Whenever Amit Acharya reviews his portfolio, he regrets the investment made on his father’s advice. The manager of Raipur-based MNC says, “The life insurance plan they offer will hardly give 6% returns.” Acharya bought his first policy in 2000, when he was 29, and added four more schemes in subsequent years as his income increased. Acharya bought his first policy in 2000, when he was 29, and added four more schemes in subsequent years as his income increased. He invests Rs 1.5 lakh in five low-income policies every year, as more lucrative investment opportunities pass through him. “This was a mistake that cannot be undone. I have to pay the premium for the entire term.
In Delhi, 43-year-old Ashok Vishwakarma is ruining his decision to join a plan that promised a clean amount to respond to surveys. Vishwakarma joined Speak Asia in February 2011, just two months before the scam was busted. The Rs. 33,000 he had spent in the survey scheme are now as good as gone. “I was not greedy and had put money in a fixed deposit, it would have been over Rs 50,000 by now,” he stated.
Investment options are also influenced by personal experiences. Prakriti Ojha of Mumbai stayed away from market-related products after the loss in missold Ulip. She now invests only in PPF and traditional insurance policies. However, she may regret her decision to avoid equity in later years.
This week’s cover story looks at 10 such investment mistakes that youngsters may regret in later years. Investing in insurance, choosing the wrong investment vehicle, or investing in questionable schemes are just three of these 10 mistakes. Waiting too long to invest, dipping into retirement savings, and spending on unnecessary items are other common mistakes that young people make. In the following pages, we tell you the way not to make mistakes that you will regret 15-20 years from now.
Investment delay until income is highFor younger earners, spending is more important than saving. A study of 2,000 professionals by Arthayantra, a Hyderabad-based financial planning firm, found that more than 90% do not start planning for retirement in the first five years of their careers. Even by the 10th year, less than 20% will have retirement plans. The consequences of this delay are mentally weak. What saves over the next 25–30 years is the first few years of starting large-scale career burgeons, although the person saves more in later years as their income increases. If an investor begins a SIP of Rs 5,000 in an equity fund that provides 12% returns, he will accumulate Rs 1.77 crore in 30 years. But if he waits till 28 to start out investing, his corpus is going to be smaller by Rs 56 lakh. Even if he enhances his savings by 10% per annum, what he puts away within the first 10 years will account for nearly 24% of the entire retirement corpus. The The longer the delay, the smaller is that the corpus.
Many young learners do not start investing because they have a low income. This is a downfall. For a young investor, the shortness of investment is more than what is available in the long run, which is available for the money to grow. The magic of compounding ensures that even a small amount grows into a spectacular amount over a long period. Investment can be increased in the coming years as income increases.
Take very little risk with investment
Although there is irrefutable empirical evidence that equities can deliver high returns over the long term, small investors continue to rely heavily on fixed-income investments. The ratio of total household savings is very low.
Amazingly, even young investors who are in a position to invest in stocks opt for the protection of bank deposits and small savings schemes. This benefit to equity can prove to be harmful in the long run. Even if you spend Rs 40,000 on household spending today, 6% of inflation will increase up to Rs 72,000 a month by 2026.
By 2031, the requirement will increase to Rs 96,000 and by 2036, it will be Rs 1.28 lakh per month. This is why risky investors should consider allocating at least 10–15% of their portfolio to equities. “To maintain your lifestyle for many years, your money needs to grow at a faster clip than the inflation rate. Hemant Rustagi, CEO, Wiseinvestor Advisors, states that this entire yield savings cannot be done by parking in low-yield fixed deposits.
Retirement housing is not just an ‘old age home’
It wasn’t quite a Wembley Arena and his guitar would go off at times, but Raghav Prabhu fulfilled his dream last month before an appreciative audience of 50-odd neighbors in his senior housing complex. Now he is thinking of starting a band.
Growing up in the 1960s, Prabhu, a Beatles fan, deepens his passion for music to focus on solving Igor Irodov’s physics problems. An engineering job, then a management position, and family never left him time for himself until he retired in 2011 and went into a retirement nest with his wife. When campus management hired a guitar trainer, Prabhu was the first to join, and for three years on he can play “tolerably well”.
Prabhu and thousands of other senior citizens like him are choosing to play the final innings of life on their terms, and a host of serviced housing projects enabling them to live together in a safe, comfortable and hassle-free environment with dignity.
“During our youth and middle age, we focused careers and bringing up children,” 67-year-old Kamini Bhandari, who retired as a senior manager from TCS and a seniors-only housing project at Bhiwadi near Delhi at Ashiana Utsav. “Right away, the time has come for us to live for ourselves.”
