Monday, December 30, 2013


 Most people have good intentions about saving for goals. But few know when they should start and how much they should save. Everyone understands, at some level, the need to save for long-term goals. Buying a house, preparing for retirement, or sending a child to college are goals that we know we have to save for. Most of us are also saving in some or other way, but in a goalless and haphazard manner. But how much difference does it make whether we start saving now versus saving later?

Sometimes it might seem that the expenses of today make it too difficult to start saving for tomorrow. It’s easy to think that you will begin to save for goals and responsibilities when you reach a more comfortable income level, but the longer you put it off, the harder it will be to accumulate the amount you need.
The rewards of starting to save early far outweigh the cost of waiting. By contributing even small amounts each month, you may be able to amass a great deal over the long term. One helpful method is to allocate a specific amount or percentage of your salary every month and to pay yourself as though saving for particular goal were a required expense.

Here’s a hypothetical example of the cost of waiting--

-There were 3 friends, Mr.Late, Mr.Later and Mr.Right Now, all aged 30 and all wanted to know about retirement savings plan.
- They all approached a Financial Advisor and only one advice, to start investing now, after all planning and charts explanations
- Mr.Late Argued  "I have just started to enjoy life ,I will Start investing when I am 40 and will invest upto age 60"-and he genuinly started at age 40
- Mr.Later said, "Boss I will enjoy till age 35 and start investing  from that year  till age 60"-and he also started investing from age 35
- Mr.Right Now said, "O.K., I will start investing from today, but invest for only 10 yrs. and enjoy and spend later"-So he did so immediately
- All invested Rs.60000 p.a. for different terms
- Mr.Late started investing at age 40, invested Rs.60000 p.a. for 20 yrs.till age 60,
  Mr.Later started investing at age 35, invested Rs.60000 p.a. for 25 yrs.till age 60
  Mr.Right Now started investing immediately, Invested Rs.60000 p.a. only for 10 yrs. till age 40       and let his investments grow till age 60.
-Once incidently all three met at a common party at age 40 ,they just came to discuss about there investments and where satisfied with the Financial Advisor, but Mr. Right Now had Finished his need of Investment for Retirement and said “now my Savings amount has ended for retirement planning and I can spend more”





3-Mr.Right Now

Invested Amt.




Maturity Amt.




Conclusion-Assuming all got 10% p.a. returns on their investments Mr.Right Now Invested the Least amount but got the Best Amount and that too after investing for comparatively shorter period.

*** DISCLAIMAR-This hypothetical example of mathematical compounding is used for illustrative purposes only and does not represent the performance of any specific investment. Rates of return will vary over time, particularly for long-term investments. Investments offering the potential for higher rates of return involve a higher degree of investment risk. Taxes, inflation, and fees were not considered. Actual results may vary. Total Maturity Amt. assumed returns @ 10% p.a.

This example makes a strong case for an early start so that you can take advantage of the power of compounding. Your contributions have the potential to earn interest, and so does your reinvested interest. This is a good example of letting your money work for you.

If you have trouble saving money on a regular basis, you might try savings strategies that take money directly from your paycheck or salary account.You could also try to increase your contribution level by 1% or more each year as your salary grows-called growing savings with growing salary model. But have to start RIGHT NOW.

Regardless of the method you choose, it’s extremely important to start saving now, rather than later. Even small amounts can help you greatly in the future.

I am still learning and reading a lot, but one of the first books I was required to buy was on “the time value of money”. The effect of earning compounding interest is fairly non-intuitive for most people, so it’s one of the first concepts that’s emphasized when you begin studying financial planning. Few people can do compound interest calculations in their heads, and many don’t even realize that over the years, you earn interest on previously-earned interest.

It's not like the power of compounding is rocket science, yet so few people understand how powerful it can be … assuming you can give it sufficient time to work(as detailed in above example). If you're older when you start saving, compounding won't be able to do as much of the work for you, and you'll need to do more yourself. That means investing a larger portion of (your) paycheck each month.

As educators, we're partly to blame for the information gap on things like the importance of starting early. We need to do a better job getting the word out.

Often we’re told that we have to suffer now — give up what we want — in order to succeed later, that in order to save we must sacrifice. Give up instant gratification to get delayed gratification.

But you can do both.  

