No doubt that investing in equity seems to be very attractive option for investment. Why it so? We hear many stories, some true, some fictitious, of people who have become millionaire overnight. But the fact is, earning money is not at all easy on the stock market. Let’s accept this simple fact that it is not everybody’s cup of tea. So, we have to be very objective about it.

It is well understood universally that a diversified portfolio is less risky and much safe than a concentrated portfolio.

In India, small-time investors usually have a very limited capital for investment. Therefore, it follows that it is a lot more difficult for this investor with limited capital to have a diversified portfolio. In other words it is not possible for small-time investors to invest directly in the market and to make their portfolio diverse.

So, how can small investors get the opportunity to make their portfolio diverse? The only option left is investing in mutual fund. Mutual funds offer a well-diversified portfolio even with just Rs 100.

A concentrated portfolio, also, could deliver high or low returns. This means that, again, it is against the small investors’ investment appetite normally. It would suit only selected expert investors with high net-worth.

One more thing to notice is that with limited capital it is difficult for small investors to buy shares with high prices like ICICI Bank, Infosys, Reliance, L&T, and other blue chip shares.
Again mutual funds seem to be the better route.
Let’s now discuss equity and mutual funds from a different perspective keeping in mind the common man’s objective.

Let us be honest as far as possible. Ask yourself the following Yes/No questions:

• Reading balance sheet of the company as a fund manager might do
• Identifying up-coming sectors
• Knowledge about companies, market, economics, and politics as a well-experienced professional fund manager might have
• Identifying the risk elements in an investment
• Predicting the future of the market as per any given scenario

If you have all of the above capabilities, go on and make wealth! In most cases, however, the answers would be “No.” Most of us do not have time to learn all these aspects of investment. Even if we do, we may not be able to do it regularly. Mutual funds are well-equipped with fund managers to do all the above activities.
Let us just concentrate on our jobs and leave our wealth management to the pros.

If a recovery agent knocks at your door you don’t have to hide in your house or avoid them by asking one of your family members to speak to them. They cannot harm you or force you to pay the outstanding at all.
The RBI has issued strict guidelines to protect the interest of the borrower and to stop unethical practices of recovery agents. You will find here the RBI guidelines towards recovery agents: how agents should approach, the time they can visit, and how they should behave.

Approach of Recovery Agents
The RBI states: “To ensure due notice and appropriate authorization by the banks, they should inform the borrower the details of recovery agents engaged for the purpose, while forwarding default cases to the recovery agents. The details should include their telephone numbers, etc. The recovery agents should call the borrowers only from telephone numbers notified to the borrower.”
This clearly indicates that if any recovery agent approaches you without following the above guidelines you should not entertain them and if they try to harass you, you can make a complaint to the police and also to the Banking Ombudsman. The bank also has the responsibility to keep the borrower informed in case the bank has changed the recovery agent. “Where the recovery agency is changed by the bank during the recovery process, in addition to the bank notifying the borrower of the change, the new agent should carry the notice and the authorization letter along with his identity card.” - the RBI guideline states.

Time of Call
The recovery agents are allowed to call the borrower only between 7 am to 7 pm. It’s as per the Code of Bank’s Commitment to Customers which banks have to abide by. In addition, visits are strictly prohibited by the code in the case of bereavement in the family or calamitous occasions - “Inappropriate occasions such as bereavement in the family or other calamitous occasion the family would be avoided for making calls visits to collect dues.”

Behavior of Recovery Agents
The recovery agents are not allowed under any circumstances to thrash the borrower or speak indecently. If the borrower does not to want to speak to the agent, the agents have to obey. “The bank and their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the debtors’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.” - states the RBI.

An important point here is to note that in case you have already lodged a complaint for any of your grievances, banks cannot send recovery agents for that specific issue. The RBI states “Where a grievance/complaint has been lodged, banks should not forward cases to recovery agencies till they have finally disposed of any grievance/complaint lodged by the concerned borrower.”

There is no doubt that credit cards are the most convenient mode of payment. If you use your credit card smartly, then you may shop your heart out as well pay the bill amount with ease.

“But how?” is the big question.

First and foremost, your income defines your shopping budget. Let say your monthly income is Rs 25000 and the total expenses are let’s say Rs. 15000 (including all your personal expenses). Now you have Rs. 10000 handy. Common sense will tell you that this is your shopping budget. You would be wrong - your shopping budget is exactly double your saved amount i.e. Rs 20000.

Let me further explain how you could do it.

Let’s assume your bill statement is dated the 5th of every month and your due date is the 25^th of every month. For instance, for the amount you shop on your credit card starting, say, the sixth of February, the due date will be the 25^th of March, not the 25^th of Feb! In the interim, you will receive another paycheck, that of March. This effectively means that you have the Rs. 10000 from February (the current month) and an identical amount from the next month’s salary to shop with.

