[clevermax]

Originally Posted by aargee

Sorry, FD may be safe upto a Lakh, beyond that money is not guaranteed.

What does this mean?

[sbraj]

Originally Posted by clevermax

What does this mean?

Safety cover for bank FDs are only for investments upto 1 Lakh. Any investment above that is not guaranteed.

[Jaguar]

Originally Posted by vrprabhu

That, my friend, is the power of inflation :-)
...
and, the story doesn't end here (people are peeping over my shoulder with what I am so busy during the hectic audit schedule - so till I get my next break!)

Please continue. From whatever you have written, I am not yet able to figure out if you are for buying a car on EMI or against

[vrprabhu]

Originally Posted by sbraj

Safety cover for bank FDs are only for investments upto 1 Lakh. Any investment above that is not guaranteed.

As per RBI / GoI guidelines, DICGC (Deposit Insurance and Credit Guarantee Corporation of India) provides insurance cover for all "insured" banks up to an Rs. 2.00 lakh for every individual deposit - in case a Bank fails. All Scheduled Banks are covered by the corporation.

Simply, put if you have money in your Bank in various forms - Savings Bank, Fixed Deposit, Recurring Deposit and the Bank fails, then DICGC will make good the amount you had with the Bank subject to a maximum of Rs. 2.00 lakh per individual.

The Bank pays the insurance premium on the customer's behalf in this regard.

Originally Posted by vrprabhu

and, the story doesn't end here (people are peeping over my shoulder with what I am so busy during the hectic audit schedule - so till I get my next break!)

Coming back to our story -

The loan was 1.00 lakh. EMI was 6,000. If interest rate had gone up and resulted in increase in EMI upto 6,200 you don't lose anything.

Now, the original amount which you had borrowed - 1.00 lakh - if you had invested in land / gold / shares or whatever. Find out its current value. Say 1.20 lakh. Reduce the interest paid on the loan - say - 0.15 lakh. Your net gain is 0.05 lakh. And original asset is still intact.

On the other hand, if you had spent the money - let's say it was something which you wanted desperately like a HD Plasma TV + HiFi Home Theatre system - then your loss will be the interest you have paid on the loan. (I am presuming that the system is still something which you need and don't want to replace in the future.)

And of course, in the meantime if the prices of the home theatres of similar config have crashed to 0.50 lakh, you have additional loss...

Well, you can't equate everything in life with money and the joy which you got by spending the money can never equal the pleasure you got by saving it

(PS - Look at the time, folks! Came to office at about 10.00 AM in the morning! There is no sign of going home for another couple of hours. You guys are talking about living on the edge. I am thinking of the blissful life when you can get up when you want, do what you like and live contendly - even if I have to cut corners and be frugal. It just doesn't make any sense to break your back to make money, and by the time you have enough and think of quitting, your health fails and family pressures and what not compels you to go on with the drudgery - and you are practically unfit to do anything else )

[vivekiny2k]

Originally Posted by vrprabhu

Coming back to our story -

The loan was 1.00 lakh. EMI was 6,000. If interest rate had gone up and resulted in increase in EMI upto 6,200 you don't lose anything.

true

Now, the original amount which you had borrowed - 1.00 lakh - if you had invested in land / gold / shares or whatever. Find out its current value. Say 1.20 lakh. Reduce the interest paid on the loan - say - 0.15 lakh. Your net gain is 0.05 lakh. And original asset is still intact.

here you are assuming appreciation in property is more than inflation (interest rate). what if it's lower?

Original asset is intact, but you really don't own it until you have paid off the loan.

On the other hand, if you had spent the money - let's say it was something which you wanted desperately like a HD Plasma TV + HiFi Home Theatre system - then your loss will be the interest you have paid on the loan. (I am presuming that the system is still something which you need and don't want to replace in the future.)

the value of the good (entertainment) is what he paid for. If he values the entertainment more than the interest, he really doesn't have a loss. He made that clear when he took the loan.

And of course, in the meantime if the prices of the home theatres of similar config have crashed to 0.50 lakh, you have additional loss...

now we are talking about frequent development and obsolence in technology. always applies regardless of loan or not.

Well, you can't equate everything in life with money and the joy which you got by spending the money can never equal the pleasure you got by saving it

perfect. there has to be a balance.

I would rather live my way and repent than live under somebody else' guidance and repent.

[aargee]

Originally Posted by clevermax

What does this mean?

Raj answered it right, but here's the proof; see Q3.

Originally Posted by vrprabhu

As per RBI / GoI guidelines, DICGC (Deposit Insurance and Credit Guarantee Corporation of India) provides insurance cover for all "insured" banks up to an Rs. 2.00 lakh for every individual deposit - in case a Bank fails. All Scheduled Banks are covered by the corporation.

Not sure when they've increased the limit; pls check the above link; if you've an updated link pls show us.

Originally Posted by sbraj

With all due respect, I disagree. I keep the stuff plain and simple. It is only my expense log. Nothing else.

No issues; you're using something that is good to you, I use what's helpful to me

Originally Posted by tsk1979

I use moneytrackin for my accounting.

