Adarsh Thampy | Financial Freedom Blog For Indians

The Best Investment Plan - Which One Do You Choose?

By Adarsh Thampy. Last updated on April 29, 2020

Overview

There is no one-size-fits-all solution.

And that’s true, especially when it comes to investments.

Your goals, existing investments, job stability, financial dependents, all play a vital role in determining the best investment plan for you.

In this guide, I will present an investment plan for each of your life stages.

Recommendation: To comprehend the investment plans for each life stage, please read about asset classes and asset allocation.

The Best Investment Plan - By Life Stage

#1: Student

“I have saved up Rs 15,000. Currently, in my second year of college. Is it too early for me to start investing?”

I was surprised.

A 19-year-old engineering student wrote to me.

Not many students think about saving money. But if you do, you are on the right path.

It’s never too early to save and invest.

Recommended Savings Plan

Allocation	Asset Class	Investment Product
75%	Equity	100% in Nifty 50 Index Fund
25%	Cash	100% in Bank Savings Account

Pro Tip: You can invest 100% in equities since you are young. However, you need a buffer for unplanned expenses. The 25% cash in your bank account will help you manage without depending on your parents.

#2: Just Graduated - First Job - Early 20s

I still remember my first salary.

It was less than 50% of the money I used to make as a consultant. But it was special.

And soon after, I received my second, third, and other subsequent salaries. But I never saved enough.

After all, how does saving Rs 5,000 monthly matter?

I didn’t know the power of compounding back then.

If I had saved Rs 5,000, every month, for the last 10 years in equity, I would have more than 10 lakhs. And that’s assuming a moderate return of 10%.

Not chump change, right?

Here’s the recommended investment plan for your single life:

First, max out EPF + PPF (1.5 Lakhs). Of the remaining, invest as follows:

Allocation	Asset Class	Investment Product
75%	Equity	75% in NIFTY 50; 25% in NIFTY NEXT 50
15%	Fixed Income	100% in a GILT Fund
10%	Cash	100% in a liquid fund

#3: Single - Late 20s

When you enter your mid and late twenties, your priorities start changing.

Your salary increases, marriage is on the horizon, or you might want to go for higher studies.

Here’s the recommended investment plan for your late 20s.

Max out your provident fund - EPF and PPF (1.5 Lakhs total). Of the remaining amount, invest as follows:

Allocation	Asset Class	Investment Product
25%	Equity	100% in NIFTY 50
50%	Fixed Income	50% in GILT Fund; 50% Bank FD/RD
25%	Cash	10% in Bank Savings Account; 90% in a Liquid Fund

Are you surprised to see lower equity allocation?

In your mid-20s, you have a lot of upcoming expenses that are less than five years away. And equity is generally not recommended for the short-term.

#4: Married Without Kids

Your whole life changes when you get married. No matter how much you prepare, you can never fully comprehend the scale of change.

Tip: If your spouse works, plan investment as a family. While both partners can manage separate investment accounts, the asset allocation should be mapped across all your accounts.

Here’re the investment options for married couples without kids.

As always, max out your EPF and PPF up to the max limit of Rs 1.5 Lakhs.

Of the remaining investment amount, invest as follows:

Allocation	Asset Class	Investment Product
75%	Equity	60% in NIFTY 50; 30% in NIFTY NEXT 50; 10% in a fund with international stocks.
15%	Fixed Income	50% in GILT Fund; 50% Bank FD/RD
10%	Cash	10% in Bank Savings Account; 90% in Liquid Fund

#5: Married With Dependent Kids

Indian couple with kids - how should they invest?

Your life undergoes a drastic change once again when you have kids.

Here’s an investment plan if you are married and have dependent kids.

Max out your EPF + PPF (Max Rs 1.5 Lakhs). Consider adding NPS to your mix. This is earmarked for your retirement.

Of the remaining investment amount, invest as follows:

Allocation	Asset Class	Investment Product
60%	Equity	60% in NIFTY 50; 30% in NIFTY NEXT 50; 10% in an international fund.
20%	Fixed Income	50% Bank FDs/RDs, 50% in GILT funds
10%	Cash	10% in your Bank SB account; 90% in one or two Liquid Funds
10%	Mixed	Investment for your kids. 50% in products like sukanya samriddhi yojana; 50% NIFTY 50 Fund.

Note: You can open a mutual fund account for your child. You will be the guardian and can operate and invest on behalf of your child.

#6: Married With Kids Who Do Not Need Support

Once your kids are financially settled, you can start focusing 100% on your financial life.

Now is the time to accelerate and save for your retirement.

The recommended plan for you is as follows:

Max out the limit for EPF, PPF, and NPS combined. The remaining amount, invest as follows:

Allocation	Asset Class	Investment Product
60%	Equity	75% in NIFTY 50; 15% in NIFTY NEXT 50; 10% in an international fund.
30%	Fixed Income	50% Bank FDs/RDs; 50% in GILT funds
10%	Cash	10% in your Bank SB account; 90% in one or two Liquid Funds

Note: As you near retirement, reduce your equity exposure. However, zero equity exposure is not recommended.

#7: Retirement - 50 to 75-Year-Old

Ah, the golden time.

You worked hard over the past several decades. Now it’s time for you to rest and lead a peaceful life.

If you have a defined pension, consider yourself lucky. You will get inflation-adjusted pensions throughout your life.

However, if you are like the millions of Indians who will not receive pensions, your investments will need to work extra hard.

Here is the recommended investment plan for you during your retirement phase.

Allocation	Asset Class	Investment Product
30%	Equity	90% in NIFTY 50; 10% in an international fund.
60%	Fixed Income	50% Bank FDs/RDs, 50% in GILT funds
10%	Cash	10% in your SB account; 90% in one or two Liquid Funds

Note: You need to draw down money for your living expenses. Move the required amount from Fixed Income to Liquid every three months. Move from liquid to bank account as needed. You can also set up an STP (Systematic Transfer Plan).

