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Photo credit: Prabhat Pandey

A Walkthrough By Rajeeve Kaushik
Marine Insight©
Financial Planning for Seafarers

Publication date: January 2016

Author: Rajeeve Kaushik

Editor : Jasmine Thakkar / Raunek Kantharia

Published by: Marine Insight
Graphic Design: Anish Wankhede
Copyright 2016 Marine Insight

All rights reserved. No part of this book may be rewritten, reproduced, stored in a retrieval
system, transmitted or distributed in any form or means, without prior written permission of
the publisher.

The authors and editors have made every effort possible to ensure the accuracy of the
information provided in the book. Neither the authors and Marine Insight, nor editors or
distributors, will be held liable for any damages caused either directly or indirectly by the
instructions contained in this book, or the equipment, tools, or methods described herein.
About The Author

By profession Rajeeve has sailed as a Marine Engineer for 29 years

out of which 19 were as a Chief Engineer. His interest in economics
came about by quite a chance at school level and has stayed ever
since through the rolling and pitching of over quarter century. Right
from the Junior Engineer level, he was appalled and surprised by the
lack of any future benefits for the seafarers.

From there started his journey of self-education into pension funds dynamics and capital
markets. He spent the younger part of his life figuring out methods and research in financial
risk analysis all with the singular goal of planning out the future for Seafarers.

As if to prove his point, he planned and called his self-retirement on his 50th birthday. He
wishes that each and every seafarer of the world can do the same and is working very hard in
helping them achieve it.

Rajeeve was brought up and schooled in the misty valley of Dehradun, and has ever since
stayed loyal to it. He spends his retired life with his wife Namita, driving around the country
and trekking in the Himalayas. He is also connected with the Vipassna foundation.

I. FOREWORD 1 8. Golden rules of investing 79

10. One for the seniors 132
1. What happens to the money 23 11. How to select funds 135
that you earn 12. Keep a track of your investments 140
2. Resolution and philosophy of S&I 33 13. Financial freedom 146
3. Compulsories and mandatories 37
 Some Common Questions 152
4. Savings and investments 49
 Conclusion 158
5. Investment in companies 55
6. Mutual funds 62
7. Direct stock Vs. equity mutual funds 76

If you have never understood the Even two brothers differ in their
highly technical language of business outlook of the world and their own
newspapers, magazines or TV priorities. 2
channels, then you are in for a 3
surprise. You will enjoy this book as it Each has his unique position or view 4
is written from the point of view of a of life. Hence it is possible that due to 5
layperson. circumstances beyond my control, 6
there may be instances where you 7
Even though I have mentioned certain may be tested or you may feel that 8
plans in the book, they are based on what is written here is lacking in some 9
my observation of a seafarer’s life and respects.
his basic requirements and 12
aspirations. At the end of the day no It is neither a gospel nor an edict 13
two people or their likes and dislikes written in stone. With time everything
are same. changes. Mutual funds are a

1 Chapters
relatively new concept in India – only he can think for himself and take I
about 21 years old. However, all those educated decisions and not be II
who understood them initially are influenced by the market talk. III
reaping rich harvests today, their only
qualification being “disciplined in It is my firm belief that nothing except 1
their approach”. good knowledge, rational thinking, 2
I do not claim to be a finance expert patience and discipline are the only
and have studied personal finance in qualifications required to succeed in 5
a very unorthodox way. Since it has attaining one’s FINANCIAL FREEDOM. 6
worked for me and a large number of 7
my colleagues - I would think that it Why I term this book as one made 8
will work for you. specially for seafarers? 9
However, as I have said in the For one, there are so many books 11
Facebook Group KAUSHIK’S available in the market for shore 12
FINWORLD, my attempt is at people and also a plethora of
educating the young seafarer so that websites and financial advisors.

2 Chapters
The seafarer, by and large is a very I
disadvantaged group. They start II
training for their jobs very early in life III
and from day one are oriented
towards their actual jobs at the sea. 1
Unlike what most of us maybe
thinking on shore, an average officer 5
at sea has to go through some 6
intensive training and a whole lot of 7
technical education. As a result, your 8
average sailor is a little naïve to the 9
requirements of the family and 10
worldly life. 11
Since boarding and lodging on ship is
free, an average seafarer does not
Photo credit: Joel Enerlan
3 Chapters
realise the responsibility of running a Since I have seen this with my seniors I
family or a household until much later and also juniors, my observation in II
in life. fact is based for a time-period III
spanning half a century right up to
Owing to the frantic schedules while date. 1
on board and the regular training and 2
other courses when off duty, one
simply doesn’t have adequate time 5
for financial planning. 6
As a result, essential time is lost when 8
he can actually make a lot of 9
contribution to his savings in his initial 10
years. By the time he realises money 11
is needed, he already has a family and 12
a lot more expenses to shoulder.

4 Chapters
Being from the maritime profession, I So I had to devise a method of not I
have a rare perspective and only safeguarding his savings but also II
advantage. to ensure that they can be repatriated III
efficiently, whenever and wherever
I am aware of the actual incomes of the need be, even in foreign 1
each rank, for all types of trades and countries. 2
by and large, seafarers’ compulsory
expenses and requirements. I found that what I did and learnt with 5
my money should not go waste and 6
I am uniquely placed in advising a should help others in making an 7
sailor on how much he will need, at advantaged start early in life. 8
what stage and in what form. I am 9
aware of the modern expectations of 10
young officers aiming for higher 11
education after a few years of sailing; 12
taking up shore jobs in shore offices
within and outside India.

5 Chapters

I had been planning to write this book
for a long time. In fact I had started
writing my blog with the same 2
objective, but after 7-8 posts I felt 3
that enough had been said and 4
written since there were so many 5
articles on the subject of financial 6
planning in the papers, magazines, 7
net and chat rooms. 8
And yet I felt that even though there
are so many dedicated sites for this 12
purpose, it is the case of leading the 13
horse to water that keeps most of us
from planning our future financially.

6 Chapters
More so, what makes the seafarer so It was the April of 1987 and I was a I
special that he does not fall into the fresh 5th engineer on board M.V. II
standard category of a retail investor? Indian Endurance, which belonged to III
India Steamships, though they did not
Frankly... nothing! There is nothing have any steamships those days - 1
special that should be taught to him “steam” was only in the name. 2
or a dedicated course that should be
given to him from what his During an evening get-together, 5
counterpart, a landlubber, receives.. dressed in the classic whites and in 6
the company of aromatic scotch in 7
Then why is it, that there is such little crystal glasses, all the officers were 8
penetration of the financial discussing their taxes since the 9
instruments in the life of a seafarer? financial year (F.Y.) was just over. In 10
This is much easier for me to those days there was a considerable 11
understand and explain since I have difference in the salaries of foreign 12
devoted my life to the pursuit of this and Indian companies, as much as 3-4
question, if you may. times.

7 Chapters
Being a young arrogant brat or maybe As soon as I had said this, the semi- I
too much under the spell of Black & bearded, Captain (whose name I II
White, I commented, "With the would not reveal here, but god bless III
peanuts that we are earning, what is him nonetheless) gave me a glare that
left to save and plan?”. almost froze me – but then he smiled. 1
In the very next second he said-“Eh 2
Kosick, it does not matter what you
earn, what matters is to learn how to 5
save it!” 6
If you slog it out whole day on that 8
road, nobody will pay you a dime, but 9
if you did some learning in that day - 10
it will save you a fortune for life”. 11
I am not sure whether it was the gaze, 12
or was it the two magical potions
already in, or the words hitting the

8 Chapters
right spot, I resolved in the very next And thus the journey began… I
moment that I am going to strive to II
gain all that knowledge like some of In my 27 plus years at sea I have III
the august company present and then withstood so many illusions,
some more. attractions and distractions in life… of 1
jumping at the prospect of a shore 2
job, on an offer of a higher paying
company with dubious credentials, 5
just to mention a few. 6
I have seen my colleagues at sea of all 8
ages, nationalities, states, states of 9
mind, and states of life. Freshly joining 10
sea, leaving sea, coming back to sea, 11
talking and planning of leaving the sea 12
life forever and never actually doing

9 Chapters
Most of their decisions, peace of mind sessions when we lounged about in I
or the lack of it was mostly connected the smoke rooms - everyone would II
to their financial situation. open up about themselves. III

There were people in their late fifties Every once in a while I used to 1
who had worked throughout their narrate this story that I had written 2
lives and provided for their parents, for a typical seafarer. This story used
siblings, wife and children, but to have such a profound effect on 5
without a respectable nest egg. most of the audience that they would 6
Suffice to say that I had seen every get very excited and get up to talk 7
case study, and every type that there animatedly, one or two would even 8
was. get very emotional and misty-eyed. It 9
had a profound impact. 10
Anyway, I was so disturbed and 11
perturbed by their lives that I wrote a The story goes as follows: 12
story, which with minor changes, was
applicable to all. During our evening

10 Chapters

III There was an Indian family, typically

middle class, comprising two brothers
and a sister being looked after by a 2
hard working father and a mother as 3
most families in India are. It was a 4
nice, close-knit family with the elder 5
brother working hard though his 6
school and securing good marks. 7
After his class 12th exam, he bags 9
admission in a few good engineering
colleges and also clears the combined 12
exam of DMET and T.S.Rajendra 13
(Maritime Academies in India). Given
a choice of other colleges, he
Photo credit: Robert S. Joaquin
11 Chapters
prefers the merchant navy career When he gets down from the ship for I
because of better financial prospects. that brief vacation after 7-8 months, II
He enters the hallowed portals of there are gifts to be taken home and III
merchant navy and before anybody at when he joins back on board … he is
home knows it, he becomes an penniless but happy. 1
officer... 2
Years pass by and this pattern
…and starts earning. continues. He keeps supplying the 5
money for home - improvement or 6
The first salary goes to the mother or bringing up the living standards of 7
the neighbourhood temple or the everyone at home and even the 8
church. The next one…for buying relatives. No questions are asked. 9
good clothes and that coveted TV 10
(which was so rare in those days).The As the salary goes up, he feels the 11
next one… for the MacBook and so on need for a better house and a land is 12
and so forth. The brother gets a bike purchased or a flat in Mumbai (or any
and everyone is happy. major city). Since he is never around

12 Chapters
to sign the papers, the property is since the children have to be I
purchased in the name of his brother educated, his wife has decided to II
or father. It does not matter since it is settle down at home. Now she looks III
the same family and everyone has after his parents, his children and also
lived together for so many years, how the brother’s children since the wife 1
could he start thinking just for of latter is busy earning a livelihood 2
himself. through the day.
..Some more years pass by and the Now as human nature is, frustration 6
brothers are married. Both have wives slowly builds up and gives vent 7
and children. The other brother being sometimes at the smallest of 8
at a relative disadvantage as far as the provocation. And so it does in this 9
salary goes, his wife also starts to family too. There are minor quibbles 10
work. and the rift is widening. There is 11
discussion to ‘separate’ the families, 12
Our dear old seafarer also has called allowing them to lead their
his wife on board a few times but independent lives.

13 Chapters
But here the responses become “The land is in my name, so what if I
interesting. you built it”. In most cases even the II
parents sided with the “weaker” of III
“This is my house, it is in my the siblings.
husband’s name”- says the on-shore 1
brother’s wife. Anyway, dialogues aside, the story 2
always had a similar conclusion. After 3
“Brother, I cannot afford to buy having put in his hard earned, salt 5
another house, at best I can look for water baptised wealth of 8-10 or even 6
one on rent, which also I cannot 12 years, our man starts over again 7
afford”. and slowly manages to put a roof over 8
his head and that of his family. But by 9
“Boss look, I have built this house now he is out of his thriving thirties 10
while you were busy merry-making at and well into his “roaring” forties. 11
sea. My blood and sweat have gone 12
into it. I won’t be stepping out so He had never expected this situation.
easily”. Never hoped for it. Not only is there

14 Chapters
a loss of trust in the relationship now, onset of a book that is supposed to I
he is a lot poorer and more at the deal with the topic of financial II
stage 1 of our life plan, which you will planning of all things? What does this III
find later in this book. story have to do with managing your
money? 1
This story is very real, and I have 2
heard it so many times on board with Quite a bit, in fact.
minor changes. Change a few 5
characters here and there and a few To start with, the fact that the 6
situations and the end is always the legendary middle class of India and 7
same. There could be more than 2 everywhere in the world is very much 8
brothers. Father could be more a reality in numbers. This means most 9
sympathetic to the “sailing son”, but of us at sea are from the middle class. 10
that does not prevent him from siding It means that our parents actually 11
with the “ailing” son. worked to make a living and get by in 12
life. Their occupations are not pastime
So, what am I trying to tell you at the or social service as is the custom

15 Chapters
today with some folks. rising on their own. I also stand by the I
fact that it is the responsibility of II
Our parents came from times when every seafarer to fulfil his duties, III
the rate of interest in the bank was responsibilities and obligations to the
12-14% and no TDS. Their idea of family, society and the country. 1
saving or investment was a FD of few 2
thousands. Having said that, what I do not stand
for and never advise is that our 5
We had a stronger bonding with our financial decisions be taken by others. 6
parents and siblings, and continue to While we are working at sea, we don’t 7
have it and hence it means we share generally have a base or a firm footing 8
our fruits of labour so that the family on shore. 9
benefits as a whole. 10
The sad fact, however is that you 11
I stand by the fact that we must alone know your best interests and 12
support the financially weaker you alone can take decisions that are
members of our family till they start best-suited for your future and well-

