LIC Credit CardsI

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I was rather amused by this news when I saw it on CNBC. A search on Rediff tells the entire story. This in a business jargon is called diversification, when an organization intends to move away from its core business domain. I am not very happy with the news. Looking at the history of LIC, you will notice that
Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost.
So the basic idea behind LIC is more benign in nature. And somehow I have personally been very wary of credit card companies (Why I hate credit cards or How credit card companies make money) , because their sole aim is to earn money with little care for the customers. So I see this as an evil move for a benign company taking towards becoming a money minded business. This might look like a philosophical and biased logic, but I guess it indicates the threat seen by LIC from the private players. With a 77% share of market, it is till numero uno, but it is facing stiff competition from private players.

I see the credit card move as a step to fight back the competition. Undoubtedly LIC has a strong distribution network, but that is because the name provides a "TRUST" to any customer. The biggest reason is the sovereign guarantee by the government. So a customer wont care much about from whom the policy is being taken and just the LIC name is enough to bring that trust. That is the reason it is still the numero uno insurance provider even amongst the youth. And fortunately it has kept pace with the changing times by being up-to-date with its customer services. The only way I would love LIC credit card if I can gain the same TRUST as LIC Insurance provider. I already have sufferred a lot with the private credit card players and dont want to add the agony with another one, unless LIC can keep its original objectives intact with the credit card business
Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders

How to identify copy paste from your blog

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Prem is doing a good job of identifying the best indian financial blogger and I was thinking about his post about why he is rejecting some blogs while nominating. He mentioned about some blog being copy-pasted blogs. I usually dont have much objection if someone copying from my blog (even if they dont quote the original source), but some people object strongly. If you are one of them and want to find who copy-pasted from your blog, then check out CopyScape. A good way to find who copied from your blog (or from where you copied the post!!). A copy paste is good if you can add some additional info or value to it.

Real Estate Prices Dipping

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I was reading an article on businessworld about the dipping rates of real estate. I do not think that this is the usual demand-supply cycle and the real estate market is going through a dip. Everyone is still willing to buy a house, and with increasing number of young people joning rising industries, the earning power is increasing day by day and real estate is the most secure and profitable investment. Considering just the IT industry, nearly 1,20,000 IT graduates join the workforce per year, imagine the amount of young people earning good. Within two years of joining the industry on an average everyone wants to invest in buying a house. So the demand has not ebbed a bit.

The real reason for the slip in the real-estate prices is that with RBI soaking the liquidity in market causing increase in interest rates, the affordability of purchasing a house through bank loans has reduced significantly. With the early boom in the real-estate market, the prices have already touched an all time high and they just going north. A simple two bedroom flat in prime location of Bangalore might cost you not less than 30-40 lakh in a decent locality. This is simply outrageous. But with easy loans from banks, it was still affordable. Now EMI getting more than to Rs 1000 per lakh of loan, it simply has become impossible for a service class person to go for it. Compare that to the cost of renting, a similar house can cost me around Rs 11,000 per month on rent with all the facilities(fully-furnished including pool, gym etc). So everyone who wanted to buy a house is postponing the plans and following the wait n watch policy. Here are Bangalore prices from the businessworld article (prices from 2004 to 2007):

Preparation for packers and movers

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I wrote a relocation guide mentioning some of the tips about moving from one city to another. This gap in blogging frequency is because of this relocation. I finally moved to Bangalore.

Bangalore Vs Kolkata

The biggest difference I find is the weather, it is a huge relief. Although traffic is said to be the nemesis of Bangalore, I still find it better than Kolkata, but the worst part is poor public transport. The auto-rikshaws are few and the drivers bluntly will reject (based on some weired logic) when you tell him about your destination. In kolkata at least you can get yellow-taxi (Ambassador painted yellow) to any destination (although costlier).

Agarwal Movers and Packers Sucks

In the comment section of my relocation guide someone warned me not to use the Agarwal Packers and Movers, but since the relocation is being done by my wife's office, which appointed them as the company for moving employees, I had no choice. I guess only one word can describe my experience, "pathetic". I simply could not believe that a famous company like this could do such a shoddy job.