#8: End of Life - 75 Years +

“In this world, nothing can be said to be certain except death and taxes”
Benjamin Franklin

As we enter the final phase of our lives, we need to be mentally and physically prepared.

Here’s a recommended plan for when you enter your late 70s.

Allocation	Asset Class	Investment Product
20%	Equity	90% in NIFTY 50; 10% in an international fund
70%	Fixed Income	50% Bank FDs, 50% in GILT funds
10%	Cash	50% in your Bank SB account; 50% in 1 or 2 Liquid Funds

Note: If you haven’t already thought about inheritance, now would be an excellent time to plan your wealth distribution. Consider setting aside a portion of your wealth to the less fortunate.

Why Picking The Best Investment Plans With High Returns Often Fails?

Why do financial scams happen?

One word - Greed.

Often, people chase high return investments. Most of the time, they fail.

High returns come with high risk. And most people are not capable of correctly estimating or mitigating risk.

Here’s how much returns you can expect from your various investments:

Asset Class	Expected Return
Equity	10-12%
Fixed Income	Inflation + 2%
Cash	Negative Inflation Rate
Cash Equivalents (Liquid Funds & Ultra-Short Term Funds)	Inflation + 1%

Note: The above chart can serve as a guide to use for planning. However, depending upon market conditions, the numbers can vary a lot. E.g., equity returns might have been 18% until last year. However, the year you want to withdraw, it can crash to -10%.

Customizing Your Investment Plan

The investment plans listed out here are static. Meaning, if you are married with kids, the recommended equity investment is 60%.

But that doesn’t mean that you invest the same percentage when you are 30 as well as 60 years.

You need to adjust your asset allocation based on your age.

FAQ

What about alternative investments?

There are several investment avenues for you in addition to the options listed on this guide.

You have PMS (Portfolio Management Service), Angel Investing, Chit Funds, AIF (Alternative Investment Funds), and several others.

Depending on your risk appetite, you can choose to invest in any of these. However, make sure you select alternative investments only after the basics are covered.

How does my risk profile affect my investments?

A risk profile is often used by advisors to recommend funds for you. However, I do not believe that a risk profile accurately portrays the risk an investor is willing to take.

Saying that you will hold on to your investments if the market falls by 50% is different than actually seeing your portfolio crash. The emotions you experience are very different.

In my experience, it’s better to focus on the risk profile of your goal; Not your personal risk profile.

Can you reach your goals by investing in safe options like FDs?

No?

Then, you need to invest in equities, even if you are not willing to take the risk.

I invest in my goals. What plan would you suggest to reach my goals?

If you are a goal-based investor, your overall allocation remains the same. However, at each goal level, your allocation and product selection can differ.

Here’s a detailed guide I wrote on why you need to re-think goal-based investing.

I don’t like taking risks. Can I invest only in fixed income?

Maybe.

Depending upon your current financial situation and your goals, you can perhaps afford not to take risks and stay invested in safer investments.

However, most people, especially if you don’t have a pension, will not be able to retire without investment in equities.

I run a business. There’s already enough risk. Should I invest in equities?

Yes. While running a business is risky, you also need to diversify your risk. Investments in an index like NIFTY 50 allows you to diversify risk with smaller amounts.

I want to invest directly in stocks. How do I tweak my plan?

No. If you are confident about your ability to make money through stock selection, go ahead - split equity mutual funds and share market investing within your equity allocation.

How can I personalize these investment plans?

Speak with a financial advisor. Or keep reading, develop enough knowledge, and do it yourself. The main area you need to focus on is getting your asset allocation right.

Why do you stick with index funds? Why not arbitrage or thousands of other schemes?

I believe index funds will serve the purpose for most investors. Most other funds add complexity. And the underlying holdings are more or less the same.

However, you are free to explore other investment schemes and choose the ones that fit your financial needs.

Which is the best investment plan in India for middle class?

Whether you belong to the middle class or the elite does not matter. Look at what happened to Anil Ambani. The best investment plan will depend on your goals and asset allocation.

Are mutual funds safe?

Probably.

Most of the liquid mutual funds are considered safe. However, I have seen cases where even short-term funds crash due to exposure to stressed companies that default on their bond payments.

However, when you compare it to DIY, mutual funds are often safer because it gives you instant diversification.

Remember: The higher the risk, the higher the potential reward. So if you need to build a large corpus or reach your goals faster, you need to take risks with mutual funds.

A word of caution: The investment plans are meant for informational purposes. Hire a financial planner to create a customized investment plan for you.

DigiPay: Everything You Need to Know

By Adarsh Thampy. Last updated on April 28, 2020

Overview

To increase financial inclusion in India, RBI, along with NPCI, created AePS - Aadhaar enabled Payment System.

With AePS, the rural population in India can get access to financial services. With Aadhaar authentication, frauds, and misdirection of funds meant for the poor can be averted.

Various apps provide AePS services. I earlier covered Spice Money, a private company that offers various services, including AePS.

If you are looking for a government offering, let’s talk about DigiPay.

What is DigiPay?

CSC (Common Service Centres) is a government initiative to provide access points that deliver public services to citizens. CSC supports social welfare schemes, financial and agricultural services, healthcare, public utility services, etc.

Village Level Entrepreneur (VLE), deliver the services to the citizens, on behalf of the Government, through CSC.

DigiPay is an AePS offering created by CSC, IndusInd Bank, and NPCI. It enables VLEs to offer various financial services to Indian citizens.

How Does DigiPay Work?

VLE (Village Level Entrepreneur) can offer DigiPay services through a CSC.

Here is the step-by-step process:

A customer walks into your CSC
The customer requests for any of the services supported by DigiPay
You log in to the DigiPay app and place the request on behalf of the customer
The customer authenticates using either IRIS or FIngerprint scanner
The authentication data is checked against the Aadhaar database
If the authentication is successful, the request will execute
A digital bill will be generated
You will need to print the bill and hand over to the customer

Note: Bill printing and hand over to the customer is mandatory even if the request fails.

