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IntroductionDear reader, Re-assemble or e-assemble is a series on the basics ofmoney management aimed at beginners and young earners. My aimwas to provide a focussed step-by-step guide to understand where weare today with respect to money, where we need to be and how to getthere by protecting our family against the uncertainties of life and byinvesting right.The series was started on Nov 5th, 2017 and ran up to April 2018. I amhappy and proud that it was welcomed by readers. This pdf is an “asis” compilation of the steps covered. Some intermediate posts are notincluded but are linked in the next page.I wanted each step to include one video but could not do this after thefirst few steps. The links to the videos also included and these can beviewed from your browser.If you find this useful, do support freefincal by asking your friends touse the site. You can also consider disabling ad-blockers.I am always on the look-out for problems that money-managers likeus face. So, if there is any aspect not covered in this series, do let meknow.Copyright You are free to share this book withoutmodifying it in any manner, but must always point to the source orauthor as freefincal.comCover photo by Ella’s dadSincerely yours,Copyright Do not modify. Do not share without quoting the source as

PattuLinks to all post in the Re-assemble series(as on May 23rd, 2018)Step 1: Listing your goals dreams and nightmaresStep 2: Lay the Foundations to Get Rich creating an emergency fundStep 3: How to buy Term Life InsuranceStep 4: How to choose a suitable health insurance policy* Apollo Munich Optima Restore Benefit vs Max Bupa Re-fill Benefit* Star Health Comprehensive Insurance vs Religare CareComprehensive Insurance* Building a health insurance comparison chart Cigna TTK vs RoyalSundaram Health Policies* How to buy a Super Top-up Health Insurance policy* How I selected a health insurance policy* Why we all need a corpus for medical expenses and how to build itStep 5: How to select a credit card for maximum benefitStep 6: How to track monthly expenses and manage them efficientlyStep 7: How to close your loans and live debt-freeStep 8: How to buy a personal accident insurance policyCopyright Do not modify. Do not share without quoting the source as

Step 9: Are you ready to let go and let your money grow?Step 10: Investment planning case study 1: How to create aninvestment planStep 11: Case study 2: Retirement planning for 27-year old AmarStep 12: Three Key Factors that decide how we achieve our financialgoalsStep 13: How to start investing in equity?Step 14: What should be my first mutual fund?Step 15 (not part of this e-book) *:(old) How to select an equity mutual fund in 30 minutes!(New) How to select mutual funds after the SEBI categorizationrulesStep 16: How to buy a house with a home loan: Tips to maximizebenefitsStep 17: How to reduce risk in an investment portfolioNote: * Mutual fund selection has become bit difficult after areshuffle of fund categories by SEBI. Hence, I have decided to leaveout step 15 from this compilation. Young Earners and beginners mayinstead choose from my hand-picked mutual fund list: PlumbLineCopyright Do not modify. Do not share without quoting the source as

Re-Assemble Step 1: goals, dreamsand nightmaresfreefincal Re-assemble November 5, 2017Dear reader, starting this week I would like to cover the basics ofmoney management and goal-based investing for absolute beginnersin the form a video series: e-assemble. Each week I will discuss onestep. The first step covered in this post is: goals, dreams andnightmares. Each step will take between 30 minutes to a couple ofhours to implement. Assuming it takes about a week to implementeach step, in about 1-2 months, your money management will becomesimplified focussed and on auto-pilot. As always, I look forward toyour support, encouragement and feedback.Why e-assemble? Well, when I want to name something, I simplyask my wife (and I don’t question her). Reassemble means “putsomething back together”. It can mean this for someone who isunfocussed with regard to money or it can mean rupee-assemble (putsomething together for the first time) to a young earner. Good or bad,as long it sticks, I am happy.Why should money management be set on autopilot? Because you and I have (or should have) better things to dothan to worry about money! Our true wealth is health and time. Howwell we use that little time we have with us and spend it on things thatwe love will define our happiness and contentment.Copyright Do not modify. Do not share without quoting the source as