For years, I was confused about this, as I read books and websites that sent me two different messages:
  1.  1.Pleasure later. The first message was that in order to be successful, in order to build wealth, you have to delay gratification. You can’t have instant gratification and be successful.
2.Pleasure now. The second message was usually from other sources on happiness, but sometimes from the same source: enjoy life now, while you can, because it’s short and you never know when your last day will come. Live every day like it’s your last.
Trouble is, I agree with both messages. Live frugally and simply! But also enjoy life!
That’s because I’ve reconciled the two philosophies into one: Live life now and enjoy it to the fullest — without destroying your future. The key to doing that? Find ways to enjoy life completely, utterly, to the fullest … that don’t cost your future very much.
Always fund your life goals account first (I call this as Life Goal account-a different view, a different expense head to be created). Once you've maxed out your Life Goals contribution in a given year, then go wild. Go ahead and buy that 70-inch flat-screen TV or whatever toys you've had your eye on, but do it after you've funded your Life Goals account. In addition, try to cut back on the kinds of major purchases that put you in debt.

It is critical to educate yourself. There are plenty of excellent resources on Life Goals Account investing for those willing to make the effort. Unfortunately, there is also plenty of bad advice out there.

Today's young singles are spending more and saving less than their married counterparts. Are they digging themselves a hole with no bottom or can a shift in the notion of how they spend, not why they spend, keep them in good financial health for the future?
A penny saved is a penny earned, but a penny saved today is a penny earning more. It is important to start saving as soon as possible for events such as retirement due to the impact of compounding. If you start saving now you will need to save considerably less than if you wait a few years.(I suggest take a cutting of my above illustrated example and put it where you see daily, which will remind you of your Life Goals and also concept of Right Now…..

I would like to thank Scott Below, chair and associate professor in the Department of Finance at East Carolina University in Greenville, N.C ,from whose notes  I have learned some things and even picked matter from some of his interviews.


Monday, December 23, 2013


Do you want to produce a lot of wealth?
Do you want to get extremely “RICH”? 

I can bet on this one, your answer is YES. The next question to ask is how does one produce wealth The answer is, you can only produce wealth with help of wealth creating assets. If I ask where would you like to invest, your mind will think of products like PPF, mutual funds, stock market, gold, silver,insurance policies, Bank FD, ETF's etc etc (There are many options that will come in your mind).

But which wealth creating asset you generally forget to invest in?

As an investor you forget to invest in YOU. Remember you are the strongest wealth creating asset of your life. Yes, you are the one who has all the power, you are the one who has immense potential in you, you are the one who is unique and special, you are one who can move the world upside down. Currently you may be carrying your body like, a temple with no idol inside to worship. Enlighten the idol within.


What is that, RICH are doing and I am not?

 Below is the List, which is sure shot way to be RICH FOR LIFETIME and with peace of mind :

- Set goals, set purpose & vision in life, and define & say your intent in whatever you are doing, to    yourself.
- Be Organised, set a system, process-you are designer of your life
- Read-Update and upgrade your knowledge regularly
- Take care of your health-Keep fit
- Be ready to Fail-Actually there is nothing like failure, it’s just another life experience
- Always ask help of best to achieve the best, for the things you cannot do by yourself
- Create surrounding accordingly
- Evaluate and re-evaluate regularly
- Understand and Change with times
- Last but not the least……BELIEVE IN YOURSELF and stick to above points

Some may be thinking,why a Financial Consultant is writing on sort of Spiritual topic for becoming RICH? but actually the answer to anything lies within.....i.e.what one wants with whatever he/she is doing and for that focus ,vision ,purpose and balancing and re-balancing is always required,which requires investment in self.

Today make a commitment to invest in yourself, buy books that can help you grow as a person, participate in programs and workshops that can help you move to the next level in your career, in life. Always choose to invest in yourself. Don't wait for your company to sponsor training programs for you; don't wait for any kind of discount or offers. I have personally invested a lot of money in my own training and development, and still am. If I see something that can help me move to the next level in life, I would invest in that immediately. No second thoughts. And I will continue to invest in myself for the rest of my life.


I saw last interview of Mr. Ratan Tata, where he accepted that nano’s marketing has failed and that we are re-launching it in different way-it requires guts to accept mistake, but what I learned from that is ; he is clear of his intentions, he has evaluated the nano business and market and he is ready to change, which only happens if a person is clear what his Purpose and Vision is and that he is investing in himself even at this stage.