What Financial Services Does DigiPay support?

#1: Balance Enquiry

Let your customers check their account balance for the bank linked with Aadhaar.

#2: Cash Withdrawal

Let your customers withdraw money from their bank accounts linked to Aadhaar. The money is deposited to the DigiPay wallet. The VLE has to hand over cash to the customer.

Note: VLE must maintain a minimum balance of Rs 1000 at all times.

#3: Domestic Money Transfer

You can offer money transfer services for customers without a bank account. They can walk in with cash and transfer the amount to any Indian bank account.

The VLE should register the customer in the DigiPay application as a remitter. Once the remitter is added successfully, beneficiaries can be added and mapped to the remitter.

The remitter and beneficiary details are stored in the DigiPay application for future use. To prevent misuse, every time a transfer has to happen, OTP authentication using the remitter’s phone number is mandatory.

Note: The service is available only on domestic accounts. International money transfer is not allowed.

#4: Payout

Payout service is not intended to be used by your customers. It’s for VLEs to get the money. You can withdraw the money in your wallet to your bank account.

How Much Money Can I Make With DigiPay?

DigiPay offers you roughly 0.3% commission.

In a month, if you have a business volume of Rs 1 Lakh, you can earn Rs 300.

Note: For transactions less than Rs 100, you do not earn any commissions.

How to Register on The DigiPay App?

Step #1: Download the DigiPay app

DigiPay app is available as an Android app as well as a Windows desktop application.

Download the official apps here.

Step #2: Register with your CSC ID

Only a registered VLE with a valid CSC ID can register on the DigiPay app.

If you are not a VLE, you can register as a VLE here.

Note: Currently, CSC is not accepting any new application for becoming a VLE. The number of allowed VLE’s in each gram Panchayat/village has reached the maximum allowed limit.

Step #3: Validate Biometric

Once you register, you will be asked to provide your biometric details. Use a valid Biometric device to provide authentication.

Note: It’s mandatory to purchase any of the authorized biometric devices. A registered device service should be active and running for authentication to work.

Step #4: Access The Services

Once you validate your authentication using OTP and biometric, you can log in to the dashboard and use the DigiPay app.

FAQ

What is DigiPay?

DigiPay application helps VLEs earn income by providing financial services to Indian citizens. Developed by CSC-SPV, IndusInd Bank, and NPCI, DigiPay offers AePS (Aadhaar enabled Payment Service) functionality to the rural population.

What is the use of DigiPay?

DigiPay supports financial inclusion in India. Through AePS, DigiPay offers a range of financial services - check account balance, transfer money, and withdraw money.

How do I make a DigiPay account?

VLEs can create a DigiPay account with a valid CSC ID. If you do not have a CSC ID, you’ll need to register on the CSC website. However, CSC is not accepting new applications currently.

How do I install DigiPay?

You can download the windows application or the android app from the CSC website. The installation process with screenshots is available here.

How do I withdraw money from DigiPay?

To withdraw money from DigiPay, click on the “Withdraw” option on the left navigation menu.

On the page that follows, provide the following information:

Bank name
Amount to withdraw (Minimum rs 100)
Customer Aadhaar number
Customer Biometric

On successful authentication, the money can be handed over to the customer by the VLE.

What is Payout in DigiPay?

The payout feature enables VLEs to transfer money from their DigiPay wallet to their registered bank account. The passbook contains the details of the payout transactions. Payouts via NEFT are free while IMPS is chargeable.

How does DigiPay CSC work?

DigiPay CSC works based on AePS (Aadhaar enabled Payment System). Once you log in with your CSC ID, you can offer cash withdrawal, money transfer, and balance enquiry services to your customers for a commission.

Loan Against Your LIC Policy: Better Than Personal Loans?

By Adarsh Thampy. Last updated on April 27, 2020

Overview

If you have dependents, you need a life insurance policy.

The mental peace that comes from knowing that your family’s financial future is secure is worth the premium you pay.

There’s another added benefit.

If you’re ever in need of money, you don’t need to take high-interest personal loans. You can take a low-interest loan against your LIC policy!

Let me explain.

How Does Personal Loan Against LIC Policy Work?

Generally, a loan is given against collateral - something the bank can possess and sell if you don’t repay the loan.

When you take a loan against the LIC policy, the policy functions like collateral.

You can take this loan either from LIC directly or from other lenders.

Loan Attribute	Value
Max Policy Tenure	Policy Maturity Date
Min Policy Tenure	Six Months
Maximum Loan Amount	Up to 90% of Surrender Value
Interest Rate	Typically 9-12%
Applicable Policies	Endowment and Money-Back Policies

Understanding the Surrender Value

Surrender value is what the policyholder will get when you terminate the insurance policy before the maturity date.

Note: Surrender value is applicable only for policies that have a savings component. That means term-life policies are automatically ruled out. Even ULIPS are not eligible for loans.

The surrender value is meager in the initial years. As you pay more premiums, the surrender value keeps increasing.

There are two types of surrender values:

Guaranteed surrender value = Surrender value factor x Total premiums paid
Special surrender value = [(Basic sum assured x Number of premiums paid/ number of premiums payable) + accrued bonuses] x applicable surrender value factor

If your policy has both, the highest of the two values is considered as surrender value.

Say you have an insurance cover of say Rs 50 lakhs. After a few years of premium payment, the surrender value is Rs 10 lakhs. You will be eligible for a loan of around Rs 8-9 lakhs (80-90% of the maximum surrender value).

The Primary Benefits of LIC Policy Loan

It is straightforward to avail a personal loan against a LIC policy.

Here are some of the benefits.

#1. Quick Cash

Typically, a loan against LIC policy gets disbursed within max 3-5 days of the application.

If you apply through LIC, they usually transfer the loan amount within 2 days.

Some people claim to have received the money within 3 hours. That’s a lot faster than most personal loans.

#2. Low-Interest Rate

The interest rate against LIC policy is comparatively lower as compared to personal loans. Usually, the interest rate is between 10 and 12 percent.