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Step 1: goals, dreams and nightmaresRemove all distractions and human contact. Get some alone time tothink about your life.Where am I today?Where would I like to be 5 years from now, 10 years from now?What are my responsibilities (goals)?What are my dreams?What are the nightmares that can prevent me from achieving my goalsand attaining my dreams?Listing this is the first step. It does not matter whether they involvemoney or not. The list will give us a roadmap and we can beginpreparations for each step. Once we complete, money-managementwill be on auto-pilot.If you are a couple, I would suggest doing this exercise separately andthen consolidate. If you fear arguments might break out, better to do ittogether and hear, listen to what the wife wants/says. Better to let thestronger sex call the shots.Here are some examples of goals, dreams and nightmares. The idea ofeach step is to make the next step obvious.Copyright Do not modify. Do not share without quoting the source as

Yup! That is a green board I finally purchased and asked my wife towrite (my handwriting is horrible, and I only write math in myclasses).Click to watch the video in your browserCopyright Do not modify. Do not share without quoting the source as

e-Assemble Step 2: Lay theFoundations to Get Richfreefincal Re-assemble November 11, 2017 e-assemble is a video series covering the basics of moneymanagement and goal-based investing for absolute beginners. Lastweek, in step 1 we consider the need to list our Goals, Dreams andNightmares. In part 2, we will consider the essential foundations forgetting rich and staying rich.When we talk about getting rich or building wealth, we often focus oninvestments – where, when, how much, how effective etc. While thatis important, an unexpected expense can result in redemptions. So,before we talk about investing, we need to anticipate theunforeseeable! Account for possible unexpected/unsavoury expenses.The next four steps are: Building an emergency insurance (discussed in this video) Getting life insurance Health insurance Accidence insuranceOnce these essentials are in place, we would feel that much moresecure and in peace. Debts can be handled better and investing startedwhen possible.Copyright Do not modify. Do not share without quoting the source as

In the video, I list common ways in which emergencies can arise. It isnot possible to have a fund large enough to accommodate all of themat the same time. However, it is important to be able to handle at leasttwo of them simultaneously. This means accumulating an emergencyfund for life!When I talk about this, someone in the audience always goes, “but lifeis uncertain, no? No matter how much we plan, there will always besomething that we did not anticipate, so why worry too much?”Well, only when we can prepare for sudden expenses that can beanticipated, can we be ready (mentally and financially) if our entirewealth becomes an emergency fund!Please do not get scared of what I am trying to say below. Start smalland build your emergency fund gradually. Remember that this wouldbe one of the best investment that you would ever be making!There were some focussing and sync issues in the YouTube video ofthe first part. Hopefully, things have improved now. The drawings thatyou see on the left side are my son’s. My entire house is filled with hisdoodling.Would you like me to speak on the basics of moneymanagement to your co-workers? Then you could write to me atfreefincal [at] I do not charge a fee for this and onlyrequest that my travel expenses be compensated.Click to watch step-2Copyright Do not modify. Do not share without quoting the source as

Re-assemble Step 3: How to buyTerm Life Insurancefreefincal Re-assemble November 19, 2017 e-assemble is a video series covering the basics of moneymanagement and goal-based investing for absolute beginners. Step 1was listing Goals, Dreams and Nightmares. Step 2, laying thefoundation of wealth with an emergency fund and in this week, weshall move on to step 3, buying life insurance policy. If you alreadyhave such a policy, do check if you completed these tasks: Things to doAFTER you take a term insurance policy! Also, please do share thisarticle with friends who don’t and use the calculators linked to check ifyour life is cover sufficient.This week, I wanted to make two short videos, it ended up inthree: Part A: we discuss the basics of a life insurance purchase onthe blackboard – what to look for and more importantly, what notto. Part B: we head over to a term policy comparison portal forselecting a policy using the grand technique of inky, pinky,ponky. Part C: I run through the basics of a life insurance calculator.Let us first get to the videos. After that, go over a summary andadditional resources.Copyright Do not modify. Do not share without quoting the source as

