Financial Health Checklist

Goal

Monthly inflow from investment is greater than outflow (net positive cashflow).

A ballpark figure is 25 times annual expense in savings (considering 4% interest rate).

0% Tax bracket

• Earn more
• Spend less
• Build a corpus for one year expenditure
• Open a savings account with highest interest rate, sweep-in facility and minimum AMB/AQB requirement.
• Invest in ELSS for tax saving if you're in the top threshold
• No FDs/RDs - you need liquidity
• Always invest in Direct MFs including ELSS. These have lower administrative cost (hence higher returns) compared to regular funds.
• Get a credit card. It's easier to dispute fraudulent charges on a credit card than on a debit card. Always pay full bill amount and not minimum due. Note - sometimes the perks on a credit card are more than the annual fee. So shop around. Also, it's easier for a salaried person to get a credit card than a self-employed or retired person.
  

10% Tax bracket

• Follow all the points for 0% tax bracket

• No FDs/RDs - instead use liquid MFs for better post tax returns

• Buy a house with home loan (never on a personal loan) which is ready to move in close to your workplace. If you do, stop buying ELSS and pre-pay to avoid tax as much as possible. Also buy a term insurance plan more than the house cost to cover for any emergency. Note - maintenance, electricity and property tax are regular costs on a house.
  

20% Tax bracket

• Follow all the points for 10% tax bracket

• Get a trading plus demat account

• Invest in equities (when market is high) choosing carefully
  

• Invest in index fund (when market is low)

• Buy a car if your company provides reimbursements for fuel and/or driver. Note - new cars have higher insurance cost.
  

Insurance

• Don't buy money-back insurance policy.
• Buy health insurance till you have accumulated money equal to the insurance coverage.

Miscellaneous

• Plan major purchases during Oct-Dec to avail various Diwali-Christmas discounts.
• Beware of floating-rate loan. In most cases, they only float upwards. It requires special intervention and multiple follow-ups for it to revise downwards.
• Mutual funds are subject to market risk - even debt/liquid funds (cf. Mar. 20, 2020).
  

Total loss insurance claim

While vehicle insurance claim for minor damages and repair is pretty routine and easy, it's not the same with total loss claim. It took around six months from reporting to payment. Hence documenting some lessons learnt.

Medico-legal case (MLC)

If there are injuries to the passengers or third party, visit the nearest hospital. They will file an MLC and offer you treatment. Keep the MLC for record. This is required if further treatment is pursued in other hospitals.

File an FIR

You must file an FIR or diary report at the nearest police station. Most importantly, take a copy of the document. Without this document, your claim will not be settled. (Note: Special thanks to Sub-inspector at Hiriyur Police station.)

Garage choice

In repair claims, it's fine to take the vehicle to the nearest garage from the place of accident. However, for total loss, if the place of accident is far from the place of registration, it makes sense to get the vehicle atleast to the same town as the RTO where the vehicle is registered. This might cost you money, but it will save delays and unnecessary rounds to the RTO under whose purview the garage falls. Also, no tout will take up the case.

Basically, for total loss claim, you need to get RC canceled. This requires inspection from an RTO officer. If vehicle is in the same town, you can help the officer make the inspection. However, if vehicle is in another town, they will send a mail to the concerned RTO for an inspection report. This might breakdown at three places - delay in onward mail, inspection by officer and report and delay in reply mail.

In my case, I'd to visit Tumkur RTO for inspection report from Bangalore. They only handed me a copy of the report. Bangalore RTO refused to accept the copy and the report didn't arrive in Bangalore for two months. It had to be escalated to Assistant RTO. He called up Tumkur RTO. He advised me to visit Tumkur RTO and collect the report by hand. On reaching Tumkur, I realised that the report was not even sent! (Note: Special thanks to officers at Bangalore Indiranagar RTO. They did their duties without any interference from touts or bribe.)

Surveyor inspection

Reliance insurance was very prompt in assigning surveyor. Only the bill generation by the garage took time. They had to revise it since the prices seemed above market price for some components. If the total bill for repair is more than 80% of IDV (Insured Declared Value), the claim is considered to be total loss.