Moreover, you need to pay the interest only once every 6 months.

#3. Minimal Documentation

Since the loan is given against the policy, it gets cleared quickly.

The following is all you need to apply for the loan:

Fill up the application form
Provide the original policy document (submit to the nearest LIC office)
Submit proof of residence, identity proof, and income proof
NEFT details for loan disbursement

#4. Flexible Repayment - No EMIs

The best part of a loan against LIC policy is that you can repay the loan at your convenience.

There are no monthly EMIs or fixed deadlines for repaying the loan. The only criterion is that you have to pay the accrued interest once every 6 months.

You can choose the following repayment options:

Pay interest + principal like a regular loan
Continue paying the interest portion of the loan only. Repay the principal when you have excess money
Pay only the interest portion of the loan. The principal amount can be settled against the claim amount on maturity/claim settlement

There are no pre-payment or foreclosure charges.

Once you repay the sum, you get your policy documents back.

#5. Credit Score is Irrelevant

Got a bad credit score? No problem.

You do not have to worry about your CIBIL score when you apply for this loan.

Even if you have a low score, LIC does not have any risk since they have collateral against your loan.

Guide Alert: To improve your CIBIL score, follow these tips.

LIC Policy Loan Eligibility: Can You Get The Loan?

Apart from being at least 18 years old and an Indian, you should meet the following conditions.

#1. Hold Endownment or Money-Back Policies

LIC gives the loans only to the endowment and money-back policyholders. Term plan insurance policyholders are not eligible for this loan.

Some of the policies against which the loan can be taken are New Jeevan Anand, Jeevan Rakshak, Jeevan Lakshya, Single-Premium Endowment Plan, New Endowment Plan, Limited Premium Endowment Plan, Jeevan Pragati, Jeevan Labh, etc.

#2. 3 Years of Continuous Premium Payments

To avail the loan, you should have paid the premiums in full for at least 3 years.

Note: If you have defaulted, you do not qualify for loan from LIC.

Loan Default Scenarios

#1: You Failed to Make Interest Payment

If you fail to pay the interest for 30 days after the due date, LIC can foreclose the policy.

The proceeds of the policy will go to the lender to settle the loan amount. You will get the remaining surrender value after the outstanding loan is deducted from it.

#2: Policy Matures Before Loan Repayment

If the policy matures before the loan is repaid, LIC can deduct the loan amount from the maturity amount. You get the remaining amount.

#3: Outstanding debt >= Surrender Value

If the amount of outstanding debt becomes more than the surrender value of the policy, LIC can terminate the policy.

The coverage benefit will stop, and you will not get any money back.

How to Apply for Loan Against LIC Policy?

Offline Loan Process

Submit Form 5196 to the nearest LIC branch to take out a new loan.

For a follow-up loan (second loan), you’ll need to submit Form 5205.

Online Loan Process

Before applying for a loan online, register yourself as a Premier User on the LIC website.

To register as Premier User, you’ll need to download an auto-generated form, take a print-out, sign the form and upload it on the LIC site. Here’s a detailed guide.

You can request a loan by clicking on “Online Loan” that is shown under the “Online Services Portal.”

Note: Even if the application is online, you still need to submit the original policy bond to your nearest LIC branch. If you lost the original policy bond, apply for a new one before requesting a loan.

Personal Loan or Loan Against Insurance Policy?

If you need cash urgently for medical, marriage, educational, or other expenses, a loan against a LIC policy is a great option.

When you take a loan against a life insurance policy, the policy gets assigned to the lender. The lender has the right to deduct the loan and interest outstanding from the claim settlement in case you die before paying the remaining amount to the beneficiaries.

However, in the case of personal loans, if the loan applicant passes away, the liability does not transfer to anyone else.

Recommendation: Overall, a loan from LIC makes better sense due to the low-interest. If the loan amount is not enough, take the remaining amount as a personal loan.

FAQ

How do I know the status of the loan application?

Log in to your LIC portal. The status will be updated once the loan is approved. If the loan is approved, it can take up to 2 days for the NEFT transfer to complete.

How quickly can I get the money?

After the application and submission of necessary documents, you can get the money as quickly as 3-4 hours. Sometimes it can take up to a week. Typically, you should get the money within 2 days.

Should I pay full interest or part-interest?

Always pay full interest possible. If you part part-interest, your net interest will be higher.

Can I submit a copy of the policy bond or upload a PDF document online?

No. You have to submit the physical bond.

With a digital copy, frauds are more likely. People can take loans from multiple institutions for the same policy.

What happens after I repay the entire loan?

The policy bond will be mailed to your registered address.

Do I need to pay the policy premium if I take a loan on the LIC policy?

Yes. You need to continue making premium payments. Else, the policy will lapse, and the loan provider can surrender the policy on your behalf to recoup the money.

What is the interest rate for loan against LIC policy?

9% to 12% is the typical interest rates depending upon the lender.

Should I take the loan from LIC or a different lender?

Taking a loan from LIC is easier. However, if you have a different lender offering a competitive interest rate, consider them.

What are the alternatives to taking a loan against a LIC policy?

You can consider personal loans or using credit cards. If your city has a trusted chit fund like KSFE, you can consider chit funds as well.

What happens if the beneficiary dies?

In case of death, the life insurance amount will be settled after payment of the outstanding loan principal and interest.

What happens if the policy lapses after taking the loan?

If the policy lapses, the lender can surrender the policy and recover the outstanding amount.

I have a non-LIC life insurance policy. Am I eligible for a loan?

Probably. If you have a money-back or endowment policy from any of the reputed insurance companies in India, you might be eligible for loans. Check with your insurance company and bank to see if the life insurance policy can be used as collateral for loans.

KSFE Chitty Analysis: Should You Invest in Chit Funds?

By Adarsh Thampy. Last updated on April 23, 2020

Overview

If you live in Kerala or is a Malayalee like me, you’d have heard about KSFE Chitty.

Chitties or Chit Funds are an integral part of savings in most Kerala households.

