Tuesday, May 6, 2014

Serial Killer - Part 2/2

 
ACP visited the crime scene but could not find any clue. He questioned Karan, his story was normal. He got late in office – his car broke down – he called mechanic – he called Aruna – mechanic took whole night for the repair – reached home at 5:45am – saw Aruna hanging and called police station. The call records confirmed his story. ACP conducted a check on his car by a garage wala and found that the clutch plate, headlights and horn replaced. ACP went to Karan’s office and confirmed his story by checking the swipe out time of the proximity card and CCTV footage. He also checked the meeting timings. Everything was as per Karan’s statement.
Since Karan was found clean, ACP got more worried. If Karan is clean, then it means Sujit is back and the city would witness more murders. ACP had to stop these murders from getting executed. ‘How to stop the murders’ was the thought in ACP’s mind. Sujit had proved that he was smart than the combined smartness of the city police force.
ACP confessed to Waghmare that he had no idea what to do next and he was feeling dumb. The constable suggested that they do a double check on the couple. ACP liked his idea. ACP was worried why Sujit is back after 5 years and who would be his next target. However, the constable gave a new dimension.
Karan’s friends told the police that Karan was very happy after marriage. Aruna was super rich girl. Her father died 2 years back and left a fortune for them. Karan was a high salaried employee and a hard working guy. 1 year back, the couple purchased the bungalow from Karan’s savings. The couple were very private and they had never met Aruna. The couple met at some place in their hometown in other state, got married and came to this city some time back. The friends were even not aware of their hometown. The couple enjoyed their privacy. That was all the police could get from the friends.
2 months went by and nothing happened. ACP thought that this was not Sujit. Serial killer Sujit would kill someone every week. That was his pattern. Serial killers never deviate from their patterns. Change is just not acceptable to them. The case was getting complicated day by day. With some more search, police found few more leads. Karan’s parents died in a car accident, some 10 years back. Aruna’s mother died while giving birth to their only child. Her father died 2 years back. Karan is clean. Sujit’s pattern is not seen. The couple had no enemies.
Another month passed. No murders and now ACP was sure that somebody murdered Aruna and faked it as that of Sujit’s work. In the meantime, Sujit cashed 100 crores from insurance company. The policy was purchased by Aruna’s father some 10-15 years back. The 800 crores in Aruna’s account now belonged to Karan. Karan was now worth 900 crores.
Showing this money transaction, ACP got permission to question Karan. He was called to police station. As expected, Karan did not show up. By all means, he was now a rich man. ACP then sent 2 constables to his house. Constables brought the news that Karan was hanged in his house and a ‘S’ was written on the wall. Interestingly, the money was not found in his account. When ACP went to the bank, the bank guys told that Karan had transferred all the money to some international bank, immediately.
At the same time, a woman boarded a plane to New Zealand. She got a window seat. The plane took off in next 20 minutes.  The woman was tired and lost in her thoughts. Last 3 months were very hectic for this lady. The woman was leaving her own country but her thoughts were not letting her rest and sleep.
The incidents that happened in last 3 months were rolling in front of her eyes. She remembered how her husband wanted to kill her for money. Her husband brought a secluded house on the city outskirts to kill her at his convenience. Instead of running away from the house she decided to tackle the situation heads on.  She took help of her gardener and faked her death. For this they had to find a body of a just died woman (so that they would get the blood to write on wall) with same blood group from other city’s morgue. They brought the body and hanged her.  She then asked her husband to tell police that the body was of her wife so that they could get the insurance money. Husband agreed and thought of double crossing her. He thought that he would kill her after taking all the money. It was a win-win for Karan.
As soon as Karan took the insurance money, the woman killed him and hanged his body in same fashion with the help of gardener. She transferred the money to the New Zealand bank. Being a daughter of a rich man and a CA herself, she knew how to handle the money trail. The gardener was awarded handsomely and left the city. The investigating ACP had kept the case away from media as he feared that people would panic on listening Sujit’s name. The woman had anticipated this fear.
Her flight landed in New Zealand airport. The lady on the immigration counter greeted the woman: “Welcome to New Zealand, Miss Aruna”.
In India, ACP had no clue what had happened. They waited for 1 complete year. No more murders, no ‘S’ sign, nothing... Commissioner ordered ACP to put the 2 murders on Sujit’s name and hide everything from the media. ACP agreed that they had no other option.  Deep inside, ACP knew that this was not Sujit. He had now 2 unsolved cases on his name.


