OCTOBER 2022 | VOL. 17 THE ORANGE BOOK Leverage your FINANCIAL QUOTIENT Welcome happiness this festive season Enjoy festive shopping, but with care Festivals are time for meeting family and friends, enjoying delicious treats and shopping for delightful things – new clothes, new furniture, maybe even a new car! However, there are some cognitive biases that make us overspend beyond our budget. Let’s know more about them. 1. Anchoring Effect: Holding on to the first piece of information we get Whoa! ₹5,000 discounted to ₹3,000! What a steal deal! I must buy it! But Rahul, it’s STILL above our budget of ₹2,000! Some ways of not falling prey to this bias are: Stay firm to your budget Remind yourself of the other festive spends you need to do and think of all the things you can buy/do with the extra money you’d have spent on the outfit. OCTOBER 2022 | VOL.17 2. Bandwagon Effect: Following the Majority This psychological bias means that we tend to do something because most people around us are doing it, even if it is not aligned to our plans or goes beyond our guardrails. Mom! I want a XYX Box gaming console as a gift. ALL my friends are getting them! But Vivaan, it costs ₹45,000– and you don’t even like gaming! Some ways of not falling prey to this bias are: Delay the purchase and take a pause to think whether you really want the object you want to buy Remind yourself of what you really like and had planned to buy, e.g. a new racing bike rather than a gaming console. OCTOBER 2022 | VOL.17 3. Decoy Effect Retailers use this effect to persuade us to purchase items that are more profitable to them by introducing a ‘decoy’ that makes a more expensive item appear a more reasonable purchase. NewPhone Alpha Turbo NewPhone Alpha STORAGE NewPhone Alpha Turbo Zoom 128GB 128GB 256GB ₹22,000 ₹25,000 ₹28,000 TOUCH ID TURBO CHARGE PRICE From the above options, most buyers will ignore the leftmost basic model because it is “lesser” in almost every way when compared with the middle model, except the price- and the price difference is just ₹3,000. And now that they are already considering buying the more advanced model, it seems silly not to go for twice the storage for "only" ₹3,000/- more. Thus, the middle version is the decoy introduced by the phone company to get customers to buy the highest end phone. OCTOBER 2022 | VOL.17 You can even see this in movie theatres. When you go for a movie during the festive holidays, check how the popcorn is priced and you will know how the decoy effect works! Some ways of not falling prey to this bias are: Make a wishlist of parameters you want in your wishlisted item and divide them into 2 categories: those which are mandatory, and those which are optional. Stick to the list of mandatory requirements while finalising an option Set an upper limit on the amount you are willing to pay for the optional requirements, and ensure you don’t cross it. However, let us remember that being too vigilant about spending money can deprive us from giving joy to our loved ones as well as to ourselves and balance is always the key. OCTOBER 2022 | VOL.17 Festive Bonanza: Marquee Offers Here are some of our top offers from Festive Bonanza, hand-picked for you to add sparkle to the festive season! Up to `10,000 discount on minimum purchase of `50,000.������� Buy iPhone 14, starting at `2,497 per month. Offer Valid on Credit Cards Valid till: December 31, 2022 Get 10% cashback up to `4,000/- on minimum billing of `10,000/for purchase made on www.luxe.ajio.com. Offer Valid on Credit & Debit Cards* Offer Period: October 20 to 26, 2022 To check out more such exciting offers, CLICK HERE Offer Valid on Credit Cards* Valid till: November 30, 2022 *Not valid on Amazon Pay ICICI Bank Credit Card T&Cs� Get 25% discount on orders above `1,500 (excluding taxes). Offer Valid on Credit & Debit Cards Valid till: December 31, 2022 OCTOBER 2022 | VOL.17 Get Get 10% cashback 10% cashback up to `4,000 on minimum up to `4,000 on minimum purchase of `15,000/-���������������������������������������� purchase of `15,000/Offer Valid on Credit Cards* Valid till: November 30, 2022 Get 10% cashback up to `4,000 on minimum billing of `15,000/- Offer Valid on Credit Cards* Valid till: November 30, 2022 To check out more such exciting offers, CLICK HERE Offer Valid on Credit Cards* Valid till: November 30, 2022 *Not valid on Amazon Pay ICICI Bank Credit Card T&Cs Get 10% cashback up to `4,000 on minimum purchase of `15,000/Offer Valid on Credit Cards* Valid till: November 30, 2022 OCTOBER 2022 | VOL.17 8 things to do before buying your dream car using a car loan this festive season Many of us choose the festive season as the perfect time to buy our dream car. Car manufacturers and dealers also often have great offers at this time. So for all of you looking at buying a new car this festive season, here is your checklist of 8 things to do before you buy your dream car! Choose your Loan Tenure and type of interest rate Search, compare & select a car Customise your EMIs Check whether you have a pre-approved loan offer from your financier Check for other fees and charges Check if instant sanction/ disbursement is available Check loan-servicing service post disbursement Know/ Assess the % of Loan To Value (LTV) OCTOBER 2022 | VOL.17 1. Search, compare and select a car Car Buying Process Car Body Style (Hatchback, SUV, MUV, Sedan etc.) Choice of Engine (Petrol/Diesel/ EV/CNG) & Transmission (AT/MT) Buying Power/ Affordability/ Cost of Ownership Smart & Convenient attributes in Car Aftersales Service (Dealer Network/ Service Centres) New Launches Car Brand Value , Reviews & References (Brand Reliability & Innovations) Primary