Kar Chale Hum Fida! कर चले हम फ़िदा! 

कर चले हम फ़िदा is a serious song from the film Haqeeqat sung with high emotions by Mohamad Rafi!

https://www.youtube.com/watch?v=n6yTCblgAQQ

I have used it as a marketing gimmick to attract your attention, you will say! You are not wrong, but the subject of the blog is similar. How to prepare for our final journey! The Rafi song is based on the war that we had with China in 1962. Don’t be surprised if your eyes are moistened when you see the video!

The subject for the blog is equally serious, but I have written matter of fact things about our assets that we leave behind when our journey ends. No need to have moistened eyes, we are all going to end our journey at some stage, and it is not a big deal!

We all go through ups and downs in life. But over a period, we keep on accumulating assets. We all hopefully end up with some cash- it could be in the form of money, FD’s and other financial instruments like Mutual Funds or Shares etc. We might end up having homes, flats, land and other such properties.

Though we don’t know the day and time of our final journey, it is a good idea to prepare for it well in advance- when we handover stuff to the next generation. You must be wondering about what is Pramod talking? To start with, it is essential to make your WILL. I have seen two opinions about the WILL. Oh, do you think I am going to die? What is the hurry? I have only one child, so does it matter if there is no WILL? Yes, it does matter. God forbid, but you may have the only child who is more bothered about your assets than you. I know of stories when one of the spouses expired; during those emotion-filled days, the child had taken away all the assets from the remaining parent. I am not going to use legal terms, but it suffices to say that you must have your WILL. Everything should (or WILL) go to the remaining spouse on the death of a spouse. After the death of the second spouse, everything needs to be distributed as per WILL. Don’t forget that the WILLS do get challenged; then it needs to be resolved. But the WILL is the document which supersedes all the other things like nomination.

Okay, you have made your WILL, but are the documents perfect. Let me tell you from my experience that the papers are far from perfect. In banks, everything will go wrong if it has to go wrong. We have so much faith in the system that we believe entirely in whatever is printed. It is not; banks make simple mistakes. We have been banking with a public sector bank since 1976. I get excellent service. But there are errors galore.

I went to a financial institution where they asked me to submit a cancelled cheque and the first page of bank passbook, as the cheque did not bear my name. While submitting various documents, I was dumbstruck. The bar code on the cover indicated my account, and I had carried the cheque book for that account. But the first page of the passbook showed all the details of another account; Jaya and I have this account in common. The records printed inside were as per barcode data. Luckily, the person saw the bank account details, noted them down and said that there was no need to submit documents.

So, I started going through all the passbooks and FD’s for details. What errors can be there? We have filled up all the forms and given instructions. To start with, we had an FD created for a specific reason. The interest was to be deposited in an account. From this account, a standing instruction was there to pay for something yearly. After this years payment was made, I found out the interest was being deposited in another account. So, it made me check all such instructions. Luckily, there were no other errors.

I  had opened the account in 1976. At that time, my address was different. But later after Aadhar card came into the picture, we had instructed the bank to change the address as per our Aadhar cards. That process is still going on after a month. When I checked last week, Jaya’s address was corrected, but Priya’s correct address was changed to Jaya’s address. My address is yet to be fixed. Now Priya’s address needs to be recorrected to match her Aadhar card address. I asked for the passbook that is mentioned above. I got it back with more errors! I give up! No, I don’t give up. Mistakes can cause a mess after us.

Then there was a question of Jaya’s surname spelling. They had wrongly put it as Panwalkar or Panwalakar. On all the FD receipts, I had to get it corrected. On a couple of FD receipts, the spelling was correct. I asked them why the spelling was correct? They had no explanation. Computerisation Ki Jai Ho! Ultimately even in computerisation process, raw data is required to be filled up by someone manually. Ab Tumhare Hawale Watan Sathiyo! The dying soldiers are giving the message to their colleagues! We also need to handover the correct instruments to the next generation. Otherwise, after we are gone, this process can be tricky.

About assets like homes, land the story is different. All these assets have government documents like registration papers or 7/12. If these are not available, then disposing of can become cumbersome. Documentation for properties should be such that if you have a customer, these should be “Saleable” immediately. That means all the documentation is in the right place.

I have heard of many horror stories. A friend who wanted to sell his parent’s home after their death found out that the corporation tax for more than 20 years was not paid. I know of stories, where someone had bank accounts, where only that person was the signatory. Such errors can cause a headache for the next generation. After the death of the husband, his wife has also continued the same policy. Fortunately, there are no disputes amongst their two children. But keeping the correct documents is very important.

About banks, now for many of their activities, the software lets you see and make changes online if required. So handover the baton to the next generation as smoothly as possible.

I will share one experience with Jaya’s credit card; she has a card from India’s pioneering company. Her card bears the name Jaya Panvalkar. Sometimes time back government had declared that Aadhar card should be linked to Credit Cards. There was an online process. My card was linked in a zip. When I tried to link Jaya’s card, we got a message, “Name not matching”. We checked the Aadhar and the Credit card again. Everything was matching. Then I went online to check. Jaya’s name was registered in their records as J P Krishna. We talked to them on the phone and then sent all the relevant documents like Passport and Aadhar copy! Later we went to their bank branch and showed them all the documents. From their side, they also sent a mail for correction. Nothing happened, and we kept on getting a reminder every alternate day.