My pathetic experience

Here is few points of my experience with them

  • From morning 8:00 they finished at night 9:00 despite the fact that I do not had any major things to pack (no sofa, not much furniture, no car)
  • They got just three persons, one of whom was doing both the paper work as well as packing
  • I shouted at them three times since they were not packing in correct manner. A glass item needs to be provided proper cushion with paper and cloths and this basic thing they didnt knew.
  • After doing half the packing they just went to some other near-by location without informing me. I was very pissed off by this.
  • There were mistakes in the paperwork, which I did not expected in a professional movers and packers.
  • When they said everything is packed, I searched in the house and found many things lying around. So I had to force him to create another carton pushing the remaining things in there. This was the worst experience anyone can ever get.
  • After such a shoddy job, they still expected me to pay an "unofficial tip".
NEVER EMPLOY THIS COMPANY FOR YOUR RELOCATION IF YOU WANT TO REMAIN SANE.

I am now just waiting for my goods to reach me safely without anything missing.

Here is a short guide on what to look when packers and movers are at your house:
  • Make sure you have separated the items you want to take with you like documents, jwellery and cloths
  • Ask the company to send atleast four or five people. Not less not more
  • Keep watch while the packers do their job. Instruct them when you think they are not doing the job properly. Keep asking them questions about how they are packing certain stuffs like almirah or fridge.
  • Make sure they put plastic around vaulable goods like TV, Fridge, Sofa etc
  • Instruct them not to pack what you want to leave. In my case they even packed my garbage box containing the garbage. I had to unpack that box and remove the garbage.
  • Keep enough water and food for yourself during the packing. You will need it.

Micro-SIPs

I think this is enough for relocation, on a different note, ICICI and Reliance have introduced micro-SIPs for as low as Rs 50 per month. I am not sure how much beneficial this is for customers. This is aimed at people who cannt afford the previous lowest of Rs 500 or Rs 1000. Imagine the income group which cannt afford even Rs 500 per month, and how much value for them even a sum of Rs 50 would be? I would expect them to be a totally risk-averse category. Can a mutual fund house be able to tell them that their hard-earned money would be at the mercy of stock markets and the returns (even the original) is no longer guaranteed. I am really skeptical about the returns of micro-SIPs vis-a-vis other risk-free avenues. I can visualize that with plethora of micro-SIPs coming, lot of investors will be robbed of their precious money without much gains. It will be a boon to the mutual fund houses rather than those investors.

Mutual Fund Vs Investing in Stocks

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I was reading an interesting post by Rohit, when someone posted a comment on his blog, ferverently opposing his involvement in mutual funds, given his knowledge about investing in stocks. Here are some of my thoughts :
  • Investing in individual stock gives huge and quick returns.
  • Mutual funds protects against any quick failures due to diversification.
  • Investing in individual stock a lot of research for success.
  • Mutual funds require little research, and no daily monitoring required
  • Investments in individual stock costs you for the buy-in and the sell with brokerage fees, but leave you alone once you’re invested.
  • Mutual funds generally cost less to get in, but slowly take away expenses over time.
  • Mutual funds provides Rupee Cost Averaging through Systematic Investment Plan
Investing in stocks is a high-risk high-gain game requiring serious study, while mutual funds are for a more reserved investor and they wont make you rich in just few years. Mutual funds should be used as a foundation for investment strategy while investing in stocks should be for playing around.

Investment Books

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I just came across the SeekingAlpha's Must-Read Investment Books, by David Jackson. The recommendations include a huge (its really huge) number of books ranging from the topics like "Money Manager's Experiences" to "Value Investing" to "Long-term investment strategies" to "Technical Analysis" (close to 45 books).

Does it really helps to read books and invest? I personally think no book can provide you the "real" experience of investing until you burn your fingers in the market. Then I found Rohit providing some insight into the book "You can be a stock market genius, by Joel Greenbaltt". He also recommends some other books.

Reading such books can provide you with some understanding of the markets and its past history, but no book can be tailor made to specific type of investors. This is because the investment goals are entirely different for different people and so is the risk-taking ability.