Modern senior housing is a world far removed from ‘old-fashioned homes’ where elders went to live because they were careless and too ill to take care of their selves, or were unwanted by their children. Far from being a coworker, it is a lifestyle statement, as evident by the mix of residents. For example, Utsav includes many doctors, engineers, and teachers, as well as many retired officers of the IAS, IPS, and the armed forces.
Another Utsav resident, Professor Y P Khanna said, “We came here to pursue our lives to the fullest and do whatever we wanted to do with all of us.”
Realizing their customers’ expectations, management is incorporating recreational facilities, including hobby classes. “We are retired, not from life, but all our consumable professional routines,” said Amita Shaw, who retired as the director of Bal Bhavan at 63 and as the head of the dance and singing club at Utsav. “Here we use our experience to complete our daily lives.”
Sometimes, being in your peer group also means new beginnings. For example, two residents found their soulmates in each other in their late 60s at the Pune property.
Functional health services with doctors, nursing staff, and ambulances are only a common facility for senior citizens and most have tied up with nearby hospitals for cashless treatment of residents in emergencies. Some also have care homes for residents with Alzheimer’s, dementia, Parkinson’s, arthritis, osteoporosis, etc.
The only accommodation for senior citizens – for people over the age of 55 – flew into India about 15 years ago and is growing rapidly. There are approximately 3,600 occupied homes in 15-odd projects across the country, and more than 5,000 are being built in 20 new projects. While the Paranjape Group in Pune, the Mantri Group in Bangalore, and Ashiana Housing in Delhi-NCR are some of the established names, Max Group and Tata Housing have also started projects in Dehradun and Bengaluru respectively. Senior housing is generally developed in the suburbs to keep costs down. Although it is part of a larger township, entry is restricted for residents. Leasing is an option, but most customers buy. Prices range from Rs 23 lakh for a one-bedroom unit to Rs 58 lakh for a three-bedroom unit, in NCR; 25 lakhs to Rs 59 lakh in Pune; Rs 39 lakh to Rs 90 lakh in Bengaluru; Rs 30 lakh to Rs 70 lakh rupees in Chennai and Rs 25 lakh to Rs 1.18 crores in Coimbatore. Now, Lavasa is also offering senior homes ranging from Rs 45 lakh to Rs 1.45 crore.
Max India offers units in its Antara Senior Living project in Dehradun at rates ranging from Rs 1.7 crore for a one-bedroom unit to Rs 7 crore for a three-bedroom unit with staff accommodation on a lifetime lease model. The lease is renewable by the heirs of the original residents, and when they can move out at the market price, new buyers have to be approved by management.
In addition to house cleaning, mopping, and housekeeping, maintenance of common areas and health clinics are covered in monthly fees ranging from Rs 2,500 for the smallest unit in Ashiana to Rs 70,000 for top-end accommodation in Antara. Paranjape Group collects Rs 8 lakhs instead of the monthly fees.
Though, all senior housing units come with kitchens, the managements also run canteens.
Shashank Paranjape, MD of Paranjape Schemes, said he aims to keep the townspeople happy and engaged. The group has also started training event managers for senior living homes. “In addition to real estate, hospitality, and nursing, a senior living enterprise requires community building with care and passion,” Paranjape said. “Housing for seniors is a lot more than a real estate business,” said Sushil Mantri, CMD of Bengaluru-based Mantri Developers, which runs the senior home project, Primus Eden. The company is using its knowledge and experience in the hospitality sector to meet the needs of its elderly customers. “The hospitality business only offers catering and accommodation for a short time. In retirement communities, you get a plethora of services and they are not limited to just catering. Furthermore, the qualification and training of employees are largely different from the hospitality sector,” said Colonel (retired) A Sridhar, who started the Covai Property Center in Coimbatore in 2001.
India has 7.6 million senior citizens – well over the UK’s population of 6.5 crore – and is expected to reach 17.3 crores by 2025. Providing housing that addresses the special needs of the elderly will be a major challenge.
Five basic credit myths debunked
Many credit cards are good – there is no doubt that credit cards are convenient and can almost universally be used to transact and pay for products and services. However, it should be understood that credit cards should be for utility and not for whims. People often go for as many competing credit cards as they can, only because banks are willing to give it. It is important to understand that a credit card is a form of unsecured debt and the more you have, the more you are exposed to easy credit money.This means that the perception of risk increases with you about banks and other financial institutions as you access a large number of unsecured funds. It is advisable to always have a limited number of cards. If you own a business, always try to separate your business and personal credit card. When you check your credit score, you are penalized – it is often believed that if you check your credit score often, the credit bureau in question would start penalizing you by lowering your credit score. is. However, this is not true. When you inquire about your credit score, it is called a soft inquiry and does not affect your scoreline.