Part A: How to buy Term Life Insurance – What tolook for?Click to watch this partPart B: How to buy Term Life Insurance: ComparingpoliciesYou may need the headphones for this one. I mention my lifeinsurance cover as 44K, that is my health cover premium. My lifecover from LIC is 10Y old and costs 36K for 60 Lakhs (loaded due toobesity and BP). Sorry for the mistake.Why LIC? Because I am opinionated and pig-headed and mis-trustprivates. I only trust LIC because it is a Sarkari dinosaur (slow but getsthere eventually) not because of its high claim settlement ratio. Justlike claim settlement ratio, it is psychological garbage. I must live withit but cannot thrust it on you. Everything has a price, and, in this case,I got to pay more. Thanks to time and inflation, the premium is not sobig today, but it was 10Y ago. You can make smarter choices. At thattime Aegon was the only online player and there was no way I going tobuy from a new kid on the block.Would I change my stance now if I could go back in time? Wecan’t go back in time, but if we could, yes. With age I have become lessstupid in some directions and more stupid in others.Why am I am not asking you to buy LIC? As choices go, LIC isnot a bad choice though (personal finance and all that sort of thing)Copyright Do not modify. Do not share without quoting the source as

but I am sure you choose on your own and make a smart choice thatyou can live with (I have no issues with mine)Why have I not changed my policy for something lessexpensive? Inertia (I hate change) and with age developed an autoimmune condition (Myasthenia Gravis) which meant my premiumwill not go down!!Click to watch this partPart C: How to buy Term Life Insurance: How muchlife cover do we need?Click to watch this partHow to buy Term Life Insurance: Executive Summary1. Find out if your employer offers a group life cover in addition tothe usual group base health cover. If yes, make sure it is activated.If they also offer a group super top-up health cover, find out theconditions and the cost. If it is not too expensive opt for it.2. Life and health insurance premium payments are an investmentfor our peace of mind. If we treat them as expenses, we will end upbuying bad products3. When you browse for products, some features will catch your eye.They are meant to! The more attractive the feature in lifeinsurance and health insurance, the more useless it is! Read policywordings to find out the real pros and cons.Copyright Do not modify. Do not share without quoting the source as

4. Do not waste time thinking about claim settlement ratio, solvencyratio etc. They are of no use. Insurance, unlike investment, is apersonalized product. Read more: How to choose a term lifeinsurance provider in 30 minutes!5. The insurer looks you (the wonderful and unique ‘you’) and offersa policy for ‘you’. That is the premium is a personalized number.Therefore, asking others about their experience is useless.6. Get a simple term life cover: nominee gets 100% of sum insured inone shot upon death.7. Avoid all riders. get an accident policy separately (that would bestep 5 in this series)8. Avoid premium-back policies. It is a waste of money9. Get a cover only up to age 55 or at beat 60 (longer the duration,more the premium waste of money)10. Avoid policies that offer the lump sum in stages and/or pay amonthly income to the nominee. It is a waste of money.11. Read policy wordings again! Look for exclusions. Preferably theonly exclusion should be suicide in the first year (or two).Remember, death by accident is also death and will be covered bya life insurance policy (even if the insured breaks the motorcycleact)12. Do not take the premiums shown in policy comparison portaltoo seriously. They are only indicative.13. Choose a comparison only to find a list of insurers who offer theproduct. opt for a portal that does not insist on a real email andCopyright Do not modify. Do not share without quoting the source as

real phone no (this is an old list might still work: Non-intrusiveterm insurance comparison portals)14. Remember: insurance is a contract based on good faith. Behonest while applying and provide all relevant information.Although the onus on proving fraud is on the insurer, they can bepretty good at it and sometimes even deny genuine claims: TheGames Life Insurers play! and No insurer will hand life insuranceclaim amount on a platter!15.Remember buying life insurance is the first step to buildingwealth. If you do not invest right and grow your net worth quickly,the sum insured will lose value due to inflation!16. You will have to find the courage and common sense to make aquick choice. If you don’t have this,17. Choose an insurer and find out the maximum cover that they willoffer you (based on your income and risk profile). If you are ayoung earner, go for the maximum amount if you can afford thepremium. It will come in handy if you get married and havechildren.18. Use this Insurance Calculator for the Young if you unmarriedand this Step-by-step guide to plan for your child’s education andmarriage if you have children to plan your life cover needs.19. Always evaluate your life cover if you get new dependents (wifeand children)20. Be sure to write down an action plan: how should your familyuse the sum insured after you are gone. They may not do it thatway, but at least you tried!Copyright Do not modify. Do not share without quoting the source as

