Monday, October 29, 2007

Look before you leap

Look before you leap
How not to trip up while taking a loan.

Applying for a loan is a complicated process where a customer is faced with many bewildering choices. It is important to make the right impression on your loan officer to get the loan you want. However, there are some things that you should just not do. Here are 10 common-enough pitfalls to avoid while applying for a loan.

1. Don’t lie in your application form

All the columns in the application form are meant to provide vital information that the prospective lender uses to evaluate your creditworthiness. Do not leave out any important details about your income, your address (both temporary and permanent) and about your past or existing relationship with the lender. All this information has also to be supported by documents. Lying in the application form amounts to fudging documents.

2. Don't fudge salary slips and income statements

Don't ever fudge salary slips or income statements. You loan officer handles hundreds of loan cases. The chances are, he knows ever trick in the book before you could even think of one. Fudging salary slips is a serious offence. It is fraudulence of a high order. Don't ever do it. Not only will you not get this loan, you can even be blacklisted by not only this lender but by other lenders too (given the amount of information-sharing between companies).

3. Don't go in for a co-applicant unless it is necessary

Loan officers are notoriously conservative. The greater the pile of documents related to your case in their files, the more comfortable they feel. You should always put your foot down when a loan officer asks for more guarantors or asks you to bring another co-applicant. The loan officer could be convinced of your case but may be merely trying to protect himself from all possible eventualities. If you follow his dictates, you are killing the prospects of the co-applicant to procure a loan for herself in the future.

4. Don't offer proof of a lavish lifestyle to prove creditworthiness

Your loan officer is only interested in seeing the adequacy of your income. This emerges clearly out of the income documents you submit with your loan application. So, an effort to project a lifestyle merely to impress him is a definite no-no. It could even backfire on you if he feels that you are living beyond your means. Remember, he can reject your loan application on this ground. If you ever blew your month's salary on your favorite perfume or that gorgeous pashmina shawl, please don't tell him.

5. Don't bounce or return cheques

Your bank statement speaks volumes about your spending habits. It mirrors your spending behavior. It provides your loan officer with a comprehensive view of how you manage your money. If there are too many cheques bounced or returned check entries in your bank statement, be prepared with a convincing explanation and papers to prove it. Generally, though, there should not be any cheque returns or bounced cheques. It lowers your creditworthiness and could result in lower or no borrowing.

6. Don't show a cleaned-out account

Maintain a certain balance and show some savings in your account. Otherwise you will come across as someone who is barely able to meet his expenses. Savings in your account will show the loan officer that you'll be able to meet the EMI. Otherwise you will have to come up with a convincing plan of lowering your expenses.

7. Don't hide details about other loans

If there is a recurring payment on an existing loan, make sure you've mentioned the existing liability in the form. Since other loan repayments bring down your income-to-instalment ratio and result in a lower loan, this is a vital piece of information. Don't hide details about the loan. Consider consolidating all your debt before going in for another loan.

8. Don't fudge details of professional degrees

Loans to self-employed professionals are extended on the strength of the professional degree and the income (especially in case of a personal loan). In such a case, fudging your professional degree or income documents can seriously jeopardise your loan application. Professional qualifications are almost always verified.

9. Don't ever attempt to bribe the loan officer

You perhaps feel that your loan application is not strong enough to get you the loan amount you are asking for. And you probably think that you can grease the palm of the loan officer to enhance your loan eligibility. Don't even think about it. Even if you got lucky and your loan officer was the bad apple in the company's basket (it could happen), your loan is reviewed by two or sometimes three other people. You were not planning to bribe all of them, were you?

10. Don't take a loan against your FD as collateral. Break it.

A common mistake most borrowers commit is to borrow against their fixed deposit. They prefer taking loan against their own money at a rate higher than the rate they are receiving on their fixed deposit. You should consider this option only when you require funds for a very short term. Otherwise, it makes sense to encash your FDs. This way you'd be able to borrow less.

Borrow only if you must

Borrow only if you must

15 time-tested ideas on how to avoid debt.

You'd think that you don't really need us to tell you that you should borrow only if you must. But a debt is easy to slip into and hard to get out of. We believe that you should not be spending your hard-earned money contributing to the coffers of a finance company. You should look at a loan if, and only if, all other avenues have been exhausted. And there are more than enough places that you would have likely forgotten to look in. Explore these and, at the very least, you could reduce the amount of loan you'd have to take. Where should you look? Read on to find out…

1. Cut back on non-essential items

If you are overstretched now, the last thing you need is more credit. It was probably some attractive advertisement that made you an easy target for buying one more electronic gadget (at a very low rate of interest, of course). A gadget that you do not need! We suggest you address your spending habits before you inundate yourself with debt and consign yourself to a lifetime of interest payments and late fees. They are the source of the problem. Even small things matter. Try and reduce the number of cigarettes you puff away and you'll be surprised to learn how much you can save on a long-term basis. The powers of compounding can be an eye-opener.

Cutting back on non-essential items does two things. One, it leaves you with more money every month: money that you can use more productively. You can pay back borrowings and invest smartly. Two, it paradoxically increases your borrowing capability. The more your repayment capability, the easier it is to borrow.

2. That forgotten treasure: your PF

Have you transferred your PF corpus from your previous employers? If you haven’t, do it. In every job, you make a contribution every month to your provident fund account. Your employer also makes a similar contribution. When you change jobs, you have the option to transfer the money accumulated in your account to the new provident fund account opened by your new employer. But many neglect to do this. Check whether you have any accumulated money in those PF accounts. The money will still be safe and earning you a nice interest. Set the process in motion to transfer them. The amount lying in them can come as an agreeable surprise to you.

There is another option: of encashing them. But, don’t encash blindly. Compare the compounded annual rate of return against the cost of the loan. If the compounded rate of return is lower, it makes sense for you to encash. Otherwise, stay invested.

3. Hit on your family and friends

Before going to a lender, explore all the options of borrowing from your relatives and friends. Unless you're the black sheep of the flock (and even that's not an irremediable state!), chances are you'll get the money at either a very favourable interest rate or without any interest. They may even tolerate a late payment or two. But if you want to maintain the relationship, it's best to keep things straight and insist on a written agreement.

4. Recover dues

If you've never been borrowed from, you're a lucky person (or you're broke always, in which case, we can’t help you). If you form a part of the real world where people rely on advice like the one you've just finished reading (Point 3, above), there are surely people who have borrowed from you and... ahem... conveniently forgotten to pay back. Turn enforcer. And get your money back. Remember, it’s your money. The rule: Better my money than borrowing at usurious rates.

5. Encash your savings and fixed deposit holdings

It makes perfect financial sense to cash in your savings and investments and use the proceeds instead of contracting a fresh loan. The reason is simple. It would make sense to remain invested in your fixed deposit or bank savings if the return on these were greater than the cost of your loan. But in today’s low interest rate environment, high-quality fixed deposits earn you between 11 and 12 per cent per annum. Post-tax, the return is even lower. Even a secured loan -- a loan backed by an asset like your car will rarely be available below 14 per cent. So the moral is: the higher the interest rate on the fresh loan, the more attractive it is to use your funds for meeting a contingency. And it will always be in your interest to break low-return generating fixed deposits. The caveat: Don’t break your low-generating but long-term retirement funds. Compounding works wonders there. We are recommending that you break only your short-term fixed deposits.

6. Take an advance from your employer

If the employer has a no-loan policy, then explore an advance on your salary. This could be structured in such a way that it would be deducted from your salary over a few months. The amount you could take as an advance will be limited and based on the salary you draw, but it beats borrowing at commercial rates. And every penny raised cheaply counts.

7. Take a low-interest loan from your employer or other sources

Employers and societies have the provision of extending a short-term loan at a highly subsidised rate of interest, especially to longstanding employees. Loan amounts are generally based on the length of service you have put in and your position in the organisational hierarchy.

8. Take advantage of the no-gift-tax rule

Gifts are not to be received only on birthdays and anniversaries. Find someone who is willing to make you a gift of money. That’s money that you don’t have to borrow and pay interest on. You can the put this to good use instead of taking on a loan or a mortgage.

Some things to remember: Keep gifts within the family, so that the authenticity (for the tax authorities) can be established easily. Gifts should be in small amounts, since verification is unlikely in small amounts -- say, Rs 20,000. If your yearly income plus the gift exceeds Rs 1.5 lakh, you'll have to pay tax at the rate of 30 per cent against it. But remember, the entire amount is a gift. So pay tax and use the rest.

9. Sell stocks selectively

Everybody has some junk stocks in their portfolio. This is a good opportunity to, well, junk them. Face it: you'll never do it otherwise. Not wanting to take a loan can actually be an opportunity to spring-clean your stocks portfolio. Also consider selling other stocks where you can book profits. In short, take a close look at your portfolio and decide what you can sell. Remember, with markets going up and down, you can still enter the stock at a later date. Right now, what matters is that you want your loan amount to be as small as possible. However, don’t distress-sell your best stocks. Selling them might cause serious harm to your long-term portfolio.

