How the Banks "FOOL", sorry "RULE"

Have your ever given a 10 Rupees note to a bagger ?, for most of us the answer is no. Most of the times we give nothing, somtimes 1 or 2 Rupees. But we are giving thousands of Rupees to banks yearly, irony is we are totally unaware about it. Lets see how ........

First of all a basic rule about interests given by banks on saving bank accounts to customers.

"Interest will be paid on amount which is deposited on or before 1oth day of the month and not withdrawn till end of the month"

Interesting, and now how it works for banks.

Suppose you have deposited 10,000 Rs in bank on 5th July and you withdrew 5000 Rs on 31 July, although you have withdrawn amount on last day but you will get interest only on 5000 Rs. If you have deposited some amount on 11th July and not withdrawn till the end of month in that case you will not get interest on that amount for month July. Hope you are getting my point now. Many people are aware about this and banks save crores of rupees in such transactions.

Crazy, now how we can save our hard earned money.

We all have lot of bills to pay these days like credit card bills, mobile bills, broadband bills, electricity bills etc. There is always 20 days time period to pay that bill approximately. Let your billing period is 15th July to 5th August and total bill amount is Rs 5,000. If you will pay your bill inbetween 15th July to 31st July then you will loose interest on Rs 5000 and you will not get any benefit of early bill payments and if you will pay your bills on 1st August then you will get intrest on Rs. 5000 and your bills will also be paid on time without fine.

In USA most people pay thier bills in last days only to get this benefit, in India also many people pay thier bills on last day but reason is different.

Some calculation now, in above case you will save Rs. 50 monthly approximately. Amount sounds very small. Some more calculations, if you will save this small amount which only needs your little planning you will have around Rs. 20,000 extra in 20 years. This amount is minimum possible and it can be as high as Rs 50,000 as our expenditure is much more then I stated.

Here i have taken only small amount but when we invest large amount like when we buy mobiles, cars, electronic gudgets, or paying our home EMI, just by little care and planning, we can save few thousand bucks yearly.

Few steps to get this unknown money -

1. Plan your bill payments well in advance and always pay in last days of billing period.

2. Try to avoid month end shopping or expenditure.

3. Do not transefer money from your one account to another inbetween 11th to end month, if you really do not need it badly.

4. Use automatic bill pay, given by various credit card companies wherever possible to plan payments better.

5. Use your credit cards intelligently to get one month extra interest.

6. Try to avoid any type of bill payments in last days of a month, where you will not be fined.


Enjoy your Money. Value your Money.

Lets Rule the banks !

Happy Saving.

Note: Your comments and feedback is most welcome.

Deeper, Longer and Harder - Welcome Recession !!!

Year 2008, it started on very positive note, for India atleast. In 2007 Market touched new highs and collection through IPOs was also all time high. It was cool morning of 14'Jan'08 when biggest, most waited and most overvalued IPO of India was announced. The Euphoria was that form Bangalore to Delhi, from Ahemadabad to Calcutta everyone was saying
"Power On to India On :: R-Power !!!

R-Power IPO created new records not in the capital markets of India but in World capital makrets. It collected 7.56 Lakhs Cores Rs. and set new benchmarks for world capital Markets. Sensex was around 21,000 at that moment and analysts were expecting that it will close around 28,000 by the end of 2008, irony is, Sensex trading around 13,500 on 15 Sept'08, its less then half the expectations.

Market started toppling down with closing of R-Power IPO and since then it lost around 30%. Increasing inflation, high fuel prices, global volatility, recession in USA and internal security in chaos. All things went wrong for Indian Stock Makrets and it followed its global peers. Year 2008 has already seen top 5 biggest one day crashes in history.

Monday 15'Sept'08 added one of the worst day in global finance world. One of oldest and biggest financial organisation Lehman Brothers, filed for bankruptcy and another biggy Merrill Lynch is sold. Such things happens once in a Century. Yes, i said "Once in a Century".

Fears of global slowdown are almost confirmed now. There have been big recessions in USA and around the globe in 1930, 1970, 1980, 2000. But unlike in 30s and 70s, recessions of 2000 were shortlived and followed by boom. But this time, as more and more finance companies are going for Bankruptcy and Sold out, there are signs of long, deep and hard recessions.

As we know that world economies are linked like never before and impacr of USA will be seen all over the globe, infact we are seeing it, so it can be said easily that we will also feel the heat in this time. Although though recently local Insaurance investment firms surpassed FIIs in terms of investment in Indian markets but the effect will be there. FIIs are already on selling route and marekts trading more then a years low, we can see new lows in very near future.

Yes, new lows and long recession will impact global economies.
Lets the dust settle. Lets the picture clear.
Till then its better for retail investors to stay away instead of burning thier Fingers !!!

Keep your eyes and ears open. Keep your Demat accounts and Bank accounts closed !!!