19dfvdfv

Offbeat Enterprises pg 66

OLM ELITE pg 30

N o v e m b e r 2 0 1 7, ` 5 0

o u t lo o k m o ne y.c o m

PLANNING YOUR

CHILD’s FUTURE

PRESENTED BY

8 904150 800027

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Contents november 2017 ■ volume 16 ■ Issue 11

pg

32

planning your Child’s future

Regulars

6 Letter 12 Queries 18 News roll 82 Smart Money Cover Design: vinay dominic Head Office AB-10, S.J. Enclave, New Delhi 110 029; Tel: (011) 33505500, Fax: (011) 26191420 OtHer Offices Bangalore: (080) 45236100, Fax: (080) 45236105; Kolkata: (033) 33545400, Fax: (033) 24650145; Chennai: (044) 42615225, 42615224; Fax: (044) 42615095; Mumbai: (022) 33545000, Fax: (022) 33545100. Printed and published by Vinayak Aggarwal on behalf of Outlook Publishing (India) Pvt. Ltd. Editor: Narayan Krishnamurthy.

Printed at Kalajyothi Process Pvt. Ltd., Plot No. W-17 & W-18, MIDC, Taloja - 410208, Navi Mumbai and published from AB-10 Safdarjung Enclave, New Delhi 110029 For Subscription queries, please call: 011-33505562, 33505500 or email: yourhelpline@outlookmoney.com Published for the month of November 2017; Release on 1 November 2017. Total no. of pages 84 Outlook Money does not accept responsibility for any investment decision taken by readers on the basis of information provided herein.

The objective is to keep readers better informed and help them decide for themselves.

www.outlookmoney.com November 2017 Outlook Money

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Contents

pg

69

Gadgets

A rundown of the latest gadgets that will come in handy,

by Tushar Kanwar

23 LI Made eaSy

How your life insurance needs change at every phase in your lifetime

24 Investment destination

Jabalpur is ready with several development projects in its pocket

28 Investment Risk

Learning about systematic risks and how to manage them

30 OLM elite

The updated OLM Elite List for every financial player

64 accident Insurance

Everything you need to know about Critical Illness covers

66 enterprise

How two techies are changing the Himalayan landscape with their offbeat business venture

74 Travel

Italy is the best answer to a post-summer travel destination for the wandering soul

80 Books pg

4

36

Preparing for a Baby

The joy of parenthood should not be overshadowed

by financial uncertainties

Outlook Money November 2017 www.outlookmoney.com

Done: The Secret Deals that are Changing Our World by Jacques Peretti; The Ultimate Guide to 21st Century Careers by Richa Dwivedi; Chase Your Dreams by Sachin Tendulkar and Boria Mazumdar

Money Talks

Simplifying Money Matters

W Sans jargons The trouble with having plenty to choose from is that sometimes it might work against your interest

Narayan Krishnamurthy nk@outlookindia.com

6

funds, between at par or unite all have to make many linked insurance. All these are very financial decisions difficult for a layman to decide that are critical to based on a 2-3 minute phone call our well-being. Yet, or a mailer with its attentionresearch has shown that a large fraction grabbing visual or subject line. of the population is unprepared to make I have been influenced by two these decisions. The financial services very interesting books—Barry industry is inundated with several Schwartz‘s The Paradox of Choice players offering products and services and The Art of Choosing by Sheena that are hard to differentiate. Take for Iyengar, which are a must read for instance the simplest financial product financial consumers and service like the debit card, which comes along providers. If you read these books, with most savings bank account; there you will have plenty of answers to is little to differentiate between them. questions like why we sometimes They are all exactly the same in size and choose against our best interests? functionality. Yet, every issuer will try to How much control do we really make it sound as if theirs is the best. have over what we choose? Why less When it comes to a savings account is more? How limited choice works with a bank, the choice is mostly driven better for investors by either convenience or over a wide choice? because of an employer Financial products making the choice for you.

Financial should be simple to But, the moment financial products understand and with decisions move to a little should be benefits which are more complex products, simple to far easy to associate choice can play havoc. If understand with. Yes, there is you are contributing to the with benefits trade-off between the EPF or the NPS, the reason which are ease with which one for doing so is that your far easy to can grasp the product employer enforced it upon associate with features versus a you. If the decision was thorough and in-depth left to a 22-year-old to save understanding of for their retirement, which the features. Explaining complex seems to be way too ahead, they would financial products in simple language never opt for these instruments, even if is a challenge. For financial products one highlights the tax benefits in doing so. and service providers, regulatory and I sometimes enjoy listening to legal compliance invariably results harried tele-callers with their strange in turning product literature into accent pitch for an insurance policy, complex documents with jargon tax saving investment, loan, mutual and more. It is here that we step fund or real estate project. Just in—simplifying personal finance in imagine asking someone who knows a consumable manner, sans all the nothing about investing to suddenly jargon. Read us regularly, because think about asset allocation, to choose more choice could harm your between fixed-income and equity financial decision making. products, between value and growth

Outlook Money November 2017 www.outlookmoney.com

Talk Back

Interaction: Vinay Sah, MD & CEO, LIC Housing Finance pg 58

Bharat 22 pg 26

Buying a Home

I am baffled by the piled up inventory of unsold flats in the NCR region and several other metros. Then you have problems like Wishtown in Noida, which make you wish why the authorities never took an action against such builders. I had a bad experience The Essential with my first flat under a DDA scheme HomE in the 1990s; after allotment I realised BuyEr’s that the place was poorly built and was GuidE so inaccessible that the value for money deal that I assumed I had struck was a nightmare. Then I started looking for a tenant, which was another challenge. I think in our chase to buy a house at any cost, we miss out on finer and more important details. I am a lot wiser now and have bought a flat in Delhi where I will spend my retirement days after 2020, which is in an area with all the amenities and is well connected. Yes, I have paid a mark-up, but that is for the amenities and I am fine with it.

O c t O b e r 2 0 1 7, ` 5 0

SubScriber copy not for reSale

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Presented by

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Anmol Gupta, Delhi

Editor

Narayan Krishnamurthy ASSiStANt EditorS

Anagh Pal, Preeti Kulkarni SENior CorrESPoNdENt

Himali Patel

CorrESPoNdENtS

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Devanjana Nag, Rimme Dirchi, Shipra Singh, Anupam Pandey Art

Praveen Kumar. G, Vinay Dominic (Senior Designers) Rohit Kumar Rai (Designer) Girish Chand (Operator) PhotogrAPhy

Gireesh. GV (Picture Editor) Soumik Kar, R.A. Chandroo (Photographers) tECh tEAm

Raman Awasthi, Suraj Wadhwa

Business Office ChiEf ExECUtivE offiCEr

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viCE PrESidENtS

Options for Senior Citizens I found merit in your argument for NPS to be considered by those who are senior citizens too. However, as much as I think about it at 62, I am not very sure if I will gain anything from contributing at this stage of my life. Nevertheless, after reading your article, I have started contributing to the NPS for my wife, who is two years younger and retired recently and has taken up some voluntary work. I have opted for the PMVVY because of its guaranteed returns.

Please do carry more stories on what senior citizens could do with money in retirement, especially with savings and investments.

Rakesh Mudgal, Pune

New Car It was a timely read as I was to collect my car just after the Dussehra break. All the points that you had mentioned about car

Prashant Kapoor (New Initiatives) Meenakshi Akash (Events)

dealers’ offers on policies were mentioned. Thankfully, I managed to get the policy from my older dealer transferred, which I was exchanging for a new one earlier. It also included 20 per cent NCB, which I was not sure if I could transfer.

Ram Sehghal, Gurugram

Gratification Unleashed Dwijattam Mukherjee is my hero!

His tale reads like the ideal life to lead with super bikes being bought on loans and getting a good deal on each one of them. Not only do personal loans help you realise some joys in life, it also helps you live the way you want to. A lot of times experts feel that one should not borrow, but they forget that it is fine to indulge once in a while and there is nothing wrong in doing so. Please do carry more such articles on unusual things for which people borrow.

Sudhir Chandel, Jaipur

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Outlook Money November 2017 www.outlookmoney.com

Ankit Mangal

Talk Back Funding your Dream Home Home loans are an easy and convenient way to buy a house.

But, the biggest risk in borrowing, despite the tax breaks and other benefits, is the reality that many of us tend to borrow more than what we can manage to repay. I faced this difficulty with my home loan in 2009, which thankfully I am managing well. But, there are phases when the burden of the loan can make life difficult and challenging on several counts, especially the times when you face other financial emergencies or when interest rates go up, pushing up EMIs. My suggestion would be to only borrow as much as you need and not be enticed into buying a bigger house because of easy loan availability and then face tough times.

Raghubir Pai, Bengaluru

Smart Home Loans Choosing between different home loans is tough. This was not detailed in your story, but I understand that the flexible home loans that exist with buyers managing negotiations are a lot better than what is on offer by online platforms and lenders. A table indicating who offered what kind of loan and tentative rates would have helped.

Rathna Shetty, Pune

Car Insurance The zero depreciation feature of car insurance add-on policy is very useful, especially in case of accidents where the plastic parts get damaged beyond repair and need to be replaced. I had read about this cover earlier too, but was not sure if it was really true.

I have now taken this additional cover and feel much safer about any untoward incident that may otherwise occur when I am driving on busy Delhi roads.

Debunking Risks Such articles by experts are welcome as they provide a different perspective at times.

I was very curious to read this article, and felt that the examples in it about fixed deposits and money in investing are relatable, as I have been through the same.

Somewhere the article mentioned that over the next 6-8 weeks this series would be discussing more on risk, so I checked your website and could not locate this series. Please do carry it in your magazine, as it is easy to read in a physical form and make notes.

Suresh Pathania, Noida

Editor’s response This series is for the magazine only and not for the web. There are 6-8 parts in this series, so you can look forward to more under this section over the next few months.

Dog’s Day Out What a wonderful story. I am always curious to read about success stories and new ideas that people explore to start their business. Pet care is one area which has a lot of potential.

Preeti Sood definitely looks like one dog lover who has gone the extra mile to turn her interest and hobby into a business model. I bet she has not only recovered her investment, she has also brought joy into many pet lovers’ lives looking for qualified experts to handle their pets.

Shantanu Dey, Delhi

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Outlook Money November 2017 www.outlookmoney.com

Bhavna Arora, Noida

PMVVY is better The opening of NPS to senior citizens till age 65 is eyewash I feel.

Yes, the returns on NPS funds are encouraging, but unlike PMVVY, these are not guaranteed. At 67, I do not have the heart to face fluctuations with my retirement corpus and the returns from fixed income products, which are going down so rapidly. The taxes and the rising indirect taxes are all a crude joke on us seniors, who have no choice but to compromise on our lifestyle and dignity in old age. I encounter so many people older than me getting into depression because their retirement savings are unlikely to match up in their ageing years.

There is no choice but to depend on children or face social stigma, which is quite challenging. I wish the government did away with income tax for senior citizens.

Uttam Kevalramani, Jaipur

Investment Risks I found this article by Gaurav Mashruwala to be very interesting and easy to follow. It was also something that I feel each of us can relate to. The introduction to the series helps as I look forward to it in the coming months.

Rupa Pai, Bengaluru

India Story I was skeptical to read one more prose about the India story at a time when the job scene is bad and economic indicator no better. But, reading this article I understood that you were mentioning the details of strategic disinvestment. Having retired from a PSU, I can tell you that I am looking forward to investing in this scheme when it is open to public. I am sure this will be a good investment for risk-averse investors and those looking for stability in their investments, as mentioned by you. This could also be a strategic investment for retirees as there is a dividend payout with the fund.

Savita Narasimhan, Chennai

Queries Amrinder AnejA, Chandigarh

Can i take an education loan to fund my sister’s education? Will i get any tax benefits in doing so?

In case of education loan, claim deduction under Section 80E of the Income-tax Act on the interest repayment on the loan is available only in the case of the loan being taken to fund the education of your children or spouse or in case you are the legal guardian. A loan to fund your sister’s education will allow you tax concessions only if you are the legal guardian. There are other conditions that you need to be aware of pertaining to education loan to qualify for the tax benefits such as the course eligibility and any other terms that the lending institution may have. deepAk mondAl, Kolkata

What is the use of personal accident cover under my credit card?

Credit card issuers give a complimentary personal accident insurance cover of a fixed sum, like Rs 10 lakh for one year or till the card needs renewal. This means that in the event of loss of the card holder’s life resulting from a train accident, while traveling on a valid ticket, the card holder’s family shall be paid `10 lakh. Most cards offer this as a complementary feature only for the first year of the card being issued. For subsequent years, you will have to pay the required premium yourself to renew the policy.

Rajesh Goswami, Gurugram

i have sold my house after retirement and am using about 75 per cent of the sale proceeds to buy accommodation in a senior citizen community. How can i use the balance in a tax efficient manner?

On sale of a property, you need to pay on the gains from the sale proceeds of the property, in your case it is your house, assuming you owned this house for a long period of three years or more. The tax attracted is known as the capital gains tax. In which case, you will be eligible to claim indexation of the costs of acquisition, with the gains being taxable as Long-Term Capital Gains (LTCG); if not, the gains would be taxable (without indexation) as Short-Term Capital Gains (STCG).

You can benefit from the tax exemption available on capital gains tax by reinvesting the capital gain in a new residential property situated in India, within one year before or two years after the sale date of the old house.

If the amount invested in the new property is lesser than the LTCG arising on sale of the old property, you could consider investing the remainder amount in ‘long-term specified assets’ being bonds issued by the National Highway Authority of India and the Rural Electrification Corporation Ltd. These bonds are redeemable after three years from the date of investment.

devikA BAnerjee, Bengaluru

i am staying in a fully furnished service apartment for the next six months. is it advisable to get the contents of this apartment insured?

Check with the owner of the apartment if the contents are insured and what your liability

12

is in case of any damage to the contents. In case they do not have the contents insured, you could suggest they take one or refuse to agree to the liability in case of any malfunction to say, the fridge or TV when you are using it during your stay. The fundamental basis of insurance rests on the

Outlook Money November 2017 www.outlookmoney.com

policyholder’s insurable interest.

As you do not have any insurable interest on the contents of this apartment, no insurer will offer you a policy in such case. The owner could buy a selective content insurance, wherein the contents that are part of renting out are only covered for.

rAjeev AggArWAl, Noida

rAkesH AWAstHi, Bhopal

i am buying a second hand car, which has 20 per cent nCB. Will it be transferred to me?

my father died within two weeks of a massive stroke. one of his life policies came up for renewal when he was hospitalised, will the insurer still pay the claim?

Congratulations on the purchase of a car that you desire. When it comes to car insurance, the policy is in the name of the owner and not the car per se. What this means is that the no claim bonus (NCB) is actually earned by the owner or driver of the car and not the car. It is for this reason that the NCB is not passed on to the new owner with the sale of the car. So, the owner of the car can retain the policy benefits before the sale is made and apply to his next car purchase, even if it is a new car. Many smart car owners use this technique to reduce the premium outgo when they upgrade cars, where the premiums could be exorbitant. Imagine someone earning a 50 per cent NCB on a small car before moving the policy to a new mid-sized sedan? The cost saving on premiums is sizeable.

The situation is tragic to say the least. Normally, insurers allow for a grace period to pay the premium on life policies. If you had paid the premium on behalf of your ailing father, the policy would have been in force and the proceeds from it would have been valid. However, in this case it appears such a payment was not done. Depending on the number of years the policy was in force, the insurer might pay you a part of the sum assured, which depends on the number of years the policy was in force for and the type of policy. You should make a representation with the insurer about the circumstances under which the premiums were not paid and the state in which you were to forget paying the premium.

Do state if the stroke occurred

before the renewal of the policy to indicate what caused the delay for the insurer to understand your situation. The chances of a full death claim are dim, but you would get something as a special consideration, given the circumstances. sAurABH sHuklA, Noida

if a policyholder becomes insolvent, is there a way by which he can protect the policy against the creditor’s claims?

Your financial interest in a life insurance policy is an asset like any other and there are possibilities that it can be attached in the event of insolvency of the insured.