16 Chapters
being. Simply because, nobody can are forced to accept decisions without I
gauge your future aspirations, your our knowledge. II
desires, your long-term goals, fears, III
uncertainties, and things you have
been through. Now of course there is 1
internet access at sea, yet it may not 2
be enough to keep in touch with your
investments and plans. 5
Caring for your family is good, in fact 7
necessary. What it does not mean is 8
that we give up our rights to plan our 9
future as per our wishes. 10
Being responsible towards your 12
extended family is a great thing too.
What it also does not mean is that we
Photo credit: Alain Buitrago
17 Chapters
It also does not mean that we take 30 paisa ad infinitum at payday, and I
expensive insurance plans from our let 5-6 months of our earnings rot in II
father’s friend or our friend’s father the bank savings account. III
which either suits the agent or the
insurance company, just because we What it does not mean is that you 1
lack the necessary wealth- keep looking at the fat salary slip 2
management and financial planning every month, without realising where
knowhow. does the money stand in the grand 5
plan of your life. 6
What it does not mean is that we 7
mortgage our happiness and freedom What it does not mean is that you are 8
to our employer to do as it bids forced to change your plans of having 9
without providing for adequate a good vacation or your exams just 10
benefits. because you have run out of money. 11
What it does not mean is that we What it does not mean, is that after
discuss the exchange rate variation of earning for a major part of life we

18 Chapters
still have to scurry around financial Now I believe you might still be I
planners at the end of our careers. sceptical as to why this book is any II
different than those glossies handed III
What it does not mean is that your over at airports or railway stations.
idea of financial planning and 1
investment gets a boost by a HOT TIP It will be because it is written by one 2
from your sailing colleague or a of yours and exclusively for you.
neighbour. Someone who knows what it is like to 5
be you. If you were to post online 6
What it does not mean is that you queries to various magazines and 7
hand over your hard earned money to newspapers or consult financial 8
that nice looking girl at the bank in advisers you would have to go 9
the name of PMS which in this case through the trouble of explaining your 10
means Portfolio Management Scheme financial situation and status. 11
and not anything else, in case you are 12
wondering. I know all about it and the book is
written from that perspective. I will

19 Chapters
not need to know your salary, the I have learned from everyone and I
time when you will be getting down everyone’s situation and adapted my II
for your tickets, marriage etc. I know own course of learning not only from III
exactly when your funds will start my own but others’ mistakes too.
flowing in and for how long. 1
It has been almost 18 years since I 2
This book has been written by have been giving finance “classes” on 3
someone who has seen the practical board and trying to inculcate financial 5
aspects of everyone’s life on board 6
ships, of all ranks. Whether, it is a 7
greenhorn cadet or a ripened old 8
electrical officer. 9
Whether, it was the all-powerful 11
captain or the modest deck utility 12
hand, or Topaz as we used to call him,
who is not found on board anymore.
Photo credit: Capt. Ganesh Srinivasan/
20 Mr. R Bhatnagar Chapters
discipline among seafarers, your malady is. I
irrespective of nationality. II
What would you say to that? The III
However, it seemed to me that the field of financial investment is similar.
100 odd people that I induced to the Because here you will find abundant 1
art of making money work for them advisors, who will be forking out the2
was too small a group. And the best plan for you, without even
process was too slow. Hence, I have listening to your requirements. 5
taken it upon myself to write and 6
make you read this book. Someone will sell you the RIGHT 7
insurance policy, someone the RIGHT 8
Consider the analogy of a visit to a pension plan and someone the RIGHT 9
doctor’s clinic. If you go to the doctor PMS but no one will sell you a 10
for a certain ailment, and he starts comprehensive plan that can serve 11
writing you a prescription the you well until your retirement age. 12
moment you enter his chamber,
without bothering to find out what Well neither I will. I am not and will

21 Chapters
not till the end of the book suggest and third extension of their PPF A/C I
anything to you. By the end of the which stands at so many hundreds of II
book, you yourself will take the right thousands of rupees. III
decisions and do things for
yourselves. It is going to be an 1
exercise in self-learning and self- 2
engineering that you will be proud of.
Beginning in the early 90s when other 6
instruments of savings and 7
investments were not popular, I 8
started encouraging all on board to 9
open their PPF accounts. 10
Most of those colleagues well into 12
their 60s, still call me up to say how
they have just gone for the second

22 Chapters
During the late 80s, I embarked upon enjoyed Gratuity, PF and I
finding the nitty-gritty of pension superannuation benefits - they went II
plans and requesting the shipping for contractual salaries, which were III
companies that I worked for, to same as the MUI scale, simply to
enforce pension plans for the sailing avoid ‘deductions’; even if the 1
staff (as we are called). deductions would later be reimbursed 2
after much growth.
Even though the sailing staff was 5
effectively earning for the company, it So much so for a bit of the history to 6
seemed it was always the shore staff give you a perspective. Hindsight as 7
that enjoyed the retirement benefits. they say is always 20/20. 8
So myopic was the vision of my But it would only be beneficial if you 10
colleagues, that while sailing with considered it to plan your own future 11
Indian companies where they had the and not make the same mistakes that 12
advantage of going for permanent I or people of my era did.
MUI salaries, wherein they could have

23 Chapters
What I will tell you in this book is After reading this book completely I
what happens to your money from you will be entitled to call II
the moment it leaves your employer or write to me for any clarification. III
and enters your bank account. I will
warn you of all those agencies whom Since I always consider my junior 1
you thought of as most secure and colleagues to be smarter than myself; 2
reliable. What I will try to pass on to I am sure by the time the second
you is whom to be aware of and edition of this book is released, it 5
whom to beware of. would be substantially revised and 6
modified from their precious 7
Finally what I will attempt to tell you feedback and suggestions. 8
in this book is ACTUALLY what to do 9
with your money as a seafarer. By the end of this book, most of your 10
questions and fears on taxation and 11
There will be no “can dos”, but only taxability would also have been 12
“may dos”. Simple what and why - just resolved and answered.
like your manuals of machinery.

24 Chapters
I would like to divide this in the same I
sequence that I used to conduct my II
financial planning sessions on board. III

First and foremost, WHAT happens to 1

your money in the various avenues 2
that you or anyone else invests his
savings? SO…. 5
Before we embark upon the long and 9
interesting journey of building wealth, 10
we must pause and think on one 11
important question to ponder. What 12
do we need in life and out of our
needs what will be taken care of by

25 Chapters
this money? electronics, vacations etc. I
Then we will go forward on how to • We need to ensure that all the III
maximise that return which your three are available to us as long as
money can provide. we are alive and later to our 1
dependents when we are not 2
• We need food, clothes and shelter.
These are our essentials and we • After your own needs are fulfilled 5
must ensure the security of all you may need something for 6
three charity 7
• We need security of life and 9
extend that security of our life to Now that the above is established we 10
our dependents shall go about tracking the money 11
that you just earned in the last 12
• We need certain trimmings of the month.
feel-good stuff such as cars,

26 Chapters


1 What Happens To The Money That You Earn?

1. From your employer’s bank, the 3. If you have requested the bank I
money is routed through a for using the funds to open a II
correspondent bank in New York FCNR account then the funds are III
if it is USD, London if it is GBP and used to open a FCNR account
Brussels or some other European which is essentially a Fixed 1
city if it is in Euros. It comes to Deposit account beneficial for 2
the bank branch whose address NRIs and PIOs in 5 major
you have provided to your currencies. Here it is important 5
company. that you instruct the bank to 6
open the FCNR without 7
2. This money is converted in Indian converting the funds to INR 8
Rupees and goes to your NRE otherwise the smart banks 9
(Non Resident External-Rupee), convert from USD to INR and 10
NRO account whose number you then back to USD to issue a FCNR 11
have provided to the company, by – setting you back by the Foreign 12
default. Exchange (FOREX) losses incurred
in conversion fee.

28 Chapters
4. Once your money is in the NRE, this limit is about 10% of the total I
NRO account which is essentially deposits with the bank). On this, II
a Savings Rupee account (former the bank gets some interest III
being “repatriable” in nature and which is called REPO rate. If you
second “non-repatriable”). Now read the papers or watch the 1
your money joins a common fund news this rate makes quite a 2
of the bank. regular appearance with the
monetary policy of RBI. 5
5. Out of this common fund the 6
bank is required to maintain 6. After taking care of the above 7
some cash with itself (called SLR), money, rest of the amount is free 8
which at present is about 22% of with the bank to do AS IT 9
the total deposits. Next the Bank WISHES! 10
has to keep some of the money 11
with the RBI- called CRR which is 7. It is this money that the bank 12
used to control the amount of tries to pass off to interested
money in the market (presently parties at the highest rate of

29 Chapters
interest possible. These parties 9. But don’t you worry, you will I
can be consumers seeking home continue to get your 3-4% per II
loan at 10.5%, auto loans at 13% annum which was applicable to III
or personal loans at 16%. These the minimum balance during the
parties can be big companies and month- till 2012 when RBI 1
industries, which need couple of intervened and instructed banks 2
hundreds thousands to buy to pay interest on the daily
material, pay off their debts etc. amount in your account. Since 5
you agreed to take MINUMUM 6
8. There are also other avenues risk, someone else is taking risk 7
where the banks put your money with our money and paying you 8
in, that too at a considerable risk. the non-risk portion. 9
We will get back to this when we 10
will treat the subject of WHAT 10. If you opted for the NRE FD, then 11
and WHY YOU DON’T DO WITH you will continue to earn a higher 12
YOUR MONEY. interest for the duration of your
deposit and it will be tax-free.

30 Chapters
Remember only NRO is taxed and 30 paisa difference for $ 10,000 I
the tax is deducted right at the the difference comes to a II
time of paying the interest to you. handsome Rs.3000, voila! It will III
This may be different in other buy you a dinner at some nice
countries. posh restaurant and that is all. 1
11. The FCNR is retained by the bank 13. However, what has happened is
with RBI, and used for various that in your zeal and 5
foreign currency needs of the obliviousness about the various 6
bank and the RBI itself. options, you have let your money 7
stay in the bank account earning 8
12. So now you have yourselves and a measly 2-3 % in NRE. Even if 9
your colleagues feeling smug in you had opened an NRE fixed 10
their respective choice of the deposit account, the money is 11
‘best bank’ that gives the best actually blocked for minimum 1 12
rate of exchange at the time your years and you will not get even 1
salary has arrived in the bank. At penny of interest if you

31 Chapters
withdrew on the 365th day because you have slogged those I
instead of the 366th which is the months away. This is really the II
minimum term of the deposit. beginning of the end. III

14. Compare this to your 4 months’ 15. In the language of Finance and 1
salary in the bank, that you Management, the loss of this 2
deposit month after month and it interest or appreciation of your
stays there till you come back on income in the bank is called 5
leave and decide to do something OPPORTUNITY COST and in my 6
with it. language trusting your entire 7
savings with the bank even for a 8
This something, if it were for short term is called financial 9
some pre-determined beneficial suicide. 10
plan, would have been OK. But in 11
all likelihood it will go into buying 16. In next chapter we will discuss 12
those ever mushrooming gadgets what a person may actually
or that super-duper 4 –WD that spend for compulsory evils, nice-
you feel inclined to be yours to-haves and the luxuries.
32 Chapters


“The best helping hand in life is …at may proceed further. I
the end of your shoulder.” II
Just like no one in your college III
Before I embark onto the next chapter actually helped you to get good
I want you to appreciate one thing grades or get a good job, it is the 1
very clearly - It is you who is going to same principle in life - You are the 2
make a difference to your life! master of your fate, as they say.
There will be no Shipping company or You alone will have to carve out the 6
otherwise (for non-shipping people if path to your Financial Freedom. For 7
they are reading this book), no this you will need some resolutions, 8
government, no bank and certainly no which will entirely be your own, and 9
financial advisor, who will EVER look some tools which we shall discover 10
after your interests; they will always together in this book. 11
put their interests first. So with this 12
thought firmly planted in mind, you So let us start with the resolutions

34 Chapters
1. I will look after the cents…the company. I
dollars will look after themselves II
- a very famous quote by III
Rockefeller. Isn’t it true? Do not
waste money in going for non- 1
descript plans, or in opting for 2
long term payment plans which
have no solid backing. Ideally, a 5
bank account should only have 6
enough money for your current 7
expenses and not a penny more. 8
(How to arrive at that number- 9
we shall soon determine). 10
2. I will link my credit card with my 12
savings account so that I do not
pay any interest to the card

35 Chapters
3. I will INSURE MY life and not that money in. So now we will go in for I
of my insurance agent by first COMPLUSORY OUTLAY or the II
clarifying the extent of mandatory things where you III
commission that he gets out of definitely have to spend your money.
each premium paid. The essentials! 1
4. I will not go for any ULIP, Pension
or Children Plans offered by 5
Insurance companies. 6
5. I will save and then spend the 8
remaining, NOT spend and save 9
what is remaining. 10
Once you have made all these 12
resolutions, you might be wondering
what avenue is left for you to put your

36 Chapters



EXPENSES AT HOME culture and we have to abide by I
them. II
Since this book is essentially by a III
Seafarer for the Seafarers, I So you have to outlay this
understand exactly the needs and expenditure. Since you are on board 1
compulsions of a sailor. It may be and there may be a delay sometimes 2
embarrassing sometimes to discuss in the expenses; I suggest that you
these expenses when I bring them up open a Sweep in/Sweep out account 5
in a class or a meeting. with the head of the family or your 6
wife or whoever is making the 7
But this is nothing to be embarrassed expenses at home. 8
about. By the time you have reached 9
the officer’s rank the parents may Sweep IN/OUT account is a savings 10
have retired or you may have started account linked to a fixed deposit 11
a family. There may be an aged or a account. Every time money is 12
widowed relative to support. These withdrawn from savings, same
are cornerstones of the human amount is automatically transferred

38 Chapters
from the fixed deposit amount to the which the IT department does not I
savings account. The ROI (rate of look into. And since the interest II
interest) for this Fixed Deposit is earned on that resident account will III
lesser than a normal FD but it is still be subject to tax, the ITD will be
higher than the savings account. happy in any case. However, that 1
small taxability will save you a lot of 2
The bad news is that most banks do trouble.
not offer Sweep In and Sweep out 5
facility on NRE accounts. So you will The FD linked can have an amount 6
need to open this account with your equal to about 3-4 months of your 7
wife or a parent, who will have to be home expenses. 8
the FIRST account holder and you can 9
be the second or EOS basis (either or Because your salary is fortunately 10
survivor basis). Since an NRI is not higher than those of fellow 11
supposed to have a normal savings or landlubbers, a single month’s pay can 12
a resident FD, this option is sail you through several months of
technically within the purview of law, expenditure.