However, when other financial institutions tap into the credit bureaus for your credit information, it is known as a difficult inquiry and it affects your credit score. For this reason, it is incomprehensible not to apply for a lot of credit cards as well as to periodically check your credit score so that everything can be ensured.
If you have no history, it is impossible to get credit – the first time you walked, and the first time you ran. Likewise, there will always be the first time that you want credit. It can be a credit card or a loan, but many believe it is impossible to get credit without a history. In all likelihood you would be considered a ‘thin file borrower’, essentially someone with little or no credit history.
Loan terms may not be favorable in this case and similarly, the credit limit on a card can be set low, but first-time borrowers can get credit as well. The best way to create a credit profile is to start with a credit card, where you pay for every transaction made diligently.
Education, religion, address matters – aspects like your education, religion, and address do not matter on your credit. Most credit applications do not capture your education if all are beyond being undergraduate, postgraduate. Similarly, religion does not matter and nothing in the financial world is based on your faith.
When it comes to addresses, some banks have watch list addresses due to legal provisions, but addresses have no role in deciding the terms of credit. It is different than your bank will always have to confirm your address to ensure that you are an actual borrower, but where you live do not determine the fate of your credit.
You cannot negotiate with your bank – Many people will be surprised to learn that it is very possible to negotiate with your bank. If you are looking for a loan, business, personal, or home, you can always negotiate with your bank for a better rate of reduction in fees. Similarly, if you are applying for a credit card, you can negotiate with the bank to give you a better deal.
Negotiations proceed from the stage where you are only applying for a loan. In cases where you are having difficulty repaying your loan, reach out to your bank, and negotiate how to resolve your situation. Banks also want to make sure that they want to withdraw the money they have lent and helped you pay through the negotiated terms and conditions.
Five cigarettes a day would cost you more than Rs 1 crore by the time you hit 60
Non-Financial Department of Smokers
Apart from a monetary loss of over one crore rupees, a smoker will also pay this price.
Family is suffering
The biggest cost is the health of your family. Studies show that children who smoke or are exposed to tobacco smoke indoors are more likely to fall ill.
Smokers have a short life. According to an estimate, every cigarette you smoke reduces your life by about 12 minutes. Five cigarettes shorten your life by one hour.
Poor health means that you can overtake healthy competitors in the workplace. A company may want to promote an energetic person rather than someone who calls the sick very often.
Quality of Life
Poor health can curb your quality of life to a great extent, which prevents you from doing rigorous physical activities.
How should it be abandoned
Medical science provides many smoking options. Here’s how they work and how much they cost.
Nicotine-based chewing gum: Rs 50-3,000
When chewed, it releases nicotine, which is absorbed in the bloodstream and stems from the urge to smoke.
Nicotine patch: Rs 600
When placed on the skin, they release nicotine into the bloodstream, eliminating withdrawal symptoms.
Ayurvedic Formula: Rs 550
Cleans the body of toxins and improves blood circulation and digestion, disrupting the need for smoking.
Bupropion hydrochloride tablets: Rs 150
This OTC drug affects neurotransmitters in the brain and urges to smoke.
E-cigarette: Rs 500-800
Evaporate a liquid containing nicotine, which can be inhaled. Simulate the action of smoking cigarettes as well.
All you should know about making will
There is an old saying: where there is a will, there is away. In the absence of a properly executed Will, however, further methods can sometimes be not only too much but too complex. Ask the Birla clan, Ranbaxy family, Ambani brothers, or even your neighborhood uncle. They will all agree that the road to inheritance on the world stage is usually paved with sick will stories. Nevertheless, in India at least, ‘Will planning’ is rarely seen as a part of financial management. But before knowing the will or the importance of its planning, let’s first understand what it is.
What is will
It is a legal document that gives the names of such persons/persons who will receive the property and possessions of a person after his/her death. The document may be canceled, modified, or replaced by the person executing it at any point during his/her lifetime.
Importance of Will Planning
Will planning is important because the document always serves as a list of properties left behind by the deceased. A clear and well-written Will helps to avoid any kind of estrangement between natural heirs. And, if a person wants to distribute his/her wealth to someone other than natural heirs, the Will holds paramount importance.