However, if a policy is obtained for the benefit of the wife and children of the insured under the Married Women’s Property Act, such a policy cannot be attached in the event of the insolvency of the policyholder. The policies specifically assigned in favour of a creditor also, cannot be attached.

Rafique Khan, Ghaziabad

i have a small design workshop where a worker was injured while working on a machine and i had to meet the doctor’s expenses and also compensate him. is there any policy that can cover me against such losses in future?

Yes, you can go in for employer’s liability or workmen’s compensation insurance. In case an employer is held legally liable to pay damages to an injured employee or the employee’s dependents, he can claim this amount against his employer’s liability insurance policy which will provide him the required cover.

Additionally, it will also pay certain expenses such as lawyer’s fees and doctor’s charges. The intention is to ensure that the employer does not suffer financially and is compensated in case of a claim. The policy covers damages arising out of injury and doesn’t cover damage to the

employee’s property. Workmen’s compensation insurance covers the liability of the employer towards an employee under the Workmen’s Compensation Act, 1923.

www.outlookmoney.com November 2017 Outlook Money

13

Queries prAtiBHA pillAi, Kochi

do health insurance policies cover plastic surgery?

BAlBir singH, Noida

Health insurance policies do not cover expenses arising out of elective, cosmetic, or plastic surgery done under normal circumstances, which means if a plastic surgery is done to improve facial structure, the expenses incurred will not be covered. There is only one condition under which plastic surgery expenses are covered—when the surgery is done to correct a distortion due to an injury caused by an accident. But, do check the exclusion list because some policies do not include plastic surgery even under such circumstances.

i plan to convert the first floor of my house into an office, with the ground floor being my residence.

Will a householder’s policy cover both the floors? How will the compensation be paid?

revAti sHAnkAr, Chennai

What is the difference between dividend reinvesting and growth option in an mF? Which will give better returns?

Dividend re-investment as the name suggests is an option wherein dividend is automatically reinvested in the scheme itself, at an ex-dividend Net Asset Value (NAV). Meanwhile in the growth option, an investor does not want to receive any part of profits of the mutual funds before its redemption.

In other words, both dividend reinvestment and growth options allow compounding. sHAilesH rAWAt, Dehradun

do banks accept insurance policies as collateral?

Insurance policies that have an element of saving in them, such as endowment plans can be used as collateral for loans. Banks will examine the features of the policy before accepting it as collateral. The surrender value of the policy will be taken as the basic value and after allowing for a margin, the rest of the value of the policy will be used as collateral. The loan will not be based on the insured value because

14

A householder’s policy has two sections – the first one provides insurance cover for the structure and the second for household goods and contents. You can buy separate policies for the structure and the contents. You can also buy a common policy covering both. A householder’s policy can be bought for a building only when it is used for residential purposes and not for commercial purposes.

So, the first floor being used for official purpose will not be covered under this policy.

For that you can take a comprehensive cover under the shopkeeper’s insurance policy to insure the structure and office goods. In the event of a mishap that may arise due to insured perils such as fire, lightning or earthquake, the reconstruction cost of the building, subject to the sum insured, is paid to the policyholder.

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the bank would not know if you are likely to pay your premiums regularly.

Loans are not made against the insured value of the policy. jAyA rAtHore, Jaipur

i intend to invest a lump sum amount for my new born daughter. please advice on the funds that i can invest in with a 5-year term.

It is encouraging to note your eagerness to invest for your new born daughter. However, we feel one should invest regularly in a systematic manner for wealth creation. There is an element of risk in timing your investment when you go in for lump sum investment. You can park the lump sum in a liquid fund and initiate a systematic transfer plan to a diversified equity fund depending on your risk tolerance. By starting a SIP you do not have to worry about timing the market, moreover, your investments will average out the acquisition over time and also gain from the power of compounding in building a sizeable corpus for your daughter in five years. rupesH sinHA, Delhi

As per the terms of agreement of a loan, i have to assign one of my high value policies in favour of a creditor. What happens to the existing nominations in a policy when it is assigned?

The existing nominations under a policy get automatically cancelled when it is assigned. But, if the assignment is made in favour of the insurer for a loan granted against the security of the policy, the nominations don’t get cancelled automatically. However, the right of the nominee to the extent of the assignee’s interest in respect of the loan advanced does get affected. In other words, in the event of a claim the nominee will be paid the claim amount that remains after repaying the loan and interest.

Focal Point

‘We Are Careful About Customer Segment Selection’ Rakesh Singh, Director, Aditya Birla Housing Finance Ltd. elaborates how the Government’s Housing For All Initiative would help Non-Banking Finance Companies (NBFFCs) capture the entire geographical spread, serve customers better and diversify its housing finance business by catering to diverse pockets of the country.

Rakesh singh,

Director, Aditya Birla Housing Finance .Ltd

 As a diversified Non-Banking Finance Company (NBFC) cutting across retail, MSME, SME, mid-corporate and structured finance solution verticals, where do you foresee future growth emanating from? And what would your strategy be to maintain top-line growth where Aditya Birla Finance Limited (ABFL) is concerned?

As an NBFC, our focused customer segment shall continue to be SME and MSME for future growth. Post demonetization and GST, a lot of SMEs have moved from informal to formal sector and this has led to even bigger opportunity for financial institutions.

Hence, I see future growth come from Mortgage and MSME lending. With the thrust on Affordable Housing and the Housing for All by 2022 being key areas of focus, NBFCs and HFCs are well poised for growth.

 Since you mentioned Affordable Housing, how is ABHFL catering to this segment of buyers?

The Affordable Housing segment, as I mentioned, provides a significant growth opportunity. India is rapidly developing as a country and hence urban migration is at its highest, increasing housing demands. At the national level, the government estimated a shortage of more than 18.78 million homes at the beginning of 2012, of which 95% were in the EWS (Economically Weaker Sections) and LIG (Low Income Group) segments.

Further, the country’s total urban housing shortage is projected to be about 30 million by 2022. This ever increasing gap between demand and supply in the affordable housing segment. Lack of availability of suitable financing options for beneficiaries also adds to the problem as then tend to focus more on HIG / MIG projects given the higher returns. This is where HFCs like ABFHL would play a significant role in reaching out to the real estate developers to provide financing options as well as work with them to create a differentiated Customer value. We will also work within the ecosystem of our group to reach out to our existing & new customers for providing financing loans for affordable homes.

Also, in-line with the vision of current government ‘housing for all’ by 2022, we see it as one of the fastest growing segment and are getting geared to tap the potential. This segment would help us in capturing the entire geographical spread, serve the customers better and diversify our housing finance business by catering to diverse pockets of the country.

 Given the immense potential of the sector, would you not be facing stiff competition from banks and other NBFCs? How would you be differentiating from other players in such a scenario?

If you consider data from RBI for FY17, you will see that HFCs and NBFCs have extended approximately over `2.5 lakh crore as credit to commercial enterprises, meeting 18% of their total credit needs, recording a 28% jump over previous year figures. In November 2016, CRISIL reports estimated that NBFCs would continue to gain share of overall credit pie from banks over the next three years as a result of their mortgage and MSME lending push.

NBFCs would play a key role in financial inclusion agenda of the government by reaching out to the end-mile customer and offering a distinguished service. Moreover, NBFCs would complement banks by meeting the huge unmet credit demand by offering niche products and services.  Bad loans are a major source of concern for all major financial institutions. How do you safeguard yourself?

We have built a robust risk management and monitoring system that allows for early warning of potential risk or delinquency and its subsequent mitigation. Our strong Risk Management processes has helped us to develop robust scorecard which captures the customers’ ability and intent to repay the loan. We focus on understanding the needs of customer and accordingly select customer segments that we can service both from business strategy and asset quality point of view. We are careful in customer segment selection in order to maintain best in class asset quality.

www.outlookmoney.com November 2017 Outlook Money

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Queries fund such as ICICI Pru Balanced or ICICI Pru Balanced Advantage and make sure to track the progress on your investments to evaluate its performance at least once a year and alter the fund selection if need be.

ViVeK jhaKKaR, Gurgaon

rAmesH AHujA, Gwalior

Can i take home loan from a relative? Can i still claim the tax benefits?

i will be taking a two week trekking trip later this year.

Can i take a travel insurance which also covers the risks i may face when trekking?

You can take a travel insurance policy for this specific trip.

Almost all the leading insurers offer this policy. If you plan to engage in adventure sports, then do make sure you declare this while buying the policy because these activities are often excluded from insurance covers. A few insurers have travel policies that are structured to specifically meet the risks that one is exposed to when undertaking such trips – you should check the scope of cover with such policies as well.

Yes, you can take a home loan from your relatives. Under Section 24 of the Income Tax Act, 1961, tax deduction benefits will be available only on the interest paid. However, no tax deduction benefits for capital repaid will be available under Section 80C. There are specific procedures to be followed while agreeing on the loan. You should consult a local lawyer, who specialises in property matters, to draft a standard loan agreement so that all details are clear to all parties. prAveen rAo, Vizag

i want to invest rs 1 lakh in mutual funds? should i invest in different schemes? rAvindrA AgArWAl, Noida

does the implementation of real estate regulatory Authority (rerA) mean that there will be fewer new launches which in turn will lead to an increase in the price of existing real estate?

With RERA, what you should look forward to is transparency and better accounting and handing over processes by real estate developers.

They will have to stick to timely completion of projects and sticking to costs. Buyers will also have provisions of flexibility of claiming a refund within 15 days of purchase of property, if one is not satisfied with it and most of all, no misuse of money by developers for any other project other than the one for which they have taken money. However, prices may not have an immediate

16

direct impact. It may increase for new launches given the stricter compliance that developers have to adhere to or it may decrease owing to the large amount of inventory overhang in the market. rAzzAk reHmAn, Bhopal

i have rs 40,000 which i want to invest in mutual funds. please suggest the best fund to invest?

If you are investing for the long term, then for a new investor like you, the advice would be to invest regularly through systematic investment plans than lump sum investments. By investing a fixed amount at predetermined intervals, the trouble of figuring the best time to invest is eliminated, which offers an efficient way to ride market volatility. Start investing in a balanced

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You appear to be a first time investor and in a hurry. When investing, you need to keep in mind the following – investment objective, time frame to invest for and the risk that you can take with your money. As a beginner, it will be good to start investing in balanced funds, which invest in a predefined proportion between equity and debt. Funds such as ICICI Pru Balanced and ICICI Pru Balanced Advantage are a good option. If your risk appetite is higher, you could even invest in a fund like ICICI Pru Focused Bluechip which has the potential growth. However, it is not clear if you are looking for a one time Rs 1 lakh investment or a regular investment of Rs 1 lakh. Ideally when investing in equity funds, you should do so regularly through systematic investment plans, which are not only convenient, but also a smart way to invest for the long run.

News Roll

Making it cumbersome The new SEBI rules for mutual fund categorisation and rationalisation is not completely going to benefit investors, says Narayan Krishnamurthy

A

t first look, the circular from SEBI asking mutual funds to classify their schemes under five broad heads sounds very helpful. However, dig deeper and you figure that in all there will be 36 different types of schemes. If the idea was to simplify mutual funds for investors, this outcome is a big joke. At present, there are 42 AMCs managing a little over `20 lakh crore of assets in about 2,000 fund schemes. If one takes into account the direct and regular plans, for a layman it is as good that double of that many funds exist.

So far in the absence of any defined categorisation, AMCs and mutual

18

fund tracking and rating companies have been creating their own categorisation. This has meant that a fund may fall under different categories depending on whose categorisation it follows and who mentions it. This was perhaps the reason for the regulator to come up with categorising funds. The move of course has AMCs that favour it and those that don’t. Bigger and older AMCs, which over the years have acquired other AMCs have a legacy issue of several funds with similar orientation and categorisation.

Hence, for them, the new development would automatically mean merging some schemes to have

Outlook Money November 2017 www.outlookmoney.com

one unique offering under each of its categories.

For several other AMCs, this is an opportunity to launch new schemes in categories where they do not have a presence. These actions bode well for the industry and to some extent the distributors, who will suddenly have new funds to promote as and when they get launched. A simple math of 42 AMCs with 36 schemes each adds up to 1,512 possible schemes, if every AMC decides to have at least once scheme under each possible category. This does not augur well for investors, as it does not leave them any better than where they are now.

Index

1

ETF

1

Hybrid

Solution based

2

Power of Two

6

Equity

10

Debt

16

New Categorisation Of Mutual Funds Investor needs

Instead of categorising funds as per the industry preference or nomenclature, SEBI could have taken a step to help achieve investor needs as the basis of categorisation. For instance, the equity-linked savings scheme (ELSS) is a very good example of a fund scheme that meets investor’s needs and something that they can easily relate to.

Likewise, a liquid fund is also a good option, because of its simple structure. The new categorisation also reduces the investment theme of a fund and fund manager choice. Imagine if all large-cap funds have the same investment universe—1st to 100th company in terms of full market capitalisation.

Yes, this step will help investors compare funds like apples to apples and the role of fund managers will become difficult and come under close scrutiny.

Chances of focusing on quarterly performance will supersede longterm performance in the equity space, which does not augur well for investors. Smart investors should not be too much bothered by this change in categorisation and continue to base their investments on their needs such as short-, medium- or long-term, along with their comfort to risks and select funds based on this approach. The OLM Elite (page 30) is one such way to select funds based on your needs rather than on categorisation and classification.

Collaboration is a great way of extracting the best of the parties and combination plans by insurers are aiming to make the most of this. In June 2016, IndiaFirst Life and Star Health had teamed up to launch the first combi-plan, now followed

by HDFC Life and Apollo Munich Health Insurance. They have recently launched Click2Protect Health plan, which is a combination of HDFC Life’s Click2Protect 3D Plus term policy and the Apollo Munich’s Optima Restore plan.

IRDAI first mooted the idea in 2009, but it had failed to find takers. However, with the insurance regulator barring life insurers from offering indemnity-based health policies, the proposition seems to have received a fresh lease of life.

Cost-effectiveness, thanks to a 5 per cent discount and convenience—due to an integrated underwriting and purchase mechanism—constitute the primary advantages of the solution. Buy this policy knowing that you cannot get out of one at a later date and the insurer combination is not decided by you.

Spreading Small Savings Small Savings instruments like the NSC, PPF, and recurring deposits have been the strongholds of post offices, which have been distributing these instruments for long. In order to spread the access to these instruments to a much wider audience and geography, the government has allowed both private sector and public sector banks to distribute these instruments. The notification

www.outlookmoney.com November 2017 Outlook Money

19

News Roll

Hold on rejection I

nsurance claims always worry policyholders to the extent that many of them hesitate to take a policy just because they are unsure of the policy claim holding good when a claim is raised. However, a recent Supreme Court judgment should encourage policyholders. So, if you can satisfactorily explain the reason for delay in filing your claim, your insurance company cannot reject it, the Supreme Court has ruled. The verdict came while adjudicating a matter between Reliance General Insurance and its Hisar-based customer Om Prakash whose insured truck was stolen.

The insurer had rejected the claim of `7.85 lakh filed on March 31, 2010, eight days after the theft, asserting that he had violated a policy condition that mandated immediate intimation of any accidental loss or damage to the vehicle. “It is true that the owner has to intimate the insurer immediately after the theft of the vehicle. However, this condition should not bar settlement of genuine claims particularly when the delay in intimation or submission of documents is due to unavoidable circumstances.

The decision of the insurer to reject the claim has to be based on valid grounds,” the apex court said, while directing the insurer to pay `8.35 lakh to the customer. However, this is not the first time insurers have been asked to restrain themselves from rejecting claims mechanically. The IRDAI had cautioned life and non-life insurers against the tendency to repudiate claims purely on technical grounds way back in 2011. “Insurers’ decision to reject a claim shall be based on sound logic and valid grounds.