Saturday, May 3, 2014

Serial Killer - Part 1/2

Clock showed 12.15 midnight. Aruna was awake. Her husband was still not at home. She was all alone in their 3 bhk row house on the outskirts of the city. The nearest house was at least 2 km away. She remembered, how she had protested to her husband during purchase of their house. However, Karan (her husband) was adamant. He was in love with this bungalow. The master bedroom window had a view of hills and a lake running on the sides of those hills. The other bedroom had a view of lush green fields. There was a terrace, where Karan wanted to sleep at night along with his friends in summer. Aruna too had loved the house. But the house being on the outskirts of the city left her little worried about daily chores.
Suddenly, the phone ranged and Aruna was scarred as she was completely lost in her thoughts. When she saw that the caller was Karan, she felt little better. Karan called her to inform that his car broke down in the middle of road and he was going to call the mechanic. This would mean that he would be home not before 2 am.
Just as she kept her mobile phone down on the table, door bell ranged. She saw the time, it was 12.50am. She missed few heart beats. She could imagine some stranger ringing their door bell. However, she thought that Karan was playing some prank and he himself must be at the door. With a mix of joy and fear, she opened the door. Whoooff... there was nobody at the door. Now her heart was filled with fear. She decided to install safety door next day. However, little she knew that there was no next day in her life. She shut the door and glanced at the clock, the clock showed 1:00am. She decided to get to her room quickly, lock the door and sleep. Karan had keys, so that should not be the problem to him.
Morning, 6:00am. Phone bell rang. Constable Waghmare got irritated. He was about to get promotion letter in his dreams and this phone call awaked him. With little sleep and little anger, he picked up the receiver. However, the caller told him something which awaked him completely and he started cajoling the caller to calm down. The caller was Karan. He called the police station to inform that his wife had committed suicide in their house.
Being the most sincere constable in the city, Waghmare reached Karan’s house in flat 20 minutes. He had weird thoughts in his mind. He was wondering, why someone would commit suicide at such odd hour. His gut feeling told him that there was something more to the story. On reaching there, he understood that there was a serial killer at work. On the wall of bedroom, a big ‘S’ was written......... with Aruna’s blood.
Since, forensic team would take some more time to come; he took pictures of the body and wall himself. The patrol team arrived in 10 minutes. They lowered the body and took few more pictures. They collected the blood samples. Meanwhile, the forensic team arrived and started to click pictures of anything and everything. They took samples from the surrounding area of the house, foot wear of Karan and Aruna, terrace..... everything.
At 10:00am, ACP Gokhale reached his office. He had been informed about the case by constable Waghmare. ACP knew that ‘S’ meant Sujit. 5 years back, ACP was very close of getting hold of serial killer Sujit. However, Sujit managed to escape. In his time, Sujit was the most notorious serial killer. He would kill anybody whom he found alone at home between 12 and 3am. Sujit would hang the victim and would write ‘S’ on the wall with victim’s blood.
People were so scarred of him that even watchmen started being in group between 11 and 4am. Since Karan and Aruna were new to the city, they knew nothing about the murders.  5 years back, ACP Gokhale (the then senior inspector) had carefully analysed Sujit’s pattern and came very close to him. ACP missed Sujit by few minutes and after that murder, Sujit vanished in thin air.
Serial killers are extremely difficult to nab. They do not look like criminals. They resemble like most common faces on this earth. They do normal 9-5 jobs. Historically, serial killers are known to be easy going and fun loving people and are always in group. However, in their mind they are just looking for the next target. Their sub conscious mind is always looking for targets. Since they do not have any peculiar feature, they often go un-noticed. Even the most famous detectives have failed to recognize them in crowd. The only way to catch them is while doing the crime.


Thursday, May 1, 2014

Financial Noise

After having a good look at financial porn, we are now headed towards financial noise. Let us see what is financial noise.
 
Since last few months, I am reading blogs of most famous people on personal finance. There are many things that are contradictory between them. However, one point on which they all agree is not listening to market experts on TV. Although, I never watch any business channel as such, I thought what is so wrong in these news channel that they all advice staying away from them. My curiosity increased. Thrice, I decided to watch most famous market news channel. On all three occasions my decision was shot down by two women staying along with me at our house. Their argument was simple: I cannot interfere in their TV serials. The TV serials are more important than news channels. We all know that a man cannot win an argument with his own mother and wife. So I decided to find out some other option. Like a typical married man, I talked with my friends about my problem (no, not on women; this time about my curiosity on news channel). My close friend promised to help me in this case.
 
He came to my place within 2 days and said few sentences on his experience on watching business news channel. Each sentence were comprised of 95% ‘manly’ words (don’t ask me how did I calculate percentage). I asked him what exactly he found on those channels. To this he replied: he was never more confused about markets than while watching those business news channels.
Example:
1 person came on TV and right away started to tell how great he was. Then he told that current market is showing the right trend and it would be doubled in 4 months. Half an hour later, another guy came and boasted his credentials. Then he said that currently market is overvalued and it would come down in 4 weeks!!!
So irrespective of market behaviour, the TV channel would claim that they had predicted the right thing. Simply superb game.
 
Just about the same time, a company published their monthly magazine. Being April, they dedicated that issue towards personal finance. We bought the magazine and read it in an hour. Believe me, every single word printed was completely useless. Some people refer that as non sense printing. I would like to call that as financial noise. This in analogy with noise mixed with sound waves in telecommunication. In telecommunication field, the speakers are designed to minimize the external noise and pass only the required sound waves. Unfortunately, in personal finance space, we do not have such filters.
 