Are you talking about this? Boy!!! I would never use a online tool for tracking my expenses. Reason? Anytime someone could hack the site (as nothing in this world is fool proof) or our own IT dept can (hack) analyze any individual's accounts & I do not want to go through the hassles.

OT - Looks like Moneytrackin is out of India & should have limited capabilities. If you believe in online accounting software & their safety, then you can consider using this. They're based out of Bangalore & help you do more in terms of Indian computing.

[ampere]

I dont need a major S/W for accounting. Dont need to compute my taxes, interest and the likes. All I want is a glorified EXCEL, where there are set fields to update details and amounts. At any point in time, I need to see a snapshot all the transactions and liquidity status. Gnucash works very well for that. Free software (no piracy )!

[clevermax]

Originally Posted by sbraj

Safety cover for bank FDs are only for investments upto 1 Lakh. Any investment above that is not guaranteed.

So if I have 5L to invest, Is it okay to assume that the money is safe if I made 5 deposits of 1L each?

[srishiva]

Originally Posted by clevermax

So if I have 5L to invest, Is it okay to assume that the money is safe if I made 5 deposits of 1L each?

The protection is per account. So it should be ok. Or you could move it between different banks. But I dont see anything happening to our public sector banks.

[Jaguar]

Originally Posted by clevermax

So if I have 5L to invest, Is it okay to assume that the money is safe if I made 5 deposits of 1L each?

As per my understanding, it is safe only if you deposit it under different accounts. If you create 5 FDs in the same account, then only 2L is safe.

[aargee]

Originally Posted by clevermax

So if I have 5L to invest, Is it okay to assume that the money is safe if I made 5 deposits of 1L each?

Did you know PO returns more interest than bank FD's? So whenever I cross more than 1L in a single bank, I would consider them moving to a different bank account or move to PO. But you don't need to worry other than learning this stuff unless you deposit the money in absconding bank pvt ltd

Originally Posted by Jaguar

As per my understanding, it is safe only if you deposit it under different accounts. If you create 5 FDs in the same account, then only 2L is safe.

Its One Lakh, not two Lakh

[Lalvaz]

Originally Posted by aargee

Did you know PO returns more interest than bank FD's? So whenever I cross more than 1L in a single bank, I would consider them moving to a different bank account or move to PO. But you don't need to worry other than learning this stuff unless you deposit the money in absconding bank pvt ltd


Its One Lakh, not two Lakh

Interesting thread. Its nice to see that people are getting serious about their financial planning. I have not been through the entire thread, but this post and some others speak about Fixed Deposits and Post Office Savings Schemes. I'd just like to point out a few things that might be of interest.

Firstly, the highest tax free, risk free, assured return debt scheme currently is the Employee Provident Fund Scheme. It currently pays 8.5% tax free and is guaranteed by the Government of India. You can increase your contribution to the same by another 88% of your basic salary. (12% is mandatory deduction). Only con is that it is accessible only on retirement or on job change.

Second, PO schemes are safer than Bank FD's since the entire amount is guaranteed by the Govt of India. However these are taxable, just like most bank Fd's.

Another very interesting savings product is the Mutual Fund debt schemes.
Consider Fixed Maturity Plans. Currently they are giving post tax returns in the range of 6-9% per annum, which is very interesting for a person in the highest tax slab.

Also, please do consider investing in equity if you want returns that can beat inflation. Logic is simple, if the company's profits grow by over 30% per year, the share price should reflect that sooner or later. Thats the only way you can really beat inflation. Earning 6-10% in debt schemes cannot do that. However, before investing, please consult a certified financial planner who will suggest your investment allocation based on your risk profile, your age and your financials.

If you need help, I could suggest a friend who is very sincere, professional and discrete in such matters.

Happy investing!!!

[aargee]

Originally Posted by Lalvaz

Firstly, the highest tax free, risk free, assured return debt scheme currently is the Employee Provident Fund Scheme. It currently pays 8.5% tax free and is guaranteed by the Government of India. You can increase your contribution to the same by another 88% of your basic salary. (12% is mandatory deduction). Only con is that it is accessible only on retirement or on job change.

The only draw back I see is that the withdrawl can be done only after 15 years, which is way too long investment.

Originally Posted by Lalvaz

Second, PO schemes are safer than Bank FD's since the entire amount is guaranteed by the Govt of India. However these are taxable, just like most bank Fd's.

Nope; the interest on PORD is not charged at the time of maturity

[absynthguzzler]

Here's a query Ive always asked myself.

Suppose i was happy with my 10lac per annum salary and the lifestyle I'm leading now in the current world. I get a 10% rise every yr as well. Do you think with the annual increases, i would still be able to have my same lifestyle 20yrs from now? Or should i actually be earning more than just the 10% increments over the course of my working career.

The thought that i should be alright with the above instead of stressing out too much has always been there to help me maintain a balance between ambition , dreams and reality and not loose track on having fun every moment your alive and able.

[Gansan]

Originally Posted by aargee

The only draw back I see is that the withdrawl can be done only after 15 years, which is way too long investment.


Nope; the interest on PORD is not charged at the time of maturity

PF membership may now be optional, but was compulsory when I joined my employer. It is a kind of nest egg - not to be disturbed lightly. Calling it safe is an under statement; AFAIK, PF/PPF funds can't even be attached by a court of law!