10. Borrow against your life insurance policy

While we constantly stress the point that insurance is not an investment avenue, the insurance policy does accumulate some value as the years go by. And if you've held the insurance policy for a sufficient number of years, you would have accumulated enough surrender value on the policy to borrow against the policy. You can expect to borrow up to 85 per cent of the surrender value accumulated.

Interest rates are typically well below usual commercial rates (about 10-11 per cent), and you can take your time repaying the loan. There is only one downside: the (remote) possibility that you may die before it's repaid. In that case, the outstanding balance plus interest will be deducted from the face value of the policy payable to your beneficiary. As a negative, that seems a small price to pay to get out of debt now.

11. Take a loan against your provident fund

Explore taking a loan against your public provident fund account. You are eligible for a loan against your PPF after three years and you can take a loan up to 25 per cent of the value accumulated in the fund. Also, this loan is available at a concessional rate of interest of 12 per cent.

12. Borrow/sell jewellery

Indians have a remarkable fetish for gold. Not surprising. We are one of the world's largest consumers of gold. Consider utilising this unproductive asset. Sell your gold and silver to realise some money. If you're sentimental about the charm bracelet that your husband gave you on your last wedding anniversary or grandpa's gold signet ring, then consider borrowing against it. It will cost you lesser than commercial rates.

13. Hold a garage sale

Consider selling your old TV, bicycle, kitchen appliances that you bought and never used, as well as all the wood and other fittings left over from last year's renovation. You'll be surprised by the amount you can raise. And as a bonus, your house would have had undergone a bit of spring-cleaning.

14. Faithfully enter contests

You never know when you might get lucky: ask those people who entered "Kaun Banega Crorepati" and won some fabulous prizes. Randomly enter all slogan contests too. And drop your name into every lucky coupon box that you can find.

15. Dig your backyard in the hope of finding a treasure!

Even if you don't unearth a pot of gold, your backyard will be ready for being planted.

Short, Flexible and Cost-effective

Short, Flexible and Cost-effective

Short-term online management programs come with three handy advantages by Anagh Pal for OUTLOOK MONEY

You might have given fulltime online MBA courses a miss thinking that they were not worth the time or the money. Short-time Management Development Programmes (MDPs), which some e-learning institutes are offering, might be worth a look.

The online advantage

First of all, these are short-term courses and cost relatively less. Second, these courses are aimed at those who don't want a major degree but just want to brush up their knowledge in an area. If you think you could do with some more education in a particular field, these courses could be the answer. Also, since the courses are being offered in tie-up with reputed management institutes, it won't harm your CV either. Finally, they offer the benefit of online education, that is, flexibility to learn while you are on a full-time job.

Says Shreesh Chandra, general manager eLearning, Macmillan India, a company offering online MDPs: “These courses attempt to give you an insight into a certain area.” Specialised short-term courses have been received with a lot of interest, unlike courses of longer duration. Though online courses are not something new, "the shift is in the kind of courses on offer and the institutes you partner with”, says Chandra.

How they work

Once you register and enter into the student arena with your user name and password from a broadband-enabled PC, you can download all the study material. In-built interactive vehicles like e-queries help you interact with the faculty at a predetermined time. The one drawback for these courses is that out of the several MDPs that management institutes offer, only a few are available online.

A smooth sail into your new home

A smooth sail into your new home

Here’s a list of six areas, which, if dealt with carefully, may help you escape problems that you may encounter while buying a house on resale. Seek the right information and ask the right questions


Buying a home is a cherished dream for most, but the path leading to it is typically fraught with challenges. This was famously imitated in the film Khosla Ka Ghosla (2006), which depicts the travails and eventual triumph of a soon-to-be-retired man duped by an unscrupulous property broker while he was buying a plot of land.

The trials and tribulations of buying a house is not restricted to buyers of plots or new apartments. They also affect those buying property on resale—from an existing owner. In recent years, as the purchases of new properties from builders skyrocketed, purchase of resale properties, too, went up. Rajneesh Gulati, 34, a Gurgaon-based garment exporter, had a reason to buy a bungalow spread over 6,500 sq. ft in 2005 from the secondary market. “The bungalow was well-located, had three independent floors and was suited for my family of eight members,” he says.

Himango Gupta, 33, a regional manager in a Gurgaon-based international firm now residing in Vaishali, Delhi NCR, had another reason. “Builders don’t meet deadlines and I wasn’t prepared to keep paying EMIs for an extended period,” he says.

Missing Links

Vishal Garg, a Delhi-based real estate lawyer, gives four small but important tips.

Establish the property’s autheticity. You can get original documents from the sub-registrar’s office, House Tax Department (check on the arrears and chain of owners), Land and Building Office. The last also has a RTI cell that can be used to check the property’s status and whether the land has been notified.

Take a loan. Even if you can buy from your own resources, opt for a loan as banks’ own due-diligence reinforces yours.

Don’t forget the frills. Be clear on issues like parking slots and the area allotted to you.

Take permission.
Take the permission of other floor owners in case of reconstruction.

There could be a slew of reasons why people prefer the secondary market. Seek the right information and ask the right questions before taking the plunge. Watch out for six problem areas.

Examine the property title papers. You should ensure that the property has a clear title. If the unit has changed many hands, the biggest challenge is tracking down the ownership titles of the past owners. Banks wouldn’t give you a home loan if the ownership can’t be clearly established. Also, the property should be free from any encumbrances. “This is very relevant as the seller could have availed loans from other banks and institutions and deposited the original deeds to them as a security. Therefore, it needs to be verified that the seller is in possession of all the original documents,” says Madhumita Ganguly, senior general manager, HDFC Bank.

For Delhi-based working couple Pallavi and Rahul Narvekar, the process of buying a 3-bedroom house was rather smooth. “All the papers regarding the property were in place, but we still hired a lawyer to validate the documents,” say the Narvekars, who bought their house in 2003. “The purchase was through a distress sale and we got a pretty good deal,” they add.

In cases of leasehold property, prior permission of the lessor—the authority that leased out the land—may be needed for the transfer and mortgage of the property. There could be situations where the properties are being sold on power of attorney. Remember that not all states recognise this transaction, and if they do, the documentation will need to be legally compliant. It is also advisable to keep other documents such as indemnities and advertisements in newspapers so that you are prepared for contingencies such as loss of documents.

Look for the purchase agreement. This is your second step of ownership verification. Get hold of this agreement paper between the seller and the previous owner of the property. It helps in identifying whether the seller is entitled to sell the property.

Appraise the building sanction plan.
You wouldn’t want a rude shock of municipal or other authorities knocking at your door and then penalising you for not conforming to structural norms and building plan approvals. “Ensure that the structure has complied with the sanctioned plan and the property has an acceptable, verifiable completion certificate and occupation certificate,” says Ganguly of HDFC. Both completion and occupation certificates are issued by municipal authorities. The completion certificate proves that the building complies with norms such as those related to its height and its distance from the road, and doesn’t flout other norms. The occupation certificate testifies to proper water, sewage and electrical connections.

Delhi-based working couple
For the Narvekars, the process of buying a 3-bedroom house from the secondary market was pretty smooth
“All the papers were in place, but we still hired a lawyer to validate the documents.”

Seek a no-objection certificate (NoC).
If you are buying a house in a co-operative housing society, it is important to obtain an NoC from the society’s managing executive. “For resale of properties in co-operative societies, the transfer should be in accordance with the society bye-laws. The society should endorse such a sale,” says Ganguly. Also, do check out for the share certificate. It is a proof of the owner’s membership of the society and should ideally form a part of the ownership deed.

Check for pending dues. Ask the seller to give you a ‘no dues’ certificate that can be procured from the house tax department and check whether all the utility bills have been paid. You will also have to get the electricity and water meter transferred in your name. Banks will typically check the property tax and utilities receipts to establish the seller’s ownership. Further, check whether the property is registered with the local authorities and the seller has the necessary paperwork to prove it. The lending bank will also look out for this.

Estimate renovation costs.
An architect can help you assess these. Also, older houses incur higher maintenance cost.

How well you do the due diligence in these six areas can be crucial to the way you buy a property and how smoothly the life in your new house begins. Remember all stories need not have a happy ending like Khosla Ka Ghosla.

Tricks developers play

Tricks developers play

Builders have a variety of ways of catching the unsuspecting homebuyer on the wrong foot. Here are eight common ones and ways to counter them

by Urmila Rao for OUTLOOK MONEY

Everybody wants a piece of real estate. The sector has been growing at 25-30 per cent a year since 2003, fired primarily by low interest on housing loans and the rising affluence of homebuyers. Those who had bought stocks of real estate companies, whose valuations have gone through the roof, are a happy lot. However, the same cannot necessarily be said of scores of financially and emotionally bleeding homebuyers. The developers play lord and master to middle-income individuals, who often live like monks to fulfil their dream of owning a house. Most sale agreements are heavily loaded in favour of builders in the currently unregulated market.

