Personal Finance

Lack of central KYC hinders market participation

Harsh just spent an idyllic week trekking through south west france. His tour organiser could put this together so well because the basic infrastructure already exists. Things like complete Geo marking of every square meter, availability of licensed hotels and taxi services who actually follow the licensing conditions & general cleanliness allowed them to build and deliver excellent packages on top. His article in the Business Standard drawing an analogy to an investors journey where the lack of a basic infrastructure like a centralized KYC has meant that 20 crore indians are involved with crypto/online gaming platforms with real money, but only half as many have demat accounts, and less than a quarter invest in MF.

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Retirement: Embrace holistic planning

There is more to retirement planning than ensuring enough monetary corpus to last out a long retired life (almost as long as the working career itself). Unfortunately, even corporate executives nearing retirement, do not think about retirement at all and the few who do, concentrate on the monetary resources required for retired life. As the example of my friend Yogesh shows even a well planned retirement plan can have it’s twists and turns but is better than none at all. Harsh’s article in the business standard. Your comments and suggestions are welcome as always.

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Insurance: High surrender charges deter exits

Most people reading this article would have experienced the bank’s “relationship manager” trying to (mis)sell a life insurance policy to them. Harsh’s article in Business Standard on the economics that push the bank to cannibalise on their own deposits and convert them into Life Insurance premiums. Comments/ disagreements welcome.

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Does your loan fulfil the AA criteria?

5 minute read – When can you consider a Home Loan or a Car Loan as a “good” loan” and how can you avoid getting taken for a ride while taking a loan by following 3 simple rules – read Harsh’s full article . For those who prefer watching a video – here is a link to a 20 minute video on the same content –

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Simplifying nominations can boost financialisation

Indian securities market regulator SEBI has recently sought public comments on a consultation paper that seeks to comprehensively revamp the entire process of transferring assets to the nominees on the death of the investor. It seeks to remove hurdles and standardise the process so that the transfer to nominees can happen in a few weeks (the dream is the transfer happening in a few days of applying and God willing even that will happen eventually as the system stabilises). The paper also deals with providing access to the investor themselves in case of their incapacitation (unfortunately many such cases are coming up as longevity of Indians increase due to advances in medical science) . This is a giant step towards making Investments in Indian securities market convenient and easy and will aid in spurring the ongoing process of financialisation of household investment assets.

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How to make tax return scrutiny less stressful

Centralised data collection by the Income Tax Department (ITD) has widened the tax base & led to higher tax compliance. Tax payers also benefit as more than 90%+ have their returns (and refunds) accepted within weeks instead of years earlier. The National Faceless assessment scheme (NaFAC) and the National Faceless Apellate Scheme (NFAC) were rung in by the ITD with lofty aims of simplifying the tax administration for those assessee’s whose returns were selected for detailed scrutiny (which remains a large number). Harsh’s article in the Business Standard on how a combination of stiff tax collection targets, overbearing and antioquated attitudes of the ITD officials and a complete lack of accountability had given a bad name to NaFAC and NFAC which otherwise might have taken their place among the host of population scale technologies such as Aadhar, UPI, Account Aggregator and ONDC that have been introduced by India in recent times.

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Creating a balance sheet for every Indian

“The Account Aggregator System should enable the easy compilation of a Balance Sheet for every Indian” – was the clarion call provided by Mr. K V Kamath as he went to the heart of the matter in his characteristic style. This was amply borne out by Harsh’s experience in providing financial planning services to his household help Sapna and her family. Such experience can be repeated with millions of Indian families if the potential of the Account Aggregator System(#AAS) is fully unlocked. #AAS has been ably helmed by RBI and is a great example of what inter regulatory coordination (RBI, SEBI, IRDA, PFRDA & GST) can achieve. Despite its undoubted potential a few steps (outlined in the article) by the regulators can unlock the full potential of AAS and enable it to live up to the goal set by Kamath Sir. It will also assist the investment advisory profession to shed it’s elitist tag and strive towards the goal of a financial plan for every Indian.

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Weigh the risks of EB-5 citizenship route

Originating in Africa, Humans migrated to the remotest corners of the earth primarily to find food, avoid the threat of deadly predators or the danger from domination by other human species or due to dramatic changes in the climate. There is an intriguing scientific theory that unforced migration is motivated by simple curiosity and boredom, what is often called wanderlust. This is credited to a variation in the human DNA (DRD4-7R) now dubbed the “wanderlust gene”. Present in about 20% of the population, it impacts dopamine levels, increasing the person’s tolerance for risk taking including exploring new territories. Those willing for (or seeking) greener pastures in other countries have a larger capacity for risk taking. But can that innate larger risk taking ability justify staking your life savings in an “risky investment for citizenship” plan like US’s EB-5. Harsh’s article in Business Standard today. Your feedback most welcome.

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Savour the joys of delayed gratification

Its festival time and all of us are besieged with exhortations to Buy! Buy! Buy! with discounted deals and “Buy now Pay later” schemes making it easy on the pocket. Credit artificially expands the amount of money available and reduces the “pain of paying”. This pushes people to satisfy their innate desire for instant gratification which is beautifully explained in this short 90 second video from behavioural economist Dan Ariely of “Predictably Irrational” fame ( ) . My article in Business Standard on the Double AA framework for differentiating between Good loans and Bad loans and how you can use the “Pay now Buy later” strategy to savour the joys of delayed gratification. Read more..

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Put checks in place to curb overconfidence

The ability to deceive potential mates provided an initial evolutionary advantage to our ancestors. Then the advantage shifted to those who could detect the tell tale signs of lying leading to an arm race between detection and deception. Self deception evolved to mask deception better, hiding the truth from oneself to hide it better from others. Impact of Self deception (or over confidence) is not limited to mating partners however and it impacts all walks of life including personal finance. Harsh’s article in Business Standard today.

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