So, please invest in yourself and give yourself time to re-juvinate and evaluate where you as a person are and where is the direction of your Dreams and Needs? Define, evaluate and worship your soul. You are the biggest asset.I know ,it may sound spiritual , but biggest discovery in science lies in the answer of "WHO AM I" and that comes only spiritually.

Investing in yourself is the best investment you will ever make. it will not only improve your life, it will improve the lives of all those around you.

“I was born poor, raised in poverty and watched my parents die that way. I worked hard, eliminated my bad habits, started thinking and doing what the wealthy and successful did. Mostly I stopped blaming others for my lack of wealth. Now I am wealthy, and help others who are in need "-Bill Gates

So has one investment avenue opened??
Is it one of the best investments??
Will it help give guaranteed double returns?? Answer yourself…

Of course this all is for a person who wants to grow,who wants to become rich with peace of mind and focus.

Happy Investing.......

Monday, December 16, 2013

SECRETS REVEALED……Proposed changes in Insurance, No agent will tell you now

Traditional insurance products are set for a makeover from October. While there are some positives with new regulations, insurance agents are mis-selling existing products as a limited time opportunity. LIC agents have an additional incentive of service tax levy to push products before the deadline.

After basic clarity on why to buy Insurance, as promised I hereby present changes which are proposed to be coming since most of existing plans will close. The Insurance Regulatory and Development Authority (IRDA) has agreed to extend the deadline of new product regulations for the life insurance industry to 1 January from 1 October.

IRDA’s new products guidelines—namely linked insurance products regulations and non-linked insurance products regulations—aim to make insurance policies friendlier for customers. However, insurers will have to discontinue highest net asset value guaranteed products and index-linked insurance plans from 1 October. There is no extension of deadline on these products. “As insurers begin to re-file their products and get approval, they will have to start pulling out the existing plans,” said Chowdhury, from IRDA. Although the wait has become longer, the new regulations could make insurance plans more favourable to customers. You need to understand the benefits the new product guideline will bring. Meanwhile, I hereby present actual gazette copy issued by IRDA / Ministry of Finance.(

After the new guidelines are applicable following changes will be seen--

Product classification
The new guidelines have drawn three broad categories: traditional insurance plans, variable insurance plans (VIPs) and unit-linked insurance plans (Ulips).

Traditional plans: These are opaque products and can be divided into pure insurance and insurance-cum-investment products. The current regulations haven’t tinkered with their design.
Variable plansAccording to the guidelines, VIPs will guarantee a certain minimum rate of return, also called the floor rate, at the beginning. Additional benefits could either be pegged to an index, declared upfront, or come in the form of periodic bonuses which will be guaranteed once declared. Like Ulips, VIPs will have to conform to cost caps
UlipsNew rules don’t change Ulips much as most of the changes took place in 2010. Ulips will have to conform to cost caps by observing the maximum reduction in yield. If the limit is breached, the insurer will have to plough back the extra cost.


Minimum cover
IRDA has mandated that the minimum sum assured or death benefit on a life insurance shall not be less than 10 times the annual premium for individuals below 45 years of age. But for policies with tenors of less than 10 years, the sum assured limit has been reduced to five times the annual premium. That said, at any point the death benefit will have to be at least 105% of all premiums paid till date.
EFFECT: This change will be applicable to all insurance companies. This is positive and will bring clarity and transparency.

Higher surrender value
In case of Ulips and VIPs, the maximum surrender charge will be Rs.6,000 in the first year tapering off to Rs.2,000 in the fourth year and becoming nil fifth year onwards. For traditional plans, the surrender charge is still on the higher side. As per the new rules, you will become eligible for a surrender value after paying premiums for two years in case the premium-paying term is less than 10 years. You become eligible to a surrender value after three years if the premium-paying term is more than 10 years. The minimum guaranteed surrender value will be 30% of all premiums paid going up to 90% of the premiums paid in the last two policy years.
EFFECT: This will be effective for all Insurance companies. This both positive and negative. We need to ask ourselves are we buying or are being sold a policy or plan of Insurance and are we buying to stop in future….If we are buying to stop or surrender in future we need to go back to basics and for that refer to SHORTEST SECRET TO BUYING INSURANCE on 

Service Tax will be added to Basic Premiums and collected
Till now LIC was not charging the service tax of 3% from the customers and was paying it to govt. from the pool of money collected itself, but now the service tax will have to be charged separately from policy holders. Which means that if your LIC premium was Rs 50,000 per annum, now it will be 3.09% higher in first year, which is Rs 51,500 and after 1st year, it will be 1.545% as per industry sources.
Basic Premiums will be equal throughout the period of the policy Service tax will be collected over and above the contractual premium. Now there will be a clear idea about how much you are paying as tax and how much will go towards premium. So this move will actually bring transparency.