This disillusionment is reflected in the rise in the number of complaints that has accompanied the growth of the sector. In the first 25 days of August 2007, the Delhi-based National Consumer Helpline, a consumers’ body, received 33 housing-related complaints. The Consumer Guidance Society of India (CGSI), Mumbai, says it gets two-three cases a day. In this scenario, what chance do you have of safeguarding your interests as a buyer?

In 1993, the Supreme Court ruled in favour of M.K. Gupta in his case against the Lucknow Development Authority for not delivering his flat on time. This landmark judgment brought housing construction under the purview of the Consumer Protection Act, 1986.

This, however, hasn’t done much to change the unscrupulous ways of builders. Owing to the bonhomie between developers, the authorities and the contractors, projects get sanctioned easily but the quality of construction goes unquestioned. Supreme Court advocate C.M. Srikumar says: “Even in cooperative societies, the contractor, the architect and the office-bearers of the society dupe the public.”

Rahul Todi, managing director, Bengal Shrachi Housing Development, says: “Unlike other consumer products, here we sell a concept first. If there is a gap between expectation and reality, then we are not doing our job properly.”

What are the most common games that developers play? Here are eight common tricks and ways in which you can guard against them.

I. When do I get my house?

Most agreements do not clearly specify the date of delivery. For instance, one says: “Completion of the building is expected to be delivered by the date mentioned in the covering letter of this allotment. The delivery of the possession is subject to force majeure.” What this means is that you cannot hold the developer responsible if he does not stick to the promised delivery date.

There have been cases when the delivery has been delayed by 12 months or more. Typically, the buyer would have paid 95 per cent of the price by the time he reaches the expected delivery date. If he is living in a rented house, delays will drive his calculations awry as he would not have factored in this additional rent (see Double Bite). Mumbai stockbroker Bhupendra M. Pitroda, 58, fought a legal battle against Megha Property Developers for five years. Reason: delayed possession.

Pitroda was promised delivery of the flat he booked in 1998 in Navi Mumbai’s Madhuri Cooperative Society Housing Project within 18 months. The builder later said that delivery would take another six months. When Pitroda visited the site six months later, he felt that the delivery would not happen soon. So, he instructed his bank to stop payment of the balance 37.5 per cent of the apartment’s cost to Megha Developers.

The developer promptly sold off the flat. An aggrieved Pitroda then moved the State Commission in July 2000. Three years later, the commission asked Megha Developers to refund Pitroda the money he had paid with 15 per cent interest. Pitroda was also awarded a compensation of Rs 15,000 for the mental agony caused and Rs 5,000 for legal costs.

The developer appealed in the National Commission, which upheld the State Commission order but cut the interest to 9 per cent. The developer then moved the Supreme Court. “The Supreme Court judge flung the papers in the face of the builder’s lawyer and asked the builder to compensate me immediately. The judgment was over in a minute,” says Pitroda. Through the legal battle, Pitroda made 25 appearances in the State Commission, three in the National Commission and one in the Supreme Court.

Many agreements have penalty clauses for delayed delivery, but they are without bite. For example: “If the company fails to complete the construction of the said building/apartment within the period as aforesaid, then the company shall pay to the allottee compensation at the rate of Rs 5 per sq. ft of the super area per month for the period of such delay.” What this means is that for a 1,000-sq. ft flat, you would get a compensation of Rs 5,000 per month—a pittance (see Double Bite).

In most cases, buyers put up with the delay quietly rather than ‘antagonise’ the builder. Most fear retribution, harassment and further delays in delivery. This is not entirely baseless. For one, agreement papers are designed to protect the builder. Two, your intention to fight the builder may look like a joke given your handicap in terms of financial prowess and influence. Three, there is no industry regulator you can turn to for redressal. Suresh Virmani of National Consumer Helpline says: “We generally encourage a dialogue between buyers and sellers to settle disputes. If that fails, the matter is taken to the regulatory body. But we can’t even suggest this in real estate because there is no regulatory body.”

What to do. Don’t just take the builder’s word on the progress of construction. Check it out from time to time, as Pitroda did. If you feel a delay is likely, start building up pressure on the developer. The best way to do this is to form a society, says Virmani. Usually, builders have many projects running at the same time and they push the ones where the pressure is higher. “The more the number of buyers, the greater is the pressure,” says Bharath Jairaj of Consumer Action Group, Chennai.

II. Where are my papers?

A lot of builders are evasive about giving the completion certificate at the time of handing over the flat. A completion certificate is issued by municipal authorities and establishes that the building complies with the approved plan. A developer would not get the certificate if he deviates from the plan.

You cannot prove ownership over your house if you don’t have the certificate as you would not be able to get the house registered. Also, you may not be able to get utility connections. You will have problems selling, mortgaging or reverse mortgaging the house as it will not be in your name. In the worst case,the unapproved parts of your house would be demolished by the municipal authorities. Not a happy state of affairs.

Businessman Mohammed Haroon, 45, got his flat in Tulip Garden, Gurgaon, six years ago, but he has not got the completion certificate yet. The same goes for the other 59-odd flat owners there. Together, they took Sarvapriya Developers, which built Tulip Garden, to the consumer court. “After four years, in mid-August this year, the court directed the builder to hand over the completion certificates within a month, or pay Rs 5,000 each as compensation to all the flat owners,” says Haroon. “But we know that none of the two will come our way and are prepared to approach the Delhi High Court in this matter.”

What to do. Sale agreements often don’t mention the completion certificate. If yours doesn’t and you notice it before signing the papers, insist on the inclusion of a clause that you will be given the completion certificate when the flat is handed over to you. Ask the builder for it as soon as he announces that the house is ready for possession. If, like Haroon, you move into the house without it, the court will probably be your last resort.

III. What’s the guarantee of quality?

Within a month of moving into his apartment in Mahagun Manor, Noida, Rajiv Raghunath, 41, got trapped inside the house as the door lock failed. In six months, the plaster started peeling off and the fans stopped working. In another few months, water started seeping in as the pipes had corroded. “I felt cheated. This wasn’t worth my money,” says Raghunath.

As of now, there is no way for a buyer to check the building materials used or the quality of construction. Says advocate Anupam Srivastava, who is with law firm Chambers of Law: “Quality is a subjective matter. Buyers should enter into an agreement on the kind of material that the builder will use.”

In October 2005, Pune’s Gera Developments started a trend by providing a 5-year warranty on its buildings. The warranty, however, is subject to the conditions that no structural changes be made to the house and that there be no misuse.

What to do. Don’t fall for the builder’s glib talk. Insist on including the sanctioned plan of the building and the specifications of the raw materials to be used for construction in the purchase agreement. If you are already facing quality problems, you can go to the consumer court. Says Anand Patwardhan, a consumer activist and lawyer: “If you want to approach the consumer court, move it within two years from the day you take possession.” Alternatively, flat owners can form a Residents’ Welfare Association (RWA) and get the builder to fix the problems, as Raghunath, an RWA member, did.

IV. What is the price really?

Nishit Babyloni, 38, mech-anical engineer in BHEL, Bhopal, had booked bungalow No. 105 with Ansal Housing and Constructions (AHC) in Pradhan Enclave, Bhopal, in 2004. On a visit to the site five months later, he found that his bungalow was not being built. He asked AHC to give him bungalow No. 120 instead, as construction was in full swing on that. AHC formally changed the allotment in February 2005, but sent him a letter eight months later asking for Rs 3.15 lakh more.

Atit Arora, general manager (marketing) and project head, Ansals Pradhan Enclave, Bhopal, says: “The bungalow’s specifications were changed. Babyloni was required to deposit the amount if he wanted the new specifications.” Babyloni retorts that AHC did not tell him about the additional work and the changes in specifications. “We were not told that we would have to pay 25 per cent more for the new bungalow till 18 October 2005.” He is thinking of moving the consumer court. But, it is not unusual for an agreement to say that a builder can ask for additional payments if specifications are changed or there are cost overruns.

There are legal loopholes as well. The Maharashtra Ownership of Flats Act, 1963, protects buyers against malpractices in the sale and transfer of flats. It gives homebuyers the right to inspect the builder’s documents such as the specifications that he has obtained from the authorities. The Delhi Apartment Ownership Act, 1986, however, is a different story. Although it was published in the Gazette of India over a decade ago, brought on the statute book by Parliament and given the President’s assent, it is yet to be notified.

What to do. The last stop is the consumer court. Says Srikumar, “Many malpractices are offences under the Indian Penal Code, for which the responsible party can be prosecuted.” Keep checking with the builder if any changes are being made to the specifications mentioned in the agreement and the allotment letter.

Also, try to get it mentioned in the contract that if a sum higher than the original price has to be paid by you, the builder would give you additional time for that. You must also ask for a copy of the sanctions that the builder has taken from the authorities to carry out the alterations.

