I loved the year 2020 or 2008. My mutual fund investments zoomed down in the ground with the stock market; my single ULIP sold to me 11 years back decreased approximately 10% in value; inflation and prices zoomed the other way up above; my 1-year-old kiddo began to like more and more varied clothes of her mom’s liking so my expenses increased (I might not be served dinner for this) – in short, I know I am at the end of a deep and dark tunnel and my financial planning can only go one way from here – up. Here is my personal finance wishlist.
Personal Finance Wishlist
A flat or depressed stock market
Yeah, you read that right. I am simply being greedy here. I want to plough in more money for long term investing. And I want to go the systematic investment planning route of mutual funds. I want to buy units at the lowest prices. A depressed market helps me in that purpose.
So if the stock markets stay flat or go down, my personal finance wishlist say, I will see it as an opportunity to invest in more money. But what about those individuals who need to pull out money from the stock market now. Well, I must ask, if they had a financial goal in mind which was so close, why was their money parked into equities in the first place ? They should have begun moving away from equities long back.
Depressed real estate prices
This is for all those readers who want to do property investment, including me. Real estate prices are going crazy. Even with this so called recession, some builders just don’t understand that I don’t have the money they are asking for. They don’t relent on the prices.
So for all desperate investors like me, I want the property prices to go down so that we can purchase our homes to stay in.
Thumbs down to inflation
Probably this should rate a bit higher. I forget the number of times RBI has increased the key rates in the last 1.5 years to contain inflation. It’s my single biggest factor of worry at this time of the year.
If inflation does not reduce, we all are going to have to grow our money much faster; expect good increments and review our financial plans even more closely.
This is the single most important factor that could derail the train in the deep and dark tunnel especially when I think I am towards the end of it.
Some more personal finance wishlist –
Good salary hike
Stop wagging your tongue. Each one of us expects the best hike in the first quarter of each year. And very lucky few get it.
As for me, I work not for the money I get but for the information it provides; because of the challenges it brings in each day; because of the fact that I do a 24 by 7 job and can be woken anytime – what the heck, why am I preaching here – Santa, I work for money so give me a good hike as well !!
And please make every soul reading the article happy too by giving them good hikes in their salaries – they have mouths to feed at home; rents to pay; petrol to buy; errr – malls to go to and fine dining bills to be paid.
Good economy around the world
Tough, eh ? But I go nuts hearing that Greece is going to take India’s economy down and sometimes hearing the euro zone crisis will engulf us. So why not ask Santa to make the economy of the whole world wide web healthy and stable, if not tottering.
Whatever happens, I have read that every growing economy goes through 3 phases to boom before it becomes a super power and struggles to maintain its status. India has had two of its phases – the first one was from 1991-2001 when it opened its gates of liberalization and the second one was from 2001 till now. We grew and saw our own fair share of challenges and scams.
The third phase is still awaited and this will be the single and last phase that can extend beyond decades. This is the one I don’t want to miss and I don’t want anyone to miss because it will make us rich.
So I hope Santa gives everyone enough reason and motivation to get onto India’s shining future with hiccups on the way.
What are your personal finance wishlist, dear readers.
Radhey,
First of all Happy New Year to you, your family and all readers.
My personal wishlist is to buy a Personal Accident Policy, i have been putting it on hold for over a year now. Same was the case with term insurance but finally bought one 3 weeks back.
Other wishlist would be to have a good economy around the world and Bull Market once again……..
Rakesh
@Rakesh, Bull market will happen that is for sure Rakesh, its a matter of when is the question.
And when it happens, it will be a big one for sure. buying a personal accident policy should be a one day’s effort so make sure you do it in Jan itself.
Great reading…When i first read A flat or depressed stock market I was shocked but reading the logic made lot of sense.
My personal wish list is to get my papers in order!
@bemoneyaware, Yeah, isn’t that a very boring but important one.
I have kept a password protected excel sheet on my lappy and informed my family members about it.
It talk about all the papers that I want to maintain and where these papers are kept.
Great and simple wishlist – hope you get to it quickly.
