A couple of strong uses for using credit cards

It is advisable for people and their spouses to have credit cards. Either on individual basis or as an add on. There are quite some reasons to it:

1. In case of a medical emergency, the credit card comes in handy for making payments at the hospital. It is true that a debit card will also serve your purpose, but only to a certain extent. An extent to the maximum per daily swipable amount at a Point of Sale (POS). Usually, this is around Rs. 40,000 per day even if you have more money lying in your savings bank account. On the other hand, the whole credit limit of the credit card can be used for making the hospital payment. This limit varies with how premium a customer you are with respect to the bank. At the minimum it will give you some Rs.20,000 worth of limit and can run into a few lakhs too.

2. Having a credit card has other uses also. The free credit period and reward points as mentioned here in this link.

http://ajitjagan.blogspot.in/2011/10/how-to-save-more-by-using-credit-cards.html

The very needed attitude of verifying

In today's fast paced and ruthless world, people usually tend to agree with the stated without any questioning of the fact. When the sales guy in the saree shop shows a 9 yards saree and says it is 9 yards, you trust his word and choose the design and colour to buy. When the investment deposit form says Rs.25000 invested at 13.32% p.a. gets you Rs. 41650 in 5 years, you trust the calculation. When shop sales guy says the table I am interested in is 4 by 3 feet, one tends to strike a match with our requirements in mind and move to other factors.

But, in days of ignorance, marketing and plain lies, you should not trust what you hear on the face of it. In the first instance, when my mom came home and tried the saree, it was 8 yards, not the nine the shopkeeper confirmed it was. His defence on returning, everything we sell is 8 yards as 9 yards. Do look at the below picture: a part of the deposit form from Shriram Transport Finance Company Ltd.: 

Turns out the actual rate of interest in the cumulative option of 5 years is 10.75% p.a.compounded annually, not the high 13.34% p.a. by which I was actually attracted to the scheme (13.34% is simple interest and why would any sane person look for simple interest in a cumulative scheme?). In the third case, the table shown to be was actually 4 by 2.5ft and not 4 by 3 ft. It looked suspicious measuring it by my eye and I asked for a tape to measure it. It was only 2.5 ft by width. The sales guy only had a sheepish smile to respond with.

Such are the various cases of buying in today's world. It usually was in finance, a phrase called "Buyers beware", but in today's case, almost every single fellow is up to tricks fooling customers.

The concept of trust cannot be blindly held. A more sane logic of he is the expert of things and we should trust him also does not find meaning nowadays. The shopkeeper knows that the worst case for him is that he will have to reverse the sale or better, exchange it when they complain. There is a perverse upside to the seller at the cost of the buyer. There are not many ways to get over it as of now, except to be aware and verify things, however untrustworthy you may seem to be.

A mandatory pain in their arse sanity check is necessary before buying to prevent a pain in your arse at a later point in time.

Government's lack of application of mind

The government of India does not seem to apply its mind thoroughly these days. It makes half baked implementation policies. Not many months ago, in the middle of the financial year when the government decided to reduce the subsidies on lpg, it said 6 subsidized cylinders per household, without mentioning whether it was calender year or financial year and whether the subsidy would be provided on a pro rata basis or fresh starting from that month. 

This lack of clarity caused a lot of confusion and harassment to the customers and the sellers of the lpgs (the big 3 Oil Marketing companies). Now, the government has yet again gone the same in another place. Applicability of Service tax on air conditioned high end restaurants from April 1, 2013.

As mentioned here, http://economictimes.indiatimes.com/personal-finance/tax-savers/tax-news/new-service-tax-from-april-1-ambiguous-on-host-of-entities-like-home-delivery-chains-take-away-joints/articleshow/19313468.cms

the tax is actually to be levied on service, but where is the service element in take aways/canteens/mess, etc.? In the absence of this, many chains including McDonalds have started applying service tax on the bills on the safer side. If the government later clarifies that they are out of the ambit of the service tax and refunds the service tax collected to the companies, as there is no way to return the money back to the customer, the companies would end up making a good profit as they sieze on it.