V. What else do i pay for?

To make your house liveable, you will need electricity, water and sewage connections. You will also need electrical wiring, appliances like fans, lights and a water pump, which are unlikely to be part of the package and generally won’t be mentioned in the agreement. These will be additional costs that you will have to bear. You might also have to keep some speed money aside for registration so that it gets done in a decent timeframe. In some cases, the builder may make a verbal promise to get it done for you.

What to do. Builders generally have a take-it-or-leave-it attitude with conscientious buyers while striking a deal. Even so, it pays to be scrupulous and to read the agreement and its fine print. “Get a lawyer, an architect or an evaluator to determine the correctness of the purchase,” says Srivastava. Finally, do some quick math and keep aside some funds to get your house up and running.

VI. How big is house?

A typical home purchase agreement states: “The plans, designs, and specifications are tentative and the developer reserves the right to make variations and modifications...” Simply put, in most cases, you won’t know the final area of the house till you get it. The agreement will further state, “In case of change in area, the difference in cost of area shall be adjusted at the time of making final payment.”

Shikhar Saxena, partner, Ace Equity Solutions, a leading housing finance franchisee of ICICI Bank, had booked a fully-furnished, air-conditioned service apartment measuring 650 sq. ft (super area) in Cabana Service Apartments in Indirapuram, Ghaziabad, which was being built by Assotech Realty. He got an allotment letter mentioning this area. However, when the builder offered possession, the super area of the flat had increased to 671 sq. ft. “Once the authorities approve of the floor space index, how can the builder change it?” he asks. After holding out for over 18 months, the choice before him now is to either accept all the terms of the builder or seek cancellation of his allotment. Further, he was informed that the maintenance charge, which was to be Rs 1.50 per sq. ft per month, has been increased to Rs 7 per sq. ft per month. The agreement shields the builder. It says “the monthly maintenance charges will be subject to revision from time to time”.

Assotech’s Elegante project, also in Indi-rapuram, was to have terrace gardens on the seventh and thirteenth floors. “There is only a patch of green; the developer has built units on these floors too,” says a buyer. Srikumar says there is nothing one can do unless the size of the garden is specified in the agreement.

What to do. Builders usually follow the same practices through all their projects. So, before buying, check out the builder’s earlier projects to see if he plays fair. Start a blog or join one to share your experiences with others, though this doesn’t guarantee redressal. You can read about the mistakes and experiences of other people on websites like

VII. What's the carpet area?

Most residential units in India are sold on the basis of the super built-up area, which includes open spaces like space for lifts, staircases and parking, among other things. But, what you really get is the carpet area, which literally means the area that you can carpet. This can be 15-35 per cent less than the super built-up area. In 2005, HDFC chairman Deepak Parekh had said the company would provide loans at cheaper rates to developers who sell their flats on the basis of carpet area. But, there has been little headway on this front. Some developers, especially in Bangalore, sell on the basis of carpet area. In Pune, too, the builders’ association has decided to increase the carpet area by 25 per cent to arrive at the saleable built-up area charged to the buyer. In both these cases, buyers are aware of the area they will get. Though there is still a long way to go, experts believe that soon properties all over India would be sold on the basis of carpet area.

What to do. Buy property on the basis of carpet area, although the builder will not like the idea. Argue with him that if the super built-up area is mentioned on the basis of the approvals and sanctions, the carpet area can be quantified. Says Srikumar: “There should be a provision for termination of the contract and resumption of the property so that builders don’t have an upper hand. However, in the absence of rules, buyers should be vigilant.”

VIII. Will I get a well-managed property?

The developer may promise to maintain the building or complex in the initial years. The service, however, may not be satisfactory. Residents of Mahagun Manor in Noida have taken over its maintenance. “The homebuyers cannot even use the Right to Information Act, 2005, to their advantage because it doesn’t apply to private builders or even group cooperative housing societies,” says Srivastava.

What to do. You are unlikely to get relief through correspondence and phone calls. You can go the e-way to attract the builder’s attention. For months, Delhi-based developer Unitech ignored the complaints of the residents of one of their premier offerings, Uniworld City. Then, a resident shot a nine-minute video that captured the visible flaws of the project, and posted it on, a broadcast site. Their grievances were soon attended to. You can use websites like and to seek further guidance.

Though the dice is clearly in favour of the builder, the buyers can still fight back and many of them are doing so. Now, the government urgently needs to put a regulator in place to ensure proper disclosures and protect the buyers.

It pays to have time on your side

It pays to have time on your side

Your portfolio should reflect your needs. Your asset allocation strategy should take into account the goals you want to reach with your funds, your investment horizon and your age

Sunita Abraham for Outlook Money

V Ravindran, a 56-year-old retired businessman, is planning to invest Rs 20 lakh in equity funds. Investment advisors may balk at this, as traditional wisdom suggests that the older you are, the lower should be your equity exposure. However, with the stockmarkets soaring and the benchmark indices more than tripling in the last three years, this wisdom has rendered many older investors mute spectators while equity investors ring in unanticipated profits.

Secular bull markets, like the one we are riding currently, warrant a relook at asset allocation. Maybe, your investments would be optimised if you moved from using age as a fulcrum to determine your equity exposure to using holding period to determine how much risk you should take. That is Ravindran’s logic too. The money he is investing in equity funds now is meant as a gift for his granddaughter when she turns 18. He reasons: “She will not need the money for the next 15 years at least. Risk cannot be totally eliminated if you want to earn good returns. You can only try to reduce it to acceptable levels.”

Analysis of the returns from the Sensex show that in the 13 blocks of 15-year holding periods since 1979, there was no period when the Sensex gave negative returns. For a holding period of 10 years, there is a only a 5.5 per cent chance of making a loss and in case of five-year holdings, there is a 13 per cent chance of losing money. This builds a strong case for using holding period as a basis of allocation of resources between various asset classes.

sourirajan 44
Business executive, Gurgaon

He is just a few years away from the goals he has been investing for—his daughter’s MBA and marriage—and wants to move away from equity to fixed income securities to avoid volatility in the period that is left.
“I’m moving from equities to safer products since my goals are now short term.”

Goals and holding periods. Holding period is the length of time for which you stay invested to achieve a goal. Longer holding periods reduce and even eliminate risk in equity. This can be the case when somebody plans for his retirement when it is more than 15 years away, new parents save for the college education of their child, someone saves to buy a holiday home, or elderly people manage wealth for inter-generational transfer of wealth. In all these scenarios, the money that is being saved and invested is for an event in the distant future and gives the equity investment sufficient time to ride out short-term volatility. Since mutual funds are the most efficient way for individual investors to participate in the stockmarkets, equity funds must form the core of the portfolios of such investors. On the other hand, investors who have a short holding period must look at fixed income securities that exhibit lower volatility in the short run.

Sourirajan, a 44-year-old general manager of Becton Dickinson India, is looking forward to his younger daughter Gopthri completing her MBA and subsequently getting married. He estimates Rs 25 lakh will be needed to meet both targets and has money invested in direct equity holdings, mutual funds and bank fixed deposits. However, even though he is fairly young, Sourirajan is looking to move away from equity and invest more in fixed income securities. He has accumulated and invested over the years to meet his goals and now that the event is just a few years away, he wants an investment avenue that will not exhibit volatility in the period that is left.

Does this mean that the age of the investor loses relevance in the asset allocation process? Not quite. Age would define the investor’s risk tolerance and should be used to identify fund categories for him. A matrix can be created to help you identify your investing profile using the concept of “payout period”, the time interval after which the funds must be available for the investor to meet his goals, as the pivot of the asset allocation process and the age of the investor as the barometer of the risk that he can take (see Holding Period Matrix).

Investors with long holding periods, but a low risk tolerance level must invest in the market through index and exchange traded funds that eliminate fund managers’ risk from the investing process. Diversified equity funds concentrating on large-cap stocks and having some exposure to well-established mid-cap schemes are also a good option. Investors willing to take greater risk can invest in aggressive equity funds such as Franklin Templeton’s Flexi Cap Fund and Prudential ICICI’s Dynamic Fund, both of which look for investing opportunities across market capitalisations. Thematic and sectoral funds can also be considered since there is sufficient time for the stories to show results. But, if your holding period is shorter, it is best to invest in the index, diversified equity funds and balanced funds. You could include mid- and small-cap funds if you are willing to take more risk.

A look at the returns from diversified equity funds which have been in existence in India for at least five years bolsters the case for long-term equity investing. These schemes have consistently beaten their benchmarks and have exhibited low volatility. The presence of a scheme in the markets for at least five years means that it has managed funds in bull and bear markets. Such schemes pass the holding time test and can form the core of any portfolio.