It may be noted that such limitation clause does not work in isolation and is not absolute. One needs to see the merits and good spirit of the clause, without compromising on bad claims. Rejection of claims purely on technical grounds in a mechanical fashion will result in policyholders losing confidence in the insurance industry, giving rise to excessive litigation,” the regulator had noted. It has also issued reminder circulars since then. Yet, the SC judgment is bound to be a more effective deterrent against claim denial on such grounds, benefiting scores of customers who are unable to intimate the insurer or file the documents on time due to genuine impediments.

20

Outlook Money November 2017 www.outlookmoney.com

mentions the top three private banks—ICICI Bank, HDFC Bank, and Axis Bank to start offering these products to its customers. With this move, banks will offer the full range of small savings products from the earlier Public Provident Fund (PPF), Kisan Vikas Patra-2014, Sukanya Samriddhi Account, and Senior Citizen Savings Scheme-2004, which they were allowed to offer.

The move will offer choice to existing bank customers and also help them consolidate their holdings in these instruments to a single location than manage multiple

points for services. However, the rates on these small savings have been falling in recent times and these rates are up for review every quarter. At the moment only two schemes—the Sukanya Samriddhi Account Scheme and the 5-year Senior Citizens Savings Scheme offer 8.3 per cent returns, with all other instruments with interest rates under 8 per cent.

New Benchmarking

The Prime Lending rates, Base rate, Marginal Cost of Funding-based Lending rate (MCLR) are the three systems for computing banks’ benchmark lending rates. Yet, banks have dodged the primary goal of all methodologies, causing heartburn among customers who do not get the full benefit of RBI policy rate cuts.

Now, the RBI has launched yet another initiative to get banks to reduce arbitrariness in setting internal interest rate benchmarks.

An RBI-instituted committee has recommended that loan rates be linked to external benchmarks like Treasury bill, certificate of deposit rate or RBI’s repo rate, instead of letting banks use internal benchmarks. This move, if implemented, could ensure better transmission of RBI rate revisions for borrowers across the board. An external benchmark could leave banks with no leeway in working around the norms.

Complaints from existing borrowers also abound on preferential treatment to new borrowers - where banks offer lower rates only to the latter. The RBI’s numerous attempts to plug the loopholes, however, have met with little success as each time banks have managed to beat the system. Borrowers will have to wait and watch to see if the new system can reverse the trend.

Going public

The insurance industry is maturing; going by what investment sage Warren Buffett does, it makes sense to invest in insurance companies.

Since the sector opened in 2000-01, several ventures floated and many have tasted success. A natural outcome for these companies is now to go public and they are doing so with gusto. In recent times, ICICI Lombard and GIC went public with HDFC Life and New India Assurance likely to go public next. While the insurance IPO juggernaut is on a roll, retail investors need to bear in mind that adjudging the sector’s valuations is a complex affair. Make sure you acquaint yourself with terms like embedded value, one of the key parameters to arrive at valuations.

In addition, evaluate the company in terms of its market share, persistency ratio, claim and combined ratio,

Interoperability of mobile wallets T

hat technology has few barriers is well demonstrated the way mobile wallets have proliferated and how cash is finding less use in a changing eco-system. Until now most mobile wallets were standalone, which meant that you could use it only on the individual mobile platform. However, now RBI is considering interoperability of mobile wallets.

Interoperability is the ability of a computer or any technology to exchange and make use of information between different technology platforms. An example of interoperability is mobile phone connections in India where in a customer can switch service providers without changing numbers. Now with the interoperability put in place, wallet users would not have to specifically look for merchants who accept a certain wallet and now can make payment to any merchant who accepts digital payments.

The RBI has decided to allow interoperability in the prepaid instrument space. With this, a key impediment to use of wallets will be eliminated, boosting convenience for users. However, prepaid instrument issuers do not seem to be enthused with the new rules—full KYC requirement, for instance, will cripple their business model, they believe. They have now petitioned the banking regulator to reconsider mandatory KYC prerequisite for prepaid instrument licenses.

The circular stated: “In the first phase, PPI issuers (both bank and nonbank entities) shall make all KYC-compliant PPIs issued in the form of wallets interoperable amongst themselves through Unified Payments Interface (UPI) within six months from the date of issue of this direction.” National Payments Corporation of India (NPCI) launched UPI, a payment system, in August 2016 that facilitates instant fund transfer between two bank accounts on a mobile platform without having any details of the beneficiary’s bank.

So, mobile wallets with up to `10,000 will need to have minimum KYC compared to the earlier limit `20,000. Also, the amount loaded in such PPIs during any month shall not exceed `10,000 and the total amount loaded during the financial year shall not exceed `100,000. For a mobile wallet issuer to start a company would be a challenge now, as RBI has raised the minimum net worth for a mobile wallet issuer to `15 crore from `5 crore earlier

www.outlookmoney.com November 2017 Outlook Money

21

News Roll

Spreading Wisdom I

n our efforts to educate young Indians on being financially independent, Outlook Money from time-to-time engages with college students. Last month, along with Aditya Birla Sun Life AMC, NISM and Stratadigm, we visited the department of Commerce & Management Studies (DCMS), Andhra University for a daylong seminar on capital markets, mutual funds, and careers in the BFSI sector. Attended by the final year students, the event was engaging and well received by students who posed tough questions to the speakers to understand the nuances of personal finance and investing. nk@outlookindia.com

among other things before taking a call. If all of this sounds complex, go by the gut feel that insurance as a sector will always thrive, because people fear and the outcome of fear is to protect against risks, which is the basis on which the insurance sector exists.

ETF credit to EPFO accounts

The labour ministry is progressively working towards bringing value to the Employees Provident Fund Organisation’s (EPFO) members.

After introducing investments in select ETFs, the EPFO is now considering the proposal to credit ETF investments to members’ accounts. The issue is being considered after the meeting of the central board of trustees, which was

then referred to the Comptroller and Auditor General (CAG).

About `45,000 crore is the EPFO’s exposure to ETFs at the moment and once this move is approved, the member’s share of ETF units will be credited to their individual accounts, which should allow members to know the real time worth of their EPFO contributions that constitute the ETF exposure. This increase in transparency augurs well, as members will be able to appreciate the gains from ETF investments compared to the fixed returns that are announced annually by the labour ministry, which has been going down steadily each passing year.

By Himali Patel & Preeti Kulkarni

22

Outlook Money November 2017 www.outlookmoney.com

Life Insurance Made Easy

Your companion for life Among the various financial instruments, life insurance finds an exceptional role with its savings, investment and tax savings qualities

M

ost people tend to have their first brush with financial decision making when they buy a life insurance policy. It is equally true that you need life insurance at every stage of your life— single, married, married with children or when approaching retirement.

Possibly, when you are young, you may need less cover to start with, but that changes as your financial commitments grow once you are married and your family grows. Likewise, as your responsibilities once again begin to diminish, your need for life insurance may decrease. Let’s look at how your life insurance needs change throughout your lifetime.

The first policy: As

soon as you start your career and don’t have a spouse yet, life insurance is unlikely in your radar.

But, this won’t be the case for too long, which means you should consider taking a policy in this phase, because it costs less and you could opt for a policy that comes for a long tenure. When purchasing a policy, be mindful that you are creating a nest egg to provide stability for future.

This also takes care of securing loan liabilities.

The CirCle of life

Married wih kids Married

Single

Starting a family:

You definitely need a life insurance policy as soon as you get married and have a financial dependent. As a couple, consider what each of your financial needs would be in the absence of the other person to arrive at the quantum of cover and the type of cover.

Career growth

Towards retirement

home loan. As your lifestyle grows, make sure you have the right cover to match this growth.

Retirement: The last

phase in your life, but something that you could start saving at the start of your career. There are retirement savings policies. in which you could keep adding with time to build a sizeable retirement corpus.

This can be used as an annuity when you retire and act as an income stream.

The various types of life insurance policies will also help you save taxes by way of the premium that you pay and the tax free status on the policy proceeds on maturity or when you make a claim. olmdesk@outlookindia.com

Baby blues: You will

almost certainly see your life insurance needs rise after the birth of your first child. He/she will likely be dependent on you for financial support, so you may want to consider a policy with some defined benefits to address the financial needs of the child, such as education.

Career growth: This is the phase when you are likely to see your income rise. You are also likely to take on liabilities, like a www.outlookmoney.com November 2017 Outlook Money

23

Investment Destination

Photo: ravindra

Jabalpur

With development projects kick-starting in full swing, Jabalpur’s landscape is set for a makeover

P

ossessing richness in tourism and architecture, the marble city in Madhya Pradesh, Jabalpur, is now fast evolving into a commercial and business centre. One of the fastest growing tier-2 cities of India, Jabalpur is an emerging hub for education, trade, and business.

Attracting skilled manpower who are on a lookout for job and academic opportunities, this has in turn has sparked a demand for affordable housing.

Affordable housing is the most chewed over issue in the real estate sector in present times because of growing requirement for housing for the lower income population.

Having featured in the Smart City

24

Project, Jabalpur is undergoing rapid industrial and infrastructure development making it a lucrative destination for real estate investors.

Prime Areas

As part of Smart City Mission, Jabalpur will attract more investments and trade in the coming years. Places like Garha, Karmeta, Gwarighat, Dhanvantari Nagar, Sheetal Puri are witnessing significant growth in affordable housing. Karmeta under the affordable housing segment has houses from `21 lakh on offer, whereas Gwarighat is offering the same in the range of `23 lakh.

Jabalpur is a prime destination for commercial and residential

Outlook Money November 2017 www.outlookmoney.com

property investors due to availability of large tracts of land at several locations. State government and local corporations are working towards developing civic amenities and the water problem has been completely resolved by the government through arrangement of about 120MLD of portable water supply, out of which currently about 25MLD is being used.

Growth Factors

Situated alongside Narmada river, Jabalpur has mainly been an agrarian economy but is fast evolving into a hub for trade and investments and for corporates to start their offices due to availability of abundant land banks. It has also

Changing face of Jabalpur

Expanding at a fast pace, city is attracting developers and investors alike

Karmeta Airport

Jabalpur

Dhanvantari Nagar Garha

Booming Jabalpur

Development indicators ■

JMC to get assistance from the Singapore government for Smart City project

■

Barela, Karmeta, Gwarighat are a few promising real estate investment destinations

■

It hosts four defense production establishments improving city’s infrastructure and connectivity

■

■

The state government and corporations are doing much to improve sewage, water, and roads.

City is an education hub hosting Indian Institute of Information Technology, Design and Manufacturing

■

Availability of large parcels of land is attracting real estate players

Affordable Housing In Jabalpur Developers Name

Location

Gala Developers

Jabalpur District

One Realty

Barela

15 lakh

Gala Developers

Karmeta

21 lakh

Mohit Builders

Jabalpur District

21 lakh

Sukh Sagar Group

Gwarighat

23 lakh

Sigma Realty

Dhanvantari Nagar

24 lakh

Price range (`)

been the home to four defense production establishments in the region, thus ensuring better infrastructure and connectivity.

Once the Jabalpur Smart City project work begins, demand for skilled manpower will grow significantly followed by increase in job opportunities. Migration of people into the city seeking jobs will in turn increase demand for affordable housing. The Singapore government would provide all needed support to Jabalpur Municipal Corporation (JMC) in making Jabalpur a Smart City.

The Centre is expected to provide `1,000 crore under the project.

Jabalpur’s entry into the list of smart cities has lead to notable growth for infrastructure in terms of proper sewage system, upgradation of roads, improved connectivity, and better water supply. Other services related to solid waste management, e-Governance, grievanceredressal and IT will also witness improvement in the coming years.

Hosting institutes such as the Indian Institute of Information Technology, Design and Manufacturing, Jabalpur is a hotspot for young and skilled graduates. Hence, the supply of skilled manpower and increasing employment prospects with ongoing industrialisation will stop the outflow of talent from the city.

As many infrastructure projects are in the nascent stage, Jabalpur is going to change dramatically in the years to come, making the affordable housing segment a good prospect in its suburbs.

13.5 Lakh Direct Logo

IFAN (Independent Financial Associates Network) is a webenabled distribution platform of Reverse Logo IFAN Finserv Pvt. Ltd. (ifan.co.in)

www.outlookmoney.com November 2017 Outlook Money

25 B&W Logo

Debunking Risk Series

Systematic and Unsystematic Risk You cannot live without risks, but you can work towards managing them by accepting that there is nothing like risk free returns

E

very child has fallen down several times before learning to walk. Every rose has thorns and every medical practitioner has to see blood. All this is part of the system, one cannot live without them. Similarly, inflation, taxes, government policies, geo-political situations and economic cycles affect all investments.

Risks exist in the system; there is no way we can avoid them. Inflation will reduce the real (actual) rate of return from all forms of investment, it may be debt or equity or property.

28

There is absolutely no way to a systematic risk.

Impact of risk is averaged out by investing fixed amount at fixed interval

Outlook Money November 2017 www.outlookmoney.com

Similarly, taxes eat into the final returns in the hands of investor.

In a communist economy wealth creation is difficult, irrespective of the risk taking ability of an individual. Likewise, if local currency is revalued all forms of investments will get impacted.

Risk that exists in system is called “systematic risk.�

There is absolutely no way to around systematic risk. However, by adopting time averaging (popularly known as Systematic Investment Plan) one can reduce the impact of systematic risk.

Crashing of property prices in Mumbai due to an unfavourable court judgment on development near Arabian Sea is called unsystematic risk Impact of risk is averaged out by investing fixed amount at fixed intervals. Since more investment units will be bought at lower cost and less investment units at higher cost, over a prolonged period, averaging will start working in the investor’s favour. Please note investment could be in any class of asset. It could be in debt, equity, or property. Another strategy, which is superior to time averaging, is value averaging. However, due to its complexity it is usually not recommended. Recurring deposit of bank is also an example of systematic investment plan.

Another category of risk is “unsystematic risk.” Risk which does not exist in the system as a whole but which is specific to a particular asset class or particular investment product is referred to as unsystematic risk. Other name for unsystematic risk is specific risk.

Crashing of property prices in Mumbai due to an unfavourable court judgment on development near Arabian Sea is an example of unsystematic risk. This will only affect property prices in Mumbai and no other form of investment in Mumbai or any other part of world will be affected. Similarly, if the CEO of Wipro Ltd resigns causing stock prices to tumble then it will be unsystematic risk. This will have no impact on other stocks prices or any other investments. Another example could be crashing of gold prices due to government control.

Diversification is the best solution for controlling unsystematic risk. Diversification has different

meaning to different investors.

There are some who invest in six different floating rate schemes of mutual funds and feel they have diversified. Then there are others whose idea of diversification would mean investing in different stocks.

To take an example, their portfolio will consist of HUL, Marico Industries, Gillette India and P&G, but a closer look will tell you that all are FMCG stocks. Yet, there are few who diversify through different investment vehicles. Example, they would have mutual fund schemes which invest in equity.

Diversification means investing in asset classes which have negative correlation. In common-man’s language, when performance of one asset class goes up, other asset class falls down. This will ensure that overall portfolio returns remain stable. If the explanation has to be further diluted—do not place all your eggs in one basket. By diversifying the portfolio, unsystematic risk is significantly reduced.

There can never be risk free returns; risk free returns do not exist. In fact, return is solely a factor of risk. However, proper understanding of risk will assist in generating higher returns with same amount of risk.

Gaurav Mashruwala (Financial Planner & Author of Yogic Wealth) gmashruwala@ gmail.com

Swotroryipng call us to address your employees to help them plan their:

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Financial Planning WorkshoPs For more details; write to suchitra@outlookindia.com or call: +91-22-33545019; +91-993-082-0790 shipra.singh@outlookindia.com or call: +91-995-362-1207 +91-11-33505683 We conduct financial awareness workshops at offices

OLM Elite

A fund to match your profile Use the Elite list to pick a fund from a wide choice to invest in that is suitable to your risk profile to meet your financial goals, by OLM Desk

A

recent SEBI circular on mutual fund schemes’ categorisation and rationalisation is just not what the doctor ordered, because in its attempt to simplify mutual fund classification the regulator has created 36 categories in which mutual funds can be slotted. This is where we step in with OLM Elite list of funds, which are based on investor needs than industry classification, with a broad investment outcome.