Health should be given the utmost importance in my opinion so part of my saving goes to a good health insurance. Health is wealth anyway. Here are some nice articles: http://www.cheapinsurance123.com/health/higher-health-risks-for-the-uninsured.html and http://voices.yahoo.com/why-health-insurance-important-you-5398415.html?cat=5
To be honest, I still don’t have one but my aim for 2012 is to finally have one. I think it would give me a sense of security both health and financial wise. 🙂
Nice job, really nice wishlist.
My wishlist is in similar lines when it comes to equity. I want the market to go sub 8000, I was such a novice to not take advantage of it few years back. So this is my first item in the wishlist.
Need a term insurance of over 50lacs, I only have a couple of whole life.
Last but not the least, want lots of cash as market is depressed.
@Sonny, Great stuff. Keep it going strong.
@Sonny, Even I missed the bus last time. The problem lies in ignoring the market completely when its going down. And thinking that it will go down once for all.
Only after it rebounds, we know what was the lowest market reached and always think it would reach that level again and wait for it to happen.
I would recommend the SIP route with investing more amount when the market is depressed. What do you think?
@Manickkam,
I think I will keep the SIP going in Diversified and Equity funds. But that’s quite not what I was talking about when I was saying making money out of the depressed market.
So many quality stocks are available at huge discounts. That’s where I am putting my money in. Sound and Quality stocks for long term at huge discounts.
@Sonny, That’s right. I just meant timing the market is hard.
I accept that there are many quality stocks available at huge discounts. But we are not sure whether it has reached its bottom yet!
So, Are you going to wait for it to bottom out or invest in it right away as it is already available in discount?
How do you identify whether it has bottomed out?
No one can time the market. If your investment horizon is over 5 years then now is the time to start investing in small lots. Markets may go down further on poor third quarter results and then we can buy more.
If you just wait for market to go down you won’t be able to enter the market at all.
Rakesh
@Rakesh, Exactly Rakesh. No one can really predict the market in the short term or long term.
The two things on my wishlist would be 1) Personal health insurance policy – Have been postponing it for quite some time now. This year almost bought it. Then realized that the premium depends only on the number of members and the age of the primary insured. So I can actually buy it till my next birthday without any imapct on premium!!
2) I wish they allow more investment in PF and EPF. The current maximum limit of 12% of Basic + DA in EPF seems to be too small.
@Pawan Nanda, First of all, thank you for commenting here Pawan sir. It is an honour.
Regards to your health insurance policy, which one did you select ?
As far as EPF was concerned, I was of the understanding that one can actually increase their EPF contribution from monthly salary to a max of some 25% (need to check this figure) of the salary. Are you maxed out already ?
@Radhey Sharma,
Apollo Munich and Max Bupa are the best. The LIC one is a total waste. Here is a useful tip for people who are already covered by their employer but are looking to buy the additional personal health insurance. You don’t need to cover your kids just yet since they will be already covered under your employer’s scheme. This will keep your premium down.
@Radhey, 12.5% is still the max as far as I know. Is there anybody who is putting 25% in VPF?
@Pawan Nanda, Need to check on the VPF and will revert. Might be worth to check with your employer as well and ask them to point to the section of the ruling so that we can all then check 🙂
Apollo Minich and Max Bupa are really good, no doubt. I think Star Health is quite good as well and slightly cheaper than the above 2. I will most probably be going for that.
On your point about not covering kids, it will reduce the premium but only slightly.
Actually I am going nuts over health insurance for my parents.
I finally zeroed down on Star Health’s Red Carpet policy.
@Radhey Sharma,
I had done the research on health insurance about 6 months back but if I remember correctly – Star did not offer life time renewal. These should be primary considerations when choosing health insurance
1) Life time renewal or age limited renewal
2) Coverage of pre-existing diseases
3) Exclusions
4) Cost
5) Network coverage
@Pawan Nanda, You are right Pawan sir.
Star does not offer lifetime renewal. I sometimes wonder whats the best health insurance policy but with so many options, it is tough to make a choice.
May be I could write on it sometime…
@Radhey Sharma,
My memory is still good 🙂 Never choose an age limited health insurance. The numbers of years that you live beyond that limit is when you will need that insurance most. That bloke Murphy has established this fact long back.