Strategies for asset allocation and portfolio construction are as unique as thumbprints. Time frame, income needs and tolerance for short-term volatility define the asset mix that each investor will adopt. If you have taken care of short-term cash needs and want to save for goals that have a long holding period, your investments should go into equity. You should invest in fund categories according to your risk and return parameters. Building a portfolio in this manner will ensure that it reflects the actual risk associated with an asset class and you do not lose out on returns merely because of your age. Time, not age is the key here!

Sunday, October 28, 2007

IGNOU to offer new professional courses

IGNOU to offer new professional courses
28 Oct, 2007, 1245 hrs IST, PTI
NEW DELHI: In an effort to further broadbase its educational programmes, IGNOU will soon launch post graduate and degree courses in various professional fields, including Computational Sciences, Advanced Informatics.

As per the plan, the Indira Gandhi National Open University will offer post graduate, diploma and degree courses in Computational Chemistry, Scientific Computing, Computational Sciences, Advanced Informatics and Technology Enhanced Education.

A Memorandum of Understanding was signed between IGNOU Vice Chancellor V N Rajasekharan Pillai and Indian Institute of Information Technology and Management, Kerala, to explore ways to offer open learning programmes in these areas, IGNOU's chief PRO Ravi Mohan

The goal is to offer quality education using emerging open learning system, he said.

IGNOU is collaborating with IIITM to offer educational opportunities to the students across the country in these areas, he said.

Saturday, October 27, 2007

From sheets to pillow cases to dusters

From sheets to pillow cases to dusters
Uma Asher,TNN

Over the years, it has slowly dawned on me that I have learned many things from my parents in years past, without even noticing. They live in an apartment in the overcrowded clutter that is suburban Mumbai. Every day, they buy a handful of flowers and bel leaves for the household altar. The flower woman delivers them to our door, wrapped in a leaf and tied with a piece of string. My mother saves the string, and when it has grown to a fist-sized ball, she returns it to the flower-seller, who re-uses it.

My father would take cloth bags to the market every day, but somehow plastic bags crept into the house occasionally. My mother would collect them, and periodically hand them over to the vegetable vendor, so he could reuse them.

In the days of glass milk bottles, my mother saved the aluminum foil caps. A few caps made a new career as scrubbers for cast-iron cookware like a roti tawa; others were given to our domestic help, who sold them as metal scrap in the slum where she lived. That way she earned a spot of extra money, and the aluminium presumably got recycled somewhere. When the tough nylon fabric from folding deck chairs frayed at the edges, it was taken out and sewn into heavy-duty bags to buy our monthly supplies of grain.

Those bags lasted well over a decade. When I was a child, the fabric of my unfashionable but sturdy cotton school uniforms was ideal for making shopping bags. Our old clothes that were in wearable condition were bartered for steel pots and pans from an itinerant vendor.

My mother rescued old zippers and buttons, and stored them in an old candy box to sew on other clothes. Torn clothes were cut up and saved as wipes for kitchen spills, muddy shoes, and so on. Old cotton bedsheets got cut up, and the ends, less frayed than the centre, were sewn up into pillow cases or dishcloths. If a container broke, the lid was saved, and used when another container was missing a lid.

To this day, gifts are unwrapped very carefully, and the paper stored flat under a mattress for reuse. Resealable plastic bags are rinsed, dried, and reused when possible.

Even though my parents live in a flat, they don’t regard their hoard of old stuff as clutter; it’s well-organised so things are there when they need them. When they need string, a plastic bag, a clean jar or bottle, a lid or nail of any size, a rag to wipe a spill, they know exactly where to find it.

Only when I lived in the US did it even occur to me that stores could sell such items. I have come to recognise and be grateful for how my parents’ little habits continue to shape the way in which I use things. They never use the expression “reduce, reuse, recycle”. When they add some little item to their stash, they simply say, “This will be useful.”

Afraid? Not us!

Afraid? Not us!
Avinash Kalla,TNN

Is conquering fear the key to success? As Dhoni and his boys swept the T20 trophy, they demonstrated amazing teamwork and spirit. Avinash Kalla unravels the success formula

Say 'fearless' and the image of a beaming Mahendra Singh Dhoni, along with his young bunch of enthusiastic cricketers, proudly holding aloft the T20 World Cup strikes the mind.

Dhoni pulled off a victory even as few gave India an outside chance of making it to the finals. So, what did this Jharkhand lad do differently when catapulted to the hot seat that others before him did not? You guessed it. He and his team operated with a mindset of utter fearlessness. "We played without fear. If we play like this, with everyone supporting each other, we're going to win more matches than we lose. We need to enjoy ourselves whenever we go out in the middle. Let euphoria take the place of fear," is the newly-anointed skipper's slogan.

Is losing fear, then, the key to success in both individual and team enterprises? And what is the role of a leader in inculcating this attribute? "There is a tremendous relationship between fear and success," says motivational speaker Shiv Khera. "There are thoughts of fear and defeat and thoughts of victory and happiness. It's these very thoughts that direct or misdirect us," he asserts.

While negative thoughts create an aura of gloom around us, the energy emitted by the positive thoughts is reflected in our actions and body language. Powered by this positive energy, one plays to win in whichever field one chooses to. As Khera puts it, "There is a huge difference between playing to win and playing not to lose. In the former, you play with an inspiration, whereas in the latter, you play out of desperation. And the results are different in both cases."

When you are fearless, you don't hesitate to take on the mighty and powerful. The Indian team demonstrated that match after formidable match against countries ranked favourites to lift the prestigious trophy.

Sabeer Bhatia, then a young entrepreneur, set aside fear when he walked in to negotiate with Bill Gates and co. for a whopping $400 million for his venture Microsoft offered him a meagre $160 million; Bhatia didn't give in. He had just one choice 'take it or leave it'. Undeterred, Bhatia who acknowledges that being fearless is certainly one of the qualities required to be successful in business, played it cool. "I'll get back to you," is what he said.

All through the way to clinching the mega deal, he remained firm and fearless. However, he has a word of caution, "You cannot have a weak hand and continue to be fearless. It would be foolish to do so; your spirit has to be justified by a solid platform. In my opinion, being fearless means that one should trust her or his intellect, and not be afraid to go against the norm to try something new."

And defying norms is no mere feat; it takes a lot out of leaders who are able to turn the tide in their favour. Capt. Gopinath, who revolutionised the way people fly today, says, "We had a class barrier to defy when we entered the aviation business. Nobody believed in my project; some went on and said 'Tata-Singapore airline never got the licence; you don't stand a chance to see it through.' But in my mind there was never a question about will I be able to do it? It was always how I can do it, till I actually did it."

Individuals like Dhoni, Bhatia, and Capt. Gopi possess what Khera terms as 'practising mental toughness' -- the mantra he says is, "I play to win but I am not afraid to lose."

His views are echoed by Dhoni who said, "It really didn't matter to me if we didn't win, because we'd given it our best."

Think for a moment, what if Bachendri Pal had allowed herself to get intimidated by the imposing Everest. She would never have scaled the tall heights she did by becoming the first Indian woman to conquer the Everest. Climbing the mountain must have been a daunting task for her, but she exorcised her fears and went single-mindedly about her mission. Again it was the courage of her beliefs that made environmental scientist Sunita Narain lock horns with a Cola giant, and stick to her guns in the face of immense pressure and arm twisting.

It's the leader's attitude and speed that determine the pace with which any team moves and builds the tempo. In Khera's opinion 'a bunch of sheep led by a lion is better than a bunch of lions led by a sheep.'

So are leaders born or do they learn to lead? And what is it that the leader needs to do differently to come out tops? "Some are born leaders whereas others acquire leadership skills over time," says Bhatia. Capt. Gopi adds, "Courage is the most important aspect of leadership; it comes from deep conviction and belief. Second, a leader needs the ability to judge people and manoeuver them ensuring their potential is optimised."

A formula Dhoni practised to perfection. When Harbhajan Singh showed signs of buckling under pressure, Dhoni decided to give the ball to Joginder Sharma, a player who, the captain felt, had fire in his belly and 'wanted to make a mark at the international level.' It was a gamble that paid off.

A leader does not hesitate to take gambles. Capt. Gopi says, "If you can't create more leaders within your team, you are not a leader worth your salt. Give your people challenges and they respond. They thrive on these challenges and you in turn create leaders who will carry the show on."

But not everything is always hunky dory for these fearless souls; they too have their lows and face defeats. "In business, you are only as good as your last quarter. It's not every time that your courage will lead to success. You lose some, but then you need to analyse various aspects and act fast," says Capt. Gopi. In these defeats there is glory as you go down fighting.

With Chak De being our current war cry, it's time you believed in yourself and went for your dreams. Remember, fear surrounds us like a cage, break it, and the world is your playground. Now that we are in the game, who are we playing next?

Management Of Change Brings Stability

Management Of Change Brings Stability
Discourse: Swami Sukhabodhananda

There are two sources of stress, internal and external. Internal stress involves thoughts, values, beliefs and opinions. External stress involves wrong exercises, faulty breathing habits, unhealthy eating habits, pollution and sleep problems.