21. Give your family the contact of a fee-only financial planner tomanage the sum insured. Otherwise, your friendly neighbourhoodsales agent will Buy after reading; buy with confidence. A term insurance policy is justthe beginning of our wealth building process. Here’s hoping we stayalive long enough to burn the policy document (when thepolicy matures expires).You can catch the other videos here: e-AssembleCopyright Do not modify. Do not share without quoting the source as

e-Assemble step 4: How to choosea suitable health insurance policyfreefincal Re-assemble November 25, 2017 e-assemble is a video series covering the basics of moneymanagement and goal-based investing for absolute beginners. Step 1was listing Goals, Dreams and Nightmares. Step 2, laying thefoundation of wealth with an emergency fund step 3, buying a termlife insurance policy and this week in step 4, we shall considerchoosing a suitable health insurance policy. Buying a health policy isone of the most difficult decisions in personal finance as this space isfilled with needless jargon and buyers often fail to look deeper thanthe sugar coating.Also, unlike a term insurance policy, a health policy is a not a “fill-it,shut-it, forget-it” arrangement. The premium increases every 5 yearsor so. Or it may increase by a huge amount if the insurance companysuffers several claims from its customers. We may need to increase thesum insured from time to time. The terms of the policy or the verynature of the policy can change upon renewal.Unlike a term policy that can be discarded upon retirement or evenearlier, it is prudent to continue health cover even when one has(more than) “enough” wealth. Therefore, it is important to take a longterm view when it comes to health insurance purchase. The premiumcould well be (if not already) our biggest annual purchase sooner thanlater.Copyright Do not modify. Do not share without quoting the source as

Unlike a stock or a mutual fund, a bad purchase cannot be easilytransferred (sold). Although it is possible to shift the insurance fromone company to another, only applying for a transfer is a right.Accepting the porting request is up to the (new) insurer.I don’t wish to scare you. Thankfully, the core features of most policiesare identical. So, it is not as hard as it looks provided we ignore thefringe benefits discussed below.My health insurance policyI hold an individual United Indian Platinum Health Cover for self,wife, son and a Gold Cover for my mother for the last 10 years withthree claims – one for myself, wife and mother. It was not exactly aninformed purchase as I got it out of fear and in a hurry when my latefather was hospitalised with cancer without any insurance.Over time I got to know the policy features well and read other policywordings. So what follows is not from an expert but from someoneinterested in the nitty-gritty of a product and scraps of gyan collectedfrom here and there. What I discuss (as always) is nothing more thancommon sense.The planIn the first video, let us consider the essential aspects of buying terminsurance. In the second, we go through the process of comparinghealth insurance policies. These two are covered in this post.Copyright Do not modify. Do not share without quoting the source as

In the next post (tomorrow), we shall walk-though the policy wordingsof few policies voted by members of the Facebook group, Asan Ideasfor Wealth. Many of them also listed what covers they have and whythey purchased it. I thank them for their support and participation.Let us get to it.How to buy health insurance: What to look forand what to ignoreClick to watch this partHow to compare health insurances: creating ashortlistClick to watch this partHow to buy health insurance: Slide deckExecutive summary for e-assemble step 4:How to buy health insurance1: Get yourself a personal cover asap. Do not assume you can shiftyour company policy to an individual cover – it may have limitations.Do not get a super top to your corporate cover with no base cover. See:Health Insurance: Switching out of my job current – My experiencesCopyright Do not modify. Do not share without quoting the source as