On another angle, most restaurant business run a scam/sham of getting the customer's money by charging service charges and a service tax on the whole bill which is itself a fraud (by design or ignorance). More on this here:

http://www.business-standard.com/article/pf/how-restaurants-can-overcharge-you-113032600554_1.html

The lack of government's application of mind is helping the people give away more of their money to the already crooked restaurants.

Ironic visions of Companies

It is very rare to see companies these days with the kind of vision that is actually required for the betterment of the humans. Say, a vision of a company in the healthcare industry "We intend to understand, find solutions, eradicate the disease and close down by 2030"

The true purpose of a specialised healthcare company would ironically be the successful conquest of the diseases in the area and shut shop when it is done. Any other reason for its existence raises a stink about its real purpose. Unfortunately, today, most companies are only profit oriented and they actually have the ability and the audacity to slow down the solutions to the market giving out incremental solutions despite having a full solution that can save many lives. And what can anyone do about it as long as these are shareholder and employee friendly instead of being society friendly.

The nature of some of these companies should be more on the lines of UN peacekeeping missions where once the task is done, the mission is closed and the people move on to the next role. Sure, companies can even encourage employees to find one stop solutions and reward the employees with life time salaries and shut the shop. The prize of attaining full lifetime salaries for all employees in the next few years may help the employees reveal such solutions to the market. But, the shareholder/management too needs to be of the idea to support the ironic vision.

Opportunist

If you want to be successful, "You must want the opportunities to come to you all the time!"

The future of missiles

With every almost big country having Missiles and if not, at least RPGs and shoulder deployable ones like stinger missiles, and ever major country developing/deploying an anti-missile shield (with Israel and US leading them), the next generation of weapons needs to be developed. My guess or rather a way to it is developing missiles which can detect incoming anti-missile and rapid change trajectory/direction randomly more than once to shake off the incoming anti-missile. The one who does this can avoid the missile shield successfully. Though it may not be possible to hit the targets which are protected by the anti-aircraft/anit-missile guns (these have a very high rate of fire, and create something more like a wall which blocks the incoming missile; the closer the missile gets to the target and maintains its trajectory, the easier it is for the gun to stay stable and fire at the missile).

How to find the truth behind what your (financial) agent tells you?

Here's a list of things that are mentioned here to detect lies by an agent.
How to tell when an agent (insurance, loan) is lying to you
Beyond this, there is one true test because at the end of the day, because actual "Numbers don't lie"*

Many agents typically sell you an investment product saying you pay x amount yearly for y years and the end of it, you get z amount. Plus, there is a bonus amount paid at the end of m years and every n years later. The agent says it as if the bonus is something free, something over and above what the company generally gives/supposed to give. This is just 'playing into' the customer's mind. Since, there are a number of different products, each with its own different flavour and rules, it is very difficult to comprehend what is the real returns expected out of the product. To decipher the real return expected out of the product, do the steps below. If you are not familiar with xls, take help of someone to follow the steps mentioned below:
Ask your agent to give you year wise, the ouflows (investment made, premiums paid, basically money going out of your pocket) and the inflows for every year (typically, a single or multiple bulk amounts at end of a number of years).
Open a new xls and enter the dates, the amount going out of your bank accounts as negative, the expected amounts as positive (in forms of bonus, returns, dividends, etc.) in three different rows.
Add these two amounts (outgo and inflow) in the next row (Row 4). (Click the pic below to zoom)

Then use the XIRR function with the net amounts as the first parameter and the dates as the second parameter to get the real compounded annual growth rate(CAGR).
CAGR describes the rate at which an investment would have grown if it grew at a steady rate. You can think of CAGR as a way to smooth out the returns.
Read more on CAGR

* Numbers don't lie, but reading the numbers in a false context/background/with bias, interpretation of numbers could lead to lies. e.g.: The Indian stock market had gone up by leaps and bounds between the period 2003 and 2008 and those numbers do not lie. But expecting that same kind of growth at any other point in time (as the environment would be different wrt to interest rates, policies, inflation, currency rates, oil prices, global liquidity, attractiveness of Indian stock market vis-a-vis the other global stock markets, investor sentiment, etc.) could be equivalent to lies. If an agent shows you the best period of growth and tells you that this can be expected in the future also, do ask for the worst period of returns and ask him/her why that the worst could not repeat.

Addiction of Internet

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