The most popular chit fund in Kerala is run by KSFE (Kerala State Financial Enterprises). Just like the state lottery, the Kerala state government runs KSFE.

What is Chitty? How Does a Chit Fund Work?

A chit fund/chitty is a combination of a recurring deposit and a loan.

Imagine that 100 people come together to form a chit fund. Each person commits to putting Rs 1,000 per month towards the Chitty.

Now the total chitty amount or “prize money” is Rs 1 Lakh (Rs 1,000 * 100).

Since there are 100 people in the Chitty, the Chitty will go on for 100 months. This gives everyone in the Chitty an opportunity to win the prize money.

If you need money urgently, you can participate in the “lelam.” The payout or “prize money” will go to the person who agrees to take the lowest amount (max discount applicable).

If more than one person bids for the same lowest amount, a lot is drawn to decide who gets the money.

The discount applied is then distributed among the Chitty members. This is the dividend payout.

There will be a person or an institution that oversees the Chitty. They will run the Chitty, handle the finances, and ensure everything runs smoothly. For this, from each Chitty, they get a commission.

Explaining With an Example

Let’s take the example of a Rs 1 Lakh chitty with 100 members. Divided equally, you need to pay Rs 1,000 for 100 months to complete the Chitty.

KSFE is the institution that runs the Chitty. They charge a 5% commission for the services they offer.

In the first month, you need to remit the full amount - Rs 1,000.

Let’s say a Roshan, a chitty member, is in urgent need of money. The lowest amount they can bid is 25%. E.g., if the chitty amount is Rs 1 lakh, the lowest you can bid is Rs 75,000.

Since Roshan needs the money, he bids the lowest amount. If no one else bids the same amount, he gets the prize money.

KSFE takes the 5% commission. So the payout to Roshan is Rs 70,000 (Rs 75,000 - 5% KSFE commission on the one lakh prize money).

Rs 25,000 is the discount. This is equally distributed to all members in the form of dividends. In this case, Rs 250 per person.

So, the next installment, you have to pay Rs 750 only (Rs 1000 - Rs 250).

KSFE Chitty Plans

There are various chitty plans that KSFE runs.

The monthly amount can range from Rs 1,000 to Rs 5 Lakhs. The duration is usually 30 months, 40 months, 50 months, 60 months, or 100 months.

To get the latest KSFE chitty schemes, call their Toll Free No: 1800 425 3455 or contact your nearest KSFE branch.

Sample KSFE Chitty Plan — A KSFE pamphlet that shows the upcoming Chitty plans

KSFE Chitty Analysis - What Returns do Chitties Gives?

KSFE is a tricky product to assess.

The prize money is guaranteed since the government runs KSFE. However, the returns are unpredictable. The returns depend on when you get the “prize money” and the dividends.

Sometimes it can be a blockbuster fixed-income investment. Other times, a bank savings account might be a better investment option.

So I did a detailed analysis assuming a chitty of Rs 10 Lakhs with Rs 10,000 as the expected monthly payment.

The various scenarios are modeled based on the assumption that you will re-invest the chitty prize money into a KSFE FD. The modeling also takes into account that initially, dividends will be high. Later on, dividends will decrease.

	10th Chitty	25th Chitty	50th Chitty	75th Chitty	100th Chitty
Invested Amount	419,250	463,875	573,250	682,625	796,375
Duration	100 Months	100 Months	100 Months	100 Months	100 Months
Maturity Value	700,000	700,000	700,000	825,000	950,000
Absolute Return	280,750	236,125	126,750	142,375	153,625
Absolute Return %	66.96%	50.90%	22.11%	20.86%	19.29%
XIRR	11.23%	8.72%	4.17%	4.18%	4.33%

Chitti analysis based on when you get the “prize money”

Learning:

The earlier you win the prize money, the higher your returns
Getting the prize money after 50% chitty is completed is often a poor return on your investment
If you are looking at Chitti as a loan, then the interest rate will be better than taking a personal loan

Getting Your Hands on The Prize Money

If you win the prize money, you have two options:

Withdraw the money
Deposit the money back into KSFE FD

If you choose to withdraw the money, you’ll need to provide collateral. KSFE accepts various securities like personal guarantee, LIC policy, property security, etc. You can see the full list here.

Other Offerings by KSFE

In addition to Chitty, KSFE offers various services:

Safe deposit locker
Money transfer
Deposits - short-term and FDs
Loans

FAQ

Should I Invest in a Chit Fund?

That depends. If your city has a trusted government-operated chit firm like KSFE, then yes. Also, take a look at the analysis section. See if it makes sense for you to invest in a chit fund.

Is KSFE Safe?

Yes. KSFE is owned and operated by the Kerala State Government. KSFE has 600 branches and more than 6,700 employees across the state.

What Return Can I Expect From a Chit Fund?

Your returns can range from 3% to 12%. The returns depend on when you get the Chitty, what discount you agreed to, how you use the prize money, etc.

How Much Commission Does KSFE Take?

For each Chitty, KSFE takes a 5% commission. This is in addition to the discount which gets redistributed as dividends.

How Can I Make KSFE Online Payment?

Contact your KSFE branch to get the bank account details of the KSFE branch. Once you remit the amount, you need to send an email/WhatsApp to the branch provided email/number.

Where Can I Find KSFE Downloads?

You can download the Chitty forms by clicking here.

What Are The Various KSFE Chitty Schemes Available?

KSFE does not publish the list of Chitty schemes on its website. You’ll need to contact the branch to get the details about the latest Chitty.

Can NRIs invest in Chitty?

Yes. NRIs can invest in Chitty through KSFE Pravasi Chitty.

If you are an Indian citizen, you need the following documents:

Indian Passport
Visa
Photo
Residing/Labour/National ID of the country of residence

If you are not an Indian Citizen, you need the following documents:

OCI or PIO of India
Valid Passport of Citizenship Country
Photo
Residing/Labour/National ID of the country of residence

How Can I Avail KSFE Gold Loan?