EFFECT: While customers see it as additional burden, note that it’s not the case exactly, Earlier – LIC was paying the service tax from the pool of money collected from investors only, which reduced the bonus amount given back to them. But now because it will not be taken out from the funds, that means the bonus declared each year will go up by that much margin and will come back to investors only. Note that Pvt. companies were charging the service tax already, so nothing changes on their side. Only LIC was not charging it separately, which they will have to do from Jan 1, 2014 deadline. So it’s a ppositive for LIC loyalists.
Possible Decrease in Premium on LIC Policies-Atleast Mortality rates will be down
There is a great possibility that the premiums on LIC policies will come down by some margin, because the mortality rates will now be revised by LIC in calculating the premiums. Your premiums may come down drastically as from new period onward new mortality table will be referred to fix insurance premium.  Especially LIC which is using the 1994-96 Ultimate Mortality Rates will move to IRDA’s Indian Assured Lives Mortality (2006-08)

Mortality rates are the rates at which the insurance company deducts the fees for insuring you based on your age.
EFFECT: LIC had been using old mortality rates till now, but now they will have to use new mortality rates. Lets not go into detailed calculation at the moment, but your risk premium part should go down by approximately 10% (not the full premium, because only some part of whole premium in traditional policies are risk premium and rest is investment part) .
As of Private companies, they are well updated to mortality tables,so no much diiference in premium rates is expected.
Agents’ incentives have now been linked to the premium paying term
Now agents commissions is linked to the premium paying tenure. Earlier a lot of agents used to sell the policies which had higher maturity tenure, but limited premium paying tenure (like 30 yrs policy with 10 yrs premium payment) .
In case of regular premium insurance policies, a policy with a premium paying term (PPT) of five years will not pay more than 15% in the first year. Products with PPT of 12 years or more will have first year commissions up to 35% in case the company has completed 10 years of existence and 40% for the company in business for less than 10 years.
EFFECT: This is Positive, as the cost may be less and so investible surplus may increase finally increasing returns for the policy holder. Also this will bring more transparency.
The funny aspect is that a lot of LIC agents tried to mislead many new investors by projecting date Jan 1, as the deadline when a lot of LIC products will stop giving good features using the official notification.
Non-Linked/Traditional Plans
1.      One can pay their premium only 30 days before the date of premium due. So policy holders who are paying premiums in advance before January in any avail TDS Benefit and after producing Advance premiums paid receipts, henceforth will have to claim TDS Paid in Subsequent F.Y.
  1. Policies sold during the transition period (from 20th Feb 2013 to 1st Oct 2013 and may be till 31st December, 2013) will have the option either to have continued their policies with existing features or move to new features (Applicable from 1st January,2014 or from date of Launch-as the case may be).
3.      Benefit illustration like guaranteed and non-guaranteed at gross investment returns of 4% and 8% respectively signed by both prospective policyholder and agent. It must form the part of the policy document

Linked Plans-
1.      Death Benefit will be either of below. A)  The Sum Assured as agreed in the policy plus the balance unit of fund. B)  Higher of Sum Assured or balance unit of a fund.
2.      But the minimum maturity value should be equal to the value of units available on maturity date.
3.      In case of death within 12 months of the start of the policy or from the date of revival of the policy then nominee will be entitled for fund value available on the date of death.
4.      For policies issued for minors the date of commencement of policy and risk commencement will be same.
5.      Minimum policy term will be 5 years and premium payment will be 5 years.
6.      Lock in period will be 5 years.
7.      Partial withdrawal will be available after 5 years only. But for child policies one cannot withdraw until minor insured attained the age of 18 years.
8.      Loan will not be available under linked products.
9.      Same day NAV will be applicable if the premium received or redemption request received within 3 P.M. Else next day NAV will be applicable.
10.  Yearly statement will be sent showing the charges and the current fund values.