Once RC cancellation is submitted to insurance office, they sell the vehicle to salvage buyer. I received a cheque from the buyer and the same was deducted from total paid by the insurer.

Favorite Movies

Though I don't watch movies as a ritual, I do like watching them once in a while. Here's a list of movies that I find interesting:

• Kaash (Emotional Drama) - This is a slow movie. But it makes you realize that small things in life matter a lot. The song 'O yaara' just sticks with you.
• Aranyak (Social Drama) - This is based in colonial times. It gives you an insight into class divide and the frivolity of nobility. The end might not be to your liking though. Personally, I don't have any complaints.
• Transcendence (Sci-fi) - Are you afraid of AI? Why? Can you trust it when you find it? Find out for yourself. Don't drop it even if you find the first half hour a drag.
• Darna Mana hai, Darna Zaroori hai (Horror) - I don't believe in ghosts and hence not much fan of horror movies with grotesque sequences. However, watch this for the twists in the stories.
•  Groundhog Day (Drama) - What would you do if you knew you couldn't die? What would you choose to do with your life?

Gold ETF and Current Account Deficit

While gold investment does affect Current Account Deficit, it's a myth that ETF gold investment will not have the same effect.

ETFs are mandated by law (SEBI) to buy gold or equivalent contracts for the money invested with them (minus the operations cost). The source can be domestic or international market depending where the supply lies. They don't keep buying indefinitely - they just buy small amounts at higher price pushing up the price of gold. In this era of open markets, obviously it makes no sense to buy at higher price domestically what is available at cheaper price internationally. In fact, BSE is more fair in gold price than your neighborhood jeweler!! The fact that gold supply is limited is the reason it has been used as a currency base for millenia. In that sense, gold investment whether in physical or paper form has the same effect on CAD.

It's interesting to note that the failure to link the paper with underlying assets was the reason NSEL fraud happened and several investors lost money with silver. https://en.wikipedia.org/wiki/National_Spot_Exchange#FRAUD

Quoting from http://www.bseindia.com/download/etf/GOLDETFsthruBSE.zip

• Gold ETF is a financial product that is available for trading on stock exchanges and represents ownership of underlying gold assets
• You can now convert even 10 units to 10 gms physical gold

Dr. Shiv Kumar Sarin

Couple of days back, DD National was airing an interview with Dr. S. K. Sarin. I'd seen his interview earlier once and was very fascinated by his ideas. But this time, I wanted to learn more about him. He's a specialist yet his advices are simplistic. His humbleness betrays his achievements. I'll try to list down some memorable quotes from his interview:

Till 40 years, health is the sole responsibility of the individual (or guardians in case of minors). Doctors are only responsible for treating sickness.

He is against the pill-popping culture. He's asking people to keep a fit and active lifestyle.

Drink tea or coffee for taste or enjoyment - not as a remedy for some ailment.

He learnt this from another 65 year old gentleman who asked him to go for a walk after a night-out when he had asked for coffee.

Fever is a good (not long lasting) - it's an indication that your body is fighting the ailment.

People are proud of their house, cars etc. and have routine maintenance for them. But they don't treat their body the same way. 

Parents are unduly worried about their kids not eating. What they should rather worry is whether s/he had a proper bowel movement!! If bowel movement is proper, one will definitely be hungry. 

Interesting coder behaviour

Here I'm listing down some interesting stuff I've seen as part of my career in IT.

Javadoc comment
/**
 * @author Not Mahdad Zarafshan <== this guy is worse than that Arvind guy
 *
 */

Counting in Hindi

One of the Aryabhatiya’s most frequently quoted verses is the second verse from the ‘Ganitapada’, or mathematics, section. Clark translates it thus:

The numbers eka [one], dasa [ten], sata [hundred], sahasra [thousand], ayuta [ten thousand], niyuta [hundred thousand], prayuta [million], koti [ten million], arbuda [hundred million], and vrnda [thousand million] are from place to place each ten times the preceding.