The purpose of the Elite list is to offer investors a choice of funds based on their investment risk profile from a selection of funds with significant track record and history to invest. The OLM Elite constituent hasn’t changed, because of the sound performance of the selected funds. olmdesk@outlookindia.com

Total Value of investment investment Gain (`) (`) (`)

Beginner

2,90,000

4,52,815

1,62,815

18.68

SafePlayer

2,90,000

4,27,465

1,42,464

17.29

UltraCool

2,90,000

4,46,653

1,61,653

19.21

Adventurer

2,90,000

5,12,544

2,27,544

25.29

FixedGuns

2,00,000

2,52,335

52,335

8.90

Value of `1,000 SIP across five funds in each portfolio depicting a unique investor profile.

Monthly SIP from Jan 2013. The FixedGuns portfolio is alternate to bank fixed deposits, and started in Jan 2015

Beginner ■ First-time investor ■ Looking at low volatility ■ Looking at saving taxes

I

t would be in the interest of new investors entering the stock markets to invest in diversified equity funds, which offer them the necessary exposure and possible gain on their investments.

Many of them are also looking at ways to save on taxes; the funds recommended include a healthy dose of equity-linked savings scheme (ELSS). Balanced funds and ELSS offer the perfect choice to the first time investors to experience equity investing. The ELSS comes with a three-year lock-in and balanced funds follow a dynamic asset allocation between equity and debt, demonstrating investment discipline.

SIP Value (`) DSPBR Tax Saver

Annualised returns (%)

Returns (%) 1-year

3-year

5-year

Annual Returns (%)

97,133

17.32

17.03

21.02

21.70

Franklin India Taxshield

88,729

12.79

13.20

18.56

17.80

HDFC Balanced

90,856

15.41

14.23

18.33

18.82

ICICI Pru Balanced

89,249

15.37

13.62

18.60

18.03

SBI Magnum Balanced

86,848

12.17

13.33

17.90

16.89

SIP Value and returns as on Oct 24, 2017; Total SIP investment of `58,000 in each fund

30

Outlook Money November 2017 www.outlookmoney.com

SafePlayer T ■ ■ ■ ■

hese funds are for investors who wish to tread cautiously and are content with inflation beating gains and tax efficiency. The funds selected for them have passed this test Cautious investor with performance history that spans both the down and 3-5 years’ investment horizon up cycle of the stock markets. Do not expect these funds to Looking at low risk perform erratically, as these have several years of history that Wants some potential hedge have indicated their sturdy performance during both market against inflation lows and highs. Returns from these funds will be less volatile, which should be the draw when investing in them. Do not feel let down if these funds don’t post very high returns during a bull run.

SIP Value (`)

Returns (%) 1-year

3-year

5-year

Annual Returns (%)

Aditya Birla SL Equity

97,907

16.75

17.74

21.89

23.25

Franklin India Bluechip

80,199

11.00

10.68

14.39

14.51

ICICI Pru Focused Bluechip

84,256

14.70

11.14

16.66

16.65

Invesco India Dynamic Equity

83,655

19.12

11.69

16.69

16.34

UTI Equity

81,448

10.10

9.58

15.99

15.18

SIP Value and returns as on Oct 24, 2017; Total SIP investment of `58,000 in each fund

UltraCool

I

■ Expects moderate returns ■ Has growth in mind ■ Over five years’ investment

horizon

■ Willing and able to accept

moderate level of risk and return

nvestors who can stomach some risk and have a fiveyear investment time frame can choose funds from this list, as the funds in this portfolio seek growth with a dash of risk. The selected funds have stood the test of times over different market cycles, which make them ideal for investors who are open to a little risk as long as the growth is commensurate to that risk. The sizeable assets managed by each of the funds here stands testimony to its ability and investor confidence in them, which you too should take a cue from when investing.

SIP Value (`)

Returns (%) 1-year

3-year

5-year

Annual Returns (%)

Aditya Birla SL Frontline Equity

86,065

13.86

12.41

18.31

17.58

HDFC Equity

84,732

14.89

8.83

16.52

16.90

Kotak Select Focus

94,477

18.12

16.30

21.20

21.67

Mirae Asset India Opportunities

94,016

20.17

14.82

20.64

21.46

SBI Bluechip

87,364

11.76

13.47

18.97

18.23

SIP Value and returns as on Oct 24, 2017; Total SIP investment of `58,000 in each fund

www.outlookmoney.com November 2017 Outlook Money

31

OLM Elite

Adventurer N ■ Have high return expectations ■ Can tolerate higher degrees

of fluctuation

■ Is more experienced and a

risk taker

■ More than seven years’

investment time frame

ot for the faint hearted; this portfolio has funds that do take risks, but also contain the downside well. These funds post significantly high returns, and at the same time pose the risk of falling sharply when the stock markets move adversely. If you are investing in any of these funds, do keep a watch on its performance, because you may need to take tactical calls on changing your investments in them based on market conditions and changes in the economy.

SIP Value (`)

Returns (%) 1-year

3-year

5-year

Annual Returns (%)

Axis Long Term Equity

94,293

17.34

14.32

22.99

21.59

DSPBR Micro Cap

1,19,215

15.24

22.33

29.63

32.10

HDFC Mid-Cap Opportunities

1,04,192

17.56

18.09

25.32

26.02

ICICI Pru Value Discovery

88,884

7.50

10.29

21.08

18.99

Sundaram Select Midcap

1,05,960

18.08

19.06

25.24

26.77

SIP Value and returns as on Oct 24, 2017; Total SIP investment of `58,000 in each fund

T

FixedGuns ■ Seeking stable investment ■ Cannot tolerate return

fluctuations

■ Looking for a substitute to

bank deposit

■ Looking for a holding period of

1-2 years

hese four funds are highly recommended substitute to bank deposits, where the interest rates have been falling steadily. Tax efficiency is the hallmark of these funds and so is their high liquidity, which allows you to redeem your investment in these funds in very short time.

Not only do they tend to earn better returns, they are as close as bank deposits when it comes to liquidity. Invest in these funds keeping in mind shorter time duration of more than a year and going up to a few years, at best, when you invest in these funds.

Investment Value(`)

Annual Returns (%)

Returns (%) 1-year

3-year

5-year

Aditya Birla SL Treasury Optimizer

63,883

7.53

10.00

10.03

9.41

HDFC Medium Term Opportunities

63,498

8.23

9.45

9.27

9.16

61,154

6.66

8.13

7.88

7.67

63,800

7.82

9.84

-

9.35

Invesco India Short Term Kotak Medium Term

Value of investments as on Sep 24, 2017; Total lump sum investment of `50,000 in each fund

32

Outlook Money November 2017 www.outlookmoney.com

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Preparing for a Baby The growing years Combining Learning with Earning Twilight Zone

Saving

s d i k r s fo

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It’s not always about costs

When it comes to bringing up children, it is not all about costs—there are emotional and psychological factors that can be very enriching for every parent Narayan Krishnamurthy A middle-class household spends `1 crore to raise a child before the child settles down in their lives. If you are wondering how that figure came up, worry not, because chances are many parents actually spend a lot more.

If you are already a parent, you know that you would go to any extent to have the best for your child, after all that is how your parents brought you up. So, in several instances, when it comes to spending on children, parents tend to overlook costs completely. Parents know how fast their children outgrow clothes and more.

While increasing cost of living and rising education expenses are factors to consider, a lot of what you spend on your child is also to do with

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Cover Story how you value money. In their exuberance to be seen as providing the best for their children, many parents tend to be influenced by peers and end up doing exactly what they don’t want to do. Likewise, it is common for parents to give in to every demand that a child makes. This may read as a parenting tip, but the idea is to make you see things slightly more dispassionately.

You need not take the extreme view that Simon Sinek famously spoke about when he discussed Millennials in a December 2016 interview. According to him, several of the problems faced by Millennials at work and in life were to do with failed parenting strategies. He mentioned about how parents kept stressing to their children that they were special, and could have anything in life just because they want. There are many interesting aspects that he spoke of and you must hear it when time permits.

Parents and grandparents pamper a lot many children in Indian homes. Going

by Sinek’s views, this is a recipe for disaster. But, that is not how most Indian kids are, because we have the challenge of being too many to compete amongst ourselves by the time we are into high school. Next, our education system is such that you are either into a professional stream academically or you are nobody. The fallout of such a system has made parents scamper to get their children the best education, without realising that many a times the education that they are scampering for, is not actually suited for their children.

Funnily, despite the need to have financial products that can be emotionally

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sold to parents, there is very little to choose from towards saving money for children. Life insurers have smelled the opportunity to offer products that are somewhat tailored to meet the needs of saving towards children’s future financial needs. However, financially, these are not the best of products.

Everything else that exists, such as investments in mutual funds or special interest rate financial instrument like the Sukanya Samriddhi Yojana, are not structured to meet the financial needs of parents looking up to save for their child’s future financial needs.

There are many financial advisors who would swear by the need to save for children from the day they are born. They are not wrong, but the hyperbole can cause too much worry for anxious parents. Like everything else related to your finances, do plan for the future financial needs of your children. Start small, and keep adding to it over time depending on the changing trends and also based on the needs of your children.

If you land up having enough when needed, good for you. If you are short off the mark, there is always education loan to fall back on. If you have more than what is needed, divert it towards other financial goals. If you are lucky, chances are your child would be meritorious enough to earn scholarships and make their way through education without being a financial burden on you. Ignore all the figures indicating the cost of bringing up children, concentrate on the time you spend with them; the emotional rewards are plenty and that is something that money cannot buy. nk@outlookindia.com

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Preparing for a Baby Kids should not cost you a fortune; there is no harm in preparing yourself financially before they actually arrive, says Himali Patel

F

inding out that you are about to become parents means bag of mixed feelings. First time parents are excited, those with experience are anxious and somewhat prepared for the drill. Preparing for parenthood is not about enrolling into parenting workshops or visits to the doctor for ultrasound or listening to advice from all those who have been through parenthood. Mumbaibased couple Rinku and Dhaval Bhalala, became parents for the first time a few months ago; the feeling is still sinking in. “We are excited and at the same time realise that it is a huge responsibility,” they state in unison.

Preparing for parenthood isn’t just tiny clothes, ultrasounds, painting the house pink or blue; it involves a lot of financial preparation. Yes, through the course of pregnancy and child birth, you would have learned enough medical jargon to know what is antenatal, EDD, fibroids and more. You will know about growth chart, the important milestones in the first year and so on. But, in the midst of all of these, you definitely should pay attention to your family’s financial well-

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being. Tax benefits, child savings plan, and emergency funds for children are equally important, if not more.

Getting ready

Actually, however one may plan for it, one can not exactly be ready when it comes to brining up a child. But, with some careful planning, chances are that you will be able to cope emotionally and financially through this life changing experience. “Costs of crèche, nursery, and day-care facilities have sky rocketed, hence planning for this in advance is also important in addition to an emergency fund created both for the child and parents to shield against job loss, medical emergencies during the first year of child birth,” advices, Dilshad Billimoria, director, Dilzer Consultants.

For most parents, the first brush with costs is the pre-natal medical procedures that one has to undergo. “During my pregnancy, medicines, medical tests and doctor visits added up to `25,000,” recounts Rinku. If one opts for any of the delivery packages offered by hospitals, the costs could range anywhere

NeHa aNd Gaurav davda, “Being our second child, we knew what we were getting into and managed the expenses with the best medical advice that was given to us.” from `30,000 upwards, depending on the hospital and the available package. She had to undergo a C-section, which cost `55,000 for the delivery. “This was among the lowest priced package as we opted for the delivery at a general hospital. My husband had a Mediclaim Policy from his work which covered maternity cost,” she recounts.

The costs do not end with just the delivery.

There are costs related to vaccinations, medicines as the child grows and include changes in your household budget too. The need for maids, house-helps and assistance in the initial phase may be supported by family members, but a growing child opens up completely different set of expenses, which should be factored in, lest one is taken in by surprise. It is best to speak to those who have been through parenting in recent times to know what’s essential and what can be categorised as optional.

Assessing finances

“If you are not financially prepared, don’t plan for second pregnancy. You and your baby shouldn’t face financial related problems,” advices Neha Davda. The mother of two daughters had her second one earlier this year, eight years after her first daughter was born. “I wanted my older daughter to be able to manage on her own before deciding to go for the second child,” she adds. Many parents swear by planning for pregnancy so that they are emotionally and financially ready for children.

When it comes to children, the reality is that they would depend financially on you for a good two decades before they start their careers.

Not saving enough money before you are planning to go for the second child is the biggest mistake. Agrees Anil Singh, chief actuarial officer, Aditya Birla Sun Life Insurance: “It is important to have separate

Photo: soumik kar

investment planning to take care of the financial needs of the second child. Inadequate life insurance is another money mistake one should avoid. With a second child comes increased set of responsibilities, therefore it is very important to have adequate insurance to completely secure the future of both your children.”

“I had never taken insurance earlier,

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Financial Checklist Expenses and list of do’s and don’ts will change for different couples, but you can take an idea on what all you will need to know before the arrival of the child.

Know the pre-pregnancy costs for every trimester till the actual delivery Increase emergency savings from three months to six months Create new household budget with new expenses that a child brings Sit down with spouse to discuss changes in spending pre and postbaby Have adequate health insurance cover If you have pregnancy covered in the health policy, do call the insurer to verify coverage for delivery and post-delivery expenses Review and increase your health and life insurance cover Plan for things that you need to buy with the arrival of the child Do keep aside money for any religious ceremonies that are essential Factor in vaccination and other pediatrician related expenses

DILSHAD BILLIMORIA Director, Dilzer Consultants

“Planning for a child is not easy. Planning for the same in advance can be a lot less stressful.”

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but after our second daughter was born, I couldn’t undermine the importance of medical insurance and opted for a floater policy, which would cover the entire family,” recounts Neha.

Child birth is a stage in life which brings in additional responsibilities and it is a good time to re-evaluate the life insurance needs of both the spouse and take adequate life cover. Especially, in cases where the mother is planning for a career break, the financial implications of maternity leave and a shift from double to single income shouldn’t leave you in troubled waters.

The importance of life insurance has become very crucial as it increases with the size of your family, along with increasing list of financial responsibilities as well as emotional ones. Says Anurag Rastogi, head – Retail Underwriting and Claims, HDFC ERGO: “The cost of pregnancy has risen due to the high incidence of caesarean section deliveries and treatment at super-specialty hospitals. In order to meet the cost of child rearing and the expenses related to pregnancy, an insurance policy covering maternity becomes an integral part of an individual’s financial planning.”

Availing benefits

There are few benefits that you should be aware of to make use of during pregnancy.

For instance, in case of working women, it is important to find out the maternity benefits that are offered by their employers. According to the amendment to the Maternity Benefit, working women are entitled to a minimum of 26 weeks maternity leave with pay. Further, an establishment which has more than 50 employees needs to create a crèche facility for the working mother within the premises of the workplace. There are other conveniences provided to mothers such as flexitimings and work from home, wherever it is possible.

Most organisations offer group medical insurance, in which maternity is also covered.

“We were lucky to have the group medical cover, because most of the maternity bill was paid by the policy,” explains Dhaval. The couple had run up a delivery bill of about `55,000, which was almost fully paid by the insurer.

These days, there are individual policies which also cover maternity after a few years of waiting; if you are looking to start a family, opt for such a policy as early in life as you can.

riNku aNd dHaval BHalala, “We were lucky to have a group health cover, which covered for pregnancy related costs as well, but we still had to pay some amount because of the limits within the policy.”

Such a health insurance policy is a must have these days, given the rising maternity costs and complications that are common at the time of pregnancy. “There might be certain complications at the time of delivery, which can increase the costs drastically for mother and child. Therefore, it is important that maternity coverage plans are taken either as standalone or rider add-on benefits. It is important that such policies are purchased at least 6-12 months in advance to get pre-natal coverage benefits,” recommends Billimoria.

It is also appropriate to think of putting in money for the child’s future expenses because it is fairly common for most Indian parents to

Photo: sanjit kundu

receive gifts at the time of a child’s birth.