KSFE offers gold loans. Walk into your nearest KSFE office between 10 AM and 4:30 PM to avail gold loan.

A maximum amount of Rs 25 lakhs can be availed per day. KSFE charges simple interest. Loans up to Rs.20,000 is charged 9.50% per annum. For amounts above Rs 20,000, interest of 10.50% per annum is charged.

The maximum loan duration is 36 months.

Qnet Scam - Why Greed Makes The Best of Us Fall For Scams?

By Adarsh Thampy. Last updated on April 22, 2020

Would you like to buy a BMW in less than a year? No loans. Full cash payment!

Your “friend” asks you while showing you pictures of his brand new Audi.

The promise is enticing - You can be your boss; No more 9 to 5.

Qnet is your shot at getting rich quick.

But if you do a little digging, things don’t seem so hunky-dory.

Why?

Let me reel you in.

What is Qnet?

Amway, Oriflame, and Avon.

Ring a bell?

These companies offer you a business opportunity. Once you become a member, you get access to the company’s products.

You can earn money through:

Commissions: Each time you sell a product, you earn a commission.
Referral fee: Convince your friend to become a direct seller

It’s a neat way to operate. Instead of spending big money on marketing, these companies rely on the power of networking.

Qnet claims to do the same.

Qnet is owned by the QI Group and operates in India through affiliates such as Vihaan Marketing India Qnet Pvt Ltd.

Independent Representatives (IRs) represent Qnet. IRs sell Qnet products, explain the business to others, and recruit new IRs.

The one who recruits you is your upliner, and the people whom you recruit are your downliners.

Simple enough, right?

What Are The Qnet Products on Offer?

Kent rebranded water purifier for Qnet — Kent product rebranded. Qnet Price - Rs 39,340. Official price on Kent website: Rs 21,000. That’s a 87% margin!

Qnet offers health and wellness, beauty and personal care, and travel products. Their products are notorious for being based on dubious scientific claims.

The main selling product for Qnet is a BioDisc that claims to energize your body. Another product claims to absorb 98% of the nutrients in food and make you intellectually superior.

Qnet is highly secretive about the product R&D process, its operations, and its employees. As a member, your only point of contact is your upliner.

Is Qnet a Scam?

Qnet has been accused multiple times of cheating investors across the globe.

In a hard-hitting order against Qnet in May 2016, The Bombay High Court observed that “the deceit and fraud is camouflaged under the name of e-marketing and business.”

Though it is not banned in India, there are hundreds of cases pending against Qnet in the country. Lakhs of victims now lament the loss of their hard-earned money.

The Modus-Operandi: How Qnet Operates?

Let’s see how they operate.

The IRs use “get-rich-quick” messaging to lure people in. IR’s will tell you that their “business project” will yield huge profits and that you can become rich in no time.

Some of the claims can be as ridiculous as “Invest Rs 5 lakhs today. You will earn Rs 5 lakhs, every week, for the rest of your life!”

Many people use their life savings to make this payment. Because, why not? Greed often overpowers your rational thinking.

If you are short, the IRs will encourage you to take a personal loan.

Once you become an IR, you’ll receive some products, and the referrer gets a commission.

Now it’s your turn to bring in fresh members. As the number of people who sign up increases, the upliners get more money as commission.

Welcome to The Pyramid Scheme

Qnet’s business model is a simple pyramid scheme.

Early entrants earn money as the number of IRs increase. Those who join late do not earn enough to cover their first outlay, and the model collapses. Any hope for a refund gets refuted or is left unanswered.

Some people do make money through Qnet.

But the majority do not even earn enough to get their initial investment back.

Desperate to make any money, they end up peddling false promises to their friends and rope in unsuspecting family members.

Qnet Complaints

Qnet review on Google — The most frequent word in Qnet review in Google is “cheat”. That should tell you what you need to know!

The number of complaints against Qnet is massive. Many are taking up legal proceedings to get their money back.

In the past, many IRs have been apprehended. The Police have also appealed to the people to remain vigilant and not fall victim to this scam.

Some estimates by the Financial Frauds Victims Welfare Association (FFVWA) suggest that the amount of money victims have lost could be over Rs 20,000 crores.

That’s massive!

Yet Qnet continues to run its operations unabated. It continues to recruit new people and garner crores of rupees as “investment.”

Charting the IR Behaviour

IRs generally operate in the same way. The downliners follow the same tactics upliners used to sell to them.

Here are a few things they do:

Get in touch with you and intently listen to you talk about your business/money troubles
Change their social media DPs into pictures of them with their luxury cars. In most cases, the images are photoshopped, or the cars don’t belong to them
Sneakily slide-in mentions of their “work visit” to Malaysia, Thailand, or other foreign countries
Humblebrag about their latest expensive purchase - a high-end phone, watch, car, or even a house
Post motivational quotes on their profiles
Convince you that they have it all sorted out through a “brilliant business opportunity”
Deliberately avoid answering direct questions that relate to the nature of the business
Arrange a meeting to discuss some business prospects and convince you that all the information about Qnet on the internet is false
If the IRs are new, they might get one or two of their upliners to join the meeting to convince you
Promise a chance of earning several crores in the next couple of years. Depending on how desperate the IR is, the projection can vary

Beware: These people might be your friends or acquaintances. Some may even have your best interests in mind. But most are brainwashed to believe that this is what will make them rich.

Verdict: Qnet Review

Like any other Ponzi scheme, Qnet is a money circulation trap. Your investment is not safe. Recovering even your initial investment is going to be tough.

Most people in the business are ensnared in debt traps and continue to battle against now absconding upliners.

While there is no harm in wanting to become rich quickly, shortcuts like these are how they seem - “too good to be true.”

It would be better to take that money and invest it in something that gives you a reasonable return.

Spice Money - Make Money By Providing Financial Services

By Adarsh Thampy. Last updated on April 21, 2020

India is a developing nation. More than 20% of Indians live below the poverty line.