39 Chapters
There is another option here for the money by not going for the wrong I
monthly expenses but we will discuss plan so read carefully. II
that after we have discussed the III
chapter of MUTUAL FUNDS. Do not go for ULIPS or endowment or
money back plans offered by LIC or 1
THE INSURANCES other Private Insurance Companies. 2
The sum assured/life coverage is very 3
YOURSELVES: Irrespective of what less for the premium that is charged. 5
your company/employer is insuring What you need is like a lifesaving pill. 6
you with (which is normally in the Let me elaborate - it should actually 7
range of $60K-$75K for death and/or cover the loss of your life and income 8
permanent disability), you must for the family in the worst-case 9
insure yourselves as the PRIMARY scenario. 10
EARNING MEMBER of your family. 11
A normal life insurance policy that 12
Let me warn you that it is under this covers you for Rs.250 thousand might
head that you will save maximum come to you at a premium of

40 Chapters
Rs. 1 lac ( 1 lac = 1 hundred thousand) a young age ( 25-26) will be around I
or more, depending upon your age. Rs.6000-10000 and is non-refundable II
and without any payable benefits if III
So instead of falling for the the person covered survives.
unscrupulous elements offering you 1
ULIPS or endowment or money back 2
plans, simply opt for a TERM
INSURANCE – that too of the online 5
variety. 6
In my opinion, as a seafarer one 8
should go for a minimum cover of 1 9
crore (Ten million) at the very least, to 10
‘insure for the family’. This sum will 11
bring some relief to them in an 12
unfortunate scenario. The premium
for this insurance if you start at a
Photo credit: Paul Igbunuoghene
41 Chapters
This is the first thing you must do, The beneficiary must be made aware I
ASAP. In fact, as soon as you are done of the claim processes and where the II
reading this chapter, since you will documents are kept, in absence of III
incur the same low premium till about this information any insurance is
the age of 75. The earlier you start, useless. 1
the more you will reap. 2
As I said earlier, this head will be the
Whatever the age be, when you take one where you will save maximum 5
the Term Insurance Cover, you money, we will return to this topic 6
continue to pay the same premium later and prove how much you can 7
for the entire tenure. Once this has save in reality and generate by NOT 8
been started, you may connect the opting for traditional Life Insurance 9
premium payment with an auto debit Plans. 10
facility from your bank account and 11
inform the beneficiary (your parents, THE HOUSE 12
wife, or children) about the same.
It is possible that you already have

42 Chapters
purchased a house or are in a process building arising due to Flood, Fire, I
of making/buying a house; it is also Arson, Earthquake, and Terrorist II
possible that you are staying at your Attacks. There are no etc., so III
parents’ home which may or may not please closely check the wordings
eventually go to you by way of of the plan before purchasing. 1
inheritance. Include the words building, 2
boundary wall, gate and plate
Whichever the case may be; please 5
insure the house that you are staying 6
in. The insurance must be a 7
comprehensive one and is normally 8
covered under various clauses which I 9
will enumerate below as best possible 10
for any person: 11
• Clause 1: FIRE PLAN A for the
building: This covers loss to the

43 Chapters
glass if it is applicable separately • Clause 3: Contents made above in I
to your house i.e. you are staying Clause 2) against theft, burglary II
in an independent home and not etc. III
an apartment.
• Breakdown maintenance of 1
• Clause 2: FIRE PLAN A for the important and expensive items like 2
CONTENTS: Make a Refrigerator, TV, Music system if
comprehensive list of all the items you have not opted for their 5
and belongings inside the house, respective extended warranties. 6
including the lighting fixtures, 7
drapes, drapery rods and • Baggage Insurance is offered at 8
everything inside the bed, minimal rates for travel unlike the 9
cupboards, kitchen, fixtures like general Insurance rates. 10
geysers in the toilets etc., 11
everything that is not a part of the Public Liability: This clause can be 12
construction (include even the availed only to obtain the discount in
plate glass). the entire premium, since the

44 Chapters
premium for this head is offered at Always attach representative photos I
dirt cheap rates. of the house with the insurance II
application. III
At this point I wish to mention that
even with the most lavish lifestyle THE FAMILY HEALTH 1
your premium may never go above 2
Rs.3000 in India (about $50), which I This is necessary and requires that the
believe is a nominal price to pay for entire family is covered for health 5
covering such an enormous risk. aliments. 6
Also start conserving all the cash There are a number of plans available, 8
memos and receipts of the purchases but the best in my opinion are floater 9
that you make. Any extra purchase / types, which also cover the parents in 10
addition that you make to the home their senior years. This floater policy is 11
inventory can be added to the list by normally issued for a maximum sum 12
informing the Insurance Company or of 4 lakhs and is beneficial because
better still added to it the next year. not everyone in the family is

45 Chapters
expected to fall ill at the same time. I
However, in my opinion, 4 lakh is too II
small a sum that is needed in today’s III
5-star hospital culture. A minor gall
bladder operation can easily set you 1
back by Rs. 1.5 lakh. 2
So there are other plans as well, 5
called top-up plans, which basically 6
have a deductibility of 3-5 lakhs which 7
the company will not pay, but will 8
cover all expenses beyond that. Such 9
plans have the advantage of less 10
premium and faster settling of claims 11
since the sum assured is immediately 12
paid on the claim. These plans have a
disadvantage that every time
Photo credit: Sudarmadji M. Mar
46 Chapters
someone is hospitalised the same policies. The premium is very little if I
deductible kicks in and anything you take a cover of 10 lakhs which is II
below the same deductible is not paid quite substantial by 2014 rates and III
by the insurance company i.e. if a take a deductible of 3.0 lakh. i.e. you
patient is hospitalised 4 times and will now have a coverage for any 1
each time his bill was less than 3.0 expenses in the range of 3 to 10 lakhs. 2
lakh or whatever was the deductible You will be required to foot the bill for
limit, it will not be paid. expenses up to 3 lakhs. 5
Hence, it is better to go for SUPER So you can buy both the policies and 7
TOP UP POLICIES. Under these the the latter one depending upon the 8
gross bill paid to the hospital is added risk profile of the family, i.e. parents 9
up and then excess off the deductible are old, very old, ailing, heart 10
is paid out. condition etc. 11
But surely you need to get this before 12
United India Super Top UP and Apollo you look at other avenues for
Munich Super Optima are two such investment and savings.

47 Chapters
IMPORTANT: Here I must add that since 2012 I have noticed a trend I
that the charges for insured patients in hospitals tend to be less than those II
for non-insured patients. This has been confirmed by the owners of two III
hospitals. There is a reason for that, which is a bit out of scope at the
moment as it will only confuse you. 1
“Even as I am writing this book, news has just come in that all 6
Life Insurance proceeds /payback after maturity will be taxed 7
at 2% , and if the PAN is not furnished the the TDS will be 20%. 9
So that is some dent in the so-called traditional policy 10
paybacks.” 11

48 Chapters



I am assuming that you have read However, though my scope in this I
Chapter 3 and hopefully made book does not allow me to sermonise II
pertinent arrangements and have you for your spending habits and III
effectively taken care of all the certain lifestyle choices, I will still take the
and uncertain expenses, along with risk of suggesting that if you have 1
the crisis expenditures that one become the primary earning member 2
encounters. of the family - you must consider
carefully before spending on luxuries. 5
Once you have taken care of this, the 6
next step is to make allocation and The world out there is full of choices 7
provision for savings and investments. and alternatives, and need I say 8
temptations. Youngsters, most of 9
Any luxury expenses that you wish to them on becoming junior officers 10
make should come only after you dream of big luxury cars, the latest 11
have made provision for this – what flagship mobiles, tablets and the 12
we will for our sake of brevity refer to whole nine yards. However you differ
as S&I in future. from your shore colleagues and

50 Chapters
friends in a way. difference between savings and I
investments? You keep hearing these II
They are able to enjoy their gadgets terms without acknowledging or III
and cars round the year 24X7. You will perceiving the big difference. I have
only have about 4 months in a year to actually spent a lot of time thinking, 1
do that. Once you come back from reading and researching before 2
the vessel after your contract, your reaching on the conclusive yet subtle
gadget would not only have become difference between the two. 5
out-dated but also depreciated in 6
value. You simply cannot future-proof Savings is simply stashing your 7
your buys. So lower the cost of these “moolah” away under your mattress, 8
fad purchases, the better it is for you in the piggy bank or the bank account, 9
and more for your savings. post office schemes, PPF and the 10
works. The money does not change its 11
Now coming back to the topic of S&I shape of form - it remains in the same 12
(remember SAVINGS & currency. It may or may not increase
INVESTMENTS), what exactly is the at a fixed rate of appreciation (also

51 Chapters
called rate of interest). All these not is entirely different question) - I
avenues are called SAVINGS. the currency immediately changes II
form and takes the avatar of the III
SAVINGS: Savings are usually risk free ASSET that you have purchased. This
but offer very little by way of is Investment. 1
appreciation and growth. What’s 2
more, savings may not be tax efficient
and WILL NEVER keep up with the 5
inflation. Which then means that the 6
real value of your money will always 7
come down with time and in the long 8
term. 9
Now when you buy shares, land, flat, 11
house, gold or give it to someone for 12
business as a loan on profit-sharing
basis (whether he gives it to you or
Photo credit: Mariana Castellanos
52 Chapters
The value of this investment can various stages, some during the I
remain same, go down or increase tenure like bank FDs and savings II
infinitely. All these avenues and many account. Others like National Savings III
more are called INVESTMENTS. Now Certificate (N.S.C) at redemption upon
you may wonder why on earth would maturity of the same. 1
anyone leave the safe haven of the 2
savings and unnecessary go for risky Low rate of interest: The interest rate
investments? for almost all the savings instruments 5
is set by the government at a rate of 6
Reasons are many but just to name a about 3-4 % less than the inflation 7
few: rate. This does not allow our savings 8
to grow in terms of real rate. 9
Tax efficiency: Most avenues for 10
savings are tax inefficient. e.g. If N.S.C. was to give you a rate of 11
That is, most of the savings interest of 9.0%, the interest will 12
instruments that are introduced by either be added to your income at the
the government are all taxed at end of the term (which is 5/10 yrs.

53 Chapters
depending upon the scheme you have will vary from 80 to 60 % depending I
opted for) or you will have to declare upon your age will be INVESTED. II
the interest every year with your tax III
returns. So what you will be left at the *** The NRIs from US and Canada
end of the term will not be great cannot invest in Indian capital and 1
appreciation in real terms. markets without completing a form 2
called FATCA and may be even after
NRIs not allowed by the law: From FY that, the funds may not accept their 5
2008, NRIs have been disallowed to application. 6
invest in any Post Office schemes like 7
NSC, KVP, PPF, MIS etc. So there goes So see you guys, until something 8
one of your important avenues. comes up later. However, you may 9
read on if your family is in India 10
The above reasons are now sufficient because then your investments can be 11
to show you why the savings will form made by your wife in India. That is the 12
part of your corpus but not a very best bet at this stage.
great one. The major amount which

54 Chapters



This will form the most important benefits such as Banking, Petro I
chapter of the book where we will products, Health facilities and II
start to unravel the maze that are Medicines, Capital or Industrial goods, III
Investments. Those who are already Consumer goods and all other things
familiar with this field may also not covered by the list are provided 1
continue reading as there is bound to by companies which are either Public 2
be some useful information for them. Sector (Government owned) or
Privately controlled or Private Sector. 5
A country is dependent upon its 6
infrastructure and amenities. This is When the public sector company 7
the reason that we treat the western needs money to manufacture or for 8
countries as advanced and also take sundry other needs, government 9
pride in the comfort and convenience simply takes a portion out of the taxes 10
of developing countries. which citizens pay and gives it to the 11
Public Sector Company calling this its 12
These infrastructure and facilities in own money. It can also go the other
terms of material resources and way as mentioned below in the case

56 Chapters
of private companies. 2. Company Fixed Deposits: Like I
bank’s fixed deposits the II
If a Private Limited Company needs companies issue fixed deposits III
money, there are many ways to raise which are not secured by anyone
the funds: except the reputation of the 1
company. Hence obviously the 2
1. Taking Private Loans: These can lesser known or so-called ‘risky’
be availed from Private money companies will offer a rate of 5
lenders or Financial Institutions interest which is higher than safer 6
like IFCI, IDBI and Mutual Fund companies. 7
companies. These companies 8
have special funds for lending 3. Debentures: There are various 9
which are loaned at a certain categories of debentures and 10
fixed rate of interest, depending these offer a fixed rate of interest 11
upon the term and risk profile of to the investor. This rate of 12
the company. interest may be more than the
bank but is taxable and not

57 Chapters
always open for the NRIs. philosophy. I
4. Shares: Are the most popular When and if a company goes III
form of raising capital by a bankrupt, the cash realised after
company and is also most liquid selling the company, is paid off in the 1
and the most ‘risky’ as per the above sequence of priority i.e. the 2
common belief. By buying a creditors are paid off first, FDs next,
share of any company the person followed by debentures and finally if 5
becomes an investor in that anything remains, it is paid off to the 6
company, howsoever small his shareholders. This is because the 7
‘investment’ in shares may be. shareholders are the partners in 8
business with the owners (who are 9
Why it was important to mention the called Promoters after a company 10
above 4 instruments (though there goes public). 11
are some more) is because each of 12
them will directly or indirectly form This is also to explain to you the
an element of our investment seriousness of the investments that

58 Chapters
you get into when you buy any of the of shares that you had aimed for. You I
above, since with the facility of may land up receiving less than the II
internet now you can buy anything stipulated number or none at all III
anywhere anytime, provided you are because IPO shares are allotted
allowed to do that by law. through a “lucky draw” system. 1
SHARES, STOCKS AND CAPITAL Once the IPO is closed, the company
MARKET is listed on one or more exchanges 5
within a month’s time. The most 6
Shares of any company can be common being NSE and BSE, which I 7
purchased at two times - one is as an am sure you know about. 8
IPO (Initial Public Offer) when a 9
company goes public for first time. At After the company is listed on an 10
this time the share of Rs.10 face value exchange you can walk up to any 11
will have a certain premium attached share broker, capital division of your 12
to it. When you apply for an IPO, you bank or online services of a number
may not really be allotted the number of finance companies and buy any no.

