Many people tell me tales of their advisers…let me tell you the WORST…

1. Madam your husband had Rs. 46 lakhs in PPF – do not remove it now let it remain there. If you remove it you will lose the benefit of tax free 8% return that you were getting…and you will have to put this in a bank. Bank will pay you 9% but you will have to pay Income tax on that.¬†At least 3 advisers did not know what was wrong.


There is only one nominee. She cannot do anything other than withdraw – she cannot renew it for say another 5 years, she cannot withdraw partially, she cannot change the branch….and if she dies her son will have to go to court to get a probate…not so easy.

2. Keep the housing loan – after all the interest is tax deductible and the house is appreciating!

Answer: the appreciation of the house has nothing to do with how you funded it. If you have your own money and you have no clue how to get 15% earnings from that, it makes no sense to keep a 12% loan going.

3. Buy as big a house as you can…after all you are doing it once in a life time!

Answer: Buy a house that you can afford by paying AT LEAST 50% of the cost of the house. If you can pay more, even better.

4. Keep money in bank fixed deposits in various branches of different banks, there will be no TDS, – THIS MEANS IT IS TAX FREE.

Answer: this advice is so stupid that the adviser needs to be crucified.



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  1. Hi Subra,

    These are million dollar tips.

    Personally I have faced the 2nd point many times, as most people prefer to continue home loan to save tax.

    But, I hate debt (realized after taking the home loan) and desperately wanted to come out of it, by making part-payment whenever is possible.

  2. Point 4) Cooperative banks were not deducting tax at source and were paying more % than large banks. Many have invested exactly in the fashion Subra mentions.
    Now, the Govt has questioned this and asked these banks to submit their past records with PAN nos etc. People have been sent letters demanding why they ahve not declared this interest on FD’s.

    I agree with all the points.

    PPF is the best debt investment after retirement. I intend to keep it and add max amount every year.

  3. Subra sir!
    As per my understanding, one can invest 1.5 lakhs max per year. Till last year or so it was 1 lakh limit.even if I assume that the mentioned person has deposited 1 lakh every year, the final amount comes to around 31 lakhs. But in your post it is mentioned as 46 lakh. Could you please clarify whether I have missed any point in calculation ?

  4. Does that mean one should prepay the loan first and then plan for other needs? I already bought a house before referring to subramoney and hence seeking advice that should I be prepaying when ever I can or bring the loan to a good limit and then start saving for retirement or child expenses

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