Financial inclusion is a key enabler to reduce poverty and increase prosperity. As of 2020, more than 19 crore Indians do not even have a bank account.

So how can people in rural India make money while helping their fellow Indians?

Spice Money offers one such solution.

What is Spice Money?

Spice Money, a Noida headquartered company, is a hyper-local payments network. Started in 2012, Spice Money employs 500+ people.

Spice Money offers various services through which you can earn up to Rs 50,000 per month.

Unlike companies that offer MLM schemes, Spice Money is a legitimate business. You make money through commissions.

Think of mobile recharge or travel agency business, only broader in scope.

What Business Opportunities Does Spice Money Offer?

You can offer a variety of services to your customers and earn commissions for each transaction.

Spice Money supports the following services.

#1: Aadhaar Enabled Payment System (AePS)

Using a fingerprint scanner and Aadhaar number, you can offer banking services like cash withdrawal and balance enquiry.

Consumer Alternative Available: Almost all UPI apps like BHIM, PhonePe, PayTm, Google Pay, along with bank apps, lets you check account balance.

Note: The fingerprint scanner needs to be purchased separately from Spice Money.

#2: Domestic Money Transfer

You can help your customers transfer money to any domestic account. The maximum limit is Rs 50,000 per sender per month.

Consumer Alternative Available: Any of the UPI apps or bank apps/websites.

Note: International money transfers are not allowed through Spice Money.

#3: Cash Withdrawal (Mini ATM)

You can offer ATM services from your shop. Once a customer swipes a debit card on the Spice Money POS, you can provide them cash.

Consumer Alternative Available: PhonePe lets users connect with nearby merchants and withdraw money.

Note: This functionality is not unique to Spice Money. RBI has allowed all banks to enable cash withdrawal from POS. However, most merchants do not prefer this option. Revenues from Cash@POS are low, and their accounts for tax purposes become more complicated.

#4: Accept Payments from Customers (mPOS) and QR Code

This is aimed at retailers. You can let your customers pay you using a QR code or an mPOS machine by swiping their card.

Alternative Available: Most UPI apps let consumers transfer money to you using a QR code scanner.

#5: Mobile & DTH Recharge

You can offer mobile and DTH recharge services for your customers through Spice Money.

Consumer Alternative Available: UPI Apps, Mobile service providers, DTH providers, and bank web/mobile applications.

#6: Utility Bill Payment - Gas, Water, Internet, Electricity, Landline Phone

Utility bill payment is essential- no need for your customers to wait in the queue. Let them pay their essential bills through you.

Consumer Alternative Available: UPI applications. Good old waiting in line to pay the bills.

#7: Travel Ticketing - Train, Bus, and Flight Tickets

You can register as an IRCTC agent to book train tickets for your customers. Do your customers prefer a bus or flight? Spice money got that covered too.

Consumer Alternative Available: PhonePe, Paytm, Amazon Pay, travel aggregators like MakeMyTrip, Goibibo, Cleartrip, etc.

#8: Hotel Booking

People going out of town and want a place to stay? Book accommodation for them through the Spice Money B2B portal.

Consumer Alternative Available: PhonePe, Paytm, hotel aggregators like MakeMyTrip, Agoda, Goibibo, Oyo, Booking.com, etc.

#9: PAN Card Services

You can offer new PAN card creation/modification services through the app.

Consumer Alternative Available: Apply directly online on the NSDL website.

Note: It’s illegal to hold multiple PAN cards. Make sure the request for PAN card creation is genuine.

#10: Online Shopping

Spice Money has tied up with Amazon to make shopping simpler for people in Tier 2 and 3 cities.

If your customers are not tech-savvy enough to order online, you can help them make the purchase for a commission.

Consumer Alternative Available: Shop directly on Amazon.

How to Become a Spice Money Agent?

You can sign up to be a spice money agent on their website.

Once you provide your details, the onboarding team will give you a call and process your application.

What Are The Fees?

To get the Spice Money ID, you will need to pay Rs 1,500 as a one-time and non-refundable fee.

Besides the one-time fee, you will need to pay a monthly fee of Rs 59 to retain the ID.

Verdict: Should You Become a Spice Money Agent?

That depends.

Spice Money offers genuine opportunities to earn money. However, I don’t think you can earn a full-time income from spice money.

Think of what happened to internet cafes.

Home internet and 3G/4G availability broke the business model of internet cafes.

If you download an app like PhonePe or Google Pay, everything you do with Spice Money can be done for free with these apps.

Additionally, people can earn extra cashback for doing transactions on their own.

As people start using more of these apps, why would they need an intermediary like you?

Recommendation: Use Spice Money to earn extra income from your existing business like a medical shop, travel booking office, bakery, etc. Don’t start a new business purely based on spice money.

How to Make More Money With Spice Money?

Spice Money helps you earn money through transactions. Every time people transact, you make money.

#1: Get Recurring Customers

To increase the money you make, aim for repeat customers.

Did you do an electricity recharge for a customer last month on the 4th? Note down the due date. Send them an SMS reminder or notify them in person the next time the due date is nearby.

Your goal should be for people to come to you regularly for bill payments, recharges, etc.

#2: Upsell Additional Products

Don’t forget to upsell to people who walk in.

You can upsell mobile accessories to people who walk in to make a mobile phone recharge.

How about selling LED bulbs to people who have higher electricity bills?

The good thing about Spice Money is that it can get customers regularly to your shop. The more frequent they come to you, the higher your chances of making additional sales.

FAQs

Is Spice Money a scam?

No. Spice Money is a registered and regulated business in India.

Is Spice Money wallet safe?

Yes. The spice money wallet is a semi-closed PPI wallet approved by RBI. It can be used for instant money transfer services.

How can I become an agent of spice money?

You can sign up online to become an agent here. Once you fill in the relevant details and pay the registration fees, the onboarding team will activate your account, and you can start using the service.

How much money can I make?

The website claims you can make up to Rs 50,000. However, to make upwards of Rs 25,000, you need a monthly business volume of more than Rs 5 lakhs.