The VPF goes to the same account as the EPF. The companies where the PF is managed by a trust, the transfer is a breeze. I have done it myself and there were no issues at all.
@Pawan Nanda, There have been varied experiences on this by different people. As you rightly say, its been easy for you; for others probably a nightmare.
Never doubted your memory 🙂
Investing in VPF is not a bad option but then it make sense only if we are ready to stick to the same employer for atleast 5 years. Moreover when we switch jobs the pain of transferring the EPF to new employer is already done. It took me over a year to get my EPF transferred, had to follow-up over 100 times to get it done.
As for health policy, i have one with National Insurance and am satisfied with it.
Rakesh
@Rakesh, Why do you say “only if we are ready to stick to the same employer for atleast 5 years” ?
The pains of transferring is so much, I know friends who had to use RTI to get this done !
Radhey,
Did you say RTI????????
RTI is a very scary thing. Not sure whether you have read about people who had used RTI on Govt./Private sector. Most of them were either threatened, some even murdered.
I know people who had been murdered when they used an RTI against a builder.
Why would a common man want to take such risks?
Rakesh
@Rakesh, It isn’t as scary as you think as long as you use it against the right people. Now if you are wanting to do RTI against builders and mafia, you better write your will; otherwise to know the balance in your EPF account and to check withdrawal progress, no one is going to shoot you.
@Rakesh, Never knew it could get so scary to just seek the information!
BTW, I too am currently waiting for my EPF transfer for a long time. Any ideas how to use RTI for this purpose?
@Jaswinder Singh, I will dig out the information and let you now Jas.
I think we can check EPF balance online.
http://www.epfindia.com/MembBal.html
Never knew we could have RTI to check EPF transfer and withdrawal progress. We know how our Govt. works and how corrupt it is. Never know when another scam would come out.
Rakesh
@Rakesh, I will write sometime on how to use RTI to get the EPF withdrawal done.
@Rakesh, Glad to know that the online service is operational again! I tried it today and it seems that the Pune PF office has records updated only till March 2010 🙁
BTW, I hope everyone is also aware of the other service provided by the PF office whereby we can send an SMS to get updates about our PF balance.
My concern here is that we still don’t have a way to verify the status of our PF transfer online. Transfers are a painfully slow process and it seems to be absolutely opaque.
@Jaswinder Singh, Don’t forget that there are agents who thwart your process of gathering information to such an extent that you are then forced to go through them. I know employers who have used agents to do the mass transfer of EPFs for employees.
The agents work hand in hand with the govt babus. Hence RTI !!
Jaswinder,
Yes PF transfer is a pain. I had to follow-up many times with both my employers to check the status. Finally after one year it got transferred. After that whenever i switched jobs i encashed my PF. I never trust Govt. officials.
Rakesh
@Rakesh, What did you do with the encashed EPF ?
@Rakesh, I understand what you mean when you say you don’t trust Govt officials; but we need to remember a fact that it’s an offence to encash PF unless you are really out of job. If you are switching from one company to another, by law you are not allowed to encash the PF amount. In fact you have to submit a written undertaking while submitting the application to encash/withdraw PF that you are no longer in employment (of course, there are exceptions such as Marriage or house construction).
There’s a real risk in trying to plan a workaround with laws since you are good only as long as your account is not scrutinized – and with computerization and automation of accounts, one can never be sure when the dreaded notice arrives.
@Jaswinder Singh, I had for a moment forgotten about this rule that EPF should not be encashed but then haven’t heard of anyone being held for it as well. I personally have done it some years back.
Radhey,
I invested the encashed EPF in FD. Its still growing….
Rakesh
Jaswinder,
For EPF withdrawal i don’t think we need to give an undertaking. I had just filled the form to encash my PF. There could be several reasons for withdrawing PF. You starting your own business. Other good example is you get an opportunity to work overseas for 5 years, you won’t want your pf account to be inactive, so it would be better to encash it.
I do not know what rules the PF authorities have to make an account inactive(after how many years).
There was a surplus in PF account that’s the reason they increase the rate for the last year.
