Remember the time of 80s or 90s staying back in your Indian city or just wherever you grew up? Purchasing things always appeared much cheaper, no matter what sources of income you or your guardians had then. Did you ever look back financially? There wasn’t any ‘real occasion’ per se wherein you would’ve felt the need to cut expenses to buy ‘a thing of choice’. Rather the easier option, back then, was to just give up the thought of buying ‘that thing’ all together & move on. Actually, the focus was always to save money, more than reducing expenses. Times were sweet and giving up a thing of choice – was still an option!
In 2020, living with the monstrous coronavirus now, it’ll be right to say that ‘expenses have gone way too expensive’. Be cautious to understand that this ‘expense track’ could devastate you in no time, especially when you know that you’re living with the monster until the end of 2021, or maybe even after that. Already, the virus must have taken a colossal blow on your existing earnings whether in: salary cuts, business earning downtimes, slashed NRE/ NRO bank interests, lost rental incomes, etc. On the top, add a plethora of expenses out of nowhere, related to: hygiene & sanitizers, lifestyle with superfoods, medicines or supplements intake, higher usage on electricity or other utility bills (while working from home), children’s online education costs, etc. – which in reality you can’t shy away from in today’s time, like how you could in yesteryears. Times are unprecedented! We need deep retrospection and quick practical actions to avoid being thrown off-balance in this problem-equation: ‘Lowered income & higher expenses’, leading to an eventual financial breakdown. Trust us, slashing expenses would be the de facto ahead for your survival, till when earnings start to increase next!
We analyzed the problem scenario in detail. We realized that besides saving money if we could help you put off some unnecessary or ‘unknown’ expenses, cycle per cycle, you would be much better off to sail through these hard times. Every penny saved would count for you in the coming 2 to 3 years. This is the kind of timeframe you need at hand to re-shape as per the economic business cycle.
Over the last 3 months, randomly talking to about 227+ ‘People’ being: Persons of Indian-origin (PIO), OCI (Overseas Citizens of India), NRI (Non-Resident Indians) & Expats, those were not our clients, we realized that for managing Insurances or Investments held in India; they were doing some common & grave mistakes, unknowingly. This was definitely resulting in their expenses being higher than what would’ve been straight savings otherwise.
2 mistakes we could immediately note to help answer for all fellow Indian-origin living globally, are as below:
Paying of Goods & Services Tax (GST):
People are mistakenly paying a high 18% Indian taxes on existing or new premiums for their Term Plan or Term-Life cover purchased from India (online or offline). This is a significant outflow of money, going out without them realizing that they are not liable to pay for this being outside of India.
Regarding their existing life insurance backed investments in India, they’re continuing to pay premiums, including 2.25% Indian taxes, without referring to their policy document at all. This could also be waived-off. Undoubtedly, the interest or investment growth rates on Indian products are decently high compared to their home countries, but that surely does not mean that one throws away money!
This particularly seemed damaging for the new investments (like: Money backs, guaranteed investments, income solutions, etc.), wherein the Indian taxes are 4.5% at the inception. This straightaway could’ve been waived-off, less they had a capable & licensed advisory to guide them through it. NRE/ NRO Bankers, unfortunately, are not bankable for wealth advice that includes taxation. Working with a Wealth Advisory should absolutely help all along to add value in your current situation.
Paying in Indian Currency (INR):
There isn’t an iota of a doubt that global currencies like: Dollars, Pounds, Dirhams, etc. are much stronger in value as compared to Indian Rupees (INR). It’s a grim mistake for people paying for their Indian premiums in INR, even now, when they could’ve paid far lesser, paying in their local currency. Come, what may, they could have easily saved 1.75% to 4% (depending on the country they are earning in), just on the currency-conversion side. Insurers in India are globally reputed, mammoth organizations with the highest standard of money safety, and accept payments in any currency of your choice.
Now, this changes the ‘money game’ completely in one’s favor, as it directly cuts the expenses of an investor (by curbing Indian Taxes, GST) and further, gives one’s overall investment a spiraling currency-effect (as lesser absolute premium gets paid out effectively in foreign currency). One easily cuts expenses to the tune of 4% to 22% each year, without moving an inch. This also means that the investment literally gains in the same percentage proportion.
Example: If a term plan, annually costs you @INR 1,00,000 plus 18% GST, making it a total of INR 1,18,000 that you were paying through your NRO account or credit card, etc., now it should cost you a modest INR 1,00,000 only (waiving-off 18% GST) and which further goes down to @INR 97K, considering that the currency conversion benefit was 3% at the time of payment. This clocks 21% of expenses controlled. Period!
Note: It’s the worst mistake of paying the Indian premiums through your international credit cards. Immediately stop it.
Note: Besides the above direct losses till when controlled, you could do a host of other strategies to improve your investments’ return. You could also pause your payment temporarily, without paying any penalties. Consult a Wealth Advisory to know all your options.
Indians and Indian-origin people have the flexibility to consult BigRise Financial ™, an Investment, Insurances & Wealth Consulting organization that works in the space of financial planning for: Indian-origin (PIO) across the world including: Indians, OCI, NRI & Expats to get them innovative financial solutions from India. They bring world-class products and solutions from the world’s most renowned financial organizations to their clients.
To get COMPLIMENTARY advice on this situation, write into: nitin@bigrisefinance.com
Or Drop a WhatsApp on:
+91 98182 46300
Author: Nitin Attri
BigRise Financial ™
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