Monika Halan is consulting editor and part of the leadership team at Mint. A certified financial planner, she has served as editor of Outlook Money and worked in some of India's top media organizations, including the Indian Express, the Economic Times and Business Today. She has run four successful TV series around personal finance advice, on NDTV, Zee and Bloomberg India, and is a regular speaker on financial literacy, regulation and consumer issues in retail finance. As part of her public policy service, she is a member of SEBI's Mutual Fund Advisory Committee. She lives in New Delhi and tweets at @monikahalan.
There are two kinds of parents I meet. One kind talks about their children’s spending habits, the peer pressure-linked expenses, the lifestyle costs. The other kind talks about how difficult it is to get their children to spend, how they actually have to set a minimum limit to their spending when they become young adults and how reluctant the children are to accept financial help after a certain age. What’s going on? How does one set of children grow up to be financially prudent and the other set will take hard knocks in their lives before they learn the importance of respecting money and what it can buy? The short answer is parenting. It’s what we do and not what we say as parents. Children watch keenly what we as parents do and say. They watch our behaviour and words. And at one point they begin to see the contradictions in what we say and what we do. That’s the time that most teenage rebellion sets in. And that’s the time money related issues too become another point of conflict.
You may have already got this very enticing WhatsApp or email. It goes like this: “Initiative Q is building a new payment network and giving away significant sums of their future currency to early adopters. It is by invite only and I have a limited number of invites. Click this link to sign up…Initiative Q will succeed only if many people join. The more people invite their friends, the greater the likelihood of reaching the goal of each Q being worth around one US dollar.” You can see the site here: initiativeq.com.
What’s the deal? This start-up aims to replace the current payment systems (currency, credit cards, cash, wire transfers) because they are clunky and costly. There are newer technologies ready to replace them, says the material on the site, but this does not happen because not enough people switch to the new currencies. If a platform was created that enough people in the world on-boarded, then $20 trillion of transactions a year will flow on this new payment system. “Initiative Q is reserving this Q currency for people who join today—the earlier you join, the more Q you can reserve”. And then the killer line: “Think of this as getting free bitcoin seven years ago.”
Notice that when there is an external date marker, we end up doing things to service that date. Take birthdays, anniversaries, exams and deadlines around work. Exam and work related deadlines specially see us working at all hours with a single focus—of cracking that exam or shipping that order. We do the same when there is a deadline around filing taxes or making tax-saving investments. But most other items on our must-do list, like a health check-up, regular work out and money management, keep getting bumped to the next week, month or year. I’ll do it when I have, fill in the words ‘time’, ‘mindspace’, ‘money’ in the space, and we have our reasons in place for postponing one more time things we know we need to do but don’t since there is no hard deadline.
eading the Irdai (Insurance Regulatory Development Authority of India) draft on updating regulations for unit-linked insurance plans and traditional policies, you get the impression that somebody gave an aspirin when what was needed was a heart surgery. Product structures in finance are taking on a new importance globally because mis-selling and unsuitable sales can be reduced by taking the tricks and traps out of these products. This simply means that the costs and benefits are better defined and marked so that investors are able to understand the features of the products properly. Product structure rules also deal with early exits and their costs so that investors are not trapped in products they buy.
Starting soon your mutual fund will cost less. The capital market regulator, the Securities and Exchange Board of India (Sebi), has put out rules that further tighten the mutual fund industry norms to take care of the loopholes found and misused by the industry. You can read the circular here. There are four changes that impact you.
One, for costs related to the scheme, mutual funds will now pay only out of the scheme account and not from any other source or account. What was happening was this: some of the bigger fund houses were using their profits to pay commissions to distributors to kick up sales. Remember that after a certain scale, it does not cost much more to run a fund house; so as the fund size grows, costs should actually come down.