Moreover, the biggest expense after a house purchase that one experiences is the one around the child’s education, once they complete school. “Today, education in India can cost anywhere between `5 - 7 lakh a year for a 3-4 year degree and go up significantly, if one is planning to study abroad,” explains Billimoria. The Davda’s, have started investing for their 8-year-old daughter Neha’s future education needs. “We did not have a health insurance earlier, but this time around we have

ANIL SINGH

Chief Actuarial Officer, Aditya Birla Sun Life Insurance

“It is very important for new parents to review their life insurance covers and increase their covers as required.”

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Surviving on Single Income

I

t was a big debate in 2012 when then Yahoo! CEO Marissa Mayer got back to working full time just two weeks after giving birth to her first child. That, however, may not be possible for most mothers. The fact that most families these days live on a dual income model, childbirth, which can be emotionally draining, comes with a financial drain as well with most families finding themselves staring at a single income stream for a considerable time. Yes, paid maternity leave in India is now for 26 weeks or six months, but with chances of a longer break, one would at some point or the other face up to a single income home.

Instead of wallowing over diminishing savings, couples should create a fund which will tide them over this phase of living off single income. Not to forget the need for adequate savings for the costs related with maternity itself. Do not mistake this fund for an emergency fund,

because that is for completely different reasons. By preparing yourself for the situation, you will be able to carry on your current lifestyle till you adjust to your new routine. If there is a possibility to take up part-time work assignment, one should take it or work towards configuring an arrangement with your employer for flexi-time, till such time you are settled to work full time.

Ensure that you do not add up debt that can get difficult to manage, for a newborn brings a completely different set of unplanned and unexpected expenses. There is a possibility that your expenses will increase and savings may reduce, but that should not deter you from saving and investing, however small a sum it may be. Be tight fisted with your spending, after all, this is a period when you cannot afford to indulge knowing very well you have to depend on a single income for a fairly long period of time.

taken a family floater to cover all four of us,” explains Neha. She has also started setting aside money for their higher education. The advantage of starting early, especially with insurance, is that you land up paying a lower premium compared to what it would cost if one starts later.

ANURAG RASTOGI

Head - Retail Underwriting & Claims, HDFC ERGO General Insurance

“In order to meet the cost of child rearing and the expenses related to pregnancy, an insurance policy covering maternity becomes integral.”

The Bhalalas have already started to set monies aside into a child savings plan. “I am going to invest in Sukanya Samriddhi account which is provided by the government of India.

Also, tax exemption is available and percentage interest is good compared to other government investment options available,” says a beaming Dhaval. He is also exploring other tax savings options that could work for his new born girl.

The best way to deal with events in life is to plan for them whenever possible. This is very much possible in case of bringing a child into this world. However, in the process of saving and investing for this event, do not miss out on the finer aspects of becoming parents. There are some events in life that can never come back—the birth of a child is one such incident that you should rejoice and not be saddled with worries over the financial implications that the arrival of a child poses. himali@outlookindia.com

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Focal Point

InvestIng on your chIld’s future

Abide by the adage of starting early with your investments to achieve one of the biggest financial goals for your child’s future only `4,100 a month in order to get a corpus of `30 lakh. Lastly, invest only in equities—as the investment time frame for this is most likely to be in excess of 10 years.

There is no need to diversify the investment to include debt, which invariably will reduce the returns.

Sunil Subramaniam

2. When a parent should start investing for his children?

As early as possible. In fact, I would say don’t wait for the child to be born. Start investing from the month you get into a job or have an earning. Longer the time horizon, greater the probability of achieving your goal.

Save a high percentage of your income—it should not be less than 25 per cent and keep increasing the amount as your salary keeps going up.

1. What according to you is the best way to invest for children’s future?

Inflation is the biggest challenge for long term financial planning. For e.g. the value of `100 has halved in 20 years. Putting it another way, the price of education is likely to triple over 16 years if you assume the long term average inflation rate of around 7.2 per cent. So, if college education costs `10 lakh today it will cost `30 lakh after 16 years.

Equity is the best asset class to combat inflation. `10,000 invested in the Nifty in 1990 is now worth `3,50,821, which is growth rate of 14 per cent which is double the rate of inflation. So, investing in equity through mutual funds via the Systematic Investment Plans (SIP) is the best way to invest for your child’s future. SIP makes it easy to invest and introduces a discipline into the process. For e.g. assuming a return of 14 per cent, an investor needs to invest

3. Should one invest in children oriented schemes or any diversified equity scheme will help serve this purpose?

Children oriented plans are good as they have a dedicated time horizon, which means the fund manager can take a long term view and more importantly there is a lock-in period wherein the funds cannot be drawn until the child turns 18. This ensures that the funds continue to remain invested and is not subject to the vagaries of human action.

Equity markets are volatile by nature and returns may vary depending on the time you enter the markets. Also, depending on the time you enter the markets, different sectors and cap curves perform well at different times. Mutual funds by diversifying investments across sectors and cap curves help you to get the best out of equity markets.

Hence, we strongly recommend investing in 4-5 funds across cap / theme curves through SIP as this will ensure that the investor is well diversified.

Chief Executive Officer, Sundaram Mutual Fund

4. Equity as an asset class is volatile in nature, so how parents should plan investment in equity or equity funds ?

Equity is volatile much more in the short term. As time horizon expands, the downside risk reduces for equities. In fact, various studies have pointed out that probability of getting a negative return for investor from market reduces with increase in the investment period. Hence, all the more reason to start early.

The one caveat is that as the time horizon to redeem the investment to meet the education needs nears, the investor should gradually start the process (say 1-2 years from the date of requirement) of moving the investment from equity to debt funds to avoid event based surprises that may erode the value of the investment.

5. How to make sure that child gets funds at the right time considering volatile nature of market?

As elucidated in my previous answer, as the milestone nears, equity funds should be sold and shifted to fixed income or money market funds.

6. What would be your investment suggestion for new parents?

Keep it SIMPLE, which means – i. Start early—be clear on the time horizon ii. Invest systematically in good quality funds which have an established long term track record. iii. Monitor the progress once a year (not too often nor too infrequently). iv. Most importantly do not stop investing because the market is underperforming for a year or two. Stay the course.

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The growing years Life gets complex with growing children.

Everything from clothes to expenses grow, so make sure you have a plan to fund their future needs. By Anagh Pal and Preeti Kulkarni

T

he arrival of a child in one’s life changes everything financially. It is an expensive proposition which lasts a good 18-20 years or more before the child is settled with a career. No wonder, for most parents, the education related costs of a child are a top priority that they worry over to fulfil, to ensure the best for their kids in life.

So, besides the essentials, parents need to work on the fee at schools, any coaching that the child needs, vacations, birthday parties and the

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list goes on. In case of talented children, there could also be expenses on pursuing a hobby like playing a game, learning a dance form, etc.

Ask a young child what they want to do when they grow up and chances are you will hear about being a chef, pilot, businessman, singer, cricketer and so on. For parents, it is extremely difficult to get a fix on what to save for in case of their children. One of the biggest factors that impacts the future cost of education is inflation. “Typically we assume CPI or WPI as the key benchmark for gauging the increase in price in future but the fact is that these indices largely represent food and other essential commodities,� says Sachin Jain, director, Moneygain Consultants.

There is enough evidence going by available data that education related costs are much higher than the average inflation. The cost of college education also depends on the stream,

specialisation, and the location of the college that one goes to. For instance, the cost of graduating in India will be less compared to say someone wanting to graduate from the US or the UK. “Just consider what you paid for your school fess versus what you are paying for your kid today,” explains Jain. It is for this reason that it is better to plan for the worse, than praying for things to fall in place.

MUDIT KUMAR

Chief & Appointed Actuary, Bharti AXA Life Insurance

“Choose a product with premium waiver benefit so that in case of any eventuality, there is no impact to the savings proposed.”

Challenging task

The Indian education system is such that a lot of what you will study in college gets decided even before you are ready for college itself.

Take for instance 15-year-old Mumbai-based Abirami Mahalingam, who is in class 11. She has taken up the commerce stream with maths, which rules out science for her to pursue for her graduation. “I want to study data analytics. But, it could also be chartered accountancy like my parents,” quips Abirami.

Both her parents, mother Hemalata and father V. Mahalingam, are chartered accountants, which could be a reason for choosing accountancy in her case. She is somewhat clear with what she wants to study in college, but there are many who are not sure where their interests lie. Some land up taking up subjects that are suggested by others.

Take the case of 14-year-old Saniya Shaikh, who aspires to play basketball at the highest level some day. She opted for sports as soon as she realised her interest and talent in it. The class 9 student benefited from compulsory physical education till class 8, as it provided

Photo: S kumar

AbirAmi mAhAlingAm, Mumbai This 15-year-old commerce student wishes to pursue statistics and data analytics as a career, unlike her parents who are both Chartered Accountants.

Having taken up commerce, she also wants to keep CA as a backup option.

“My parents have saved and invested regularly for my education expenses, just the way they did for my older brother.”

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JAndiAl fAmily, Mumbai Tvisha is 10, and is special for 42-year-old Mukesh, the doting father.

After she was diagnosed with Cerebral Palsy, he has followed every piece of advice that the doctors have given to ensure she has access to the best treatment and help.

“The current expenses leave very little room for savings.

But, I am working towards creating a corpus to take care of future financial needs.�

Photo: Sanjit kundu

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Special care B

ringing up children is tough and takes a toll on your physical and mental fitness. For families who have children with special needs, the complications only compound. Coping emotionally with the situation is one thing; the bigger challenge is financial planning for two generations and not one. Financial plan should take into account not just the parents, but also the child, especially in cases where you know that the child will outlive the parent.

The planning varies depending on the medical condition of the child and the complications one is actually facing. For instance, there will be expenses that can be categorised as immediate, regular (on-going) and those for the long term.

For instance, physiotherapy would be an on-going expense, whereas a planned surgery after attaining a specific age will be long-term in nature. Immediate expenses could be to meet doctors to arrive at a diagnosis and understanding the treatment procedure.

It helps if families with special kids get into support groups to share their

experiences for others to learn from and face the situations that they are likely to get into in the future. When it comes to expenses, one could put them under three major heads – treatment, therapy, and education. “Physiotherapy costs `10,000 a month and annual doctor visits add up to another `50,000 at least,” says Mukesh Jandial. Depending on the special school and the ability of the child, there could be expenses that could far exceed what one pays for regular school going children. Yes, having a special child can be financially draining, but that should not be a reason to give up. Plan for expenses and as much as possible, engage with agencies and institutions that support disabilities, because depending on them is a lot better than losing hope.

More importantly, make sure of creating a trust to take care of the child’s future needs with a clear instruction and not wait for a later date to affect such a model. Most importantly, take care of your health, because you will need to be around to manage not just your life but also of the child as you grow older.

ReStart now

make sure you are on track with

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Financial Checklist If you are the parent of growing children, there are a handful of financial priorities that are extremely important to make note of Know about costs with school admissions and school fees Keep a separate fund for children with expenses of a year tucked away Create a separate expense budget for children, as it will evolve as they grow Maintain adequate health insurance for self and include the child in a floater plan or a separate policy at appropriate age Review your health and life cover, as children grow older Create funds to manage additional school expenses like excursions, extra-curricular activities, and any special needs your child may require Set aside money for coaching in higher classes, if need be Factor costs specific to the child – books, uniforms, birthday parties and others Create and track the investments for future financial needs towards education or marriage

ANJALI MALHOTRA

Chief Customer Marketing & Digital officer, Aviva Life Insurance

“Child education plans are specifically designed to help the customer accumulate a corpus through disciplined savings, which will help fund the cost of education.”

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her with the exposure to try out her interest in an area that she was keen to follow. “I am currently competing in the Under 16 district level,” she chuckles. Her parents have planned for the expenses that a sportsperson needs.

“Sports coaching, diet, training, and travel are all expenses that one needs to plan for,” quips Saniya’s mother, Reshma.

The Shaikhs spend about `2,500 every month on her training. She also has to spend three days a week at a special training centre.

Her training expenses could go up in the future when she starts competing at the national and international level. For those wondering if following a sport is expensive, just go and watch a re-run of Dangal or Mary Kom to get an idea.

Helping your child realise their future dreams does cost, unless you are lucky to wade through with scholarships.

Saving for the occasion

Several parents are well prepared these days about the costs they are likely to face for their child’s future. The Mahalingams, for instance, have been regular savers for their children’s education needs. “We have always saved 20 per cent of our income. Though it was not specifically earmarked for education of the kids, we knew we could fund their regular expenses till class 12 from our income and have enough to fund their college expenses,” explains Hemalata.

What they have also done is to start building a corpus towards the post-graduation expenses of their kids as soon as they are in their 12th standard through regular monthly investments.

This way, they have 3-4 years with them to build the necessary corpus. For most other people, it will be a good idea to start saving for their children’s future expenses from an early date to benefit from the power of compounding. Says Nita Menezes, associate director and head– celebrity practice, My Financial Advisor: “We recommend our clients to be disciplined with systematic investments directly in mutual funds and instead of investments in child plans, which are costly and an indirect form of investing.”

If you are wondering about routine school and other expenses that a child needs through school and at home, the best way to tackle it is to include regular expenses in your monthly budget. “Routine education expenses of the child can be met through regular income.

Further, for education need of next 1-2 years, one can set aside surplus funds periodically,

Mutual fund investments are subject to market risks, read all scheme related documents carefully.

Cover Story

reshmA And sAniyA shAiKh, Mumbai

Sania’s love for basketball resulted in her playing in the under-16 category at the district level, which is why she is keen to pursue the sport as a career option. She is currently preparing for the State level championship.

“Basketball is a not very expensive a sport. But you need to train and have the right diet and fitness to play at the top level, which does cost.”

SACHIN JAIN

Director, Moneygain Consultants

“Education loans come in handy in only two scenarios – when the corpus falls short and when investment returns are higher than borrowing rates.”

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Photo: Soumik kar

in liquid form of investments. This way one can accumulate some portion of the required corpus, rather than having to arrange the entire lump sum amount at once,” suggests Menezes.

“Many schools collect fees at quarterly or half-yearly interval and not necessarily every month. Hence, parents should keep a certain amount aside every month. Also, an additional amount may be needed at the time of exams or for certain different reasons,” explains Pankaj Mathpal, founder and managing director, Optima Money Managers. Basically, bucket your expenses under heads such as regular, occasional, and for the future. This way, you will not be scrambling for money or reacting with a shock everytime a need for a school excursion or a birthday party emerges.

Make sure that the money set aside for such needs of the child is in liquid investments, where one can dip into at one’s convenience, without worrying over tax implication or any other charges that may otherwise creep in

PAtel fAmily, Mumbai Photo: Sanjit kundu

with instruments where exits are regulated.

Depending on the age of your child, the education they have in mind, and your own ability to save for this goal, the money that you set aside would vary.

For instance, there are parents who may not be able to create a sizeable corpus for their child’s college education. In such cases, they should not worry too much as the government has made lending for education a priority and today education loans are easily available and with convenient repayment mechanism. Then there are instances when circumstances may not permit you to save appropriately. Instead of doing nothing or wallowing over your fate, do save and invest as much as you can.

Friya, 21 and Farzan, 18 live with their mother Kashmira, who has been singlehandedly working towards providing for them after the sudden demise of her husband four years ago. Both are following their respective career interests.

“The sudden demise of my husband was a big blow. But, we had been saving for our children’s education.

I took up a job and rearranged my finances.”

Changing circumstances

The Mumbai-based Kashmira Patel’s tranquil world was shattered the day her husband passed away suddenly five years ago. “Like any other family my husband and I had many aspirations

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NITA MENEZES

Associate Director & Head – Celebrity Practice, My Financial Advisor

“Routine education expenses of the child can be met through regular income and for education needs of a few years ahead should be set aside periodically, in a liquid fund.”

PANKAJ MATHPAL

Founder and Managing Director, Optima Money Managers

“Planning for child’s higher education should start right from the birth of the child.