Who can make a Will?
Any person who has a silent mind and who is not a minor can acquire his/her property with the help of Will. Those who are blind or deaf or dumb can make a Will if they understand the results of their actions as well as the legal consequences. A person who is normally insane can also make a Will, but only when he/she has a sound mind. However, if a person does not know what he is doing, he cannot possibly create a Will in such a state of mind.
A will can be executed on plain paper and remains completely valuable even if it is unregistered, that is, it is not mandatory under the law to register it. However, this does not prevent a person from simply registering the same to eliminate any doubts raised on its authenticity. If someone wishes that someone’s Will to be registered, one has to visit the sub-registrar’s office with the witnesses. The names of the sub-registrars for various districts are to be found out and the person from the concerned office is to find out who will help in registering it.
Once registered, the Will becomes strong legal proof. It must be in writing, stating that the person executing it is made up of their own free will and is in the voice of the mind. The Will must be signed by its executor and verified by at least two witnesses. Also, no stamp duty is payable on the Will, so there is no need to write it on the stamp paper.
Types of willsThere are two types of wills: privileged and unprivileged. The privileged Will is an informal Will appointed by soldiers and airmen in expeditions or actual warfare, as well as by mariners. All other Wills are called unplugged Wills. The former can be done either in writing or by oral declaration and on short notice by individuals who are at risk of their lives, while the latter is required to follow the formalities.
The mark or signature of the testator – the person making the Will – is required for an unexpected Will. In some cases, the testament may be signed by another person in the presence of the testator, who may be physically unfit to do so. Some states also allow individuals other than the testator to sign a Will, but this can only be done with the will or consent of the testator. However, it will always be appropriate to have the Will signed by the testator to avoid any dispute later. Each unsolicited Will must be verified by at least two witnesses who have seen the examiner or his agent. Each witness must sign the Will in the presence of the testator. But one witness doesn’t need to sign in the presence of another witness/witnesses.
Will’s safe custody
The Indian Registration Act, 1908 provides for safe custody in a will. The sealed cover in the name of the testator or his agent can be deposited with any registrar for safe custody.
The legal side of witnesses
A Will or beneficiary should not be a witness under a will for a will.
Cancellation of Will
The cancellation of a Will can be voluntary or involuntary. An involuntary repeal results from the operation of law. Any Will made by a testator is void if he/she married. The representation is not only the first marriage of the examinee but any later. A Will can be made several times as a seeker, but only the last Will, which is executed before the death of the testator, is enforceable.
Government simplifies contribution and withdrawal rules for Atal Pension Yojana
Intending to broaden the reach of the Atal Pension Yojana (APY) among informal sector workers, the government today said that it has revised the flagship program to give customers the option to contribute on a monthly, quarterly, or half-yearly basis. “To increase the acceptability of the scheme among informal sector workers, the government has revised the APY. Individual customers will have the option to contribute on a monthly, quarterly, or half-yearly basis”. The Finance Ministry said in a statement.
APY was launched on 9 May 2015 in Kolkata by Prime Minister Narendra Modi. Under this scheme, subscribers, who should be between 18-40 years of age, will get a fixed pension of Rs 1,000 to Rs 5,000 after attaining 60 years of age per month, it depends on the contribution which varies in the age of joining.
The statement further said that there has been a lot of change in the customer’s favor by discontinuing the payment of contribution.
“The account will not be deactivated and will remain closed until the account balance with self-contributing minus the government co-contribution becomes zero due to account maintenance charges cuts,” he said. The Ministry further stated that the penalty on delayed payment has also been increased to Rs 1 per month for a contribution of Rs 100 for each delayed monthly payment instead of separate slabs.
Similarly, premature exit from the plan was not allowed before the age of sixty, except in exceptional circumstances, the statement stated, “Now the amended provision allows the customer to voluntarily opt-out with conditions. ”
Subscriber will be refunded only the contribution he has made to APY, along with the actual interest earned on his contribution. (PTI)
Major budget takeaways you need to know!
Insurance for senior citizens—is it worth it?
When Mr. Verma was 35, he was very organized with his finances and investments. He had a wife and a young son to support. He bought various types of insurance including life plans and health plans.
Fast forward today. As a 67-year-old retired grandfather, Mr. Verma is unsure what to do with his retirement money. Should he get some insurance plans? Or, should he take some fixed deposits in his name? Or maybe invest in his granddaughter’s education? His options are many but he cannot make the right decision.