Let us look what was the suggestions and how good (rather useless) they are:
 
One should not hold money in any instrument for long term:
How stupid. I think, the author copy-pasted above line from somewhere without proper context. For long term goals, you have to keep money in an instrument and hold it there for long term for compounding to work.
Example: money held in TCS shares for 15 long years. Along with capital appreciation, we get bonus, dividend, splits, etc… Only, if we hold money in long term instruments for long term, we can expect our money to grow.
 
You can redeem money immediately after 3 year locking:
Ideally, equity MFs (or ELSS) should be held for minimum 10 years. Now, redeeming money after 3 years would neither attract any tax penalties nor any exit loads. However, risk involved is very high. Time and chances of good returns are directly proportional. More the time spent, more are the chances. Simple.
The above mentioned strategy of redeeming money after 3 years is a typical strategy adopted by planners who are distributers as well. So this churning of MFs i.e. buy-sell frequently helps them generate good commissions. So this ensures that you get sub-optimal returns and they get handsome commissions (Ever wondered why distributes suggest MF with high expense ratio? Bingo: commission). However, the just concluded line can be very well challenged and proved wrong by same advisors by showing some data and how this strategy earned 20% returns. But as they say, data can be tortured to reveal or show anything you want.
 
Equity MF are most tax effective. Hence, avoid FDs and RDs and go for MFs:
Again, a copy-paste line without context. Instrument cannot be suggested without considering the tenure of goals of that person. This advise is again from a distributer cum planner. They may even show you how other fund is giving 22% returns and ask you to book profit of 6% and invest the just redeemed money in that 22% wala MF.
In short, they would tell you that X fund gave 18% this year and next year it could give 38%. Next year, they would tell you the same story with different figures. After 8-10% years of such investment, you can conclude that FDs were much better than MFs!!!
Lastly, taxation part. When you invest in equity MF, your point should be of wealth accumulation and not taxation. Tax rebate should be like a cherry on the pastry. Remember, it can never be the pastry itself. In short, the instrument first must find a place in your portfolio. If it suits you, then check if it has tax rebate. Do not got in reverse order.
 
Invest in PPF for current financial year. After 5 years, withdraw X amount and use it or invest in equity MF:
Again, very ignorant and irresponsible advice. If a person invests in PPF with 5 year goal, why not go for RD? In PPF, the amount withdrawn would be tax free (unlike RD). however, that amount would be only 50% of accumulated value. Moreover, PPF is originally a long term investment product. Please run away from person telling this.
We invest in PPF to get debt exposure for long term investment. This approach would be typical suggested by either completely ignorant person about PPF/MFs or are driven by traditional methods.
Our parents did a RD to pay for our tuition fees. This was perfectly sensible as RD ensures capital protection. For goal like education, capital protection is of prime importance. But you cannot simply copy-paste this approach for PPF-MF.  This is not suitable to anybody. Just draw a equity to debt ratio and continue the same.
 
Get loan on your insurance policy and invest in equity:
A person was sold endowment insurance plan. When he wanted to get rid of his insurance plan, his agent came up with a gem of a advice. The agent accepted that the endowment plan gives 5-6% interest rate. So he said, get a loan on endowment plan and invest in equity (direct, off-course) and get 32% CAGR (God knows how). Hence, average return could be minimum 25% (again, God knows how). Taking loan on endowment plan would be like paying interest for your own money.
No chocolates for the person who guessed that this agent was broker too. However, can we blame the agent? Nopes. He just ensured his retirement and other goals are taken care off. It’s for you to think and act in your own interest.
 
Mutual Funds are not for women:
Yes, can you actually believe such advice? The article had below conclusion: since women are known to be very patient and foresighted species, it is best they invest in direct equities.
Amazing parameters to be eligible for direct equity investment. I do not blame the writer. Nowadays, all politicians are singing tune of women empowerment (and doing very little). So this writer must have thought of cashing on this euphoria. In reality, although patience is required in direct equity, it is not the only criteria. It is like saying, if you have pen, you can become author of world’s best seller book.
To become author, you would at-least need knowledge on the subject and willingness to learn more on the subject (apart from the pen off-course). All money making instruments are for men as well as women. They are independent of sex (well, I meant gender).
 
Invest in endowment plans because they are not ULIPs:
Wonderful (repeat it 3 times). Can we say, a suicide is better than a murder? Can we say dying with revolver is better than dying with a .9mm pistol? Can we say that diabetes is better than high blood pressure? Can we say…. Okay, you got the crux. ULIP and endowment plans are different like chalk and cheese. However, they are common in below context:
  • Both are completely opaque with respect to returns.
  • Both are generally mis-sold by showing some random % CAGR.
  • People generally suffer losses in both products.
I do not know, for whom endowment plan and ULIPs are good. However, I know for sure that the reason is plain stupid.
 
Invest in global markets for diversification:
Diversification is good. But somehow, I am not sure if international market would provide us the exact reason for which we diversify. The reason behind diversification is to contain volatility. However, we cannot see what is going on in international market at retail investor level. Moreover, ever if we do, we must keep in mind that our rupee is fluctuating with respect to international market.
So returns from such diversification is subject to international markets as well as currency fluctuation. An average investor has little idea on both these things. So to KISS, keep diversification within Indian markets.