59 Chapters
of shares for any no. of companies. or small the company is). I
You will only be required to open a II
Demat account and a Trading account. This can be an onerous task even for a III
The trading account will require to seafarer who may have the facility of
have some money in it which will be internet to keep a track of companies 1
the upper limit of your purchases. It’s on board. But this doesn’t guarantee 2
as simple as that! you a comprehensive outlook on
other news of different companies, 5
BUT... simplicity ends there because and the factors which can be political 6
there are a lot of companies LISTED and economic, and can have multiple 7
on exchanges. You will not only have effects on a single company. 8
to decide which stocks to buy but also 9
allocate your share purchases in I am sure you have heard of a 10
terms of verticals such as Pharma, company called Satyam and how it 11
Engineering, Consumer goods went down in a day, wiping out the 12
(FMCG), Petro etc. and also in terms wealth of a million shareholders,
of Market Cap (which defines how big along with their

60 Chapters
plans and aspirations. Another taking baby steps. I
example is of a company called II
Bhushan Steel. Even if the most informed advisor or III
investor told you of a very good
However, what you may not have company it is simply not enough. You 1
heard of is, the whole stock exchange must know the what, the why and the 2
vanishing into the blue and the how of share buying and selling to
government not taking any action on benefit from this activity. 5
it. 6
It is this precise knowledge that an 7
It is not that I am discouraging you ordinary investor does not have and 8
from buying shares and leading you to sometimes by sheer stroke of luck 9
any specific mode of investing. What I even the most passive investors who 10
mean to suggest is that as a partially buy a share and forget it for two 11
informed professional you should first decades – land up with windfall gains. 12
obviate your risk, and if you cannot, But this story cannot be repeated
then at least try to minimise it by often.

61 Chapters



This class of assets is not only the and how it is used from the largest I
most favoured across the world, but Pension Fund Company in the world II
in the specific context of India it is to the smallest individual investor. III
most heavily controlled and
monitored by the Government The company that starts a mutual 1
through SEBI, and hence most safe fund is called an AMC and is normally2
among all investment products. started (sponsored) by a company. It
starts with seed money which must 5
It not only encompasses all the modes be at INR 50 crores as per SEBI 6
of investments that we have directive. 7
discussed above, but also allow the 8
freedom to choose between various This AMC starts a Mutual Fund 9
options depending upon our age, Scheme which may be of equity type 10
stage in life, risk perception and or debt type and starts collecting 11
requirement. money from the public by way of NFO 12
(New Fund Offer). It has to declare its
I will go about explaining the concept objective (called mandate) right in

63 Chapters
the beginning and has to stick to its and Corporate debt papers if it is a I
mandate or objective throughout the DEBT scheme. II
life of the fund. SEBI keeps a strict III
watch on the fund with the highly After this, the fund is opened to
qualified Fund Manager and his continuous transaction/subscription 1
teams. where the existing unit holders can 2
sell their units and new subscribers
The AMC is allowed fixed initial can buy more and more units upon 5
charges and later annual charges for their requirements. 6
running the fund. The charges are 7
transparent and the conscientious 8
AMCs actually charge less as their 9
corpus under management grows. 10
After the money is collected, the AMC 12
starts buying assets – stocks, if it is an
EQUITY scheme, or takes Government

64 Chapters
EQUITY FUNDS: They’re of various d Diversified Funds- which invest I
types: across the entire spectrum of II
Indian Economy III
a. Open ended and Closed ended -
Closed ended meaning those that DEBT FUND: They are of various 1
will mature and terminate at a categories, in fact there is a maze of 2
fixed date irrespective of the them.
market conditions 5
a. FMPs: Fixed Maturity Plans, often 6
b. Large Cap, Mid Cap and Small Cap mistaken by people as fixed 7
– depending upon their company return plans, these are something 8
size like Closed ended funds 9
c. Sector Funds- Auto, Banking, b. Income Funds: Those investing in 11
Petro, Infra, Pharma or FMCG Private and Public Corporates 12
c. Bond Funds: Those investing in

65 Chapters
Government Debt Papers those that invest in all the above I
types and the AMC keeps II
d. Arbitrage Funds changing according to the scenario III
of the Indian and world economy
e. Fixed Maturity Plans 1
The advantages of parking your funds 2
f. Ultra-Short, Short Medium and in Debt Funds instead of Bank Fixed
Long maturity Debt Funds Deposits are various and also very 5
attractive: 6
g. Liquid Funds: They’re funds 7
which invest in debt papers of • Liquidity: The appreciation of your 8
extremely short duration. These funds in Debt funds is on daily 9
can be used to park your money basis and in case you need the 10
which may be required in a short money suddenly; the funds may 11
term of few weeks to few months be available to you within 24 hours 12
without any loss of interest
h. Dynamic Bond Funds: They’re

66 Chapters
Of course, there will be some • Inverse relation to bank interest: I
deduction of tax at source in case The Debt Funds invest their money II
you are an NRI. In case of a bank to buy debt papers of private III
FD, you may be penalised or may companies and the government of
earn no interest if the NRE FD is India. These papers carry a certain 1
for less than a year. rate of interest. When the bank 2
interests go down (as is expected
in next 1-2 years), the yield of 5
these debt papers rises. This 6
boosts the return on your debt 7
funds quite substantially 8
• Lower Taxability: Interest on bank 10
deposits in India is tax-free for NRE 11
FDs but not for NRO deposits. For 12
resident FDs the interest is only tax
free up to Rs.5000. The debt

67 Chapters
funds are taxed at a nominal rate • By the Finance Bill of July 2014, I
and additional advantage of the taxability of debt funds has II
indexation is available been changed to disadvantage the III
big investors like corporates and
• Ease of transferring funds: As I had banks. But the headline for 1
mentioned earlier in the book, I seafarers is that it won’t be of 2
will mention features that will much consequence as their money
exclusively be useful to you as a is in debt funds for a shorter 5
seafarer. A bank FD requires the duration 6
original FDR receipt to be signed 7
and presented to the bank. The biggest advantage of Mutual 8
Getting your money out of a debt Funds is the seamless movement of 9
fund will require an online funds from Equity to Debt and within 10
transaction and the very next day Equity or debt itself, without any 11
the funds will be available to you major movement of funds through 12
in your bank account the bank.

68 Chapters
Another very important advantage of children desire to go abroad for I
investing in mutual funds that has so education or settling down II
far eluded even the best of Financial and need foreign exchange. III
advisors and which is very specific to
the needs of seafarers is that you can It is even attractive for those who are 1
invest as a Non Resident Indian (NRI) planning to quit sea and are about to 2
with full repatriability at the existing take up superintendents’ jobs in
exchange rates. Singapore, UAE, or US or other 5
countries. They can actually take their 6
This is especially of great attraction to entire corpus to help them settle 7
youngsters who may still have to clear down initially. 8
Certificate of Competencies from UK 9
and Australia. Then again since the folio number is 10
always active they can resume their 11
It may also be attractive to seniors investments whenever they have 12
and Captains on the brink of investible funds.
retirement and Chief Engineers whose

69 Chapters
MORE ABOUT MUTUAL FUNDS funds would either lie unutilised I
in the account or get used up in II
During my life in the pursuit of right frivolous expenditure. The III
investment, I found that even though psychology of expenditure being
I was making substantial profits in that since this money was the 1
direct stocks, the corpus was not profit - it was somehow free 2
increasing and I was finding it
increasingly difficult to keep a track of • Improper selection of stocks: Not 5
my profits vis-à-vis the investment. all the scripts that I bought into, 6
Upon deeper analysis I found the were profitable. There were few 7
problem to be multi-fold: stocks that were multi baggers, 8
but on the other hand there were 9
• Not utilising the profits: After some which I had bought with 10
profit booking, the funds used to little or no research which had 11
flow into an account and if there sunk 12
was no proper investment
opportunity at the moment - the • Fear: Somehow I could not bring

70 Chapters
myself around to invest a your money in, but he also keeps a I
substantial amount in direct track of the daily events of the market II
stocks, because I could not trust a with respect to the companies that III
single stock with all my savings. your fund owns and also those it does
The ‘don’t put all your eggs in one not own. 1
basket’ motto came into play 2
The stock selection is not only
Going back to Mutual Funds: diversified in terms of companies but 5
Each Fund whether Equity or Debt is also with a view to that particular 6
as good as the Fund Manager it has, sector. A good fund manager will go 7
supported by the research team. over weight or under on his 8
perception of which sector might do 9
Each fund invests into about 30 or well. 10
more stocks with different allocation 11
to each stock. The fund manager and At the end of every month the fund 12
his team not only research into each manager will have to reveal his
company that they choose to invest complete holding of the fund. And

71 Chapters
at the end of each week he is required a bank account into which the I
to reveal what he bought or sold purchase money of investors, II
during the week. dividends flows in and the purchase III
money for stocks/bonds etc. and the
Every day, the MF team calculates the redemption request for investors 1
total assets under each fund and uses flows out. 2
it to declare the NAV (Net Asset
Value) for the same. This enables SEBI looks into this and daily 5
absolute and 100% transparency transaction details very closely and 6
which is not the case for most of your carefully on a daily basis. Plus the 7
assets. daily declaration of NAV keeps a tab 8
on the AMC. 9
There is a question that I am often 10
asked - What happens if the Mutual In case a Mutual Fund Company 11
Fund guys just close shop and run (called AMC) decides that it is no 12
away? I answer that there is a certain longer profitable to run their MF - as
assurance. Every fund of an AMC has has been the case with a lot of

72 Chapters
companies, theoretically they can But on a practical note they have to I
close down the Fund House by paying find a buyer because then they can II
all their investors whatever is due to actually sell off not only their assets III
them. but also a premium for the business.
This buyer will buy out the entire 2
Fund House by paying for all the
AMC’s assets and plus some 5
settlement money for the business 6
and goodwill. 7
Another question that a lot of 9
investors should ask but no one does 10
is - What happened to UTI? UTI was a 11
government backed Mutual Fund 12
launched in the 50s.

73 Chapters
Apart from various interesting government matters). No one knew at I
schemes they had a flagship scheme what price the shares were bought II
called UTI 64 which paid for the and sold and whatever happened to III
retirement of lakhs of people and got the dividends.
lakhs of eligible girls married. In 2002 1
the fund house ran into a scam/ You can compare the scenario to 2
financial controversy and closed BSNL/MTNL and the other private
down. telecom companies. But all this soon 5
changed after the emergence of 6
What was wrong with UTI was Private Mutual funds in 1993. 7
precisely this - It belonged to the 8
government and was the first such For now not only are there rules, but 9
entity which had no rules to follow. they are also being so constantly 10
upgraded that only the investor is 11
NAVs for its schemes were never or winning. It has a short history of 21 12
rarely calculated and purchases of years to go by, but a history recorded,
securities were kept a secret (like all documented and transparent.

74 Chapters
Hybrid Funds: There are certain funds If at this early stage you invest in I
that carry the advantage of both Debt some fancy fund that you read about II
and Equity .These go by the names of in some newspaper (purportedly the III
hybrid or balanced funds. No.1 fund) it is highly probable that
you are investing during a bull run. 1
These can further be heavy in equity And in all likelihood your money will 2
portion or heavy in the debt portion. fall in value in a year or two and you
Accordingly they are classified as will swear-off mutual funds for life. 5
Debt-based balanced funds or Equity- 6
based balanced funds. 7
“There is no trouble in managing an 8
I always advise a beginner to start assortment of investments yourself. 9
with an equity-based balanced fund The one fund gives it all and reduces 10
till he sees his corpus heading in a 11
your overall problem of managing
definite direction and he gets 12
the investment.” 13
interested in the vast universe of
Mutual Funds.