With sufficient time in hand to achieve the goal, it will be easier to accumulate the desired amount.” but his sudden demise jolted me out of my dream world” recounts Kashmira. The reduction of household income posed a challenge, as she had given up her career to bring up her family.

“I was a home maker and had to start working at 44,” she recounts.

Today, her son Farzan, 18, is in his first year of college. while daughter Friya, 21, has just stepped into the world of media after graduation. “We had planned for the children’s education expenses with deposits and insurance plans for them so they can achieve their goals,” she stresses. Thankfully, there was no need to compromise on the education front; she lives by the save first and spend later principle now.

In some ways like the Patel family, 42-year old Mukesh Jandial faces the challenge of bringing up a special child in his stride. “She is 10 now and doing well for herself. She has several requirements that I need to budget for, but it helps improve her situation and I would not compromise on it,” he says. His wife spends most of the time taking care of Tvisha, and Mukesh has not been able to save much after meeting regular expenses.

“I am working towards creating a corpus to meet her medical needs with time and to

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meet regular expenses,” he adds. The financial scenario for families with special children is very different (See: Special Care), because the financial plan needs to take into account the requirement of two generations. Whether you are a single parent or a parent of a special child, the financial outcomes can be challenging.

Limited options

Although financial needs of children is a very important field, there are very few financial instruments available to address this directly.

Yes, there are a few mutual funds available that are labelled as child plans and several insurance policies that exist with child plan as the theme, neither are very good options. Insurance policies score over others because of the emotional angle that salesmen generate when it comes to selling a child plan. However, these do tend to have cost structures which are opaque and there is very little room for liquidity.

When it comes to child’s education, unlike several other financial goals like buying a house or a car—there is no room for negotiation of postponing the goal year. Further, because of the inherent low risk taking phenomenon among Indians, insurance policies thrive because they suit people with low tolerance to investment risk.

“There are many investment options a customer can choose from depending on the risk appetite. And, depending on the target amount needed, the premium is chosen and investment is made,” says Mudit Kumar, chief and appointed actuary, Bharti AXA Life Insurance. Moreover, insurance policies also have the tax saving edge, which makes it a popular choice. But, one aspect where child insurance plans score the most is the waiver of premium feature that they have. “In case of death of the parent, the company funds the future premiums such that the family gets the required amount at the specific time so that the child can continue his/her dream of the chosen stream of education,” says Anjali Malhotra, chief customer marketing and digital officer, Aviva Life Insurance.

Whatever is your situation, just the way you should ideally start saving and investing for your retirement when you start your career; you should start saving and investing for your child’s future from their birth. Education is the key to securing your child’s future. Proper planning can help your child pursue the career of her dreams. anaghpal@outlookindia.com

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Cover Story

Combining Learning with Earning Rising education costs can be managed if planned well. If you are short on funds, worry not—education loans and scholarships could turn into a way out,

by Rounak Kumar Gunjan

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he fee that one pays at the graduate and post-graduate level can gauge the cost of education in India. The marquee engineering from any of the IITs costs `2 lakh annually just on the fees, so you can imagine what the total cost would be for the four year programme. The costs run into several lakhs if you are pursuing your MBA from the IIMs, which could go as high as close to `20 lakh for the two-year course.

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These jaw-dropping figures are scary even if you look at institutions in the next level.

According to a survey conducted by the Associated Chambers of Commerce of India (ASSOCHAM) in 2016 nearly 1,600 working parents in cities like Delhi, Mumbai, Lucknow, Dehradun, Pune, Bangalore, Kolkata, Chennai, Chandigarh among others, it was found that college fees was up by 150 per cent when compared to the same period in 2005. The sad side to the survey was the fact that 9 out of 10 parents found it very difficult to meet their ward’s college fees and expenses. In several families, the cost of education is close to 30 per cent of the household monthly income.

Whether you are a meritorious student or one who is average in your studies, when it comes to education the costs are high for all. For parents it becomes natural to save for this one financial goal that is very

close to them. Moreover, from the protected environs of home, the moment a child enrolls into a college, the first brush with managing their money on their own is equally challenging and very tough. While most of the college fee is taken care of, it is the expenses on daily needs like commute, food and other things necessary in college life, the pocket money may never be enough.

Riding on scholarship

depend on their parent’s to fund their college education, as these scholarships can be used to meet a part of their day-to-day expenses while pursuing higher studies.

The Central Sector Scheme of Scholarship for College and University Students is covered under the Direct Benefit Transfer (DBT) wherein the scholarship is disbursed directly into the bank account of the beneficiaries. To receive this scholarship, the candidate needs

Scholarships are a way of encouraging students who excel and do well. Those who earn a scholarship, find their fees waived, because of their excellent education credentials. Many such meritorious students need to strive harder to fare well for the scholarships to remain through their college education. “It is always better to have a scholarship. It not only reduces the monetary burden but serves as a confidence booster as well. I had to take up an extra test to be eligible for this benefit,” says Aarzoo Snigdha.

She is currently studying at Loughborough University, London where she was awarded a scholarship of `4 lakh that brought down her tuition fee to `11 lakh.

Most private universities in India offer scholarships to encourage students to follow their passion, which can be availed after sitting for separate examinations and even interviews. Additionally, the government provides scholarships to meritorious scholars who need monetary assistance. The Ministry of Human Resource Development provides financial assistance to deserving students having family income of less than `6 lakh per annum. In this way, the student need not

AARzoo SniGdhA, 23 , London This aspiring journalist is doing all it takes to hone her skills and has chosen the best of institutes to get her act right.

“I was lucky to get a scholarship of `4 lakh to pursue my masters in Media Studies at Loughborough University, London, which reduced my tuition fee considerably.”

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Cover Story

Financial Checklist When you are studying in college, do not get complacent with money coming from your parents.

Get prudent with your money management skills.

Start with budgeting and making do with the money that comes to you from parents for the essential expenses Make it a point to save well and manage within your allowance and avoid borrowing as much as possible In case you are short of money, look for ways to earn it while you are studying You could take up part time working assignments to fund your education needs There are scholarships, endowments, and education loans available, which you could consider exploring to reduce the burden on your parents for paying towards your education Stay healthy and be judicious about what you spend on. With a save first, spend later attitude, chances are you will turn out to do a lot better financially even in later stages of life

AMIT CHANDRA

Associate Director, Centre for Civil Society

“Education shouldn’t be denied based on the financial capabilities of a family and monetary relief through scholarships grants a way out.”

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to furnish proof of possession of Aadhaar or undergo Aadhaar authentication. For more information, do visit https://scholarships.gov. in/ to know the details of the scheme.

“Scholarships are always welcome.

Education shouldn’t be denied based on the financial incapabilities of a family.

Both private players and the state should come forward to make efforts in providing education to as many people as possible.

Monetary reliefs are one of the premier-most ways in resolving education related issues”, said Amit Chandra, Associate Director Centre for Civil Society, New Delhi.

There are several private scholarships and in central universities there are many endowments that help the financially needy students to benefit from the scholarship to follow their passion. Moreover, several community trusts and charitable institutes devote a lot of funds to educate youngsters and this is something that one can benefit from if one looks around to know how one can qualify to avail such schemes.

Part Time Work

Unlike the West, where taking up odd jobs is the way of life for most college students and even those studying in schools, it was frowned upon if a student spoke of part time work.

Of course, there are many tales of several leading professionals who had taken to parttime work to fund their college education or subside it. Take the case of Vinayak Sharma, a 20-year-old engineering student, based out of Mumbai who says, “I teach mathematics at two coaching classes in Ulhasnagar in the evening, after my college hours.” He is a classic case of a student who wishes to give wings to his entrepreneurial skills to make a mark even before he formally finishes college.

The start-up culture and setting up of several fast food restaurants is giving opportunity to several discerning students who wish to do part time work at these food joints. In fact, the current Textile Minister, Smriti Irani has recounted about how she worked at McDonalds before embarking on her television career and later politics. The choice of part-time work from teaching to content writing-to-writing codes and more are there to look out for. “I also create content for Junkminds, an education portal and make about `12,000 a month,” adds Sharma.

VinAyAK ShARmA, 20, Mumbai Photo: Soumik kar

“I encourage students to work while pursuing their studies. It not only provides economic relief to the parents or whoever is funding the education but also gives the student a taste of the outside world,” says Parth Shah, Educationalist, New Delhi. In the case of Sharma, his efforts have reduced his dependence on his parents for money, while he still depends on them for his college fees. He uses what he earns to buy books and equipment, and the occasional time out with friends. He is happy to be trying his hand out in teaching, something he wishes to pursue later in life.

Enter Education loans

When nothing works, there is education loan. In order to enthuse students to pursue their dreams the government has made education loan, a priority sector lending by facilitating finance for higher education an

He is in his final year of engineering college and ends up teaching at a few coaching institutes to support expenses towards books.

“My parents support my education, but with my earnings from part time assignments, I spend on teaching aids and other things necessary for my future.”

option. The biggest draw for such a loan is the fact that it can be repaid by the student after completion of the course, once they start earning. There are also tax benefits that they can claim on the loan repayment. The loan is available to students pursuing courses in India and abroad, with the loan ranging from `10 to `20 lakh depending on the course one opts for.

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Cover Story

It pays to borrow

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professional or technical education in India and abroad.

Although the cost of higher education has ballooned up, there are more people opting to study further or go abroad to study for the necessary exposure and experience.

The good part is the increased effort by the government to make education loans easily available and attractive. The idea is to provide the much-needed financial support to deserving students for pursuing higher

Education loan is provided to those students who have obtained admission to career-oriented courses, such as medicine, engineering, management etc., either at the graduate or post-graduate level.

There are also tax concessions to claim by those opting for this loan. Earlier, you could claim deduction under Section 80E of the Income Tax Act only in respect of interest on loan taken, for pursuing higher education in specified fields. But, now you can claim deduction for all courses, including vocational studies, after completion of school. As the student who borrows the money repays the loan, it is in your interest to take a loan, to reduce the financial burden from your parents. After all, the right support at the right time would ensure success for students and the possibility of a secure future.

he importance of education can be best understood by chatting up someone who has been denied it. Education plays a crucial role in everyone’s financial future. A good education is passport to a good career and a secure future. And, as education is not finite, chances are that you will enroll for a special course or go in for an executive programme to further enhance your skills. There are several instances of working professionals opting for a short-term academic course to boost their career prospects.

The interest rate on this loan is standardised across lenders, which leaves very little to haggle for students. The Vidyalakshmi education loan portal, where one can apply for an education loan and get the loan approved by any of the empanelled lenders. For instance, Aditya Kapoor, a resident of Kolkata, took an education loan for his engineering. “I took `4 lakh to fund my college education from Heritage Institute of Technology, Kolkata. I have just

PARTH SHAH Educationalist

“I encourage students to work while pursuing their studies, because it gives them the necessary exposure to face the world better when they actually go out for employment.”

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landed a job and wish to pay the installments through the salary that I draw. It should take me two years to completely repay the loan along with the interest,” says Kapoor.

With an education loan, you can also claim tax benefits under Section 80E of Income Tax Act on the interest paid on the loan. This is a big relief for students who have borrowed to fund their education.

Moreover, the deduction applies only after repayment of the interest on the loan commences. And, the moratorium period or repayment holiday, which is either one year after completion of the course or six months after getting a job, whichever is earlier gives plenty of time for student loan takers to plan the repayment. With so much going for students when it comes to funding their education, it is time parents get to worry a bit less and let their children face up to the opportunities to fund their education on their own. rounak@outlookindia.com

Inputs from Preeti Kulkarni

Cover Story

Twilight Zone The phase when children grow out of your home either because of their marriage or their careers can be a tightrope walk,

by Preeti Kulkarni

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here is a general belief that when children leave home, you may find extra resources to invest in yourself and towards your retirement.

However, in times of nuclear families and longer years when children are dependent on parents, this is not how plans may pan out.

There is something about Indian households where parents tend to overlook their own financial goals, especially retirement and focus relentlessly on their children’s future. There are plenty of instances when parents have withdrawn from their provident fund to get their children educated or married.

So, it does not come as a surprise when chances are high that as a parent you may be managing dual households—your own and that of your children studying in a different city, or who have just gotten married. It is a tough balancing act to pull off, but is achievable like

everything else with some meticulous planning.

Take the case of 57-year-old Mumbai resident TG Radhakrishnan – his 22-year-old daughter Roshni is pursuing her MBA in Bengaluru, while he lives with his wife PR Vijayalakshmi in Mumbai. Here is the case of a couple at the cusp of retirement managing dual households.

“Being the sole financial provider of the family, I have to work very hard to manage the household. Moreover, it is also important to ensure that my daughter completes her education” says Radhakrishnan, who is into the business of machinery maintenance. College fees apart, living expenses also have to be provided for. “I pay for the expenses as much as I can and for the balance, I have borrowed from friends and relatives. At present, I am working hard to repay these loans,” he adds. Next academic year, the family plans to apply for an education loan to balance their requirements.

Facing new challenges

The empty nest as a phase in life is one when your children have left home and your house is nearly paid off reducing your financial burdens Photo: soumik kar

SUDHAKAR SHANBAG CIO, Kotak Life Insurance

“The right time to start planning, saving and investing was yesterday If you have not started yesterday, then it is today.”

RadhaKRishnans, Mumbai Their daughter is pursuing her MBA in Bangalore and this distant living has introduced them to a future possibility a lot earlier.

“Being the sole earner, it is a challenge to work within the limited means to ensure everything is met and no compromises made.”

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Cover Story

MANIK NANGIA

Director Marketing and Chief Digital Officer, Max Life Insurance

“Planning for children’s education should start from the time of their birth so that one does not have to dip into corpus created for other life stage needs.”

Financial Checklist In the empty nest phase of your life, do not be blinded by the love for your child to compromise on your own finances.

Budget and pay bills on time – you cannot do without utilities, food, gas, insurance and mobile service before spending on discretionary items.

Maintain an emergency fund and review it more frequently if you have children who still depend on you occasionally for money matters.

Manage debt and be debt free by this time. Encourage children to borrow on their own, especially when it comes to education loan.

Although your risk appetite towards equities may be waning, do not sway away from investing in equities, because that is the only asset class to beat or match inflation.

Do maintain your health insurance till the insurer allows. There are special policies for senior citizens, which you should consider taking if you don’t have one.

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considerably. Conversely, you are nearing retirement and will be more conservative, focusing more on capital preservation than growth. You may also be experiencing increased medical costs. This is how typically one refers to empty nesters in the classic sense. However, these days, this could turn into a stage in life that can be extremely taxing as major expenses pile up during a short span of time. “It’s a challenging phase to say the least. The best way to address the same is to stick to the basics of savings and investments,” says Sudhakar Shanbag, CIO, Kotak Life Insurance.

One way to manage this phase deftly is to learn from others’ mistakes. “Many tend to underestimate children’s expenses - apart from their tuition fees, there can be additional costs like taxes (GST), hostel costs, food, clothing, travel to parents house from city or country for holidays,” points out financial planner Tejal Gandhi, CEO and founder, Money Matters.

Also, you need to take into account their medical expenses that may come up.

“Change from a field to another if the child is not able to manage can also increase the cost of education,” she adds. Typically, at this stage in life, the classic challenges faced by the sandwich generation are bound to come to the fore.

“Parents normally have older dependent parents at this stage of their life (in their forties) which might increase their expenses when they have to meet their medical expenses, if not covered by insurance policies,” highlights Gandhi.

Have a contingency back up in place in case things do not go as per original plan. For example, even if you have planned for funding your children’s higher education, their career choices might throw up surprises you may not have factored in. “Times have changed and there are multiple career options one can opt for. There is a possibility that you may require the funds earlier than expected in case your child decides to pursue a different career from the one you financially prepared for,” cautions Manik Nangia, director, marketing and chief digital officer, Max Life Insurance.

A plan for you

Getting the basics—creating an emergency fund, adhering to your budget, increasing savings by reducing expenses, buying adequate life and health insurance and making investments after linking them to specific goals—can go a long way in ensuring your peace

deys, Kolkata Photo: sandiPan chatterjee

of mind during the turbulent period. “There is a spectrum of simple tools to hiring an advisor which can be used to ensure you are able to execute and monitor your plans. One has to actually start doing it to believe it and reap benefits,” says Shanbag.