Nobody can avoid stress in life. One has to minimise stress. That is possible if one can work on both internal and external stress. The most important factor is our mind and how it looks at life.

At the end of one of my programmes, a lady danced for three hours in sheer celebration. Then she came and sat next to me and told me how happy she was. As she was drinking coffee, the beverage spilt on her beautiful saree. Immediately, she screamed, saying her joy from the three-hour dance was gone.

Looking at this incident, i learnt that three hours of happiness was invalidated by a sorrow lasting for a few seconds. If our mind can work like this, the reverse is also possible. The three hours of sorrow can be invalidated by a few seconds of joy.

The secret of being happy is to recollect happy incidents in life. Weaken the effect of unhappiness by distancing yourself from its pictures. Can you undertake the following acts in your life? Understand the mind. Transform the mind. Transcend the mind.

Transforming the mind involves the understanding that there is no complete satisfaction in life; there is only a possibility to improve upon the existing state of affairs. We don’t have to win every time in order to be happy; happiness does not depend only on success. Learn to respond and not to react to events and incidents in life. If one continues reacting, reaction becomes a habit. Then an egoistic and reactive "I" emerges. It will have its own foolish logic.

A dog and a cat had an interesting conversation. The dog said, "I am so lucky that the owner of the house serves me and the children of the house adore me. So i feel they are God".

The cat also said, "The owner of the house pets me, the children of the house adore me, and the servant maid serves me. So i feel i am God".

Effective management of change is an art. For this, you need to cultivate leadership qualities. To be successful in life, one has to have the leadership quality to manage change.

In esoteric teaching there is an important law called the law of three. The positive effort you put in is called the first force. As you put in positive force there is a negative force that would affect the positive force.

This negative force is called the second force. If one conti-nuously puts in positive effort, there would be a third force that would descend and transform the negative force into a positive force. This is called the law of three.

If you do not continue exerting a positive force, the negative force will take over. So the law of three urges us to be open to the negative force, but to continue applying the positive.

Meeting The Challenge Of Changing Patterns

Meeting The Challenge Of Changing Patterns
Janina Gomes for TIMES OF INDIA

"We once saw a man draw some black dots. We looked and could make nothing of them but an irregular assemblage of black dots. Then he drew a few lines, put in a few rests, then a clef at the beginning, and we saw these black dots were musical notes. On sounding them we were singing”. This observation set me thinking. There are many black dots and spots in our lives. We cannot understand why they come — unexpected bad news, sudden deaths, illnesses, unsavoury encounters, brushes with the uncouth... We wonder why God permitted them in the first place. Then, other experiences come flooding in, equally unexpected: good tidings, experiences of goodness, compassion and mercy.

Maybe God has been adjusting the dots. He has been drawing the lines he wants, separating the good from the bad, lifting us above what is low and unseemly. He puts in the rest in the proper places. The black dots no longer remain an irregular assemblage. They are drawn into a larger pattern, woven into a wider harmony.

When we look down a long avenue of trees, we are amazed to look from one end of the avenue to the other at the rich greenery, the large boughs, the arching leaves. Sometimes, the trees seem to groan under the burning heat of summer, yet they provide shade to the hapless who take shelter under their outstretched arms.

There are seasons, when the trees shed their leaves and remain brown and seemingly barren. Then once again, they suddenly turn green in spring. Fresh new leaves appear. All is verdant, green, inviting once again.

When we look back along the long avenues of our years, our experiences are quite similar. There are good times and bad. There were times for growing roots deep into the ground to withstand the winters of our lives. There were times to shed leaves, experiences, persons and situations that were poisoning our lives. There were times to shift our alliances and allegiances to bring them more in tune with God. There were times to go deeper in search of water and the source of life.

We all have to deal with change in our lives. Change is really an opportunity to grow. The unexpected always comes along. The unexpected could also come in the form of the beautiful and the inspiring. We all know what joy meeting an old friend by chance can bring us.

An unexpected phone or letter that encourages us can light our day. An experience of quiet joy and peace may come to us through a sudden shaft of light from the window. Affirmation from a friend or loved one could lift us, when the lowness of some around us is getting us down.

Change and difference are a part of life and the mystery of being unsure never leaves us. It is no secret that deer, squirrel and owl are not alike, that birds do not fly in lines and fish don’t all float at the same level. We choose the level at which we live our lives, the heights that we touch and the depths to which we stoop.

We cannot determine the times of sunshine and the times for cloud and rain. Our spiritual experiences may not always be pristine and un-diluted light. We all cannot escape the darkness and gloom. But the closer we move to God, the better we learn to handle change.

Text the teacher

Text the teacher
Pragya Kaushika,TNN

Come November and the School of Open Learning (SOL), Delhi University (DU), will launch its welcome gift for the new batch of students enrolling in the BA programme for 2007-08 - a 24-hour query helpline via e-mail and mobiles.

One guest faculty member will be appointed as counsellor and instructor for a group of 20 students, informs H C Pokhariyal, executive director, SOL. He adds, "The basic need for any education system is the availability of teachers who can devote time to students. Distance learning is coming up as an alternative to regular classes as there are many students who do not get admission to regular courses."

The idea emerged from the SOL's interaction with the open universities in the UK. Admitting that distance learning in foreign countries has upgraded to a level where it can compete with the regular education system, Savita Dutta, director, SOL states, "We have invited experts from the UK to help us improve our distance education methodology."

If the experiment with the BA programme manages to achieve the goal with which it has been started, it will be extended to other courses provided by SOL. Says Dutta, "We cannot limit the number of students enrolling in our courses, and since they need tutors just like regular students, we will enhance the teacher-student link to manage them efficiently."

Apart from helping enrolled students find the right guidance during examinations, this new system will also provide job opportunities for fresh post-graduates. "MA/MPhil students will be invited to join us as guest faculty under the scheme, and this will simultaneously address their employability issues."

How many are enough?

How many are enough?

The more life covers you have, the tougher they are to manage. A smart investor buys a term cover for life insurance and invests in funds independently. But for those who cannot, Ulips are the best bets

by Sunil Dhawan for Outlook Money

Consider the following grim statistics. Almost eight of every 10 Indians are without any kind of life or health insurance. But the irony is that even those with insurance policies, especially life covers, maybe underinsured.

On the other hand, there are individuals who have bought insurance policies for the sake of investment only. Take the case of 38-year-old Minoti Desai, a former member of the Indian women’s cricket team, who is now self-employed. She has 23 life insurance policies, mostly money-back, endowment and Ulips (unit-linked insurance plans) with a total life cover of Rs 40 lakh and an annual premium of Rs 3.4 lakh. She can have the same cover at a premium of about Rs 21,000 in a term plan till age 65, a life insurance plan that only provides your dependents with the sum insured during the tenure of the policy and not returns. The remaining annual contribution could have been invested in a range of pure investment products ranging from low-risk products like public provident fund to high-risk investments such as equity mutual funds (MFs). This combination provides higher cover as well as higher returns.

Why people have too many policies. There are many like Desai who have a portfolio of insurance policies much like a portfolio of MFs. Much of it has been because putting their money in traditional products such as endowment and money-back, has been their preferred investment. “I have been buying traditional plans almost every year for the last 13 years. It keeps a check on my spendthrift ways and helps me save money,” says Desai.

Since traditional products didn’t have the flexibility to adjust to changes in one’s life, such as the need for enhanced cover after the birth of a child, people had to buy fresh policies. There are other reasons as well. Insurance was sold as a tax-saving option and access to it was relatively better, thanks to a larger number of insurance agents as compared to, say, MF agents. Many people treated insurance products as the only investment tool to achieve life’s goals, such as children’s education and retirement.

Problem of plenty. A pile of policies comes with a pile of problems. To name a few, it may be difficult to keep track of premiums, updating nominations and maturing policies even if your agent is helpful. Since you are committed to premium payments, you remain vulnerable if your commitments are large, especially in exceptional times, such as a job loss, or when you want to take a sabbatical without pay. The other major problem arises when you realise that your agent has sold you a policy whose features don’t fit your needs and even the returns are not endearing. Life insurance policies being long-term contracts, the exit costs are high (see The Right Policy: Pick Live Covers, Drop Dead Ones, 15 January), which forces one to stay put.

How Ulips can prevent pile-up. For those who can’t actively track and manage investments and would like to rely on investment-cum-risk insurance products, Ulips are an alternative to holding large number of policies. You can buy a Ulip that ensures adequate insurance cover, gives flexibility in premium payments, and has a decent fund performance. You can even attach a critical illness and a disability rider. This way you could cover a lot of risks in a single policy. More savings can happen in the same Ulip through top-ups. Thanks to this flexibility and hardsell by agents, Ulips have become popular. “I have almost stopped buying traditional plans since 2001; now my insurance pie also features Ulips,” says Desai. If you want greater risk cover or find the premium unmanageable, you can even rely on a combination of a low-premium, high-life cover term plan along with a Ulip.