75 Chapters
Photo credit: Viaceslav




Now if we were to enumerate the purchase of direct stock by I
technical and subtle differences in external influences like II
investing in the equity market through newspapers and news channels. III
DIRECT STOCKS and EQUITY MUTUAL However, if you invested through
FUNDS, they would be: monthly or weekly SIP/STP, that 1
choice and dilemma is taken away 2
• To invest in stocks you would need from you and a fixed amount is
a certain corpus which could be invested every week or month, 5
substantial if you wanted to buy in depending upon your 6
a blue chip company. Whereas you instructions. e.g. instead of 7
only need a minimum of Rs.5000 Rs.5000 per month you can reset 8
for the initial purchase to have the instructions to invest Rs.1250 9
your Folio No. generated, after per week which will further 10
that minimum purchase is Rs.500 spread the purchase covering four 11
only conditions of the market 12
• You would be tempted to defer • The prices of shares keep varying

77 Chapters
in a day. Psychologically this can I
be very overwhelming. You will II
always feel that you could have III
bought it cheaper and this may
affect the purchase next time. In 1
MFs you don’t have to worry, the 2
purchase is made at a price (or 3
NAV) which gets declared at the
end of the day. 6
So now that we are pretty 8
comfortable with terms like MFs, 9
Equity, Debt, AMC, and NAV etc. and 10
have generally understood the 11
concept we will go into a few tailor- 12
made situations to help you identify 13
which one you belong to.
Photo credit: Jose Jacob

78 Chapters
Photo credit: Muhammad Saiful Daud




First my favourite SEVEN RULES. instalments over a period of at I
These are the ground rules that if you least 2 months if not more. II
follow well, will help you not only to III
select the right fund in the right way, This is because the tool that we
but also fill up the form for maximum will be adopting in our investment 1
benefit in terms of logistics and process is of risk minimisation. 2
In the first place you have opted 5
DON’Ts for MF route instead of direct 6
stocks, effectively distributing 7
X Never invest all at one go: When I your available money in about 30- 8
make this statement, I am 40 stocks of different businesses. 9
referring to the Equity Funds. If Hence your risk is divided by that 10
you have about Rs.50000 to spare, factor. 11
do not get impatient and invest all 12
these funds at once. You will do Now you must remember that the
well to distribute it in at least TEN market is nobody’s friend

80 Chapters
and everyone’s enemy if not of that fund. So far they have not I
handled properly. invested anything and own II
nothing. So we will not entrust III
Hence, we do not know that the our hard earned money to
market is at its low or high - there novices. 1
is no indicator or sure shot 2
methodology, all theories fail the X Never invest in sector funds:
test of time. So all we can do is Sector funds are those that own 5
distribute our investment over a stocks of some specific sector or 6
few weeks by way of SIP or STP as theme. They are mainly Capital 7
I will explain later. Goods, Banking and Finance, 8
Power, Petroleum products, 9
X Never invest in an NFO: That is Pharmaceutical Companies and 10
correct. Though an NFO has each FMCG. Though these funds have 11
unit priced as Rs.10 (mostly), it is some good brands in their 12
not cheap because the AMC does portfolio, the issue lies elsewhere.
not have any assets or background Specific sectors do well as per

81 Chapters
the Indian or global situation and least 5 years’ history or existence. I
as per Government policies. Any Though the funds say that past II
change in the above scenarios performance is not an indicator of III
can adversely affect the future, you must have some idea
performance of this entire fund of the fund house. 1
and despite concentrated 2
investment into a lot of  Opt for GROWTH OPTION: There
companies the fund performance are three options when you intend 5
will fall. So at least for a few years to invest in any fund. Dividend Pay 6
until you start understanding the out, Dividend Reinvestment and 7
nuances of the financial market, Growth. In effect Dividend 8
you must stay away from sector Reinvestment is same as growth 9
funds. except that its NAV is lesser and 10
the entire amount after a dividend 11
DO’s declaration is considered as the 12
investment amount. You can safely
 Invest in OPEN ENDED go for Growth Option as you are
82 Chapters
here for a LONG Haul. I
While filling in the form, opt for
NRI status and with REPATRIABLE 1
option. Of course you will have to 2
mention your NRE account as the
Primary Default Account in the 5
form, but it won’t require any 6
proof beyond this. You will be 7
required to mention your 8
Company’s Overseas Office 9
address as your overseas address. 10
However, an Indian address will be 11
required for correspondence. You 12
may also invest as an NRI from
your NRO account but in that case
Photo credit: Vadym Bezkrovnyi
83 Chapters
the field Non-Repatriable will while you are at sea. I
have to be selected. While doing II
this, you are perfectly within the Since all facilities are not available III
law and are not violating any of on the internet transaction sites,
the rules. use the nomination field to 1
nominate your second parent or 2
 Keep a second Applicant, your child. Always keep only ONE
Nomination: It is better to appoint person as nominee for ONE type 5
your parent or spouse as the of fund or Folio No. 6
second applicant. Since they may 7
not be NRIs themselves, they will  CONTACT DETAILS: Mention your 8
be selected as the POA (Power of mobile number and an email 9
Attorney holders). You must apply address in the form. This is going 10
on Either or Survivor basis (EOS). to be very important even though 11
This will facilitate in carrying out it seems like a small detail. Try to 12
certain transactions by signing the mention the mobile number which
transaction slips or applications will remain in India and is not

84 Chapters
likely to change. Also if possible This avoids the hassle of getting I
create a separate email address the redemption proceeds by draft, II
and use it for all mutual fund depositing it in the bank and III
transactions and investments. As I waiting for it to clear. As you are
will elaborate further, like your well aware that transfer is almost 1
PAN number this email address immediate from one bank to 2
will enable you to map all your MF another via NEFT with a message
investments in future as your trail that records all transactions 5
number of funds will increase in SMS or email. 6
with growth in your family and 7
your financial situation. 8
MF form these days, the default 11
option of sending dividends and 12
redemptions (selling) is DCB – that
is credited directly to your bank.

85 Chapters
Photo credit: Ruari Mclachlan



9 LIFE PLAN Chapters

LIFE PLAN NO.1: THE STARTER As I said earlier in the book - No I
Age 18-21 company, no employer and certainly II
no government will help you achieve III
You have just started at sea. You are a this. This book will help you to learn
cadet on deck or in the engine the essentials of wealth-management 1
department. You have just started and planning just like the skillset 2
learning the ropes of your profession required to excel at your job.
and have a long way to go. You have 5
approximately 40 years of service left 6
whether you consider at sea or on 7
shore. 8
If you are reading this in the year 10
2015, you will require a corpus of at 11
least 9-10 crores after 40 years for 12
you to retire at 60 and live
Photo credit: Joshua Omobhude
87 Chapters
And once you start on this path, it is a of a beautiful tree some years later. I
journey of continuous learning. Not only will you learn the basics of II
saving but you will also get a kick that III
You are extremely excited by those comes after seeing one rupee grow to
$250-500 that you will get as your two without you having to do much. 1
stipend. You have your eyes on that 2
lovely smart phone that you must get A prudent and a wise step at this
for yourself since you felt guilty about stage will help you achieve a corpus 5
asking your parents for it. It is not as by the age of 45 that will grow faster 6
though your stipend will be able to than your salary after that. So get into 7
make a monumental difference to the habit of saving as I mention 8
your overall life planning. below. 9
Caution: This seemingly nominal It is possible that you have just been 11
amount of your stipend will behave selected and are about to embark on 12
exactly like that seed we sow before your first vessel.
the rains in order to reap the benefits

88 Chapters
This is your list of do’s and don’ts: Opt for internet Banking facility I
and ensure you have your USER ID II
• Don’t listen to your father’s friend and password ready before III
and sign that Life Insurance boarding the vessel. You can sign
proposal that he has convinced the cheque book and leave it with 1
your father to be perfect for you. It your parents 2
is only ideal for him
• Sign a form for HDFC Prudence 5
• Apply for a PAN Card. Don’t worry, fund or ICICI Prudential Dynamic 6
just possessing a PAN card will not fund and leave it with your 7
bring Income Tax department to parents. Fill in the form as advised 8
your door step. This will in fact earlier 9
help you at a lot of places 10
• Take a term plan: Even though you 11
• Open an NRE and an NRO account have no dependents at this stage, 12
in any bank based on your CDC life on board is full of risk. In case
issued before joining the vessel. something happens to

89 Chapters
you, you can cover your parents’ span of 60 years and you have I
future and their responsibilities minimum 30 lakh saved, before II
that they may have expected from even starting to work. III
you. You can obtain this cover, by
showing your stipend as salary. • Once you are on board and your 1
stipend starts coming into your 2
Take a cover of 50 lakh or hands enjoy the first two-three
whatever is the highest offered by months .Then ensure that it is sent 5
the insurance company and go for to your NRE account. 6
the maximum term of 75 Years of 7
age. Without doing anything you • Ask your parents to submit the 8
just saved yourselves at least 50K mutual fund form to the MF 9
of premium that you would have company office in your town. If 10
been forced to pay for all those there is difficulty ask them to go to 11
Money Back and Endowment the bank, now most banks are 12
insurances of Life Cover. Add up selling MFs and they only charge a
the premium for an entire life nominal fee of Rs.250 as

90 Chapters
expenses. Of course an ARN No. Having made your initial I
will be there on the form which investment, you will soon receive II
only means that the bank will get a statement of account by mail (if III
a commission for investment… you have opted for that option) or
which at this stage is not your by email. This will bear all your 1
concern. details: name, PAN NO., contact 2
details, scheme name and option
(which you have selected as 5
growth). It will also have an 6
important number called FOLIO 7
NO. This number is unique to this 8
Fund investment. 9
You can further make investment 11
in this AMC in any other scheme 12
by quoting this Folio Number.

Photo credit: Zarah Jean Paz

91 Chapters
• Now that your details including • It is my suggestion that you opt for I
your bank account number are simply Rs.5000 worth of monthly II
registered with the AMC, you can investment. You can do this either III
rest assured that you don’t need by way of routine purchase if net-
the bank or agents anymore. banking is enabled (and of course 1
internet access on board) or go for 2
• Simply go to AMC’s website (in this a SIP of Rs.5000 at your bank.
case HDFC or ICICI) and create 5
your User ID and Password. • There is a special purpose for 6
mentioning those two schemes 7
• After this you can enrol for SIP or that I will disclose later. If your 8
TP or invest lump sum when you parents are already into Mutual 9
have or if you have. Fund Investments, they may be in 10
a position to select any other fund 11
• What you have done here is you for you which is perfectly alright 12
have made a healthy financial and right thing to do.
habit of saving and investment.

92 Chapters
• After about a year of training on I
board before you appear for your II
exams for Second Mate or Fourth III
Engineer you would have saved
about 1.0 lakh in the bank and 1
about Rs.50000 in the MFs (that is 2
assuming without any
appreciation). 5
• This money while not substantial, 7
is certainly much more than not 8
saving at all. Of course depending 9
upon your luck and current 10
market situation it might have 11
grown but the important thing 12
here is that you have firmly built
your track.

93 Chapters
Age 22-25 II
You have just come on board after
clearing your Fourth Engineer’s or 1
Second Mates license. You have 2
joined as Third Officer or Fourth
Engineer. 5
Your salary is about $3000 depending 7
upon the company (and country) and 8
it is the first time that you will be 9
seeing this money. You do not have 10
any direct dependents or immediate 11
responsibilities. Maybe you have to 12
occasionally shoulder some of your
parents’ responsibilities towards
Photo credit: Jose Jacob
94 Chapters
weddings in the family or ageing  NRE and NRO bank Account? I
grandparents. Fair enough. II
 Term Plan? This you may not have III
Go to the previous Chapter THE taken so far so search online and
STARTER, and see how much of it you right at this age take an online 1
have completed already. If not, then term plan for about 50 lakhs to 1 2
just do it. crore for the maximum age limit
(75 years or thereby). It is going to5
The drill is the same for cost you about Rs.5000 per year. 6
everyone. Everyone needs those For a coverage of Rs.1 crore, I 7
mandatory STCW certificates, isn’t it? think that is cheap!! 8
The rules are the same here too. 9
 After reading this book you will be 10
Tick the following boxes if done. able to select the right Mutual 11
Fund for yourselves. Even then if 12
 Pan card? you have not started already I will
suggest the same for you what I

95 Chapters
have mentioned for the cadets in HDFC, IDFC, ICICI, Reliance etc. I
the Chapter called THE STARTER However you are going to put II
your money in a Debt fund III
 From the very first month make
sure maximum of your pay comes  DEBT CATEGORY: Opt for a Liquid 1
to your NRE account (This will be Fund with growth option and 2
called REMITTANCE) deposit about Rs.50,000 in it as
starting corpus. Once the Folio No. 5
If you have some responsibilities is issued you will be informed by 6
to shoulder with your parents you way of Account Statement (just 7
must leave some money in your like your Bank Statement) by 8
NRE account to take care of at email. It is time to move on to the 9
least 2 months’ expenditure from next step 10
the First Remittance itself 11
 Once your investment in First fund 12
 Mutual Fund: You must fill a form (let’s call it DF1) has been made ,
for any AMC like Axis MF, DSPBR, start your internet transaction as

96 Chapters
I mentioned above for THE month and enable the money you I
STARTER and set up a STP have put in DF1 to last for about 5 II
(Systematic Transfer Plan) from months III
your Liquid Fund DF1 to an Equity
Fund. Let the amount be only Rs.  The following month, you can start 1
2500 every week. Select about another Debt fund with different 2
100 weeks for duration AMC e.g. DSPBR, Axis etc. Once
the account statement is 5
• EXAMPLE: You put money in a delivered, set up your Internet 6
Debt Fund Called HDFC Cash transaction and go for another STP 7
Management Fund, Treasury from your DEBT FUND to an Equity 8
Retail, Growth option etc. Now Fund 9
you set up a STP of Rs. 2500 every 10
week from HDFC CMF to HDFC  In a similar way you should set up 11
Prudence Fund, Growth, Retail, at least 3 STPs with different 12
DIRECT option. This will only be an AMCs. After the 3rd month you
investment of Rs.10,000 per must again put part of the

97 Chapters
remittance into your FIRST Debt At this time when even the senior I
fund (which we called DF1). This officers may have read through the first II
way the corpus in your Debt fund two made-to-order plans a question III
might arise in their minds as to why STP
will keep getting augmented and
is suggested instead of the more popular 1
you will have further money to
SIP which is being advertised in the 2
carry on your STPs for a longer media. 3
As I said this book is being written by one of your own fraternity, who understands not 5
only the source of your income and the value of it but also your constraints. 6
In case of a SIP the money goes out from your bank account into the Equity Fund 7
directly. 8
This essentially means that you will be required to maintain a balance in your NRE 10
account keeping in mind your expenditure and SIPs. This will unnecessarily create 11
stress for you and also not isolate your needs which should be fulfilled from your NRE 12
account. 13

Secondly the rate of interest you get in a NRE account will be far less than what

98 Chapters
you will get from your Liquid Debt Fund.
Thirdly, The liquid Debt Funds have a very good liquidity and no penalties (called EXIT II
LOADS), hence it is safer and more efficient to put your EXTRA money in these rather III
than banks. In case you need money you may simply do it by redeeming via Internet
transaction or your parent (who is a joint holder in the fund) may sign a transaction 1
slip and submit it to the AMC office in your city. 2
The funds that you have redeemed will be transferred to your NRE account the very 4
NEXT day, without any delays or penalties. 5
Even if you withdraw your complete Debt Fund and the balance is zero, there is no 7
danger of any penalty by the AMC. If within 3 successive STP dates the transaction 8
fails due to ZERO BALANCE the STP will be stopped. The next time when your deposit 9
funds to your DEBT FUND again you can register the same STP process. Some AMCs 10
like ICICI simply suspends the STP process and once funds are deposited again the STP 11
starts automatically. 12
I have practically found that this method increases your return on Gross Income by
almost 8-10 % per annum, without creating any anxiety over emergency
99 Chapters
LIFE PLAN NO.3: PREPARING FOR You have put in about 2-3 years as an I
VOYAGE AT SEA officer at sea. II
Age 26-27 years. III
You are still not married, but you have
You are a 3rd Officer/Second Officer or locked your eyes on the intended 1
4th Engineer/3rd Engineer on board. beauty and aim to get hitched in the 2
near future.
You have booked an apartment for 6
yourself and are going to take a loan 7
for it. Agents have sold you 1 or 2 LIC 8
policies or a ULIP with an annual 9
premium of about 40k to 50K.You 10
have some cash stashed away in the 11
bank and don’t know what to do with 12

Photo credit: Vadym Bezkrovnyi

100 Chapters
You have already taken the health Alert: At the time of taking a I
insurance for yourself and the family - home loan you may be asked that II
if not, then do so now. it is compulsory to get your III
insurance done.
You have taken either a single Term 1
Plan of 1-2 crore or of 50 lakhs each- 2
This not compulsory and the bank 3
if not then do it ASAP while the is simply trying to cover itself from 4
premium is still low for your age. Go
unforeseen contingency in case 5
for the maximum term offered, like up 6
to the age of 75 or thereabouts. This something happens to you. In case
will help you lock the premium at you already have a term plan, you 8
today’s rates. can quote the no. to them and 9
they will not bother you. 10
You have started investing MFs due to 11
some good influence and maybe by 12
No need to take another
now have about 3 to 4 lakhs in the insurance. The bank already will
corpus. use your property as collateral.