What documents are required to become an agent?

You’ll need Aadhaar, PAN, Address Proof, and your latest photograph.

What is spice money b2b?

Since spice money operates a B2B model, their login page is located at b2b.spicemoney.com. This is your agent logic page.

What is the spice money registration fee?

Rs 1,500 one-time. Thereafter, Rs 59 every month.

Where can I find the spice money login?

Head over to your agent login page >> https://b2b.spicemoney.com/loginPageLogin. If you already have an agent ID and password, you can use it to log in. However, if you do not have the ID, contact spice money.

What are the spice money customer care details?

Website: Visit the ‘Contact Us’ section on the spice money website to submit your query
Email: You can reach the customer care by emailing customercare@spicemoney.com
Phone: Call the numbers 0120-3986786 or 0120-5077786 between 7:00 AM and 11:00 PM. Phone support is available every day, except for public holidays.

What is the spice money aeps login page?

You can head over to the agent login page. Log in with your Agent ID and Password to access the portal.

How to Check Your CIBIL Score Online for Free

By Adarsh Thampy. Last updated on May 2, 2020

You walk into a bank, ask for a loan, and the money gets deposited to your bank account.

That’s the utopian fantasy for loan disbursal.

But the process is not simple. It often takes weeks for banks to process our loans.

What gives? Why do banks take so much time to process loans?

It all comes down to one thing - trust. Do you have the capability to repay the bank?

But how do the banks figure out your creditworthiness?

Since they don’t know you, they use a third-party for verification - CIBIL, a credit rating agency.

CIBIL provides a credit score that acts as your financial report card. Let’s see what that means.

What is a CIBIL Score?

Your CIBIL score is a 3-digit number ranging from 300 to 900. The higher the score, the better your financial track record.

CIBIL measures your creditworthiness based on several criteria - primarily, your repayment track record.

When you file for a loan or apply for a credit card, your bank checks your CIBIL score. A high CIBIL score (700 or more) indicates that you are prudent with money.

Guide Alert: To improve your CIBIL score, here are some tips.

How Important is Your CIBIL Score?

Very important!

Of the four authorized credit information companies, CIBIL is the oldest and has the largest customer base.

Around 85% of the financial institutions in India use CIBIL. Further, banks and NBFCs give preference to CIBIL score over any other credit score during the credit approval process.

A good score (650+) is required to get a loan or a credit card. A better score (750+) gives you access to loans at lower interest rates and premium credit cards with high credit limits.

A low score is grounds enough for any institution to reject your application or seek a higher interest rate from you.

Bottom Line: A high CIBIL score provides quicker loan approval and potentially lower interest rate. The lower your interest rate, the more money you save.

CIBIL Alternatives

There are three other credit rating agencies in India approved by the RBI - Experian, Equifax, and CRIF High Mark.

All the agencies use their proprietary algorithms to estimate your score.

Can you check your CIBIL score for free?

Yes, albeit once a year.

RBI made it mandatory for credit bureaus to provide one credit report online for free to their customers every year.

The free credit report includes the same information that is provided to banks and other lending institutions.

Check your CIBIL score frequently. Stay on top of your credit health and report any inaccuracies that might be affecting your score.

Busting The Myth: My Credit Score Will Drop if I Check My Score Frequently

You can check your credit score any number of times.

Don’t worry!

Checking your score is treated as a soft enquiry and does not affect the score.

However, when lenders check your credit score based on your loan/credit card application, it is treated as a hard enquiry.

Multiple hard enquiries in a short period can potentially lower your score.

How to Check Your CIBIL Score for Free?

#Step 1: Visit CIBIL’s official website.

#Step 2: Click on ‘GET YOURS NOW’

#Step 3: Create Your Account

Fill out the necessary details such as email address, phone number, name, date of birth, and pin code. You will also have to provide a listed government ID to get yourself verified.

If you already have an account, log in through the “Member Login.”

#Step 4:

Your CIBIL score will be shown online and also sent to your email ID.

Exhausted the Free Report Limit?

If you have downloaded the free CIBIL report earlier in the year, you will have to purchase the next CIBIL report.

You can do so following the steps below.

#Step 1: Visit CIBIL’s website.

#Step 2: Choose your subscription plan.

#Step 3: Click on “Proceed to Payment.”

#Step 4:

After successfully making the payment, you will be taken to an authentication page. Answer at least 3 out of 5 questions related to your credit history correctly to authenticate your identity.

#Step 5:

Your CIBIL report and score will be sent to your email ID within 24 hours.

Hacks to Get a Free CIBIL Score

If you have already checked your score once in the year, additional soft enquiries are chargeable.

We have a hack around that 🙂

To check your CIBIL score for free, you can use the following websites:

Both the providers are official partners of CIBIL and provide the official CIBIL score.

Word of caution: Any website that offers free CIBIL check has to pay CIBIL money. So why do they offer it to you for free?

Because they can collect your data and offer you loans. People who check their credit scores will usually be looking for loans. So companies treat it as a marketing expense.

Expect SMS and calls with loan offers if you go through any other website that CIBIL’s official site.

Frequently Asked Questions

How to check whether the CIBIL score is authentic?

If you check your score on websites other than CIBIL, make sure that the score comes from CIBIL’s website. Make sure that the website is CIBIL’s official partner.

What to do if there is an error in the credit report?

If you think there is an error in your credit report, dispute it on the CIBIL website.

How long does CIBIL take to resolve my dispute?

CIBIL takes around 30 days to resolve your dispute.

How often should I check my credit score and report?

Ideally, you should check it once every 3-6 months. Frequent checks would make it easier for you to notice any error in your credit report.

Checking the score frequently is crucial for people with low credit scores.

If you are looking to apply for a loan soon, start monitoring at least 6 months before you apply. This would give you enough time to improve your score.

What is TransUnion CIBIL?

TransUnion and CIBIL are the same. In 2016, Transunion bought an 82% stake in CIBIL. The combined entity is called Transunion CIBIL.