Rakesh
Radhey,
As for the first part of the question, “only if we are ready to stick to the same employer for atleast 5 years ?”
What i meant was it would make sense to add more to VPF if we are to work with the same employer for atleast 5 years, works well for Govt. employees. Will not benefit software professionals who switch jobs every 1-2 years then they would have to keep transferring the EPF now and then.
Rakesh
@Rakesh, Ok got it Rakesh.
@Pawan Nanda, Yes.. That’s quite right on the premium side. But the coverage starts right from when you get the policy. Also, don’t you need the coverage right away? Its better to take the health insurance right away.
Similar to EPF, you have NPS and PPF which have similar debt funds in place to give a good lock-in period and also no need of transfer when you switch jobs.
Great wish list Radhey. It would be very very nice if the first and last points go together :).
I and many here will be very happy for the second point. (Why builders don’t understand first home buyers while booking profits 🙁 )…… My list is still in progress and would be ready in few hours. I did some good personal reforms in 2011, so it’s time to go next.
@Chirag, Do let us know what your final wishlist is Chirag.
@Radhey Sharma, @Radhey Sharma, Hey Radhey, sry I was busy last few weeks so couldn’t post the list, will post here soon…….. You know I was about to ask you to do an article about Mutual Funds to invest in India 2012…….. You were faster than I ask…… and also good to see that you have done different articles based on classification.
@Chirag, Welcome back Chirag. Glad I met your expectations.
I will do more MF articles this month for tax saving, balanced and debt classifications.
@Radhey Sharma, Thanks Radhey. I will be waiting for the article on debt funds.
My wish list is the same as yours and few general which continues every year.
Below is the main action list to do in 2012.
Investment:
Finalize a Medical Insurance policy (floater) and purchase the same. (Priority: Medium)
Introduce debt funds in medium term portfolio. (Priority: High)
Changes in tax investment if DTC comes into act. (Priority: Low, not sure it would happen this year)
Research on realty and accordingly manage investment to buy home and finalize on time. (Priority: Medium)
Expense:
Get a new mobile with basic technology I use most. (Priority: High, a techy should use good technology. Current mobile is going to complete 2 yrs within few days, my family waiting to use it.)
Car (Priority: Very Low, this is on my list since 2+ yrs, this year there are some reasons to get it. I feel it may continue to be in the next year’s list too, let’s see.)
@Chirag, Very very meticulous. It is very nice to see that you have assigned priorities also.
I would think the health insurance policy is high priority as well, no ?
I intend to write about that in this month.
I also intend to write about tax saving instruments with DTC in mind in this month.
Mobile…hmmm…
Buy a home is awesome – your goals for 2012 are loaded man !
Which city are you from and what do you do Chirag ?
@Radhey Sharma, Hey Radhey, it seems I was somewhat unclear and so the question on last line arised, who is this big guy :)…… wants to do so many things in a year.
I am a soft engg from Bangalore (basically from Gujarat).
Here is my clarification, let me know your genuine openion, still year is starting and correction can be done :).
Priority – High: 3 months, Medium: 6-8 months, Low: before year ends, Very Low – If all points are taken care, then.
As I have company health insurance policy, I am not in hurry and put it as medium.
I am mostly not buying home this year (though not to take long time), need to finalize time to buy. Accordingly make myself ready for that and increase investment. Actually, so many thoughts here holding on as I may or may not shift to Pune. Also was checking on residencial lands. Whatever, I should be clear on everything very soon. Not sure if I am clear, hope you understood.
Mobile – I have the budget ready for this 🙂 as though earlier. I thought of 10-12K and that is fine. Many times I need to reply/check emails immediately and other few things leading me to this.
Let’s load the gun, will fire whatever we can :)…. Trying is good, always everything doesn’t happen, so no must for me.
@Chirag, PERFECT sir. Get going. I like your style ! Keep it up.
Avoid residential lands as a first time investment – buy a house to stay in.
@Radhey Sharma, Thanks so much for reading everyone’s comments here so interestingly and replying too. That made me commenting this much (about me) here.
