The Golden Rule of Investing is that the Man with the Gold Makes the Rules of Investing.

You have to remember this rule – because this article is about REBATING. Rebating is illegal in India – it means if I ask you to invest in a life insurance policy, general insurance policy or a mutual fund, I cannot share my commission with you.

I always found this amusing. In most businesses the businessman decides on what margin he/ she will work. If a shop has huge overheads, is situated in a posh area that shop is likely to have a higher mark up compared to a shop in a poorer locality.

Unfortunately in India the big mutual fund and life insurance distributors found rebating difficult and cumbersome – and reducing the margins. So they got together and said ‘Rebating is illegal’ all Managing Directors would parrot it without believing it. My friend calls this piece of shit advice as irrelevant. He says it is like the groom/his parents/ relatives at a wedding telling you ‘please have dinner / lunch’ – people by and large decide to eat or not eat much before they attend the wedding. L O L.

A couple of big retailers found an easy way out – they gave huge incentives to the employees – who were encouraged to rebate. This ensured that they stayed within the law – the person who was getting the application was not rebating. Only the employee was rebating from his incentive. Laughable, but it worked while mutual funds were selling. Now of course there is no mis-selling. This is because there is no selling of mutual funds at all 🙂 – and there is nothing to rebate.

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