Friday, April 29, 2016

Why investing in LIC is a very bad idea….

Long time ago, when I knew money needs to be saved, but cared little to know about finance or economics I had purchased a pension plan from LIC. Swayed by a sweet speaking, erudite LIC agent I took in a 25 year pension plan (only thing I knew those days was that investment had to be long term). The monthly premium was quite small- it was a stepping stone after all, out from Post office savings and banks FD’s to the exciting world of equities and bonds.
With monthly SIP’s automatically getting deducted, I did not follow up on the performance of my investment for years. As years passed on and when my interest on all things finance kindled, I remembered my first LIC investment – How was it doing? What were the returns? And many such plethora of questions rushed to my mind. After many years, I logged into my account and checked the values. Well the balance was more than the investment. That was a good sign.
Then I plugged in the numbers and the preliminary returns turned out to be a measly 4.1% ! I wanted to calculate the exact returns on my investment (XIRR) for which I needed to know the monthly deductions (various charges levied by LIC), NAV at which the units were purchased and the date of purchase every month.
So I called up the agent and asked him to give me these details. He was flummoxed at my request, looked at my numbers and told me- “well you have for a 5.5 % return.”. I told him “That is simple interest, what about compound interest, or what about IRR, XIRR?”. To which he replied my LIC app. Does not give those details!! Realising that it was a futile endeavor, I decided to write to the LIC’s regional office to give me the NAV details. After beating around the bush in a couple of mail’s, LIC finally admitted that they had NAV details of only 1 year and they can’t find the other 6 or so years.
“The details are not important, they are required only to calculate your returns you see… “ was the indirect message that was being conveyed.
With so many people investing in LIC, I wanted to know how good their investments are doing. Are they making justice to people hard earned money? So I began my research- it was pretty simple, I only had to read LIC’s balance sheet.
This is what I discovered.
Year
Income from Investments (Crore)
Investments (Crore)
Returns
Average return on a Bank FD during the same period
Difference
2005-06
35,479
524,017
6.80%
8%
1.20%
2006-07
40,572
613,267
6.60%
8.20%
1.60%
2007-08
47,999
756,891
6.30%
8%
1.70%
2008-09
56,583
815,484
6.90%
8%
1.10%
2009-10
67,198
1,095,841
6.10%
7.80%
1.70%
2010-11
77,667
1,266,539
6.10%
8.20%
2.10%
2011-12
90,267
1,349,532
6.70%
8.70%
2%
2012-13
103,882
1,486,457
7.00%
9%
2%
2013-14
118,097
1,684,690
7.00%
9.20%
2.20%
2014-15
135,483
1,946,249
7.00%
8.50%
1.50%

As you can see, LIC has done a pretty miserable job when it comes to managing people’s money. It has been lagging behind even bank FD’s by more than 150 basis point and in some years even by 200 basis points. If one had kept their savings in a banks FD, they would have generated better returns.
Also, as you can see from the above table, the money people are investing in LIC is certainly growing. Thanks to the “Govt. backed up” tag it has got. Government has been milking its cash cow for many years and will continue to keep doing so. Well as long as government interference continues, all your hard earned money in LIC is certainly doomed.

Well, LIC is anyway a poor investment disguised as an insurance, which is generally inadequate. So to all my friends reading this get wise and forget LIC… 

Thursday, April 28, 2016

Honeycomb adventure

There was a honeybee hive growing on two of our chickoo (choko, Sapota, Sapodilla) trees and with the fruits ready to be harvested, it was quite tricky to pluck them without disturbing the hive. So we finally decided to remove the hive. With no idea how to go about it- the general consensus was to burn the hive down. 
This is something that really bothered me. One is, bees are in decline and although they are not classified as endangered they are rapidly falling in numbers  (thanks to all the chemical farming methods and climate change )
The second reason being, it is these bees that had pollinated our fruits and vegetables and we need them to continue pollinating them- How could I burn them ? 

Fortunately for us we came across an elderly acquaintance of ours ,who just knew the technique of harvesting a honeycomb without killing the bees.  Just what the doctor ordered. 

