This is going to be a fairly odd and short post. I am going to discuss a topic which is not a fun topic, but nonetheless important.
Are your papers in order?
God forbid, if something were to happen to you tomorrow – does your family know the financial situation and has access to all the documentation?
I have heard of a lot of stories and personally encountered some, where the head of the family died and the heirs realized that the paperwork was a mess. I cannot tell you how painful it is to sort such matters.
So, I would suggest each one on us should atleast do the following
· Make a will
· Please add nominee in all your accounts – bank accounts, demats, FD etc
· Have a term insurance which pays in the unfortunate event of your death
· List all your accounts details on a piece of paper, make two copies with one in possession of a close family member and the other one in a locker
· Consolidate your provident fund with your current company – I repeat, please do this now! Getting provident fund issues sorted is a nightmare especially if they are old issues.
· File all the paperwork properly and update it atleast once a year.
I am myself partly guilty on not following all of the above. However I am continuously trying to ensure that my paperwork is in order and plan to clean it up further in the next 1-2 years.
You may be the next warren buffett or Rakesh jhunjhunwala or whatever you are dreaming of, but if your paper work is a mess, your family is going to suffer. The last thing you want is for your family to suffer due to the paperwork in addition to the emotional problems.
10 comments:
Hi,
This is the main reason why I don't advise (big word) Indians to subscribe Life Insurance. Most of the people dont know how to claim Insurance in case of death. (Life Insurance is great business in India because most of the policies are unclaimed).
Surprisingly most people claim Medical Insurance properly. (In reverse Medical Insurance companies are bleeding to death)
Vishnu
Hi Rohit,
Nice post. One thing I must appreciate is you are well organised and motivate us also to become one.
Keep writing such issues too
Avadhut
Hi Rohit,
This becomes extremely important when the asset size gets large.
I have been thinking of making a will for a while now, will mark it in my calendar to do list in next few months.
All are very important points, most of us who are in their 30s never think of this. Nobody can be sure of Death.. we should definitely document at least what you have listed.
Thanks again..Gotta go..let me start with high level list first.
Vic
Hi vishnu
That's an interesting statistic, was not aware of it
The other issue is men in India don't discuss finances with their wives and that leads to all kinds of complications. Somehow finance is still seen as a man's job, though there is no proof that they are any better at it
this is a very useful post. nobody thinks about death - but if u really think about it, it is scary what happens to ur family, since u know you have not shared everything from a financial perspective with them.
I have one query about Clariant.Its PE is 14 now.Industry Average is 11.Even if you bought it few months back at PE = 9,then too it defies logic...Even if all other things true-its overvalued...
hi navjot
thanks for the comment
vic - yes, having lots of money is a good problem to have. at the same time, irrespective of your networth it is always critical to keep papers in order and family informed of it
rgds
rohit
hi avadhut
thankfs for the comment
navjot - PE is a very narrow measure of valuation. you have look under the hood - that is the business to evaluate if the company is overvalued or undervalued. a PE of 5 can overvalued too.
clariant is becoming more efficient and its ROE and other measures are improving. a high ROE biz is worth more ..also clariant is not into bulk chemicals which are a commodity ..so it is not entirely comparable with the sector
rgds
rohit
Rohit - Your post remind me of pure insurance policy. I have to do analysis to choose the best insurer. Have you done this in recent past?
I have recently cancelled my insurance policies linked with market / child education / etc. When I took them 5-6 years back, I never realized the final return I will be getting. Now I realized that I am misusing my money.
Fortunately – I have a spread sheet with details of all my investments and cash in banks. I try to update this every quarter and pass to my wife. In addition to my wife – my father is aware of all my investments / account.
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