3 Places where you SHOULD NOT use your Credit Card

I don't know about others, but my personal experience has been that I tend to spend my money more carefully when I pay in cash as compared to when I use my credit card. 

However, given the US experience, where living on credit is quite common and because of which they are now experiencing extreme financial difficulties, I presume that this phenomenon is widely prevalent — using a card makes you complacent about your spendings.

As such, I think it would be prudent to use our credit card more judiciously. Else we too may go the Americans way and land up in financial soup.

The word 'soup' gives us the first clue as to where paying cash would be better than cards...and that is at the restaurants/bars.

Shouldn't bankers be doing what they do the best...banking

Last week I went to my bank to deposit a cheque of Rs.1 lakh. The amount interested my banker and he inquired whether I would like to invest this money in a single-premium insurance policy giving guaranteed returns. Aware of the pitfalls of such insurance plans, I said no.

'Why don't you look at some good mutual funds' suggested my banker, not willing to let go of me. I again refused politely saying that I was already well invested in mutual funds as per my requirements.

However, my banker still persisted stating 'Gold prices have come down sharply. This is a good time to take advantage of this price correction'. Since I am in agreement with Warren Buffett's views on gold (that it is a non-productive asset), I had to decline and dishearten my banker for the third time.

Have you checked your Employee Provident Fund (EPF) Account balance?

As you are aware, companies deduct a part of your salary every month and, together with their own contribution, deposit it in your Provident Fund Account.

However, it has been observed that sometimes when the company is undergoing financial stress and does not have sufficient cash, it fails to comply with this statutory provision. Not only does it delay paying salaries but also skips making the necessary deposits to the PF Accounts of its employees.

Given that the Employees Provident Fund Organisation (EPFO) has now computerized its data and provided you with the option to check your PF balance online, it would be advisable to do so from time to time. 

Are you protected against misuse of your credit cards?

Theft and misuse of credit cards has become quite common. This can have serious financial consequences apart from all the inconveniences.

Merely depending on the fact that you will immediately report the loss of your card(s) and hence not be liable for their misuse thereafter, may not be an adequate protection...especially if you lose your wallet, credit cards, debit cards, mobile phone, money etc. and don't have immediate access to all the relevant contact numbers.

Therefore, it would be prudent if you get yourself suitably protected against such unfortunate events...more so if you carry multiple cards.

Apart from the usual precautions and protection offered by the banks issuing the credit cards, you also have the option of approaching companies that specifically provide credit card protection plans.

Don't get conned by the so-called golden investment opportunties

Couple of months back, a reputed company offering wealth management services (especially to High Networth Individuals) approached a friend of mine with an alluring "risk-free" opportunity to earn "high" returns.

The product details were as under:
Instrument : Non-Convertible Debenture
Issuer : XYZ Property Developers Pvt. Ltd.
Security : Secured 2.5 times by the land owned by the company
Interest : 18% p.a.
Tenor : 30 months
Up-front fee : 3%
Listing : Unlisted Private Placement
Form : Physical

When my friend asked my opinion, I straightaway said 'No'. 

Should I sell Infosys?

Infosys stock has been on an upswing since the recent announcement that Mr. N R Narayana Murthy, legendary founder of Infosys and retired since last around 7 years, comes back to the company in an executive role.

The company has been facing rough weather since last few years and has lost its position as the premier Indian IT company. It now ranks 3rd after TCS and Cognizant...and sliding further. To stem this rot, Mr. Narayana Murthy makes a come back and use his charisma and skills to bring back the glorious days of Infosys. He also brings in his son Rohan to be his executive assistant.

This news has pleased many, especially the market and Infosys is now touching 2500 after dipping below 2200 soon after the Q4 results were announced and was trading at around 2300 immediately before the announcement of Mr. Murthy's comeback.

Therefore, conventional wisdom suggests that one should buy Infosys.

Did you know that NAV of a mutual fund has 'zero' impact on your returns?

HDFC Index Sensex Fund is a fund that invests in the 30 stocks that comprise the BSE Sensex and in the same proportion. Its objective is to generate returns that are commensurate with the performance of the Sensex. 

Around a year back, as on Jun 11, 2012, its NAV was 139.11.

Let us assume that you invested Rs.10,000 in this fund. Accordingly, you would have received 71.8856 units (=10,0000/139.11).

One year down the line, as on June 7, 2013, the NAV of the fund is 163.0949. Thus, your investment is now valued at Rs.11,724 (=163.0949 * 71.8856).