So below is the video of how he went about it and he took me along (the trainee) to teach the method. It was simple, take a sharp knife, tie it to a long pole and cut the branch on which the bees have built a hive. Then run... 
video


Well, we just did that, and a few minutes later, most of the bees had abandoned their fallen hive. The few remaining ones were not just bothered as we picked and handled the hive. 

I must admit here that although no bee stung the master- one bee did sting the apprentice. It was darn painful. Well initiation ceremony perhaps. But I was happy to know that no bees were killed in making of this story (except the one that stung me )


The bee hive was quite old, so the bees had used about 85% of the honey they made. So despite the size of the hive we only managed to squeeze out about 45 ml of pure wild honey.


Well now we had a big hive to take care of and a hive has something very precious in it- Beeswax. 
Beeswax is used to make premium candles and pure natural beeswax also gets used in the making of high end cosmetics. Most of the off the shelf cosmetics use paraffin a much cheaper option.

Gram for gram bees wax is many times expensive than honey itself.  

So this is how I got the wax out. The hive was placed in a cotton cloth and a bundle made of it. The bundle is tightly knotted and put in boiling water. I used an old vessel, since once the process is over, the only thing the vessel can be used again is to make more beeswax.

I boiled the entire thing for 10 minutes constantly pressing it with a spatula to squeeze out the molten wax from the bundle.  

 10 minutes later the water turns brown and yellow waxy stuff appears. Take out the bundle and squeeze out all the water with a pair of tongs. All that remained in the cloth were dead bees and unhatched eggs.


Let the water cool down. Since it was a hot day, I refrigerated the vessel for 1 hour and the wax solidifies.



 The wax formed a nice rim and is smooth and can form a lovely salve for dry-skin in winter.

Well enough adventures for the day- the next honeycomb- for another day. This time the apprentice will be the master.

Monday, April 18, 2016

More precious than gold !

We have been growing turmeric organically for a couple of years now. Mostly for its aromatic leaves, in which we use to wrap and steam cook quite some delicacies. This year, we decided to go a step ahead and make turmeric powder from the rhizomes. 

After the green leaves wilt the rhizomes are generally harvested. Although our plants wilted in November itself, due to lack of commitment from our part we left the rhizomes in the ground. Mother nature takes care of them. Finally in April, we dug out the Rhizomes and manged to get about 4 kgs of them. We kept aside 250 grams of healthy looking rhizomes for the next crop and washed the rest of the turmeric rhizomes thoroughly to remove all mud.  


Next we boiled the turmeric for about 45 minutes. This boiling makes the turmeric yellow in colour and floods the kitchen with turmeric aroma. (my previous experiment with a small batch of unboiled turmeric gave me dark brown turmeric, instead of yellow ones.)  I boiled the turmeric till I was able to easily poke a fork them.


I decided not to peel the skin of the turmeric. Since our turmeric is organically grown, the skin can have only valuable nutrients, without any pesticide residue and it is too precious to be chucked away. On the other hand, the colour of the turmeric will not be bright yellow-orange, something that we can live with.


We then broke off the fingers that are attached to the rhizomes into individual bits and once boiled they easily snap off.
The turmeric was then dried in the scorching April sun and after two days of sun drying, they shrivel up quite a bit.

We then took a  hammer and pounded the rhizomes flat. The increased surface area helps in drying of the rhizomes. See the photograph below of a well flattened batch of once juicy, plump turmeric.


A couple of days more of sun drying and the turmeric is completely dry. It feels as hard as a stone.

Now comes the powdering part. Instead of giving it to a mill, we decided to use our normal mixer to grind it. Although it meant more work, we did not want to contaminate our organic harvest with other unknown batches.

15 seconds of grinding, at the lowest speed, gave quite good results.  I sieved the powder through the finest net and and residue was put in the jar again for another round of grinding.


After two rounds of grinding and sieving, nearly all the turmeric was converted into a fine powder.

The powder was as fine as the ones made commercially.

It took me 2 hours of grinding in small batches, to grind our entire quota of turmeric. 4 kg of rhizomes gave us 650 grams of turmeric powder. The colour may not be bright like the commercially available variety, but the aroma is as powerful if not more than any turmeric powder that I have seen.

Free from pesticides and adulterants, this jar should last us for six month. The next time we aim for a quantity that is enough for one year.