Even as you search for the best Ulip, you need to be on your guard. This product is meant for long-term investment, since much of administration and other costs are levied in the initial years of the policy term. However, unscrupulous agents have been hawking Ulips to those looking to park money in equity-related instruments and getting them. There have been instances where new Ulips have been sold to the same customer just because the insurer has launched a new fund option at a lower net asset value. Worse, some agents, after having switched insurers, urge policyholders to exit existing Ulips to buy newly launched ones by their new companies. Therefore, zeroing down to the right agent is essential (see Finding The Right Partner, 15 September). Also, check whether the exit costs of the Ulip are manageable.

How many policies should you have? “There is no thumb rule for the number of policies that one should buy,” says Debashis Sarkar, director (marketing), Max New York Life Insurance. Opt for Ulips that give both the sum assured and fund value as death benefit, instead of those that provide the higher of the two. Choose Ulips that offer life cover till age 100. You can increase or decrease the cover whenever the need arises. A periodic review of life risk cover also helps. “Do a ‘needs analysis’ at periodic intervals; it may so happen that one of your risks may increase or decrease and your calculation may change completely,” says Anand Pejawar, country head, Bancassurance, SBI Life Insurance.

What do you do if you have already accumulated a pile of policies that you might now want to reduce? In Ulips, you need to stay invested for the long-term, given the commonly front-loaded cost structure. For traditional plans, depending on exit penalties, you could take a call to minimise your losses. Buying life covers is all about knowing how much cover you need and figuring out when it is enough. The good news is that with the ever-expanding choice in insurance-cum-investment options, you can actually strike a balance.

Questions to ask your wealth manager

Questions to ask your wealth manager
Go through this checklist before entrusting your wealth to someone, because it is important to ensure that your money is in the right pair of hands

by Moinak Mitra for Outlook Money

The name’s Bond! Plain, vanilla, old-fashioned bond. Or trust. You have worked hard to build yourself a plump financial portfolio, the least you can demand is ‘trust’ from the person or organisation you assign to manage your wealth. Moreover as a busy professional, you might be unable to devote the kind of time needed to take care of the money you earn and would, ideally, like to outsource your money management to a trusted person or organisation. So where do you go?

India is still at a stage where the wealth manager is not necessarily a certified entity and the term itself is used rather loosely. With banks and distribution houses, insurance agents, mutual fund distributors and chartered accountants liberally calling themselves ‘wealth managers’, there is a mindboggling array of people to choose from. So, it becomes imperative to first identify the type of people you can sign on as your wealth managers.

Manager Conundrum

There are wealth managers in banks who will eagerly do your financial planning if you fall in the HNI (high net worth individual) block. The banks assign a relationship manager (RM) to you, who is expected to manage the relationship with you by proactively using his knowledge to tailor unique and innovative financial solutions that will create value. However, he is restricted by the number of distribution tie-ups he has—not all of them can sell all products. Besides, as banks and distribution houses increasingly compete with each other with a similar set of products, an RM may end up just pushing his own brands instead of delivering long-term advice.

The high churn among RMs in banks often leads to sudden breaks in “relationship” building and a whole lot of miscommunication between the customer and the bank ensues. Take the case of Piyush Singhal, 40, managing director at a Delhi-based software firm, Infoedge Solutions. In 2001, an RM from a prominent MNC bank offered to take stock of his investments. Singhal was advised to invest in 15 debt mutual funds (MFs). Within a year he had burnt his fingers and exited when his portfolio crashed. Singhal held on to the bank, but this time opted for another RM. He then fell prey to the New Fund Offer (NFO) churn game that banks play with their HNI clients. From 2003 to 2004, Singhal invested in NFOs recommended by the bank. “There was a 50 per cent churn within the very first year, and there was at least one instance when we sold one fund and bought it back within a month,” he says.

When Singhal looked at his return, net of the short-term capital gains tax and commissions, he found that he had barely made 8 per cent in a market that topped 40 per cent. So, why is Singhal still with the bank? “They are all the same,” he says. His strategy now is to diversify across banks and he has signed up with another bank a year back.

Other ‘Wealth Managers’

Then there is everyone else keen on getting a slice of your pie with assurances to make you richer than you are today. Your friendly neighbours who sell insurance and mutual funds may not always be the right source. After all, their interests in selling you a particular product is the commission that they earn through selling you a financial product. Besides, your accountant or stockbroker may not adopt a holistic approach to all your financial planning needs.

If you strictly go by the book and look for a qualification that befits a wealth manager, then you should go to the 150-odd certified financial planners (CFPs) who have been certified by the Financial Planning Standards Board (FPSB), India. Remember that a true wealth manager uses the financial planning process to help you figure out how to meet your life goals through the proper management of your financial resources.

Once you have identified the category of your wealth manager, it boils down to choosing one. Here are nine questions to ask before you hand over that cheque. And remember to keep asking as you go along.

What is your experience and qualifications?

Wealth management requires hands-on experience and a strong technical understanding of topics such as personal tax planning, insurance, investments, retirement planning and estate planning and, how a recommendation in one area can affect the others. Ask the planner what his qualifications are to offer financial advice and if, in fact, he is a qualified planner. Ask what training he has successfully completed. Ask what steps he takes to keep up with changes and developments in the financial planning field. Ask whether he holds any professional credentials including the Certified Financial Planner certification, which is recognised internationally as the mark of a competent, ethical, professional financial planner. Find out how long the planner has been in practice and the number and types of companies with which he has been associated. Ask about work experience and its relation to current practice. Choose a financial planner who has experience counselling individuals on their financial needs.

What value added services do you provide?

Ideally, your manager should offer complete financial planning. He should be able to give you advice on equity investment, debt, commodities, art, insurance, international investment, which home loans to take and why, tax planning, estate planning, filing tax returns, superannuation, real estate, and do a cash-flow analysis. If you don’t see a mix of different asset classes, it is a red flag. Diversification is the essence of wealth management. Apart from regular services, it would be nice to get some more value out of your advisor to update your own knowledge. Look for the factors that differentiate one wealth advisor from the others. Check whether your advisor organises any client education seminars, gives you free research reports and regular updates on your wealth portfolio.

What plan can you suggest that suits my needs?

It is important that the plan made for you is unique to your income, your financial goals and your station in life. Each person’s financial plan is significantly different from the others. Your financial planner should be able to consult with you, draw out your financial dreams, and make a plan that will help them come to fruition. The plan changes depending on your income, the size of your family, what you consider necessary expenses, your luxuries and others.

Some financial planners have a few blueprints that you have to choose from, with pre-determined asset allocation ratios. While following this financial plan may be better than no financial plan, a custom-made plan that suits just you is ideal.

How much do you charge and on what basis?

It is better to be clear on this one. These charges are over and above any other charges like an entry and exit load charged by mutual funds when you invest in them. Ask if the fee structure is available in writing. They can charge you in different ways.

Fees: They are based on an hourly rate, a flat rate, or on a percentage of your assets and/or income. At times, it is on the nature of the work done.

Commissions: Though commissions are not paid by you, but by a third party (like a mutual fund house or insurance company), it does come out of your pocket. Fund houses and insurance companies use their entry and exit loads to fund these commissions for their brokers and distributors.

Combination of fees and commissions: Here you are charged fees for the amount of work done to develop the financial plan and commissions are received from any products sold.

What is your investment philosophy?

Don’t put all your eggs in one basket. Spread them around so that a downturn in the life of one asset class does not affect the overall returns of your portfolio. Sure, everyone knows that but your wealth manager should be able to put it down on paper and actually tell you how to do it.

He should be able to tell you the structural risk inherent in a product. For example, he should be telling you that within equities, mid-cap funds are riskier than large-cap oriented funds. In addition to a strategic allocation, your planner should also be able to advise on the tactical allocation of your assets. For instance, within the debt space when the interest rates are tightening, he should advise you to stick to floaters and should be able to tell you to shift your money into gilts in a scenario of falling rates.

If he has not mentioned the words ‘asset allocation’ and ‘risk reward’, stay out. The expected returns from various asset classes he mentions should also sound realistic. If your wealth manager’s promises sound too good to be true, they usually are. Again, if the wealth manager promises no downside, there is something wrong. Since all asset classes pass through varying life cycles, you should ask your wealth manager the downside of investing in a particular asset at that point of time.

Can you give references from existing clients?

You will get one only if there are satisfied clients. Trust is the first and foremost factor that you need to establish before choosing a wealth advisor. Talking to an existing client and knowing his experience will certainly help you take an informed decision.

How can I be assured of good service?

Look for an advisor who has good support staff and a manageable client roster. You also want to get an idea upfront on what his service policy is. How often will he sit down with you to review your financial plan and investments? How will he communicate with you in the meantime? A regular annual review should be the minimum. Semi-annual or quarterly vetting, depending on the complexity of your portfolio, is also important.

Do you recommend your own products?

