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What Do The Numbers Tell Us? Date: April 3, 2014

It is beyond any doubt that we live in an era of numbers and it is impossible to imagine a World that believes in any hypothesis without numbers to back it up. May it be political rallies where we see to-be MPs shouting out big numbers in order to criticize the ruling government or an interview where the interviewer is grilling the candidate to test his ability, numbers play a pivotal role.

The most recent and popular target of number stories is “Apna own bollywood” as quality of movies is now gauged on the basis of box-office collection (The benchmark being Rs 100 crores).Even Sunny Leone’s latest movie Ragini MMS 2 used the strength of numbers in its tagline:

2 mai zyaada mazaa hai” (Translation: There is more fun in 2).
  [You are free to ponder upon its implications 😉 ]
Okay, before I lose you into thinking about the movie, songs, Honey Singh or Sunny Leone, let me tell you about the purpose of this article. As I mentioned, numbers are highly significant to impose any thesis on people and hence, I am here to introduce you to some numbers that could make you think more about your money. Just before we start, let me clearly point out that none of this numbers are made up. They have been taken from reliable sources. (Plus. you have Google with you to check its veracity.). So here we go:
4,866 crores is the amount of unclaimed insurance money lying with life insurance companies as at the end of 2012-13.
250% is the growth in amount of unclaimed money with life insurance companies over a period of four years starting 2009-10.
So, both of this numbers relate to unclaimed insurance money and emphasize of an extremely important point. The reason, as explained by IRDA, behind such massive amount of money lying with insurance companies is the fact that dependents are not aware of existence of a life insurance policy. So, if the husband has paid big premiums for securing the life of his spouse and the spouse is not aware of it, then the whole exercise is fruitless.
Takeaway: Let me tell you that while there are other reasons like delay in settlement of claims, complexity of claims process etc. behind that massive number, the biggest reason is failure to track finances.
In most of the households in India, financial information is kept by the breadwinner to himself/herself whereas the ideal approach is to let the family know about each and every of your investment. A lethargic attitude and other factors are responsible for the failure to maintain a log book on investments, which is must.
Hence, if you are reading this blog but do not have your investments tracked and informed to the family then my earnest request is that you do it ASAP!!
22,636 crores is the amount lying in inoperative Employee provident fund accounts as at the end of February, 2014.
We think that working people have a good idea of their money and can take adequate care of the same. Well, think again!!
As per data, the mentioned amount is linked to EPF accounts that are lying dormant for more than 36 months and have stopped earning interest. The primary reason that these accounts have become inoperative is because employees holding those accounts have moved on to new jobs but have missed transferring their EPF accounts to the new employment.
Takeaway: Again, as in the case of unclaimed insurance, the problem is failure to track your investments. For employees of big corporations, it is a tough to miss the transfer of EPF accounts since the payroll teams aware you of these accounts. However, it might not always be the case and the ideal approach is to keep a record of all your investments including the EPF accounts, lest you have a sharp memory that can remember everything.
1101 crores, the amount of unclaimed dividend lying with companies as of 2013. Once this money stays unclaimed for a period of seven years, it is transferred to Investor Education and Protection Fund (IEPF) post which no claims are entertained.
Takeaway: While there are various reasons behind unclaimed dividend, the primary reason is insignificant amount of dividend on an individual basis. The implication is that individuals hold a limited number of shares of companies and hence, the dividend due to them is quite low.
As a result, people are not highly bothered by dividend announcements and to top that. they are not quite aware of their portfolio as well because it is largely handled by stock brokers.
However, any amount of money is important and should not be forgone because of the magnitude. The ideal way to go is to keep a tab on the annual reports, dividend announcements etc. made by these companies and monitor your portfolio so as not to miss out on your income.
21% is the fall in savings rate in India since 2008. The current saving rate stands at 30.9% of GDP of which household sector is the biggest contributor. Household savings rate dropped a percent in 2012-13 to 22.8% of GDP.
Takeaway: Well, the takeaway is obvious here, isn’t it?
The need to save money is the basic principle in the skill of money management. However, I would like to make a small addition: As important it is to save money, it is equally important to channel it to productive use. Thus, it is extremely necessary that your savings are not lying idle at home but are being used to generate more money.
So, that is pretty much about the story of numbers behind “Money” in India!
Hope that these numbers would strengthen the hypothesis on “managing money”.
Any thoughts/opinions, please mention in the comments below!
Cheers

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