101 Chapters
You own about 3 to 4 equity Now with your promotion and I
funds and are continuing your STPs in consequential increase in salary your II
these funds for the last 2 years or STPs should go up to about a total of III
thereabouts. 1.5 lakhs per month.
You have started investing MFs due to After your marriage within the next 2
some good influence and maybe by six months to 3 years your expenses
now have about 3 to 4 lakhs in the will rise .The outlay that you will need 5
corpus. You own about 3 to 4 equity to keep for domestic expenses will 6
funds and are continuing your STPs in need to go up. Whichever way the 7
these funds for the last 2 years or household expenses get taken care of, 8
thereabouts. you also need to factor in a 9
reasonable allowance for the spouse. 10
If this is not your profile, then please 11
make sure in terms of financial At this juncture one important change 12
journey you get onto this with the that you will need to make is to
help of the previous 2 plans. MODIFY YOUR HEALTH INSURANCE

102 Chapters
to include your spouse - if it was for a PLAN. Some term plans offer it as a I
single individual before. Now you will rider but I did not mention it earlier to II
have a floating policy of TWO ADULTS- keep it simple. The Critical Illness Plan III
congratulations on that. makes the pay out of the assured sum
at the time of diagnosis of the disease 1
It is important that you do this since (there is normally a list that covers 2
you will have to plan for a family them).
eventually and most of the Health 5
Plans do cover pregnancy related The biggest cut will be for the house 6
expenses. If not go ahead and get one that you take a loan for. So if you do 7
that suits you. not need the house now, don’t go for 8
it just for the sake of “investment”. It 9
This will be the most critical phase of will not be a great investment idea at 10
your life when the expenses will not this point of time. Moreover the loan 11
only start but actually spiral. that you will be sanctioned will be for 12
You may also hunt around for a a lesser amount, since your salary is

103 Chapters
At this time after taking care of all the 4. One Small /Micro Cap Fund I
necessary expenses, simply put your II
head down and invest in your mutual Investment in these funds should III
fund portfolio. essentially be made through STP
instead of SIP, to harness the true 1
At this point of time your MF portfolio power of your money lying idle in the 2
should look like this: savings account.
1. One or Two Large Cap Funds of 5- Care should be taken not to switch 6
7 years history and sustained funds too often if the performance 7
track record has fallen. Even in case of falling 8
performance, observe the fund for six 9
2. One or Two Mid and Small Cap months and then gradually either 10
Funds with similar qualities as the start withdrawing money or switching 11
Large Cap fund to another fund in the same Fund 12
house (AMC).
3. One Multi-Cap or Dynamic fund

104 Chapters
Do not be disturbed by the news that lying in inefficient avenues and I
you see in the Finance section of daily earning sub-inflation rates. e.g. 15% II
newspapers, neither should you be return on your entire corpus (say 10 III
elated with joy in case your fund is a lakhs) is better than 70% return on a
chart topper. Just keep a holistic view part corpus (say 1-2 lakhs) even 1
of the entire portfolio. Your goal is to though the net result is same. This is 2
get a respectable return on the because of the following reasons-
ENTIRE portfolio of your savings, debt 5
funds and equity funds (and stocks if A. In case of direct stocks you will 6
you have started investing). have to do an immediate profit 7
booking and then again deploy the 8
People make the mistake of just capital, which is a tough deal given 9
jumping when their stocks give them the volatile scenario of the markets. 10
100% return in a year. Little do they However, this is not so in the case of 11
imagine that they have only invested MF, since the fund manager is doing 12
a very small amount in that asset? all your work for you by buying and
The major chunk of the money is still selling at the right time. Your idle

105 Chapters
money in the equity funds (termed I
cash) is also earning a substantial II
return which you will never know III
because you are looking at the overall
return of the funds. 1
In MF investment the sum total return
of your debt fund and the linked 5
equity fund will not let you lose out 6
by the way of opportunity cost. Since 7
every night the return is being 8
generated. 9
So essentially at this stage you will do 11
well by extending your savings as 12
much as possible and delaying your
heavy expenses by two or three years.
Photo credit: Ram Rammy
106 Chapters
Age 29-35 years. II
We are familiar with the above term
as associated to leaving port and 1
starting the Sea Voyage. 2
You have cleared your Mates/ Second 5
Engineers exam. Some of you have 6
also cleared Masters and Chief 7
Engineers. You have been sailing in 8
rank for some time. Few smart and 9
lucky ones have even got command in 10
the respective Deck and Engine. 11
Salaries have suddenly jumped 2.5 to
4 times and the ship has just left for
Photo credit: Vadym Bezkrovnyi
107 Chapters
sea instead of just coasting or doing how little that premium is today. This I
river passages which are more fraught is called inflation and working as II
with shallow waters and dangers. negative compounding. III
If you did not pay heed to the above 3
plans due to some other misfortune, Your Medical/health insurance is also 1
it is never too late. You will have to being renewed every year and now 2
begin at the start by adhering to the 3 includes your children and your
basic plans, no matter your age. There parents. 5
are no shortcuts. 6
Since your financial standing is much 7
Some of you may even be thinking in better you have given up the standard 8
terms of leaving sea life for shore health insurance and opted for a 9
jobs. SUPER TOP UP PLAN of the deductible 10
of 3 to 5 lakhs, hence the premium is 11
You have a steady term plan going for much less. You have gone ahead and 12
you for the last 10-12 years. All you made a few NRE fixed deposits, even
need to do is just look back and see though I never told you to do so.

108 Chapters
Your MF investments are now close to I
1 crore (Rs. 10 million) since you have II
been investing for about 10-12 years III
now. Together with your salary and a
conservative estimate of 15% return 1
on MF, your net worth is really seeing 2
an incredible growth.
If you have not bought a home for 6
yourself you can do that now. Avail a 7
home loan with fixed rate of interest 8
if the rates are sub 9% and keep them 9
floating if they are above 9.5% until 10
they come down. 11
Please ensure that you make the
down payment for the property from

109 Chapters
FCNR/NRE account and keep the Both of which are required at this I
record safely with your property stage of life. II
papers. You might need this in future III
should you require to sell this It is also a good idea at this stage to
property and take the money abroad start one fund with your wife /spouse 1
in case of settling abroad. as the first holder into which some 2
investment from your salary or return
If you have already been servicing a from some of her savings can be 5
loan for last few years, you can start made. 6
pre-paying part of the principal from 7
your salary. This will help you reduce Change the nomination to include 8
your interest outgo. As per my advice your children (One child for one fund 9
while prepaying part of the mortgage only to keep things simple). So overall 10
(or loan as we call it in India) try not you are investing in about six equity 11
to reduce the duration, go for EMI funds by way of STP from Debt funds. 12
reduction. This will free up cash for One fund is on the NRE- Non
your consumption and investment. repatriable basis connected to your

110 Chapters
NRO account. One fund in your wife’s so attractive any more since ELSS MFs I
name (first holder and you as the can give you a much higher return. II
second holder). But now you are at a stage with a III
great deal of discretionary income
Even though the PPF account earns and must diversify your assets. Hence 1
less interest, it is recommended to open these PPFs and start depositing 2
start one in your wife’s name and as much as you can with a limit of 1.5 3
another in one of your children’s lakhs in each account. As per recent 5
name. revisions, this is the limit set by the 6
government. 7
For your child, you can act as the 8
guardian. Remember you cannot This avenue by way of my definition 9
open a PPF account as an NRI (as of will not be called investment, but 10
regulations in force now). simply saving. As opposed to the 11
plain old FD accounts, the returns on 12
PPF is a unique tax saving instrument this are quite handsome if you
which is tax free at all stages. It is not consider the tax benefits.

111 Chapters
LIFE PLAN NO.5 through 3. I
Age 32-45 years
Once again you are familiar with the 2
above terms. For my “non-shippy”
audience, it means that you are 5
sailing at sea in extremely good 6
conditions and the sea is assisting 7
your speed. In fact, you are moving 8
comfortably at much higher speed 9
than the power that you are 10
generating from your engine. 11
This is what your financial condition
should be if you have followed Plan 1
Photo credit: Anil Samotra
112 Chapters
You are about 32-45 years of age and he/she turns 18. I
have been sailing as Chief Engineer or II
Master for at least 5 years. Your You have a house of your own with III
children are grown up and you are loans fully paid up or marginally
probably worrying about their college remaining, say about 15-25% of the 1
education - more so if you are principal you had borrowed. 2
planning to send them for undergrad
to US or some other foreign land. You are contemplating buying another 5
piece of property for investment’s 6
About this time, your corpus should sake. I shall refrain from comment 7
be about 3 crores in the MFs alone here since it depends entirely upon 8
with substantial PPF account in your you. I would just say that it is not a 9
wife’s name and also possibly your necessity. If you require you can use 10
child’s name (under your guidance). the DEBT portion of your MFs or FDs 11
The child’s account in fact may be to partly finance your purchase. 12
about to mature or will be fully
transferred to his/her name as soon

113 Chapters
Few of you may be contemplating Once you have made the switch and I
taking a shore job, if you have not feel that money is still needed for II
already taken up. Some maybe paying your fees or setting up the III
inclined to go for higher studies. household in a foreign land, you can
start slowly redeeming your Equity 1
For this particular segment – the one MFs. 2
intending to take up a shore job or
higher studies, I will play the devil’s A little extra amount than what is 5
advocate and advise contrary to the required. Since your holding is on a 6
popular counsel doled out by financial NRI-Repatriable basis, there will be 7
advisors. Do not redeem your Equity absolutely no problem in getting this 8
holdings at one go. As a debt or fixed money out of India from your NRE 9
income group you have some FDs, account into which your MF 10
PPFs which should pull you through redemptions will flow back. 11
for the next 2-3 years when you give 12
up sea life in favour of a career In fact, the Forex that you will
ashore. buyback from the bank will be

114 Chapters
cheaper than that of an Indian citizen amount after paying the Capital I
with an ordinary account. Since you Gains. II
will not be required to pay the service III
charge and VAT on it. This Should you not be doing any of the
information, again is valid at the time above, please continue investing into 1
of writing this book. the very MFs that you have been 2
fostering so diligently. No diversion,
At this time if you feel the need to sell no distractions, no change of plans. It 5
your house in India and take the will be somewhat of a “boring” 6
proceeds overseas, go ahead. The fact journey as you see your wealth grow 7
that the down payment was made exponentially now. Boring because 8
from your FCNR/NRE account and even after 10-15 years of investing 9
your repayment of loans was made you are not actually doing much in 10
from FCNR/NRE account will allow terms of logistics for the fund. 11
you to put back the proceeds from 12
the sale of the property into your NRE A little change of asset allocation can
account and repatriate the entire be considered. Buying into a

115 Chapters
commercial /residential property. NPS- New Pension Plan I
Buying some Blue chip stocks when II
the market is down. Buying some Despite my search for pension plans III
Gold ETFs to prepare a cushion for in my career I have not mentioned the
your portfolio. available pension plans anywhere in 1
this book so far. 2
A six monthly review of your MF
portfolio is a must to check that all There is presently one pension plan 5
funds are performing at their by LIC and one by Franklin Templeton 6
optimum. and they give assured returns too. 7
The best bet is NPS or New Pension 8
They need not be chart toppers. But a Plan mandated by the government for 9
1-3% drop in performance over 6-12 everyone in the country. In fact for all 10
months period should not make you Central Government employees it is 11
queasy. As I have mentioned, all good mandatory on contributory basis. 12
funds will generate similar returns However, I still think these pension
over the long haul, give or take 2-3%. plans are lacking in many aspects.