Mind you, I am not recommending this as an idea for out-of-control shopping. I am only putting this idea across for anyone who would want to time their purchases so that they don’t end up paying a penny more than what they have spent on high credit card interest payments.

Another familiar gripe - A little outstanding amount remaining on the credit card because of bank’s mistake, bank promises to waive off the amount and close the account.

But, surprise! The account has remained open, accruing interest. In a fairly new twist to this scenario, the bank now proceeds to divert payments made to credit card account to the customer’s loan account. Result? Outstanding dues in both accounts. Long term result? Credit card applications being rejected, loan applications being rejected…

The customer is not willing to pay the remaining amount because, he thinks, rightly, that he shouldn’t be left holding the baby because the bank screwed things up. And he asks, very sensibly, what are the guarantees that the bank will act towards removing his name from the defaulters’ list? (which, by the way, the bank cannot. Once your name appears on the defaulters’ list, it is there to stay for the next seven years.)

The answer to all this is not calculated to have customers such as the one mentioned above burst into song. The best way to deal with this kind of blatant chicanery is to indeed pay the outstanding amount up first. The more one delays, the more it affects the credit ratings. Once this is done, one should register a complaint on the bank’s website. And if one does not receive a satisfactory response within 2-3 weeks, approach the Banking Ombudsman with your complaint. Details on how to do this are available on the site - www.bankingombudsman.rbi.org.in.

The full story is at:
http://economictimes.indiatimes.com/Personal_Finance/Mutual_Funds/Trail_fees_by_any_other_name_pinches_as_much/rssarticleshow/3299673.cms

The story is about MF houses charging illegal fees to their investors.
“In a bid to boost their profitability, several MF houses are now charging trail fees (even for direct investors) under the other expenses head, disguising it with names like miscellaneous marketing expenses or other operating charges,” says a financial planner, who is empanelled with several fund houses.
Why are the fund houses fooling the investor? This shows clearly that the MF houses are only looking at their own benefits. Why is the regulator silent on all these wicked strategies of mutual fund houses? Why is no action being taken? Why is SEBI not taking this seriously?
There will be people who might think that this is a small issue; but my dear friends, this is a very serious issue as the MF houses are eating up investors’ money. They are committing fraud as no one is stopping them. Not even the regulator! I would request all the people who read this to complain to SEBI about it.

The best way to avoid fraud is to know how the fraud occurs. Credit card fraud starts when the card is stolen or when the crucial information of the card is stolen. This includes name of card holder, the account number, expiration date, and verification/CVV code. Stolen cards should be reported quickly by calling the customer care department. But stolen information is difficult to trace and one can only know that the fraud has occurred when the bill statement. Ergo, one should also check bill statement carefully when it comes in.
Identity thefts on card are increasing these days. Identity thefts are of two types - application fraud and account takeover.

Application fraud refers to the fraud when the criminal steals your document to open an account in someone else name. The criminal may steal your important documents like utility bills and bank statements in order to build up useful personal information.

Alternatively they may create fake documents. In account takeover fraud the criminal may gather the information of a person’s bank account then the criminal calls up the bank as a genuine cardholder and ask the bank to send the mail to the new address. The criminal would then report the loss of card. And then once the criminal receives the replacement card, he/she can use it!

Skimming is another type fraud done on credit cards. It is typically done by the dishonest employee working with the merchant. In skimming the criminal uses a small electronic device which is known as skimmer to capture the magnetic strip data on the card. This is then transferred to another, duplicate, card. The duplicate card is then used for fraud purposes.
It is easy for the bank to detect this type of fraud. The bank can collect a list of all the card holders who have complained about fraudulent transactions. Then, it uses data mining to discover relationships among the card holders and the merchants they use.
For instance if a large no. of the afore-mentioned credit card holders have used a particular merchant, that merchant terminal or (point-of-sale device) can be directly investigated.

In case of application and account takeover frauds you don’t have to worry much. If any unsolicited card is activated without the consent of the recipient the central bank has said that the issuing bank has to reverse the charges. Plus, they (issuing bank) would be required to pay a penalty twice the amount of the charges reversed. All you must do is to report a complaint at the issuing bank. If you do not receive a satisfactory/any response within 2-3 weeks, please approach the Banking Ombudsman. The details are available at www.bankingombudsman.rbi.org.in.

The aim of writing this article is to help the merchant as well as the customer to avoid risk present in the customer not present (CNP) fraud. Here we will carefully learn how the CNP process works to avoid CNP-related frauds in the future. CNP transactions happen with the card holder not present at the point of sale. Here the card holder’s order is taken by the merchant over the phone, email, or by fax. The merchant is unable to check the identity of the credit card holder. CNP transaction is thus the most risky for both card holder and merchant. Criminals can take undue advantage of this by using fake personal details by illegally obtaining your card information.