Savings and investments apart, insurance can be your most trusted ally while taking challenges head on. “Parents will need to think about what would happen if death or disease prevents them from reaching the savings pot which they’ve imagined for the child when they are 18. All other avenues can provide the savings bucket you need—but only a life insurance plan can manage the risks of death and move towards the goal,” reasons Nangia.

Kolkata-based couple Salil and Debalina Dey are a great example of how early planning can be rewarding in future. While their 18-year-old son Jishnu is studying in Bhubaneshwar, their 26-year-old daughter Shreyasi has just started working after completing her education. “We have always had a regular monthly savings plan, which has been a great enabler. We have always used one of our salaries for household expenses and saved the other,” says Debalina.

The Deys have two children for whom they wanted the best of education, ensuring that everything was planned to meet their career ambitions.

“We have got used to both of them being away because of education in recent years. As we both have been working, we made sure we save and invest for their education from an early date.”

They had invested in traditional life insurance policies so that they mature when their kids enrolled into colleges. Another source of comfort is their investment in real estate. “We have also invested regularly in mutual funds, in addition to some tax-saving investments. It really helped us that we started early in life,” affirms Debalina. The idea was to create a fund that is large enough to eliminate the need for education loans. “At the graduation level, we had planned their studies in India. If they want to study abroad, we can support them and they can also look for scholarships,” she adds.

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Traps of being in an empty nest

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ne thing true about parents is that they will never stop caring for their kids, be it emotionally or even financially. In their eagerness for the best, many parents tend to continue to offer their children extra support, be it for a down payment on their first house or to help fund their college education or marriage. In many instances, parents go as far as paying for their grand children and bestowing gifts on them. There is nothing wrong with this approach as long as you have the money for your own needs.

However, given the increasing longevity and empty nests, it is important for you to factor in your retirement needs a lot more closely than helping your children. There is equal chance that you are in your 50s and you now have the opportunity to make catchup contributions to your retirement savings.

Do cut the emotion and let children fend for

themselves, especially if they wish to study further, because there is education loan, which is easily available these days. Moreover, the more you are letting your child depend on you, the more you are making them less dependent on themselves.

Lack of financial awareness and understanding is one of the biggest causes for several elderly parents to be funding their children’s financial dreams well into their marriage and even later.

If you do have some extra money, don’t hoard it or pass it to children. There is no harm to splurge on you or catch up with friends. If you have extra room in your budget, go ahead and indulge: travel, learn a new skill, do whatever else you have been dreaming. These days you have the choice to post online to find people with similar interests and stage to expand your network of acquaintance in this late stage of your life.

Finding a way

TEJAL GANDHI

CEO & Founder, Money Matters

“Parents should plan for higher education for children when the children are about 3-4 years old to benefit from the power of compounding.”

AMAR PANDIT

Founder, Happynessfactory.in

“As you move closer to the goal, shift to debt instruments to safeguard the corpus you have built.”

If your planning has started late, be prepared to embrace the uncertainties—market risks as well as the chance that your efforts could fall short of expectations. “Take stock of the funds your child will need over the term and your current savings.

If your goal is say five years away, look at investing in balanced funds, after factoring in your risk profile. As you move closer to the goal, shift to debt instruments to safeguard the corpus you have built,” recommends Amar Pandit, founder, Happynessfactory.in, a financial planning portal.

When it comes to settling children, you need to make sure that you get it right; some parents start planning for their children’s future right from their cradle days. When you start early, you give yourself a longer investment horizon.

It gives you the luxury of setting aside just small sum and also of stomaching market risks.

More importantly, follow the first principle of investing – maintain your asset allocation and rebalance it periodically. Instil the habit of money management in children from a young age so that they can be on their own as they get older than depend on you indefinitely. preeti.kulkarni@outlookindia.com

Inputs from Anagh Pal

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Critical and Personal Accident Covers

A Must in Your Protection Portfolio Add personal accident and critical illness covers to your protection portfolio to ensure complete financial security against risks, by Preeti Kulkarni

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hat life and health insurance policies are critical to protect oneself and dependents from unforeseen exigencies is a widely accepted view. However, not many stop to think of the major risk that can deal a body blow to finances during one’s lifetime—that of being disabled in an accident, affecting employability and thus, income flow.

A large life or health cover would be of little help in making good the loss of income. The only solution to this conundrum is to buy a personal accident – or accidental death and disability – covers. Disabilities could include dismemberment of any body part, loss of sight or hearing.

A simple health cover of say `5 lakh could also prove to be inadequate should one contract a major illness like cancer or renal failure, which entail huge treatment costs. This is where a critical illness of say `20-25 lakh could help, shielding your finances from the impact of treatment expenses.

The Workings

A personal accident policy, like a term cover, is a fairly uncomplicated product. It does not promise any returns during the policy tenure or at maturity, but compensation in case an accident leads to the life assured’s death or disability. The product is also quite cost-effective. For example, a 35-year-old buying an independent accident policy of `10 lakh, which also covers disabilities, will have to pay a premium of around `1,500 a year, depending on the insurer and

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Disability Lexicon Permanent total disability (PTD): This kind of disability can put one out of action from attending to any occupation of any nature, such as losing vision or loss of both hands and/or feet.

Permanent partial disability (PPD): This form of disability impacts one’s day-to-day functioning at workplace. Again, insurers define such a situation due to loss of sight in one eye or the physical loss of an entire hand or foot, loss of speech or hearing, among others Temporary total disability (TTD): Injuries that totally disable and prevent the insured person to attend to his normal duties in workplace that last temporarily for a certain period

Outlook Money November 2017 www.outlookmoney.com

plan chosen. You can also choose to buy this cover in the form of a rider attached to your life insurance policy. The key advantage here is the convenience it offers at the time of renewal—you can renew both at one go. Do note, however, that should you discontinue your life policy and decide to switch insurers, your personal accident rider will also cease to exist. Also, some policies, depending on the variant chosen, cover education expenses of children in case of death or permanent total disablement of the insured.

A critical illness cover too is triggered only in the event the policyholder is diagnosed with major ailments specified in the policy.

Unlike regular health plans that reimburse the actual hospitalisation expenses, it hands out a pre-defined sum upon the diagnosis. Even if your regular health cover can shoulder a large part of the expense burden, the critical ailment plan will come in handy to take care of any loss of

income or recuperation and lifestyle modification costs.

Read the Fine Print

While a personal accident policy is a simple product to understand, you need to understand the nittygritties before choosing one. Read the clauses that trigger admissible claims carefully. For example, some policies pay weekly compensation in case of temporary total disability, while others make a payout only if the disability is permanent in nature.

Besides, if the life assured loses say one eye or limb, the claim disbursal might be restricted to 50 percent of the sum assured. The sub-limit for say burn-related injuries could be `50,000 even if your overall sum insured is `10 lakh. Moreover, in case of temporary total disability, the weekly payout could be capped at 1 per cent of the sum assured, up to say 100 weeks from the date of accident.

Likewise, in case of critical illness cover, go with a policy that has broader terms of coverage rather than one that promises to cover a large number of ailments. Also, keep an eye on the percentage of payout promised in some cases. For example, early stage cancers.

Buying a cover after evaluating the exclusions and sub-limits will ensure that you will not have to regret your purchase later. preeti.kulkarni@outlookindia.com

Rajiv Kumar

MD & CEO, Universal Sompo General Insurance

Critical Illness & PA Who should consider personal accident policy and why?

A personal accident policy, without doubt should be the first insurance policy one should invest in when one reaches adulthood or/and regularly starts venturing outdoors due to personal or professional commitments. More and more people are exposed to the risk of accidents. Indian roads are amongst the most unsafe in the world.

Such fatal accidents can cause huge hospitalisation expenses and corresponding medical bills, thereby vanishing one’s lifelong savings.

A personal accident insurance cover not only monetarily compensates for the death of the insured caused due to an accident but also extends financial support when the insured has been immobilised due to the accident, irrespective of the physical immobility being permanent or temporary in nature. The cost of premium for choosing a personal accident cover is minimalistic when compared to health insurance.

What are the main features of this policy?

Sum insured, policy coverage,

benefits, add-ons available, and exclusions are the key factors one should keep in mind while buying a personal accident policy.

Generally, a personal accident policy covers bodily injuries or disability or death caused solely by violent, accidental, visible, and external means. Some of the common features of personal accident policy across all the insurers are accidental death, permanent total disablement, permanent partial disablement and temporary total disablement.

How is this different from critical illness cover?

Unlike a personal accident policy which is a fixed benefit plan covering bodily injuries or disability or death caused solely by violent, accidental, visible, and external means, a critical illness policy is a defined benefit plan.

It pays a lump sum amount on diagnosis of any pre-specified life-threatening disease such as cancer, first heart attack, multiple sclerosis, etc. (number of life threatening disease may vary for different insurers).

Get instant Financial support on diagnosis of Critical Illness to counter heavy medical expenses Bene ts:Ÿ Ÿ Ÿ Ÿ

Coverage for 11 Critical Illnesses and Surgical Procedures including Cancer, Kidney Failure, Permanent Paralysis, First Heart Attack of Speci c Severity and many more.

Sum Insured ranging from Rs. 2,50,000 to Rs, 20,00,000.

No medical test up to age of 55 years.

Get 15% discount in premium with purchase of Critical Illness Cover for three years.

Toll Free No. 1800 22 4030 Log on to www.universalsompo.com A joint venture of Allahabad Bank Indian Overseas Bank Karnataka Bank Ltd. Dabur Investment Corp Sompo Japan Nipponkoa Insurance Inc.

ENG/CI/MAG/2017 | IRDAI Regd. No. 134 | Regd. Office : Unit No. 401, 4th Floor, Sangam Complex, 127, Andheri Kurla Road, Andheri (E), Mumbai – 400059, Maharashtra. | Fax# 022-29211844 | CIN# U66010MH2007PLC166770. | UIN No. IRDA/NL-HLT/USGI/P-H(c)/V.I/29/13-14 Email: contactus@universalsompo.com. | Insurance is the subject ma er of solicita on. | For more details on risk factors, terms and condi ons please read sales brochure carefully before concluding a sale. IRDAI or its officials do not involve in ac vi es like sale of any kind of insurance or financial products nor invest premiums. IRDAI does not announce any bonus; Those receiving such phone calls are requested to lodge a police complaint along with details of phone call and number.

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Enterprise

Thrill Seekers Welcome The story of two techies changing the Himalayan landscape with customised treks that are affordable and gaining popularity.

By

Rimme DiRchi

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t a time when technology has created abundance of new business ideas and ventures, it is surprising to meet two IT professionals venturing into the business of outdoor activity.

Meet Ashish Bhatia and Nitin Mahajan, who are both adventure seekers. Setting up Trek Trails in 2016, the idea was to make weekends more productive and invigorating, and it has turned into an exciting new business venture.

“We realised that like us, there are several others who have only the weekends to spare to follow their passion,” explains Ashish about the genesis of the venture.

What actually started off with three friends coming together to pursue their interests in trekking and mountaineering has shaped into a business model, which allows them to enjoy nature and also make money on the side. Based out of Chandigarh, this ecofriendly company has gathered the necessary buzz, which has resulted in easy flow of people seeking their adventure trek services.

“The idea behind Trek Trails is to provide a platform for rejuvenation amid the hustlebustle of work life,” explains Nitin Mahajan. It is for this reason that their treks are actually

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centred around weekends, relegated to spending time outdoors.

At a time when several trek routes are well documented, the duo used their own past experiences to discover many new places, which has resulted in them offering several unique destinations. In order to make the experience completely authentic and natural, they have made arrangements with the local communities in the hill where their treks are held. “We give back to these communities in

Photo: gireesh gv

our own way and ensure that no one litters the villages when we are trekking through them and so on,” stresses Bhatia.

They also do their biding by contributing towards development of these remote and far-flung areas. During their recent travel to Kareri Village in Himachal Pradesh, they ended up distributing stationary to schoolchildren. “The experience of being with remote communities on treks is very different from what an ordinary trek is like. Our

customers also share the joys of giving back to the communities when they join us in such activities,” adds Mahajan.

Passion takes over

Both Ashish Bhatia and Nitin Mahajan are IT professionals and have full time jobs. This meant they could devote time to their venture only after work hours and weekends. “We wanted to try out something which interested us, was less expensive to operate, and allowed

www.outlookmoney.com November 2017 Outlook Money

67

Enterprise

Adventure Checklist Launch: January 2016 Location: Chandigarh initiaL investment: `90,000 usP: customised and eco-friendly treks

us to have fun,” they state in unison. Trek Trails may not have an office, but their efficient website has allowed all the necessary work for business to come in their way; the social media presence, word of mouth about their offerings, and a general network of people keen on adventure have all aided them in this nascent business.

On being asked how they manage everything, Ashish explains, “over time, we have managed to build good repertoire with the locals from the sights we visit, so that helps us in doing our research thoroughly. We identify the area for trek and get in touch with a small team we have built and then we finalise our location. The online thing works for us for now because both of us have full-time jobs and we can manage everything efficiently online. Our clients come from diverse categories—solo women travellers, school children, casual trekkers, nature lovers; everyone is welcome here.’’

With a small capital of less than `1 lakh, some equipment and gear needed by trekkers, the duo managed well in stepping up their entrepreneurial journey. “Our initial investment came from our savings and we hardly

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Outlook Money November 2017 www.outlookmoney.com

had any overhead costs,” recounts Bhatia. The two have plans to expand to cover more areas across the foothills of Himalayas. Plans are on anvil to venture next into Uttarakhand and then to extend our journeys to the North-East region, with eventually offering Nepal and Bhutan as options. With their business growing more than ever, they plan to quit their regular jobs to run Trek Trails full time.

Lean team

“We decided on creating these unique ecofriendly trekking trails for anybody who is up for some adventure. This has personally been very enriching journey for the both of us. As we enable a platform for people who share our passion towards nature. Our effort goes into ensuring that our clients have personalised quality services and we have hired a permanent team working for us,’’ they state. Moreover, being trained and certified themselves, having the right skills and qualifications was never a challenge. The founders are adrenalin junkies with Ashish Bhatia being a certified Advance Mountaineer and Nitin Mahajan being a certified Wilderness First Responder from NOLS, USA and a certified crossfit trainer.

The treks offered by Trek Trails encourages limited number of people in the groups for better organised experience. Typically groups of as less as 12-15 people are popular, though they have organised treks for up to 50 people as well. ‘’We have hired a highly efficient team who are locals and belong to the sights we visit and this has allowed in smoothening the process of managing our treks. So far, we have only explored Himachal Pradesh but we wish to expand and explore other parts of the Himalayas,” explains Bhatia.

Although the idea seems very simple to start and set into a business, there are challenges such businesses face. Finding time, organising the treks and ensuring safety of those who are on such treks are all facets that the Trek Trail team witness in each journey. They also make profits which helps continue this venture. Considering the model is designed mostly as a weekend activity, and with full time jobs to keep them busy, the Trek Trails team is delighted with the way things have shaped up so far. Not only do they get to follow their passion, they manage to spend time with other thrill seekers and also make money for their expertise. rimme@outlookindia.com

Gadgets

Gadget Reviews

Here’s a rundown on the latest gadgets that can come in handy, by Tushar Kanwar Xiaomi Mi Mix 2

X

iaomi has largely been seen as a value-for-money, budget player in India, and the Mi Mix 2 is a bold step forward for the brand to showcase its premium side. Sporting a nearlybezel-less display and a ceramic body, the Mix 2 packs in a 5.99-inch screen in a phone that is no bigger than most 5.5-inchers, and Xiaomi’s kitted it with flagship hardware to boot. It’s priced alongside formidable competitors like the OnePlus 5 and the Nokia 8, but if there is a phone that looks like it’s from the future, this is it.