116 Chapters
Here’s why: group individuals who have I
sufficient surplus as back up II
The two plans by LIC and FT have a money and should be contributing III
very low assured return (about 5-7%) maximum possible to PURE Equity
and secondly they attract tax during funds. It is that time that will 1
the pay-out. At that rate simply calling actually lay the basis of 2
them pension has no meaning. exponential growth in times to
come. With the Debt crisis of 5
The NPS is by far the best and 2013 how sure are we that the 6
cheapest in terms of management 50% allocation to Debt will not at 7
expenses. However this has following some time bring the growth of the 8
shortcomings as of date (of writing corpus to negative. 9
the book): 10
2. At the age of 60, up to 60% of the 11
1. The maximum allocation to corpus will be given to you for 12
equity is 50%. This makes it highly use. This will again be taxable at
restrictive for the High Income the rates applicable at that time.

117 Chapters
3. With the remaining 40% you will 5. You do not control your actual I
be required to buy an ANNUITY pension amount and on the II
(means a pension plan ) from contrary have to plan your III
some approved companies which lifestyle in keeping with the
will actually start paying you a pension amount. 1
monthly salary which will again 2
be taxable. 6. After you have started your
subscription in the NPS you may 5
4. So in effect you have paid tax on not be able to back-track unless it 6
an amount that you may not is a TIER II account (another 7
need, only to start worrying detail). The pension fund 8
about where to invest it - at the performance cannot be closely 9
age of 60. You are being asked by monitored and even if it becomes 10
the government to take an possible in future there is 11
important financial decision of precious little you can do about 12
your life which better hold good it. You are allowed to switch the
for next 25 years at least. corpus to another Managing

118 Chapters
company about three times, but as of I
now the performances of all of them II
leave a lot to be desired and are close “My idea of pension is to have a III
to each other. simple, hassle free, tax free payout
during my non-working years. The 1
amount of payout should be as per my 2
requirement and not as per the
formula determined by the Pension 5
Company. 6
Plus why am I required to pay tax on 8
an amount that I do not even need - 9
that is the excess pension if I am 10
fortunate enough to receive out of 11
these plans.” 12

119 Chapters
Now consider Equity Mutual Funds: stocks in each of your funds. I
You have the flexibility of selecting II
• After 365 days of investment of a the amount of equity at each life III
particular transaction – all the stage starting at 100% equity at
capital gains on it become 100% 22 to 50% by the time you hang 1
TAX FREE. your sailing shoes. 2
• You can check the performance of • In times of great need, i.e. 5
the fund every day, week, month children’s education, buying 6
and year. If you are not satisfied by homes, cars, marriages etc. all you 7
the performance or the service of need to decide is which kind of 8
a particular fund – you can switch fund you will be withdrawing from. 9
to another fund or you can even Then simply withdraw as per your 10
change the AMC. requirement and leave the rest 11
there. 12
• You are aware that at the end of
every month about the portfolio of • As you embark on your retirement

120 Chapters
all you need to do is withdraw are heavily regulated by SEBI. The I
from the least performing fund- only two things that you need to II
amount equal to your weekly, succeed in attaining financial III
fortnightly or monthly needs. freedom are - A: Selection of
Good Funds, B. Discipline to stick 1
There need not be any extra to your convictions throughout 2
money in the bank, because all your life.
that is invested in the MFs is still 5
growing night and day. More “If you ask me, over time, I am a
importantly, it is ALL TAX FREE to believer in the Indian financial
you (at least at this time). saving story getting stronger; a lot 8
more savers are moving money 9
• Your MF investment is not only away from gold and real estate into 10
easy, convenient, cashable, banks, mutual funds, insurance and 11
flexible, and transparent but also equities.” - Uday Kotak: Managing 12
Director of Kotak Mahindra Bank 13
safe and the least risky of all the
other assets. In India at least they

121 Chapters
Age: 50 Years + III

Your children are either in college, 1

about to pass out or for some of them 2
about to join college also.
This age and stage can be a bit 6
stressing, you are senior and drawing 7
towards your retirement. The thought 8
itself is quite intimidating. 9
Though you have a substantial corpus, 11
you are still doubtful if it will be 12
sufficient since the daughter is still to
be married, maybe children are still
Photo credit: Mohamed Alkamoushi
122 Chapters
around college. The idea of sitting at Whatever you do, don’t think of I
home after a few years is frightening. alternatives to start a business or II
mess with your corpus. If you haven’t III
At this point before I proceed with the been able to do anything in the better
financial part of things, I want to part of life, now is not the time to do 1
mention something. it. 2
On a lighter note, we have already
As soon as you have read this and if heard the Americans say – “You 5
you have not done earlier. Start should do business with OPM (Other 6
preparing for social conjugation after people’s money)” 7
retirement. Expand your old hobbies, 8
take up new ones, and make new Your assets are well diversified in MFs, 9
friends. some direct stocks, Gold ETFs, an 10
extra house or two, a commercial 11
Take up a job if you have to – just to place or an agricultural plot. You have 12
keep in touch with the people. fulfilled most of your desires, but a
Socialise if the need be. few still remain. A world

123 Chapters
trip, maybe a bigger car (even if you family member. It may have proved its I
don’t need it. It can be anything since worth. Depending upon the existing II
there is no limit now.) cost of hospitalisation you can III
enhance the top up limit (say from
Your term plan will hold well as it 10.0 lakhs to 15.0 lakhs if the year 1
requires you to pay such little when you are reading is 2035), it will 2
premium, that probably your dinner not cost you much extra.
with family in a 5-star hotel costs 5
much more if you include the tip to For all your children who have 6
the valet and waiter. reached adulthood you will need to 7
go for independent health plan which 8
Your health plan which you had you should do promptly. 9
converted to super top-up is also 10
running without any hitches. Possibly Once either of them starts earning or 11
you might have dipped into the cash- is on a stipend during internship - you 12
free feature during a medical can book his TERM PLAN too with
emergency and hospitalisation of a your wife or yourselves as the

124 Chapters
nominee, just the way you did for your MFs on a periodical basis - say I
yourself 25-28 years ago. You are just weekly or fortnightly. II
passing the baton. You may pay the III
premium for him/her until they start
on a proper salary. 1
Before you actually quit active sea
service, you can test your system, 5
which I am sure you must have 6
already done by now. 7
CHECK THE SYSTEM: Just like we do 9
our drills on board. Do not use your 10
salary for anything. Just let it be in 11
FCNR or NRE account for the period of 12
your stay on board. Now ask your wife
to withdraw money from ONE of
Photo credit: Sohit shukla
125 Chapters
E.g. she expects that in January from expected - so by 12-13th let her I
1st to 15th she will need 1 lakh. So redeem some more from the same II
considering the holidays in the year fund. Again, this money should be in III
end and allowing 3 days of your bank by 15th.
transaction let her redeem 1.25 lakhs 1
from the least performing Equity 2
See for yourselves how much time it “In fact I urge all investors to carry 6
takes for the money to come to bank. out this exercise after about 1 year of 7
Check again that the amount you starting the investment, just to 8
redeemed was correct and no TDS develop faith and confidence in the 9
was made by the AMC since all these system that you are trusting your life 10
are in the tax-free zone now. savings to.” 11
By 12-13th of Jan. she feels that the
expenses were more than what she

126 Chapters
LIFE PLAN NO.7: ALL FAST/ FINISHED twice a year, yet there is nothing to I
WITH ENGINE worry, no fear of completing 185 days. II
Retirement. Age – 60 Years + III

This can be a very intimidating time 1

and also overwhelming. If you have a 2
positive mind and have planned well
this will be the best time. All your 5
children are near settled. There is 6
absolutely nothing to worry on earth. 7
Good health earned during sailing is 9
standing you in good stead. Golf, walk, 10
social service, reading, gardening, 11
farming and some odd jobs for home - 12
it is nicely cut out for you. You are
taking foreign travel

127 Chapters
If you had played by the script as This will especially be useful as now I
discussed in plans 1 to 5- you are you won’t incur any TDS when you II
sitting on a very neat pile of money, make withdrawals/ redemptions. III
all white, legal and hopefully still tax- If you read the finance columns in
free if the Government has any sense. papers and magazines, you might 1
Now the question that you will be left have read that about 3 years before 2
with is how to sell your corpus. your requirement or reaching the
goal, you must start shifting to Debt. 5
First thing that you will need to do is 6
change your status from NRI to It is not a strategy that I recommend. 7
resident in the MFs. This is rather easy Since you have substantial outlay in 8
since you would have converted your FDs, PPF, Gold and Real estate - all 9
NRE bank account to a local savings that accounts for non-equity 10
one. So simply take a letter of change investments. On the flip-side if you 11
from the bank manager and apply to are at the age of 58, going by present 12
ALL the MF companies for a change of life expectancy, you and your wife
holding status. should have a good 27 years of

128 Chapters
peaceful life ahead. a return of -10%, if you take the I
inflation into account. You may not II
The corpus that you have built has register this as your eyes will be III
been a painstaking process of almost focussed on the maturity amount.
35 years. With an unexpected rate of However, by the time your FD has 1
inflation and fanciful taxes by the matured you would be a lot poorer. 2
government you can’t let it putrefy. This is the twisted mathematics that
makes a lot of unsuspecting investors 5
Let us take an example of 1 crore in suffer. 6
bank FD at the rate of 9% (which is 7
unlikely to be sustained). Imagine WITHDRAWAL STRATEGY: So my 8
getting an interest of 9% against suggestion is that by way of parallel 9
inflation of 12% and paying income investments in Debt Funds, Bank FDs, 10
tax on the interest earned. At the Post Office MIS in Wife and Children’s 11
highest end of the tax slab you are names you can actually build quite a 12
theoretically getting a return of corpus .This corpus should suffice you
around 7.6% and in effect, practically in your daily expenditures if required.

129 Chapters
Still as a matter of asset allocation I
you hold these FIXED return assets II
and there is no need to sell your III
equity funds to open Bank FDs at this
stage. 1
Also while filing your ITR, declare the
interest earned on all these 5
instruments in the name of the first 6
holder (which means you will need to 7
file returns for your wife and the child 8
who has turned MAJOR annually). 9
This will prevent you from paying a 11
tax on the entire income earned when 12
the FD has matured. Another strategy
would be to keep small deposits of
2.5-5.0 lakhs each instead of one big
130 Chapters
deposit. In this way you will need to falling market. This strategy will never I
liquidate only one deposit instead of let your corpus fall below a certain II
breaking a bigger one and losing threshold level, as per my calculation III
interest on the entire amount. of even a modest amount of 12% tax
free return. 1
Whatever is your expected 2
expenditure for the month redeem
double of that amount from ANY of 5
the equity funds and transfer it to “ Some investors make is to invest the
money in the name of their parents, 6
your bank account. 7
as many banks offer between 0.25%
This strategy will take care of your to 0.50% extra interest to senior 9
Equity funds in case of a rising citizens. While earning extra return is 10
market, as the remaining fund will always a good idea, shifting the 11
continue to grow. Plus the additional ownership of the money could 12
amount that you have withdrawn will complicate things at a later date.” 13
give you a breather in case of a

131 Chapters



There is a class of people who have taking up shore jobs could not really I
bid adieu to the sea and taken up form a substantial savings base. II
shore jobs related to sea. Some of III
these are directly connected to the
sea life by the virtue of becoming 1
superintendents and others are 2
connected indirectly by virtue of
taking up teaching jobs etc. 5
I am definitely not considering those 7
who took up different careers on 8
shore based industries; they are very 9
well off and definitely do not need 10
this book at all. 11
My concern is only to those seniors
who had changed careers and despite

1 Chapters
Some organisations may be offering You can ignore the Chapter Heads I
retirement benefits in form of saying life Plan and simply follow each II
Provident funds, Gratuity etc. If they chapter by the age group that you III
have taken advantage of these, they belong to. Since each individual need
will be better off. If they did not have and goal is different and so is the 1
these facilities, their financial income, there might be some 2
condition may not be very customisation required in terms of
comfortable as they draw close to number of funds or type of funds, but 5
their retiring age. that will not be much. 6
Though this book is intended for You can always send me a mail or a 8
sailing staff, I do not intend to leave query to valueresearchonline.com to 9
the shore personnel in lurch. They can help you with fund selection. 10
read and apply the principles of 11
investing to make a portfolio for 12

134 Chapters
Photo credit: Pascal Lassus




Yes, this is the most important step in To select anything, we need to have a I
the entire process, as this forms the choice. In the field of financial II
backbone of the whole system. investment and wealth management, III
Returns from the best to worst fund this choice should be based on
over a period of 10 years despite mathematical/statistical figures rather 1
being 2-3% might mean the world of than just the name. 2
difference when you consider
compounding. Hence we need a database which can 5
give us the choice. There are a lot of 6
sites on the net that provide you with 7
information for free, but there is only 8
one which has been the pioneer and 9
virtually acts as the custodian of 10
information. It will be your one stop 11
shop for all information on Mutual 12

136 Chapters
INTRODUCING as you normally do. Takes about I
by DHIRENDRA KUMAR the editor of III
Mutual Fund Insight, 2. When you go towards the lower
valueresearchonline.com can be called end of the page, you will come 1
the custodian of modern Indian 2
across a classification of all funds
mutual fund industry. indicating return for 1 year. It will
look something like this. 5
He has slowly and painstakingly not 6
only compiled data on each and every https://www.valueresearchonlin 7
Mutual Fund in India but also e.com/h2_cat_Year.asp 8
prepared a system of quantitative and 9
qualitative evaluation scrutinising 3. Now if you will click on any of the 10
each MF closely. rows in Green (indicating Equity 11
Funds) Say Large Cap, or Large 12
Upon visiting this site first: and Medium Cap it will expand
1. Create your login and password

137 Chapters
the complete list of all the mutual Your job is to critically evaluate I
funds of that category. On the funds which have been in II
right hand side of the list you will existence for more than 5 years. III
be able to see the fund quality in Check which of them have
terms of star ratings, 1 year sustained their performance for 1
performance and the more than 5 years and have not 2
management fee in %. shown too much fluctuation over
various periods. You will not be 5
On top of the list will be various left with too many funds – you 6
filters including performance. If can shortlist about 2-3 from the 7
you will select this, it will give you list. 8
the historical performance of all 9
funds in that category, starting 5. Now when you click the name of 10
from 1 week, 1 month, 3months, 6 any one of the shortlisted funds it 11
months etc. to 10 years and since will open a pdf file in another 12
the fund’s inception. window- which is called FUND
CARD. It will be a 7 pager,

138 Chapters
detailed information about that 30-40 stocks at the very least, I
fund. From here you can get a lot without actually going into the II
of information regarding its lump nitty-gritty of all those stocks. III
sum vs. SIP investment
performance etc. You will be able 1
to make your analysis here. 2
For the first fund you need not 5
carry out this analysis (since I will 6
mention some funds which are 7
good for beginners), but as your 8
investment, your corpus and your 9
interest grows- you will find this 10
exercise easy and enjoyable. 11
Remember you are not only 12
analysing a fund but the whole
portfolio of the fund consisting of

139 Chapters
Photo credit: Antonio dragoslavic




There are two ways of going about auto transfer all mails coming I
keeping a track of your investments from your MF AMCs. You need not II
and none of it involves any extensive retain your SMS for the sake of III
paperwork, passbook or accounts etc. privacy and secrecy which (I feel)
Your Bank Statement of Account must be maintained with financial 1
together with the one below are information 2
sufficient to collate information.
“SMS and Email alerts have becomes 4
an important communications 5
Transaction Alert: Every time any 6
purchase, SIP, STP or Redemption is medium in the present market. This
made in any scheme you will get an functionality is of increasing interest 8
immediate alert on your SMS and to the financial services industry 9
registered email. Normally this because it enables customers to use 10
happens, early morning the day after their mobile phones or PC to interact 11
the transaction. You will do well by with their banks or other financial 12
making a separate folder in your email services institutions from any location 13
client named MUTUAL FUNDS and at any time.”