I will be here to read your articles on Health Insurance policy and DTC, it’s aligning to my list and will help me, really great. (One more thing I got from news is, some good changes are going to happen (this year) in health insurance like no age limit and life time renewal. Seems they are thinking on it. Good.)
@Chirag, A forced no age limit and life time renewal is AMAZING to have from all health insurance companies.
Where is the news at Chirag ?
@Radhey Sharma, Thanks Radhey, I will concentrate on buying a house to stay in. Radhey you are the sir here and we are your students.
@Radhey Sharma, I have seen the news (related to health insurance policy change) on CNBC Awaaz, if I find somewhere online will post the link.
Your wishlist is super Radhey! 🙂
Couple of them..rather almost all of them must be universal (almost) wishes.
Mine is – to stop my ULIP & get one term insurnace; to get one health insurance (I’m confused among two dozen companies so its still pending,any suggestions Radhey?); to start investing in mutual funds through SIP. PPF is already on its way.
Salary hike is pending since Nov’11. Expecting it in this week.
If RBI lower the interest rates & the builders offer reasonable prices then to look for a property in Pune.
May God hold/slowdown the inflation..because our Govt. is least interested to work on it.
@Sudip D, Salary hike in new year…that’s a great start!!
@Jaswinder Singh, Yeah! Hope to get a good percentage hike.
@Sudip D, On health insurance, see Pawan’s comment above on which are the best.
I like your milestones. Please do tell us when you stop your ULIP and take the term insurance.
@Radhey Sharma, Thanks Radhey for referring the post. I will compare the 2 companies on the mentioned parameters & then finalize 1.
Really wish to achieve the milestones asap. 🙂
Will definitely let you know once I stop the ULIP & take the term insurnace. Radhey, as the year end is nearing so should I wait till Mar/Apr 2012 to end my ULIP (concern-tax calculation) or is it ok to go ahead & stop it this month only & take a term insurance in its place?
Reply awaited.
The first item that I wish to cover ASAP is the recommendations of my financial plan. This item in itself consists of several action-items and will be a real starter for my financial wishlist of this year.
Radhey,
I don’t think your first wish will be fulfilled.
” A flat or depressed stock market”
LIC to invest $37bn in FY12
State-run insurer Life Insurance Corp of India expects to invest 1.9
trillion rupees in the fiscal year ending March 2012, acting chairman
D.K. Mehrotra told reporters.
LIC, which is a major investor in India’s capital markets, has already invested 1.25 trillion rupees between April to November, he said.
Rakesh
@Rakesh, LIC has this nice habit of doing this everytime ! But I am happy to let go of this wishlist honestly. It’s not that I would not like the stock market to zoom up.
Thanks for this information Rakesh. Keep contributing.
@Radhey Sharma, Yeah.. We cannot the predict the market anytime.
@Rakesh, If you see, The major reason for this is the investors of ULIPs. LIC has to invest in market anyway this money.
I think most/some of them would discontinue SIP of ULIPs/MFs during recession and this will happen when the global scenario is bad. – Meaning when Europe goes into recession.
@Manickkam,
Yes, that’s right the main investments is through the premium of ULIPs.
Still there a lot of people who keep buying these policies without any knowledge. Infact if you notice, Jan & Feb are business months for Insurance companies. Lot of employees will buy these policies now just to complete their investments in 80C.
Rakesh
@Rakesh, I don’t think employees BUY these policies – it is SOLD to them !
@Radhey Sharma, Can’t agree more with this: “I don’t think employees BUY these policies – it is SOLD to them!”.
I myself have been a victim of such policies due to poor knowledge, insufficient learning opportunities and scarcity of time to go into the details and the fine prints.
When the knowledge was acquired and websites were scanned for comparisons and further information, the problem of buying “incorrect” policies manifested in another form: I tried to ‘assist’ some needy people and indirectly help them financially by buying insurance policies from them – while being well aware of the fact that such non-term policies were not the best ones to go for.
Life does teaches a lot of lessons…and we better learn them fast!
@Radhey,
I agree, the policies are SOLD. I was sold a couple of such policies few years back. But when my knowledge of financial planning grew over the years (Thanks to FP bloggers like you) I cancelled them.
Rakesh