These are the major points which one must know. The list is big to go by, but I mentioned the major changes one must know.More detailed list can be read on and /or /  (as all listed here are not my rules, I need to give credit to these sites) 
According to one ethical LIC agent, “There is confusion among agents and hence the strategy is to go for the kill as they are unsure about their effectiveness to sell new traditional products next month. Moreover, we don’t know about the new products LIC has lined-up. But, if I hard-sell to my customers today, then how do I sell them products next month?”
What should you do?
The insurers have to refile all their products to IRDA and already lots of products have been approved and many are still waiting for approvals. So if you have a insurance policy then you will get the communication from your insurer about any changes if any. Right now, for sure the traditional plans have got better, compared to their past avatars.
If you are adamant on buying endowment plan, better wait for some time and let things get more clear, and even if you have already bought you have an option, right?
SURELY REFER TO MY EARLIER ARTICLE ON - SHORTEST SECRET TO BUYING INSURANCE & one can get better insight on basics of what and why to do, on insurance…

 What do you think about this change? Let me know through your comments……


Monday, December 09, 2013


Do you buy Insurance / Risk Cover, because Life Insurance Plans are closing? Are you being Bombarded with Mails, Letters, Messages and what not saying

“Life Insurance Plans closing soon, Hurry, Last Chance.. !!!!! ”

Don’t worry you are not alone, I am going to share shortest secret to buying Life Insurance, from any company or agent or executive. I am sharing this because since September I have received queries from around 78 persons till date on the same matter and problem. Messages such as these are doing the rounds and claiming that Life Insurance policies bought after 31st December, 2013 will come with fewer benefits and added service tax charges, most of the people are confused. Before I come to reality, we will know what are the common confusions in people’s minds.

Queries were related to CONFUSIONS like,

-What will happen to my exisisting polices?
-What if the charges increase and plan get costlier?
-What if the plan I am being proposed
 currently,does not exist then?
-What will be the extra cost I have to
 bear,after december? 
 -Will my Exisitng Policy Premium increase? 
-Will I get same benefits as proposed to me when I bought the policy?
-Is the co.I bought insurance from closing,and so plans are closing?  
-Will my existing Policy also end or Will my Existing Plan also be withdrawan?
- Is the current proposed plan good or the new coming plan will be better?

Etc Etc…..I am sure you may be having your set of queries.

Under such or many more confusions and fears especially after lot of fearfull talks and pressure by Insurance Agents people buy new Insurance Policies / Plans, with before and after closing of plans comparrissions and what if scenarios.(Which generally put’s people into understanding that my cost will increase with similar benefits)

How to clear doubts and confusions…..SIMPLE…just ask yourself following questions to make things clearer,-

*Are the Insurance Companies closing down, Including LIC, SBI, ICICI, HDFC, Birla etc  ?
*Why are plans closing?
*What will be the case once plans closing date ends, i.e. from January, 2014?
*Will there be no Life Insurance Plans?
*Do I really need to buy Insurance? And if not how it matters to me?
*Do I really need to buy Insurance? And if yes how much and what?
*Is this a forceful way to sell plans for Companies/Agents?
*Has my current insurance portfolio satisfied me, or is giving me tensions?

We all have heard two to three years before, that in 2012 the world is going to end…..did it happen? How many of us knew then that it was a marketing campaign by Movie makers of now famous movie “2012”?


As a Financial Advisor, I answered this queries and tensions to one of my prospects, only in simple questions

         ·         Do you need insurance currently? What is your current insurance portfolio like?
         ·         Are you satisfied with your current portfolio of Insurance?
         ·         Why are you actually thinking of buying Life Insurance or Life Risk Cover?

Let us sit and evaluate that first, that is what matters and that the answers to above questions should be your deciding force to buy Life Insurance at any point of time and not because plans are closing. Actually this is what only should matter to any person who is buying or thinking to buy Life Insurance.

Have you got clarity in mind and heart?
Happy Investing…..

From the Desk of,
Viresh Patel
Financial Consultant
Means to Achieve Financial Freedom
For Detailed Profile click here – -

…..Comming up Next

Secrets Revealed….Proposed changes in Insurance, No agent will tell you now