Experience: After porting from group health insurance to a familyfloaterDo not buy a top-up policy for your company mediclaim!2: A company cover may help in case your parents or in-laws havepre-existing diseases. Getting them a separate cover (if possible) isalways a good idea though. You may need the help of an intermediary(broker/agent) if insurers start rejecting you. The intermediary mayget you the policy because of the sales they bring in.However, always disclose all details no matter how you buy.3: Get a base policy for a few lakh top up (will cover this nextweek) OR get a large floater cover for your family (get a separatepolicy for parents or for those with fragile health) for say 15-20 Lakh.4: It boils down to how much money you can spare!5: Discounts and bonuses only matter for expenses. Health insuranceis an investment for your peace of mind6: Buy a policy that works for you. Not the “best” policy. This meansyou should know what you want! That is hard for a lot of people!7: Focus on core benefits on health policy: hospitalization cover andday care cover for major procedures.8: Ignore fringe benefits like restore, recharge, health check-up*, nonallopathic care** etc. More the fringe benefits, more expensive thepolicy and more confusing the terms.Copyright Do not modify. Do not share without quoting the source as

* I will not provide periodic updates on the status of my health to theinsurer. Health check-ups are important, and I will pay for them frommy pocket. Please note that insurer cannot increase the premium ordeny renewal based on these results or your claim history. However,they are free to deny an increase in cover based on your claim historyand/or health check-up results. The Same logic applies to the fancy“benefits for staying fit”.** non-allopathic hospitalization is rare, and a policy will not covercasual doctor visits (any kind of doctor)9: Build a relationship with a family doctor. I have family doctor family neurologist family orthopedist, dentist, dermatologist,ophthalmologist . (yeah, I am sick in more ways than one)10: Understand what a pre-existing condition is. It need not bedeclared in the policy. If they find evidence that it could have existedbefore the inception of policy a claim can be denied. Moral: readpolicy wordings. Remember that there is a good reason that policywordings are in dull font and located in hard-to-find places. They arehoping that you will not read it!11: Understand how room and ICU daily rent limitations affect you.Those who live in expensive cities should avoid them. Others can getby with these limits but need to find out room tariffs from localhospitals. A policy with no sub-limits will cost more (obviously!)12: Along with sub-limits, avoid co-payments, and disease-dependentlimitations in cover amount (e.g. only 40% of sum insured for piles,fistula, hernia, etc.)Copyright Do not modify. Do not share without quoting the source as

13: Do not get attractive to restore option, re-fill option anddiscounts. They are being provided only because the insurer is bettingthat they will not be utilised often. Remember they have legal help inwording policies carefully.14: Before you start comparing policies, have a list of conditions thatare important to you (e.g. lower pre-existing disease waiting period)15: I have shown policy comparison resultsfrom in the second video.Please note, I found this website by accident when writingabout: Illustration: Factors that matter while choosing healthinsurance. I have no connection with the owners of the website. Donot assume that all data provided in this comparison portal areaccurate. Use it for a short-list of 2-3 policies and read the latest policydocument (old clients may have a different policy document).Bottomline: All insurance is a game of probability. The insurer isbetting on you to not get sick often. Two can play this game. I wouldnot pay for any feature that I am least likely to use. For example: nonallopathic hospitalization, maternity expenses (company coverprovides this or I will happily pay (how many children am I going tohave?!) ambulance cover (I have 5 hospitals within 200 metres ofwhere I live, so will pay from my pocket).In other words, ask yourself which features matter the most and focuson them.Do not go by feature listings on webpages. For example, many peopleincorrectly believe that PSU insurers (United India, Oriental, NewCopyright Do not modify. Do not share without quoting the source as

India) do not provide day care coverage. They do not advertise itprominently enough. If you read the policy document, it will be clearenough.When you read an article about health insurance find out who haswritten it. If it is a broker or agent or aggregation portal, do crosscheck facts. Do the same with this post. As regular readers will tellyou, I am clumsy and make mistakes often. I have only one thinggoing for me – I mean well. Cheers.Health insurance is a complex subject. I would like to continue talkingabout it next week too. Please suggest issues and policy features thatwould benefit many.Copyright Do not modify. Do not share without quoting the source as