Then one fine day, they sent an email, “Your card will be blocked after one week if you fail to link Aadhar card to the credit card.” We immediately wrote, “Thank you so much for blocking. I have already got a credit card from xxxx.” Next day, there was a mail, “We have checked our records, now you can use the card again.” No apologies or no Sorry!” They know that if they accept the error, they can be taken to the consumer court! I went online to see the changes they had made. It was changed to Jaya Panvalkar, finally.

Addendum: My friend Subhash suggested that I should also specifically say that we should have minimum possible active accounts. Close the dormant ones! Perfect!

Money Matters!

Money, Money, Money is lovely song by Abba from 70’s. Money is an important thing in life but it is not everything.

Historically when life started, there was no trade as there was no ownership concept. With individual ownership concept, starting 10000 years back, barter system started. Which later got converted to money and later into currency system. With industrial revolution, wealth generation started galloping and with that the greed! Before this period, only rich people were  the royalty and their kin! This of course continues, I need not say who the modern royalty is. Latest revolution in computers and related businesses have crossed imagination in wealth generation, beyond everybody’s expectations. But the main thing is the “you and me” gang started doing well, moneywise!

How do people make money? Some are brilliant wealth creators, they develop products, processes and concepts which the whole world appreciates and buys. Some inherit money but people like you and me, make money in a very conventional way. Typical people of our generation got themselves good education, took a job, tried to get office accommodation, later bought own home. With other family responsibilities, small amount of money remained in balance which was promptly invested in Bank Deposits. This was the process of living life, straight as an arrow and most important, safety first!

But is the conventional way of living safe life and being satisfied with it, relevant in today’s times. Probably safe deposits route was perfect for socialistic thinking of 70’s and 80’s of last century, we got used to it and continued. One person in Mumbai was given Shares of Wipro in 70’s worth Rs.10000/. The person was moneyed even in those days. He promptly forgot about the shares. When he died around 2010, his family found these shares which were simply stowed away. Their value had become Rs. 280/ million! Wow, Wow and Wow! In today’s financial jargon it is called long term investment! The money was invested in the so-called Market! In modern economies an individual is now being forced to be in the “Market”. For bank fixed deposit now, interest rates are negligible hence the shift. But there is greed. People got lured from FD in banks to very high returns from time immemorial. When banks could not give good returns, how someone else will be able to give high  returns on money. No one raised such issues, at least initially.

In came Charles Ponzi in 1920 in USA. He started one such scheme and lots of  people got sucked and ruined in his schemes. A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator on previous investments. As explained, excellent marketing techniques helped first group of people to be lured to such schemes. They were given exorbitant returns from the money invested by next batch of people. This cycle continued for some period and then unexpectedly for the investors, but expected by knowledgeable people, these schemes collapsed. With the schemes collapse, the people collapsed. The way Cadbury chocolate has become generic name for chocolate made by any other company, all such fraudulent schemes came to be known as Ponzi schemes.

Latest to join the bandwagon is the currency in news, I won’t call it popular, Bitcoin. Bitcoin is a cryptocurrency, a digital asset designed to work as a medium of exchange that uses cryptography to control its creation and management, rather than relying on central authorities. The presumed pseudonymous Satoshi Nakamoto integrated many existing ideas from the cypherpunk community when creating bitcoin. Over the course of bitcoin’s history, it has undergone rapid growth to become a significant currency both on and offline – from the mid 2010 onward, some businesses on a global scale began accepting bitcoins in addition to standard currencies.

To give you some feel, in 2010 Bitcoin was trading at 1 bitcoin = US $ 0.003. In November 2017 at its peak it was trading at 1 bitcoin = US $ 17,900/. Today, January 2018 it is trading at 1 bitcoin = US $ 11,171/, this is the  reduction in one month. Ponzi Scheme? I don’t know. Bitcoin is trying to replace global currency in the form electronic currency. But for such type of Electronic currency to succeed, all nations in this world will have to agree. Ten developed nations in the world including US, UK, Denmark, Sweden, Australia have formally accepted Bitcoin as a currency. This may get accepted over a period of time as money. All sovereign countries formally have to be accept Bitcoin. Without this acceptance I visualize a tricky scenario e.g. today you can get one Pizza in US for one bitcoin. How much will you pay for the same Pizza in UK and in Australia? Is this rate going to be based on comparative rates of current currencies? Presently, I find it difficult to understand how this will be achieved. Will I dabble in Bitcoins today? Definitely not. The currency which can get 38% devalued in such a small duration, and has yet to get approval from most of the countries in the world, is a strict no, no for me. I am sure Bitcoin or something similar may become a global currency in future but I feel that is still some time away.

What will today’s generation tell their children about money management? Take your education and learn some special skills of your own! Well, I am sure you know the market conditions, if not study them and create your wealth. Don’t waste your money on homes and cars, when you can always rent whatever you want. But try to stay away from Bitcoins of this world. It is today’s Ponzi scheme!

To you my friends one quick suggestion. Under financial advisor, put some money in market schemes which are Trigger based. Your funds are normally invested in debt funds; but when the equity market is on the Bull run, the money  will get transferred to Equity, make decent money and when Bear run starts money will be shifted back to Debt funds! Any takers from my generation?