A tweet from @TheMFGuy started the debate on social media a few weeks back. The tweet read: “Like wallets @SEBI_India should now make rules for mutual fund portability allowing to switch from one fund house to another.” Portability in a service is the option to move your business to another service provider without losing the identification number (as in a telephone number), or losing the history your account has built up (as in a medical insurance policy where a no-claims-bonus builds up for every claim-free year) or having a tax implication when an investment is switched rather than redeemed.
What does portability in a mutual fund mean? There are four kinds of portability that we need to understand in a mutual fund. First, between asset classes, for example, between stocks and bonds. Second, between schemes, for example, from the large-cap to a multi-cap fund of the same fund house. Third, between fund houses, for example, from the mid-cap fund of one fund house to the mid-cap fund of another fund house. Fourth, between various options in a scheme—for example, switching between growth and dividend or between regular and direct.
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.
Both anecdotes and data seem to suggest that Indian health insurance polices that are bought by us as individuals don’t pay up as much as they should. As we listen to the stories of our friends and family about the run around given by hospitals and medical insurance firms to pay up claims of a hospital bill, we quietly send up a prayer—please let me not be the one whose claim is rejected if I ever need to use my policy. There is increasing distrust in the medical insurance market for privately bought covers. Covers bought by corporations, called group covers, seem to have less problems of claims getting rejected.
The anecdotes are supported by data. A May 2018 working paper, titled Fair Play in Indian Health Insurance has done a deep dive into the sector. The big findings are two. One, claims are not paid as much as they should be. Two, India has the highest complaints rate when compared with other countries.
As the security woman at the entrance to a multiplex turns my hand bag inside out giving competition to an airline security check, she gleefully hits pay dirt. Not a small grenade, she’s found my bottle of gum and my tiny jar of dry fruit. No food allowed. But this is not food, it is something I carry in my bag all the time. An argument ensues and the movie experience is reduced. Once inside the complex, I find myself unwilling to pay exorbitant prices for average quality food that is pushed hard by ushers-turned-waiters who come in the way of movie watching.
What food costs inside a multiplex is suddenly part of the urban middle class discourse at dining tables, at social events, on social media, with the humble popcorn itself at the core of this debate. Popcorn in a multiplex costs about 500% more than what you get outside in the mall. Pop them at home, and the mark-up is more than a 1000%. While there is other food and drink being sold that is more expensive than retail prices outside, the price point of popcorn shows the highest mark-up. To force sales, multiplexes prohibit outside food from entering their premises, making for a captive consumer group who is out to have a good time and is in a mood to eat, drink and be entertained.
Super review by R Jagannathan in Swarajya magazine.
“This may be an overstatement, but it is probably true that most Indians are bad at managing their personal finances. And one is not talking only about people who use their credit cards as if there is no tomorrow, go for inappropriate insurance policies, invest in real estate or gold for the wrong reasons, buy stocks on the basis of inside information, or people who generally don’t save for their retirement till it is almost too late.
The truth is, even the financially literate, people who dabble in money day in and day out, can sometimes make huge mistakes based on ego – I know what I am doing; after all, I give others advice on where to put their money. I know, for I was one of them. I invested large sums regularly in the National Pension Scheme (NPS) on the assumption that no law would be daft enough to tax 100 per cent of withdrawals on maturity (usually at age 60, but which can be extended); I assumed that the tax, at best, would be on the gains made on my investment. Well, I was wrong, and ended up losing money on the NPS a year ahead of the time when taxation on withdrawals was made more rational.”