Pros: There’s much to like in the Mix 2, from the no-compromise components—a Qualcomm Snapdragon 835 chip with 6GB of memory, 128GB of fast storage and the most global radio bands in any phone—to the incredibly good looking ceramic back with a fingerprint reader in the right place. Of course, the highlight clearly is the expansive screen, which stretches all the way up to the top of the phone and avoids the notch we’re about to see in the iPhone X by some clever engineering around the earpiece and the proximity sensor.

Cons: The weak link is the camera, which takes good-looking photos that are rich with detail only in good light. `35,999 In low light, you start seeing some amount of blur and noise. Courtesy the virtually non-existent top bezel, the selfie camera moves down to the slim chin below the display, and takes some getting used to. It’s priced incredibly competitively, but at this price point, the lack of features like water resistance and wireless charging stand out.

Samsung SSD T5

H

ard drives may still rule the roost when it comes to affordability, but when it comes to performance and reliability, solid state drives—drives that store data on flash memory chips instead of spinning magnetic platters are unparalleled. Samsung’s Portable SSD T5 is up to five times faster than most other external storage devices, with its support for the super speedy USB 3.1 Gen 2 standard. It weighs only 51

`13,500 onwards

grams and can connect to your PC or Android phone directly as well, plus it’s shock resistant and can withstand accidental drops to up to 2 meters.

Pros: Since it uses the future-proof USB Type C port which is fast becoming the norm on phones and newer laptops, it’s good to see Samsung has got an eye on backward compatibility with existing devices. You get one USB C-to-A cable for your PC/Mac and one USB C-to-C for your newer smartphone or tablet or laptop—a small inclusion but one that matters until we reach our all-USB-C future. Speeds on current USB 3.1-compatible devices are downright blazing, with read speeds touching nearly 500Mbps and write speeds about 440Mbps.

Cons: It’s pricey, so it’s likely to appeal to professional video editors and photographers who need large volumes of data on the move. It’s a great investment for professionals, but normal folks couldn't possibly justify this outlay, no matter how spectacular the performance.

www.outlookmoney.com November 2017 Outlook Money

69

Gadgets

Apple Watch Series 3

A

pple’s wearable continues its dominance in the smart watch category, and while India won’t be seeing the LTE cellular data-equipped version of the Watch, the third gen model that launches here features improvements such as an altitude-aware barometric altimeter and constant heart monitoring capabilities (including post-workout cool-down period and irregular heartbeat tracking).

Pros: The design is iconic; the combination of a pleasingly neutral face with dozens of interchangeable straps work very well, whether you like its square face or not. There is new hardware under the hoot, including a zippier S3 processor and a faster and more energy efficient W2 wireless chip, both of which contribute to snappy everyday performance and by far, the most responsive

user experience on a smartwatch.

Sports and fitness tracking is still its forte, and this version ups the game in swim tracking and gym workouts. Despite the brighter OLED display, the Watch manages a full day of use.

Cons: When you're buying the Apple Watch, the usual caveats apply—it doesn't come cheap, and you’re locked in to using it with the iPhone—not to mention your data is locked down to a small number of compatible apps. Siri on the Watch is more useful now, but it is still limited.

`29,900 onwards

HP Sprocket

A

printer that fits in your pocket and one that will certainly raise eyebrows at the next party—the HP Sprocket is a portable power-bank sized printer that pairs with your smartphone and prints photos from your camera roll and social accounts onto small sticky-backed 2x3-inch ZINK/HP photo paper sheets. Best of all, no worrying about ink cartridges – just pick up a new pack of ZINK sheets (500 bucks for a 20-pack) and you are set.

Pros: Instantly printing photos at a get-together or a party is immensely gratifying, and these little stick-anywhere mementoes are perfect giveaways that can guarantee a smile from anyone. The fact that you can carry this printer in your pocket and print just about anywhere you can imagine simply by connecting to your smartphone over Bluetooth makes it almost worth the price of each print. The battery lasts nearly 1.5 days, which is very respectable for phone with a display this big.

Cons: This is not for everyday prints, but even so, with ZINK paper selling for about 500 bucks for a pack of 20 sheet, with a pack of 50 setting you back by `1249, this is a pricey proposition. The end results are usable, but you wouldn’t call them outstanding, with colors that are slightly muted when compared to the original image. The prints themselves are tiny, and I’d have preferred a slightly bigger Sprocket that could push out a more practical 6x4 size print instead.

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Outlook Money November 2017 www.outlookmoney.com

`8,999

Nokia 8

N

okia’s return to the smartphone business was missing a true flagship smartphone, until Nokia 8 was launched. It checks off all the specs and features, matching the best Samsung and co. have to offer at a price that will not burn a hole in your wallet. Add to it clean, uncluttered software and a sprinkling of classic Nokia design magic, and Nokia may have a winner on its hands.

Pros: The 8 delivers what a lot of folks wanted – a Nokia-branded smartphone with flagshipclass specifications. You get a Qualcomm Snapdragon 835 chip with 4GB of memory and 64GB of storage (expandable if you forgo a second SIM). Since it ships with near-vanilla Android 7.1.1, the lack of software bloat coupled with top-notch hardware equals excellent day

to day performance and multitasking, proving that you don't need 8GB of memory to make a flagship. The 5.3-inch QHD (1440x2560 pixels) LCD screen matches the best in the business when it comes to colors and brightness, and you get all-day battery life and quick charging as well.

Cons: The camera was a mixed bag – in good light, the dual camera (color + mono sensors) setup captures bags of detail and good colors, and there’s even a mode for those blurred background portraits, but low light images lose out on detail. The unfortunately named ‘bothie’ mode, which takes simultaneous photos or video from the front and rear cameras is unique, but the novelty is short lived. Not fully waterproof either.

`36,999

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The greatest risk is not taking one!

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Travel

Italy

an Artist’s Paradise

Outside the iconic Colosseum

From Rome to Florence to Venice, this European destination will be hugely rewarding with everything that it offers, by Manish Mehta Photographs by

I

undertook a vacation to the beautiful country of the Romans, Italy, rich in history, fashion, food, wine and cappuccino.

The journey began in Rome and the city was definitely not built in a day. Getting to the city from the airport is easy with the Leonardo Express train from the airport to the main train station Roma Termini or if not in a rush, one can hop into buses which get one into the main train station for between 5-7 euros with free WiFi. Hotels are a plenty and most popular spot would be

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Manish Mehta

around the Main Train Terminus. I would not recommend Air BnB type accommodations because Italy is prone to petty thefts and you do not want to be stranded in an unfamiliar city. Also, all hotels charge a city tax ranging from 4-6 euros per person per night which needs to be paid at checkout, so budget for it when making a booking. Roaming within the city is easy too. I would not recommend the hop on hop off bus in Rome since most sights are in narrow lanes, which are not accessible by the bus. Better to take the underground and it’s feasible

Outlook Money November 2017 www.outlookmoney.com

since it has only four lines.

I would definitely recommend a walking tour which starts from the old city and concludes at the Colosseum. It was interesting to know how every empire kept building the city over the old one just like a lasagne. The Colosseum is a marvel of architecture. I was immediately transported into the era when the Romans would host the games and the sheer size of the place is bound to mesmerise you. No trip to this city is complete without a visit to the Trevi fountains, Spanish steps, Pantheon, and Republic square.

When in Rome, Vatican City cannot be missed. I took another walking tour of the museum and church to get a glimpse of the history, art, the Sistine Chapel, and the church in about three hours.

Locals say that a complete visit through the museum can take up to three months but I say three days are enough in Rome unless one is into history and wants to know more.

Next stop was to the Island of Capri just off the coast of Naples.

It’s a lovely drive from Rome to Naples and the region is famous for their lemons, so ensure to fill in some lemon milk chocolates and lemonchillos. It was probably the highlight of my trip and definitely a place to spend a few nights in.

Located at a higher elevation on the Island is Ana Capri, which was filled with hotels, restaurants. Island is a tad more expensive than the mainland but the experience is worth the extra money spent. During the stay in Capri, one can take boat trips round the Amalfi Coast or visit the Blue Grotto (sea cave). The water colour completely changes to fluorescent blue inside the cave and it’s a spectacular sight. Don’t forget to carry your swimwear if you are in the mood to dive inside the Blue Grotto.

Next stop was the city of Florence, capital of the Tuscany region, famous for wines and leather. The old city is an easy walk from the main train station and good hotels can be found around the station or the old city. Most sightseeing places like the Duomo and the old bridge are at walkable distance. They have a roadside market for their famous leather products. An interesting observation was many locals in “Being Human” T-shirts, which on further investigation led to the findings of a Salman Khan movie song being shot in the town square and distribution of the T-shirts.

No trip to Florence is complete without an excursion to Pisa. A

Close encounter at the Pantheon

By the trevi Fountain Walk around Rome

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75

Travel

Gothic Church View

What to knoW Best time to visit:

April to June, Sept to Oct

Must try:

Lemonchillos in Naples, boat ride to Blue Grotto, wine tasting in Pisa, Gondola ride in Venice

Conveyance:

Trenitalia rail network offers smooth traveling experience across the country

Must visit:

Island of Capri

day’s trip to the Tuscany country side is recommended for vineyards, wine tasting, and soaking in the countryside.

The final stop was Venice, which personally was bit of a disappointment after having visited other canal cities like Amsterdam. It is a maze and be prepared to carry a map the moment you get there.

There is a good network of water taxis, but expensive. The famous Gondola ride is a must and for a better experience should be taken on the main waterways rather than the internal canals. The usual charge of 60 Euros till 7pm increases to 100 euros post 7pm. The touristy

the Rialto Bridge

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Duomo, tuscany

Outlook Money November 2017 www.outlookmoney.com

Venice by night

places to stay can be found around the St. Mark’s square, which is full of shops selling local artefacts. A trip to the island of Murano and Burano is recommended to experience the intricacies of glass making at Murano. Burano is a lovely fishing town famous for their lace and local biscuits. If in the mood for some sea and sand, head to the Island of Lido just off the island of Venice.

Internal travel is very efficient on the Trenitalia network of trains.

Summer is not the best time to travel across Italy as it is extremely hot / dry with occasional thunderstorms, and was probably the biggest damper in my trip. Hence, the best months

Orvieto Cathedral

By the Leaning tower

Italy is a breathtakingly beautiful country with varied experiences of history, culture, art, and food on offer for a trip to Italy would be from September to October for the perfect weather.

Italians are passionate about their food so be prepared to only see pizzas, pastas, and gelatos. Trivia, the margarita pizza, depicts the three colours of the Italian flag – Red (Tomato), White (Mozzarella Cheese), and Green (Basil Leaves). Most restaurants will charge a cover charge irrespective of what you order so if that’s factored into your bill, you may decide on the tip. Another interesting observation, unlike India they don’t give you tasters of gelato so better be sure about what you want to order.

Italy is a beautiful country with varied experiences of history, culture, geography and food. Did I see it all?

Definitely not; probably a glimpse and a longing to return to the country, albeit in better weather.

Where the dead lay buried

a View from the top

Manish Mehta is National Head-Sales & Distribution, Kotak Mutual Fund and an avid traveller www.outlookmoney.com November 2017 Outlook Money

77

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Book Review

The UlTimaTe GUide To 21sT cenTUry careers

DesigneD to brace you up to new age careers

A

t a time when finding jobs are getting harder by the day, this book is a great attempt to showcase the changing job trends and career opportunities. Who would have imagined about a career in data analytics, coffee brewing or animation and gaming? In this book, Richa Dwivedi has shared her expertise in career guidance, training and coaching. The changing trends in education in the past two decades have left students with plenty of choice, but very few clear career options.

A growing economy has also meant that people have been forced to acquire new skills and update themselves frequently to stay relevant with changing job scenario. The author is forthcoming to state early

on that not all jobs are for everyone.

She urges you to go for a field of study and a career that would help you find your flow. No, this is not some esoteric suggestion, because Dwivedi actually has come up with a way that will help you find your style or fitment.

Every possible old and new age professions are dissected with possible job description in detail. There are a lot of examples thrown in of what one could do and the kind of remuneration one can expect. There is plenty of resource material in the form of colleges to consider, courses to pursue with associated costs and prospects.

A very useful reference book for youngsters looking for a career path and anyone interested in understanding the changing dynamics of a workplace to stay relevant and hire accordingly.

Publisher

Author

Richa DwiveDi

hachette inDia Price

` 450

chase yoUr dreams

captivating anD stirring tale of master blaster's journey

C Author

Sachin tenDulkaR anD BoRia MazuMDaR 80

Publisher

hachette inDia Price

` 299

ricket is religion and Sachin is god! An autobiography with the versatile Boria Majumdar is a fast read for the less than 250 pages that the book spans. Spread over 40 chapters, the page rate for each chapter is 6.25, which is the kind of scoring rate you expect from Sachin the batsman. This book is an adaptation of Tendulkar's autobiography Playing It My Way, exclusively targeted a t children and young adults. You do find bonus pages in a comic format, which enhances the fun element of the book bound to leave you pleased once you are finished reading.

The book is structured chronologically spanning the over

Outlook Money November 2017 www.outlookmoney.com

two decades of his playing career.

There are several anecdotes and fun moments from his life, which have been shared in great detail including non-cricketing ones. In every page, you find something nostalgic and heartwarming to read and know of the man who made people sit up each time he walked into bat. There are details of international tours, select matches and how he fared in them and of experiences when traveling abroad.

The chapters on his surgery and recovery from recurring pain due to wear and tear of the body makes you feel sorry for the man. But, this is the story of grit and determination and the title just emhasises that. Read this one for Sachin and you will not regret it.

done

The SecreT DealS ThaT are changing our WorlD

story of those hanDshakes that are changing the worlD arounD us

Swotroryipng

T

his book, written by award-winning journalist Jacques Peretti tells the story of the secret deals that are changing everything around us —be it money, the food we eat, the drugs we buy, and the way we live. According to the writer, all these deals never make the headlines because they are done secretly on golf courses and in the high floors of board rooms that are inaccessible to most of us. Spread over 15 chapters, which are topics of immense interest, the book catches pace as you start reading it.

Peretti may sound cynical when he says that eight people own 50 per cent of the world’s wealth.

Likewise, you discover that 90 per cent of the world’s entire wheat production is controlled by four companies. Facts aside, the book has been stitched well with tales that very nicely override facts and research which maintains the pace and also leaves you wondering how come you did not know so much. It also shatters several myths, which otherwise we tend to take for granted.

The very first chapter—Cash: who is killing it and why—sets the tone for the book and can be very well empathised by Indians who are still facing the perils of demonetisation.

However much one may justify the demonetisation move, the move towards plastic and digital currency is a plan to make select networks to benefit from controlling money transfer.

Sharing example of Nestlé sending a boat up the Amazon handing

call us to address your employees to help them plan their:

Taxes retirement Publisher

Author

JacqueS PeRetti

hachette inDia Price

` 550

out chocolate, ice cream, and baby milk to indigenous peoples, gives insights into how large conglomerates are changing the way we live.

An example which can be closely observed in India these days is the manner in which coffee shops are mushrooming in every city, considering the fact that India is predominantly a tea consuming country. The coffee shop culture has managed to do many things— convert people to consume coffee by paying a big sum and making it seem elitist. Likewise, those serving coffee in these cafes are designated baristas, which sounds fanciful, but in reality these youngsters have barely finished formal education in many instances.

You will get insights which will make you notice things around you in a different vein than what you are otherwise used to.

Vacation Future Get your finances in order with

India’s No.1 Personal Finance Magazine

Financial Planning WorkshoPs For more details; write to suchitra@outlookindia.com or call: +91-22-33545019; +91-993-082-0790 shipra.singh@outlookindia.com or call: +91-995-362-1207 +91-11-33505683 We conduct financial awareness workshops at offices

Smart Money

Save Money for

Retirement

Going by recent incidents of low interest rates, you are likely to need twice as much money in your old age than you think would be enough

tion

I

la f n

Illustration: Mohan SharMa

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1990

1 Lakh

1996

60,630

2006

26,340

2016

11,440

RNI NO. DELENG/2002/08292

Over 2,79,500 unique investors^ in this fund.

Call your Mutual Fund distributor or visit

www.franklintempletonindia.com