How to select a credit card formaximum benefitfreefincal Re-assemble, Young Earner December 2, 2017I discuss simple ways to select a credit card, use it efficiently andmaximize its benefits. This post is part of e-Assemble: a series onthe basics of money management for young earners. You will besurprised as to how many people do not understand how a credit cardworks and how many people get into huge credit card debt becausethey did not read the terms and conditions before using it.A few years ago, I took my M. Sc class out to lunch. Since I rarely eatout, I wanted to figure out ball-park costs. One kid said, “just use yourcard, sir, swipe karo”. He assumed that if I swipe my card, I don’t needto pay the bill! Personally, I am not a fan of credit and inspired by JackReacher cancelled my SBI card as I was not using it. My wife has hadthe same Citibank card for the last 17 years (which do I use asmentioned below) and we have never once bothered to find out thebenefits it has or used its reward points. We just are not wired thatway. So, you might be surprised to see this post from me. Am I theright guy to start a discussion on how to select a credit card?Yes, I am. For the simple reason that credit card selection is hardlydifficult and anyone who has the common sense to put in a little effortcan choose well and more importantly use it right.In Gamechanger, my young co-author Pranav Surya discusses howCopyright Do not modify. Do not share without quoting the source as

to choose select cards and maximise benefits. I cannot match up withhim, but try my best, I will. Let us get started with the basics.Before you select a credit card, ask: what is acredit card?This is how the average young earner thinks a credit card works:The credit company offers us a line of credit. That is, we can spend upto a certain limit, withdraw cash from ATMs up to a certain limit. Eachmonth a bill listing our usage will be generated and a due date forpayment will be set. If we do not pay the full amount that we spent orwithdrew before the due date, we will be fined by the card company.The more we spend, the more we get rewards.This is, word-for-word true. However, what that “fine” is, how it iscalculated, the difference between using a card for spending andwithdrawing money is what matters.At least, the above definition is way better than what a retiree told me:I never fail to pay the minimum amount due each monthIf you think there is nothing wrong with the above statement, youneed this section!Let us pause for a moment and look at the similarities between acredit card and health insurance that was considered last week. Bothproducts come with a lot of window dressing:Copyright Do not modify. Do not share without quoting the source as

Credit cards talk about fuel waivers, restaurant discounts, loungeaccess, airline miles etc (the more you earn, the more the credit lineand more expensive the benefits).Health policies talk about restore, re-fill, multiplier benefit, bonusesetc. However, as we saw last week, these benefits are offered to hidethe most important features of the policy and come loaded with termsand conditions. Credit cards are not very different. Their benefits arealso subject to several limitations and they too are used to hide theessential working of the credit card.Before you select a credit card, ask: Who needs acredit card?To borrow a line from Ratatouille:Anyone can use a credit card, but that does not mean anyone should! Today internet-based transactions, a credit card is essential onlyfor those who make international transactions frequently, whotravel around a lot (even within the country). Consider thepurchases associated with freefincal: domain renewal, hostingrenewal, adding CPUs or ram to the cloud hosting, backups,plugins etc. Practically all of these are USD or Euro transactions. IfI did not have a credit card, I will have to use a Paypal account Ofcourse credit cards and PayPal have the same no of steps involvedbut a card is a bit more convenient.Copyright Do not modify. Do not share without quoting the source as

As discussed in e-Assemble Step 2: Lay the Foundations to GetRich, a credit card can be used as a source of instant emergencypurchases. Building a line of credit (promptly repaid) is important for yourcredit score. This will come in handy if you apply for a car loan orhome loan. Pranav discusses this too in Gamechanger.Aside from these three usages, I cannot think of any exclusive creditcard usages. A debit card, or IMPS or NEFT or the good oldchequebook or plain old cash would suffice.Buying credit cards only for its rewards and benefits is fine but buyingit for a revolving line of cr

* Star Health Comprehensive Insurance vs Religare Care Comprehensive Insurance * Building a health insurance comparison chart Cigna TTK vs Royal Sundaram Health Policies * How to buy a Super Top-up Health Insurance policy * How I selected a health insurance policy * Why we a