Personal Finance Developments That Mattered in 2016

Published: December 31, 2016 at 11:09 am

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As 2016 draws to a close, a look at some of the personal finance developments that made a difference and the lessons from them. Before we begin, allow me to wish you a happy new year and pray for the ability to make informed decisions. If we get that right, the rest should take care of itself.

Also, this weekend Amazon has dropped the hardcover price on You Can Be Rich Too With Goal-Based Investing from Rs. 375 to Rs. 266 (prime) and Rs. 306 (normal). Infibeam also is at an attractive Rs. 278 The Kindle edition is also available at a discount of 30% at Rs. 244.30 The Google Play Book edition also has the same price. Do consider picking one for yourself or gift it someone who may need it. If you have read it/used the online calculator modules, we would be delighted if you can spare a few minutes to write a short review at Amazon or Infibeam.

Here we go. Do let me know if I have missed something. I get the feeling that I have.

1 The EPF Debacle

Budget 2016 was a nightmare for many, including me (as a blogger). First EPF was taxed and then it was not under “public pressure”. Not really the public – salaried individuals on social media (SISM) and then unions took it up.

The result: plenty of confusion.

The learning:

Tax rules are not forever. The government can change them at any time. So don’t take those tax-free Excel projections too seriously. When the facts, change, ….

2 Rate Cuts

Not as many rate cuts as they were in 2015 (just two in 2016, four in 2015). Senior citizens learnt a hard lesson: They were keeping all their eggs in one basket and cannot afford to change now (both mentally and financially).

Hope not too many made the mistake of “investing” in Gilt funds, arbitrage-laced balanced funds.

When gold started moving up in early 2016, many wanted to invest in gold and sovereign bonds without understanding how risky they are. When gilt fund NAV started spiking after Nov. 8th, they suddenly realised it was a good idea to invest there. Gilt NAVs have been on the up move for nearly two years now!

The learning:

Don’t invest in what you never did, in the evening of your life

Don’t close the barn door after the horse has bolted

3 Direct Mutual Funds

Tomorrow is the fourth anniversary of direct mutual funds. I had called 2016 as the year of commission-free investing. I don’t know if that is right, but happy to see MF Utility grow in popularity among investors. Many direct investment portals have sprouted up. I will not be betting any money on how much they would grow, but it is clear that more and more people are recognising that there is no free way to invest in mutual funds unless you do it via MFU or with the AMC. And as for MFU, who knows who will own it in 2017 or if it will remain free!

You can invest directly with AMCs and still track everything “in one place”. It is not binary!

This 2017, Switch to Direct and DIY or Switch to Direct and get professional advice from a fee-only financial planner. I got a list here.

4 Demonetization

There was no hullabaloo (from the “public”) when Rs. 500 and Rs. 1000 notes ceased to be legal tender. Why?

When EPF was taxed, it did not affect the rich guys. Now, even if I suffer, I am happy the rich black money hoarders will suffer more. That is more important I guess?!

I asked a washing machine dealer a couple of days back if his business was affected by this. He said yes, but that is how the cookie crumbles. Went on to add, “how many people do you think are foolish enough to keep the black money as cash”? Right!


Lesson:  A good chunk of the educated elite would prefer to preach about going cashless because it suits them, rather than stand in a queue in an ATM.

The cashless space is seriously messed up and it silly to expect anyone born before 1990 to start using an app for money transfer. Exceptions make poor examples.

Ps. You need a smartphone for discounts (while your data is used for “analysis”). You do not need a smartphone for going cashless. A chequebook will do just fine.

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About the Author M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates  and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)
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