Pension plan is best for retirement planning.
• This child future plan will give u guaranteed return.
• This insurance cum investment plan is best in market.
• All of my clients have taken this money back plan.

So beware of such sweet words from insurance agents. Be alert before buying a product from insurance agent, do some homework on your own. Read reviews on net, ask financial experts on various financial forums. Take your own decision and don’t rely on insurance agent’s advice. There is no role of insurance agent in successful financial planning.

Stay away from Insurance agent

The only job of insurance agent is to sell the financial products of the company for which he is working. After all insurance companies are not here to do charity they are here to do business. Term insurance is the only best product being sold by insurance companies.

Insurance agent will try to sell only those products in which he will get highest commission. Once I requested for insurance on a reputed insurance company website following day I got call from a agent. The first question he asked me was how much you can invest? Though my requirement was insurance, he never spoken about term insurance.

Why insurance agents are reluctant to sell term insurance is because they will not get much commission on it. Insurance agents are so experts, they will explain you a product in such a way that you will be convinced that you are buying a good product though you are buying a product in which insurance agent will get more commission.

Don't get fooled by below mentioned phrases of Insurance agent.

• Whole life plan is the best product for you.
• You will not get any returns in term insurance.
• ULIPs will double your money in 3 years.
• Pension plan is best for retirement planning.
• This child future plan will give u guaranteed return.
• This insurance cum investment plan is best in market.
• All of my clients have taken this money back plan.

So beware of such sweet words from insurance agents. Be alert before buying a product from insurance agent, do some homework on your own. Read reviews on net, ask financial experts on various financial forums. Take your own decision and don’t rely on insurance agent’s advice. There is no role of insurance agent in successful financial planning.

Worst Financial Products in India

Investment + Insurance = Worst product.

What I mean to say is any product which is a combination of both Investment and Insurance can never be a good product. Because Insurance will cost money to you, Investment charges will be separate and less amount will go towards actual investment hence it will be a costly product. Never mix insurance with investment or buy any financial product which is the combination of insurance and investments.
Understand your insurance and investment need for insurance Term Insurance is the good product and for Investment mutual fund is the ideal product.

Below are the lists of such product which is combination of investment and insurance. These products are very costly so avoid such products.

• Whole life insurance plans
• Money back insurance plans
• Pension / retirement plans
• ULIPs (Unit Linked Insurance Plans)
• Child future plans
• Any INVESTMENT CUM INSURANCE product

ULIPs and other similar products are costly and gives you life cover of 5-10% of annual premium which nothing compare to term insurance. Term insurance gives you enough life cover with low premium, so take term insurance and invest the difference in mutual fund.