141 Chapters
Monthly CAS: It is delivered by email paperwork and accounting they hire I
(or physical mail if you have opted for what are known as (Register and II
it) if you have made any transaction in Transfer Agents). In India they are III
any fund .This is generated by a CAMS, KARVY, FTIML and SBIML. The
separate company and will cover all last two keep a track of their own 1
fund houses for the same FIRST funds (i.e Franklin Templeton and SBI 2
Applicant. i.e. if you have you, your Mutual Funds). CAMS is the largest
wife, both parents and a child as RTA and accounts for covering most of 5
different investors in schemes and the fund houses. Karvy takes care of 6
they are FIRST holders in their own Reliance etc. 7
schemes, you will receive FIVE 8
separate statements if you have made However you need not concern 9
any transactions in these accounts yourselves with the brass tacks. 10
during the month. Whenever you wish to get a CAS 11
(Consolidated Account Statement) of 12
RTAs: The Mutual funds are a lean ALL your funds whichever RTA they
outfit and for keeping a track of their are with, all you need is the SAME

142 Chapters
email ID that you had registered with funds with the above four RTAs will be I
the AMC at the time of filling up the delivered to your email. II
form III
Visit camsonline.com>>> Investor CAUTION: There is a small indiscretion
Services>>>CAS-CAMS, KARVY, that I will suggest. You are going to be1
FT.SBFS. one of the few HNI investors in the 2
country. It is not advisable that you
Select the type of account statement receive your statement accounts by 5
you want (Detailed or summary). Type post or snail mail for the fear of it 6
in your registered email ID and any falling into wrong hands. 7
password. PAN is not required as you 8
may be having different persons as the It is advisable to maintain 9
first holder and the PAN of the first communications strictly on email only, 10
Applicant is captured for generating for your MF, other investments and 11
the CAS. also your bank statements. It is not 12
necessary to retain any physical
Within an hour a statement of all your records as

143 Chapters
everything will be on email for you to My constant quest for a viable, I
retrieve when you need. Creating lucrative yet easy system to II
separate folders and rule for plan my finances and aim for financial III
automatic forwarding on the email freedom has led me to this wonderful
client itself for this purpose should world. 1
suffice. 2
I thank my friend in Chandigarh at
I have taken enormous pains to write whose home I first saw a book on 5
this book. Penning down the summary savings almost 30 years back and it 6
of my 28 years of learning in 60 odd attracted my attention. I retained the 7
pages is not easy. That too in the author, whom I call the grand old man 8
subject matter as vast, as dynamic and of Indian investing, as my financial 9
ever changing as finance which is advisor for almost 5-6 years (believe 10
largely based on the socio-economic me I was paying through my nose). 11
conditions of not only the country but 12
also the world. That experience instilled in me the
feeling and discipline of looking at

144 Chapters
money as a reward for something that There is so much more to be written I
you were doing by focusing all your which I will supplement on my own II
energies and not simply paper-work. blog soon. III

It was my focus that I should enhance 1

my wealth so much that it outgrows 2
my own needs and I can use it for the
benefit of the less-privileged. 5
However this will start a 7
communication between you, the 8
reader, and myself and along the line 9
we will keep developing and 10
improving our strategies as the 11
government keeps changing its rules. 12

145 Chapters
Photo credit: Stevo Devotion




What is Financial Freedom, a new tomorrow and go to office at 9 or to I
buzzword that we get to hear from all the ship. A sizeable number of us II
these financial experts? never chose our sea career, it was III
given to us or simply came our way.
The words “Financial Freedom” have 1
perplexed me for over two decades. 2
Finally, as I was getting near my own
goals it hit me. Yes it had to be this. 5
The freedom to choose your own life, 6
your own level of expenses. The 7
freedom to choose your own time, 8
when to call quits and what people 9
call retirement. 10
It is indeed a matter of great 12
exhilaration, when one can really say
to oneself, I do not have to get up

147 Chapters
There were few amongst us who did with utmost seriousness. I
diversified right after college and re- II
qualified these skills in alternate fields I always felt that freedom is available III
and professions. There were few who to those who really enjoy while going
left after few years of sailing and then about their jobs. In that sense, few of 1
took up jobs on shore. us do enjoy this field. Still not as 2
creatively as a writer, an artist or a
This by itself was not a choice to singer would enjoy. I have always 5
many, but simply an escape from a envied the great poets and singers like 6
career that they never liked in the first Jagjit Singh. There was a sense of 7
place. satiated completeness on his face 8
when he sang. 9
Of course quite a few liked it as well 10
and went to great heights First he went about creating his space 11
in related or non-related fields. in the world how he liked it and then 12
However to cut to the chase, it was with gay abandon sang and people
never freedom. It was work that we paid to listen what he preferred.

148 Chapters
That is in my opinion a complete Most of this world barely makes its I
freedom from the worldly naivety and ends meet. Expenses are postponed, II
smallness of things. opportunities are missed, and plans III
are shelved solely because you do not
Somewhere deep down in this what have the money. WHY? Because 1
he achieved was a sense of financial someone else is deciding what you 2
freedom. To do what he wanted with will earn? Mind you this may not be
his time, his schedule, his work. In fact due to lack of qualifications, but 5
he decided what his work would be simply owing to the circumstances of 6
apart from singing. He used his money where you end up working. 7
beyond his own requirements. 8
A large part of what people earn is 9
That in my opinion is the meaning of simply spent in supporting the system 10
Financial Freedom: USING YOUR that they earn from; like the 11
MONEY BEYOND YOUR OWN transport, food, equipment like 12
REQUIRMENTS. laptops, tools etc.

149 Chapters
For a female teacher earning Rs.7- are spread far and apart they don’t I
10,000 a large part may go towards synergise towards any concentrated II
keeping her presentable and goal. This problem is seen increasing III
transport. Where in all this is lies an manifolds now as new forms of
opportunity to save for a better future innovative yet opaque financial 1
to enhance the horizons? products are hitting the market. 2
Same is the story from the lowest paid When one cuts through the clutter 5
labourer to even the Class I officers of and follows an aim he lands with a 6
the society. The higher the level of the surplus that grows exponentially. At a 7
earner, the higher is the level of certain time with proper effort and 8
expenses. At the end there is nothing discipline one may even reach a stage 9
much to use for betterment. where one’s annual return in a 10
compounded way maybe higher than 11
A prudent person may save one’s salary. 12
something randomly in the bank, PPF,
Post Office schemes but since all these This is my own concept of Financial

150 Chapters
Freedom where your money itself is With time the return that this I
earning money and the net amount Compounding formula will generate II
again earns more money. What will be mind boggling and is the single III
Einstein famously called the eighth most factor that will ensure your
wonder of the world, in our lowly financial freedom. 1
language it is called COMPOUNDING. 2
The freedom when you will decide
In simple terms after legally earning when you will work, how you will 5
the money you can invest it in a way work and what work you will do. 6
that Post-Inflation and Post Tax it 7
generates some income. Then it is 8
called a positive return. 9
When this positive return combines 11
with the investment of next year and 12
gives an even higher return it is called

151 Chapters

Q I am only a cadet. Don’t you think it is too early for me to start investing? I
hardly earn about $400.

This is a very frequent question that I was asked on board and also in my emails.
As a cadet one has about 2-3 years of on board training. Though what you get
cannot be called a salary, it is only a stipend.

If you can manage to start investing just 25% or even $80 of your stipend every
month; there will be 2 advantages.

First, you will get into the habit of saving and see your money grow, doing it while
you do not have any responsibilities of a family.

Secondly, by the time you come down for your first exams your money would
have grown to some extent. It may not be enough for you to pay for your exam
expenses. But it will be substantial.
152 Chapters
However much I try to persuade you, unless you take that first step you will not
educate yourself. It will be best to do that as early in life as possible.

Q The market is very low now, is it the right time to start investing now?

Absolutely yes! The market is not a fixed entity, what you see is only an index of
few funds (30 in the case of Sensex and 50 in the case of Nifty). What you should
see is the whole country which will grow bit by bit each day.

So if you do not start today on your journey of continuous monthly investment

(however small be the sum that you invest), you will miss out on the growth which
will surface when the market moves up from the low value. So start as soon as
yesterday if you can.

Q Market is high now. Is this the right time to invest in equities?

The easier question to answer would be, WHEN is the right time to invest in
To that I would have answered “Today before 1500 hrs.”
With you I have to take a little more time and effort. Why is it that you want to
invest in equities?

Is it because everyone in the office trains and TV is talking about it?

They always talk about onions when they sell for Rs.100 per kg - who gives a
damn about it when it sells for Rs.15 a kg. So what’s new?

Is it because you have read somewhere that equities will give a good return in
times to come?

Frankly they have always returned handsomely provided you buy at the right time
and also in the right business. Have you suddenly realised that equities should
form an important part of your savings allocation. That is a different ballgame.
Now you are talking business. Because equities should be invested in, out of
every rupee that you save; only trick is to determine HOW MUCH.

Q Why it is important to invest in EQUITIES?

For the uninitiated let me first explain what is equity?

Yes, I think you know that it means SHARES or STOCKS; but let me explain this in
detail. If you are invited to be a part of some business venture by your friend –
you are a partner.

At any point in time if you decide to sell some of your part of the business to x
number of people- they will become shareholders in the company and you and
your friend will be called promoters hence on because you own the majority stake
of the business. Since you may be also having the technical knowhow of running
that particular business, so you will also be the operational Staff as well
(CEO,CMD etc.) - but that part is not our concern at the moment.

The percentage of the business sold to each of the shareholder is not complete
until each of them is clearly told how much of the total business each one of them
owns. This is best doing by breaking the complete business into small

parts of Rs.10 each. So it is easy to keep a track of how much each one holds.
However, since you may have already run the business for some time and brought
it to profitable situation - you might want that the part of the business that you
sell to the above people be sold at a premium (or higher) than Rs.10.

So in short your Rs.10 is the face value of the share and the premium that you sell
it for (together with Rs.10 face value) is the CMP or Current Market Price.
So the technical term for all shareholding based business is called EQUITY and the
entire business dealing and linked with it is called CAPITAL market.

Now suppose your business starts doing well because of your synergy and
collective efforts with your friend. If someone had bought share at CMP of say
Rs.100 (Rs.10 + Rs.90) because the company will expand its business to earn more
money and make profit this CMP will keep increasing.

There may be small fluctuations in your business due to someone sneezing in US

or getting allergy in China or the Government bringing in policies which

could hurt you or the foreign currency fluctuations. On the whole if you have
been running your business sincerely and professionally it is bound to expand and
so is the CMP.

Hence, if an investor who has already bought your shares wants to profit from
your business, he must not only retain the shares of your company, but also buy
some more when the price is going down due to external factors.
Only condition is that he must understand your business and have faith in it.
Now reverse the situation.

You are buying the share or part of the business, should not you be doing the
same thing. Should you not be first understanding the business thoroughly and
also know about the promoters before buying into their business. Once you have
done so, should you not be keeping the shares indefinitely till you require the


So far in this book I have endeavored to unravel for you the nitty-gritty of personal
finance which should pave the way for your life planning as such.

I have used easily understood terms and then laid out LIFE PLANS for you to
follow. Once you become savvy and knowledgeable, you will be able to further
fine tune the plans with newer products that are introduced. However I must
caution you that while looking at any new product/plan or scheme; understand it
completely by discussing with reliable people. Make sure you stand to gain more
than the person selling it to you.

Once you have set out on your path comfortably, simply follow it in a disciplined

Finally , read about finance in different magazines or websites. Make it your or

your spouse’s habit to read about any changes in the financial world, tax laws or

any new product coming in the market.

You need not be an expert , but if you can as much as just become aware of these
things- half the battle is won. After that you can ask about it on any Finance
website or send me an email for explanation.

One last request to the reader of this book is to spread the knowledge. Find time
on board to discuss various topics of Future planning. By doing this you will
understand the concepts better and also help hundreds of your colleagues the
way I have.

Remember that all of us at sea are fighting the natural elements and also
manmade dangers to earn our honest money. By spreading the knowledge and
sharing your plans you will be doing an immense service to the fraternity.

God Bless All!

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