During the CNP process the merchant request authorization from the bank to process the sale transaction. The bank verifies that the card is not stolen or lost, and checks whether the card carries enough funds or not, and then gives the go-ahead to the merchant to proceed with the transaction. Now, if the transaction results in a fraud, the full amount has to be paid by the merchant. And the card holder whose card has been used for fraud purposes comes to know only when he/she gets the bill statement. So….check your bill statement as and when it comes in. If you find any fraudulent transaction, report to your bank immediately. In CNP frauds, the card holder is still safe as the bank would not hold the card holder responsible. The merchant is not so lucky. It has to pay from its own pocket whatever the fraudulent transaction amount is. So what’s the solution to avoid it for both the card holder and the merchant?

• Merchants should avoid CNP transactions as a matter of course.
• If they intend to do it, they should do these transactions only with clients who they know well; which means they can recognise the client’s voice properly. Even in such cases, they should avoid the transaction at the first hint of suspicion.
• Card holders should not share their credit card details with anybody; not even with friends.

Here is a story about Islamic organizations terming health insurance policies as illegal and issuing a fatwa asking Muslims to keep away from them.

http://economictimes.indiatimes.com/Personal_Finance/Insurance/Health_Insuarance_illegal_Islamic_body/articleshow/2930737.cms

This has raised a doubt in my mind as to how Islam cannot allow taking health insurance. I have a valid reason. At the time of Holy Prophet (s.aw.s) whenever there was any war, soldiers used to cover themselves with armor to protect them. In my opinion the Holy Prophet (s.a.w.s) has shown that one has the right to protect one self against any uncertain event. No matter that the ultimate protection lies in God’s hands.

In the same vein, whether your health cover will help you or not is ultimately in God’s hands; but it IS your responsibility to make sure that you are adequately protected.

The point I want to make is, please provide proper daleel (proof) why it has been declared illegal so that if I am wrong I may correct myself. If possible, quote Quranic ayat and tradition or precedent supporting it.

The Consumer Unity & Trust society (CUTS) has failed in convincing the Reserve Bank of India to pull down credit card interest rates.
(http://economictimes.indiatimes.com/ET_Debates/Cap_credit_card_interest_rates/articleshow/3473126.cms)

You would think that the CUTS would get some sense knocked into its stubborn head after repeated failures. After all, it has been at this for over five years. And even it they are fighting the good fight on our (the credit card consumers) behalf, the complaints are not going to go away. Neither are the problems. Whether interest rates go down or not, we ARE paying those interest amounts, month after month.

And let’s face it, no amount of sound logic is going to convince any of us who are inveterate spenders to slow down and maybe, you know,..spend less.

So, this will be just an exercise in questionable logic.

Do you wonder why when you just have Rs. 10000 to spend in a month, you end up spending twice that? How is that even possible?

Today is your lucky day.

Your income defines your shopping budget. Let say your monthly income is Rs. 25000; after expenses, let’s say you have Rs. 10000 free and clear. This is spending money, folks! Here comes the catch - Your shopping budget is actually twice that Rs. 10000! How? You know you can back Rs. 10000 worth of shopping on your credit card with this spending money. But when you are swiping that card, you know that you have a fifty day grace period before you gotta pay it back with interest. Guess what, your next pay will come in by then and with it comes another Rs. 10000 of spending money. So you are simply spending that money right now. Neat, eh?

Now, how do you do this smartly, so that you don’t default or end up paying exorbitant interest on all this?

Let’s say your credit card statement comes on the 5th of every month, and the due date of payment is the 25th of that month. Now, if you buy something on the 6th of the month, that purchase is listed only in next month’s statement. Which means, provided you pay up by every due date, you can blow the spending money of this month as well as the next month AND pay zero interest on the amount swiped on the card.

You are welcome.

http://economictimes.indiatimes.com/Personal_Finance/Insurance/ Life_cos_say_cover_sale_by_MFs_affect_distribution_infrastructure/rssarticleshow/3405002.cms
The above story is about life insurance companies expressing concern on sale of insurance cover by mutual funds.

The insurance industry is strongly opposing this move. Life Insurance Council chief executive SB Mathur said: “Insurance companies are spending hundreds of crores on training agents to sell insurance. If mutual fund distributors are allowed to sell insurance without adequate training, the sanctity of the training would be lost.”

Mr SB Mathur’s self-righteous indignation is pathetic as well as misleading.

Even after spending hundreds of crores on product training, insurance agents are not selling the insurance products in the right spirit. Today unit-linked plans (ULIP) are the hottest product in the market. The reason is not because it is the best. It is one of the most miss-sold products in the market due to the high commissions offered to agents who sell ULIPs. Many cases have been found out were people go to banks to buy mutual funds and end up taking a ULIP Plan in the name of mutual funds. Insurance products are not marketed; they are sold.