This might happen when a bank is your wealth manager. If all it is doing is pushing its own group company’s products, there is an inherent conflict of interest. The wealth manager should be able to impartially say which product is best suited for you among a range of them and why. The planner should study the costs and returns of various products and recommend the most efficient among them. He should not recommend a product just because he gets fatter a commission by selling a particular one, or his internal targets are skewed to selling a certain kind of product.

if i am not satisfied, What’s the exit route?

The planner is a pure wealth advisor or broker—so you are never invested in him; you invest through him or on his advice. You have to talk to him and understand the fee structure and other details at the time the relationship is being evolved. That alone can guarantee a safe, hassle-free exit in case you feel the service is below par.

These nine questions should help you narrow your options down to the most suitable wealth manager. Review the answers every once in a while, it helps you keep track of why you hired him in the first place and whether he is still the right manager for your wealth.

Diskeeper Releases the Most Intelligent Real Time Defragmenter Ever Built

Diskeeper Releases the Most Intelligent Real Time Defragmenter Ever Built

Burbank, California, United States, Wednesday, October 24, 2007 -- (Business Wire India) -- Diskeeper Corporation announced the launch of Diskeeper(R) 2008, the greatest performance enhancement defragmenter ever built. New features include the ability to defrag in the most extreme levels of low free space or the highest levels of file fragmentation. This is all done completely transparently through the highly advanced background processing technology called, InvisiTasking(TM).

Every machine suffers from file fragmentation(1). Past solutions included resource-heavy "one pass" or manual approaches. With advancing technology, these have since become antiquated and replaced by modern background processing technology. Diskeeper 2008's revolutionary InvisiTasking allows defragmentation operations to take place in real time, as fragmentation occurs. This means no performance degradation is ever caused by fragmentation, giving the user a constant maximum in speed and reliability at all times.

Diskeeper 2008 also introduces the most powerful defragmentation engines ever developed. Even on systems with as little as 1% free space available, Diskeeper can restore performance and reliability. New engines also handle extreme levels of file fragmentation numbering in the millions, as seen at large enterprise sites with massive server traffic.

Diskeeper 2008 also contains an intelligent defrag function that detects and analyzes volume and system conditions and dynamically chooses the most effective software engine to net performance gains on that system. Diskeeper 2008 is the most intelligent automatic defragmenter ever built.

Key Features:

-- NEW! Defrag with 1% free space ensures defrag management under the most extreme hard disk conditions.

-- NEW! Defrag under the heaviest fragmentations levels including millions of fragments.

-- NEW! Intelligent defrag dynamically chooses which software engine will net the most performance gains on any system.

-- NEW! Frag Shield 2.0 boosts reliability by automatically preventing fragmentation of critical system files.

-- NEW! Volume Shadow Copy Service (VSS) Compatibility mode leverages the data protection of VSS with the performance and reliability benefits found from defragmenting.

-- NEW! Disk Performance Analyzer for Networks in the Administrator Edition provides performance metrics on-demand or emailed.

-- I-FAAST 2.0 (Intelligent File Access Acceleration Sequencing Technology) automatically boosts access speeds for your most frequently used files up to 80%.

-- True Transparent, Background Defragmentation, unnoticeable to users--except for the newfound performance and reliability.

-- Real Time Defragmentation automatically handles fragmentation as it occurs, keeping system speed and reliability at a constant maximum.

All of this takes place using Diskeeper's innovative InvisiTasking background processing technology. This taps the full power of otherwise idle resources to ensure maximum performance and reliability at all times. Once Diskeeper 2008 is deployed, a system runs better and faster--period.

For more information visit


(1) Fragmentation: a condition caused by users writing, deleting and resizing their computer files on the hard drive. This causes the files to be become scattered or "fragmented" into many pieces. The more fragmented these pieces of information, the longer it takes the computer to read them. Fragmentation is a major cause of performance degradation on computers.

About Diskeeper Corporation--Innovators in Performance and Reliability Technologies(TM):

With over 26 million licenses sold, home users to large corporations rely on Diskeeper software to provide unparalleled performance and reliability to their laptops, desktops and servers. Diskeeper Corporation further provides up-to-the-minute data protection and instant file recovery with Undelete(R).

(C) 2007 Diskeeper Corporation. All Rights Reserved. Diskeeper, Undelete, InvisiTasking, Frag Shield, I-FAAST, Disk Performance Analyzer for Networks and Innovators in Performance and Reliability Technologies are trademarks owned by Diskeeper Corporation. All other trademarks are the property of their respective owners.

Media contact details

Diskeeper Corporation
Teal Thompson
818-771-1600 x 1616


Diskeeper Corporation
Teal Thompson
818-771-1600 x 1616

Beer after workout better than water

Beer after workout better than water

LONDON: When you reach for an ice cold mug of suds after playing a game of football, cricket or a long run, you're not just quenching your thirst, you're actually doing something healthy for your body -- seriously!

Researchers in Europe have carried out a study and found that a glass of beer is far better at re-hydrating the body after exercise than water as the sugars, salts and bubbles in a pint help people absorb fluids more quickly.

"The carbon dioxide in beer helps quench the thirst more quickly, while beer's carbohydrates replace calories lost during physical exertion," the 'Daily Mail' reported on Friday, quoting lead researcher Prof Manuel Garzon as saying.

In fact, the researchers at the Granada University in Spain came to the conclusion after examining 25 students who were told to do strenuous exercise in temperatures of around 40C until they were close to getting exhausted.

Half of the students were given a pint of beer to drink, while the others received the same volume of water after the workout. Subsequently, the team measured their hydration levels, motor skills and concentrationability.

Prof Garzon said the re-hydration effect in the students who were given beer was "slightly better" than among those given only water. Based on the studies, the researchers have recommended moderate consumption of beer -- 500 ml a day for men or 250 ml for women -- as part of an athlete's diet.

It may be mentioned that past studies have revealed that sensible drinking of one or two units of beer a day could help reduce the risk of heart disease, dementia, diabetes and Parkinson's disease.

Team 1 Dubai comments:
So, shall we re-write the old saying and make a new one " A beer a day, keeps the doctor away"

Do you have any, please post here or reply by email at

Watch your steps - Check the hidden cost of opening bank account, using credit card or taking loan

Photo Speaks - Passing shots- 26102007

Burj Dubai - getting ready.

Sheikh Zayed Road traffic towards Dubai - early morning rush

Sheikh Zayed Road traffic towards Dubai side - early morning rush

There is a street in Dubai which has a series of 2 headed coconut trees planted in the decorative median of the road. Identify it or just look for it next time you drive around. The amount of traffic block and bottlenecks, I am sure you will not miss it.

Two headed coconut tree in Dubai

Friday, October 26, 2007

Mind Speaks - Cartoon corner

Indian Sensex going well above 19000 points during the last couple of days and this is what cartoonist had to say on it......

The joys of living in a faster world

The joys of living in a faster world
24 Oct, 2007, 0041 hrs IST, By Vithal C Nadkarni for The Economic Times

A fortuneteller in Singapore once told Vince Poscente that he would die at 40. That stuck in the business consultant's mind. The best way to react, he thought, was to cram more living into the remaining lifespan. As a competitor in speed skiing, a demo event in the 1992 Olympics, Poscente was no stranger to speed.

By making peace with the whoosh of a 24/7 lifestyle, he discovered the joys of living in a faster world. This led him to a contrarian insight: speed leads to a more pleasant, less stressful experience. That has now been spun out in 36 essays, each no more than two pages long, contained in The Age of Speed, which has a hare leaping over the tortoise at the finishing line on its dust jacket.

Of course not everyone would agree. Many people complain of being overwhelmed by the speed and sheer pace of change in modern life. People do want things faster, but that’s for all those goods and services ‘wanted yesterday’. They do not necessarily want themselves to be rushed in their own work schedules.
Poscente argues that his book is really about choice and having the time to enjoy what’s significant in your life.

(By the way, he’s already outlived the prediction by six years!) Although technology has boosted productivity, the extra time is filled with even more productivity, he explains. What you need instead is to make tougher calls on desirable ways of spending time. He also talks about a new imbalance introduced by speed in the ‘love triangle’ of

Time, Quality and Cost: technology gives shortcuts that not only save time and money but also produce equal or better quality. If we can accept the positive potential that speed offers, we can do more, be more, live more, he writes. “We don’t have to assume that if we embrace speed, our lives will just get busier and busier. We need to adapt, evolve and shed our outdated or misguided perceptions of speed. Integrating home and leisure into work, can turn Time into a single powerful resource that we can use to accomplish our goals and dreams, regardless of where we are.”

That leaves the larger question how to spend the time. That’s where an insight given by Sunil Bharti Mittal triumphs. The Lord of the Rings whose company won an ET award, says he would like his company to represent the innate goodness of the Tatas with the speed of Reliance. He would like it to be a hybrid of the two great companies: ethics on speed; or speed with a heart.