Attributes Present Car Condition e.g. Kilometres Driven, Accidental History etc. Warranty & Certified Car Resale Value (For future Car Upgrade) After Sales Support Additional attributes for buying used cars Verify the authenticity /title of Registration Certificate, NOC etc Easy access to Finance Fair Valuation Dealer Reputation OCTOBER 2022 | VOL.17 2. Check if you have a Pre-approved Car Loan offer with your bank /financier Avail a Car Loan from Branches of Banks/ Other Financiers Digital Loan Sanction from Financier Website Authorised Manufacturer Dealerships Organised Startups for Used Car Loans 3. Know/ Assess the % of Loan to Value (LTV) Higher the % of LTV, lower is the down payment Additional Funding – Check with your bank/ financier if they also offer loan on any add-ons like genuine accessories & manufacturer-backed AMC and service packages over and above the on-road car price. 4. Choose your Loan Tenure and type of interest rate Longer the tenure, lower the EMI Maximum Loan Tenure: 8 years For used cars: Loan is provided till age of car reaches 12 years Rate of Interest: Fixed (constant for whole loan tenure) or Floating (changes as per benchmark rate). OCTOBER 2022 | VOL.17 5. Customise your EMIs Standard Most common repayment method - Equated installments throughout the loan tenure. Graded Non-equated installments across loan tenure Generally reduces monthly EMI obligations. Balloon/ Bullet Balloon: Borrowers are to make lump sum payments towards the end of repayment tenure Bullet: Borrowers are to make Step-up Initial EMI is low and increases annually - Best suited for borrowers who expect income to increase annually. lump sum payments towards the end of every year. OCTOBER 2022 | VOL.17 6. Check if instant sanction/disbursement is available Servicing Time – Quick Loan Sanction allowing swift delivery of the dream car Documentation requisites – Minimal documentation making it a hassle free loan proceedings Dealer Disbursement – End to end Digital Customer Journey & financing with opportunity to avail loan disbursement easily and conveniently from the comfort of home, office or any remote location. 7. Check for other fees and charges Foreclosure &/or Part Pre-payment charges Processing fee & other charges Check for other charges as on financier website. 8. Check loan-servicing service post disbursement Ease of obtaining Statement of Accounts, Foreclosure Statements, No Objection Certificate etc. 13.45 Your Loan Account Home Loan Number of branches and proximity of branches Car Loan Dispute and grievance redressal mechanism Personal Loan Digital access to loan account. Statement OCTOBER 2022 | VOL.17 How Jini brought sparkle to the festive season without burning a hole in her savings! Jini had started working at her first job just a few months ago and was eager to shop for exciting festive gifts for family and friends with her own money. Unfortunately, her savings were not enough to buy all the exciting gifts she wanted. This is a setback many of us have faced at some point in life. Account Balance: `66,000.00 Insufficient Funds Available. Luckily, due to the power of Consumer Financing at No Cost EMI, we can now purchase consumer durables that seem ‘out of budget’ but can be purchased without worrying about the down-payment & huge lump-sum costs. So let’s know a bit more about Consumer Financing.� OCTOBER 2022 | VOL.17 Type of No Cost EMI offered by ICICI Bank Credit Card EMI Where can it be used? Offline (stores) Online* (ecommerce). Debit Card EMI Offline (stores) Online* (ecommerce). Cardless EMI Offline (stores) Online* (ecommerce). Consumer EMI @ Point of Sale Offline**. How does it work? Requirements You can convert the purchase transaction amount to EMI during or after the transaction. You need to have an ICICI Bank Credit Card. You can convert the purchase transaction amount to EMI only during the transaction. You need to have an ICICI Bank Debit Card. No need to carry a Credit or Debit Card You need to be a preapproved customer of the bank Simple OTP-based authentication process. You can avail EMI only within available limit. Walk in to any physical store which has an ICICI Bank representative EMI can be availed based on previous credit history and CIBIL report. Avail of EMI by speaking with the representative Can be availed only at physical stores (Paper-based process & NACH Mandate) KYC is done through Standard Government documents. * No paper work involved in the journey, complete digital process **Paper documentation involved, Sales Representatives help in the process OCTOBER 2022 | VOL.17 A festive take on investing in equities directly Vs Equity Mutual Funds* One of the most popular festive sweet dishes across the country is undoubtedly the Gulab Jamun. While some of us make them painstakingly from scratch, others prefer outsourcing the task to the expert professionals and buying them ready-made. And, in keeping with the festive spirit, we can extend the same analogy to equity investing as well! Investing in equities directly = Making Gulab Jamun at home from scratch Need Managing an equity portfolio Making Gulab Jamuns at home Knowledge about the companies and sectors Knowledge about the ingredients and the recipe Time Time Resources Ingredients Inclination Inclination Investing in equity MFs* = Buying Gulab Jamun readymade Need Investing in Equity Mutual Funds* Buying Gulab Jamuns from a sweetshop Little to no knowledge No Knowledge Less Time No Time Fund Management Charges Higher Price to be paid *ICICI Bank Limited is a AMFI Registered Mutual Fund Distributor. Mutual Fund investments are subject to market risk. Read all scheme related documents carefully. T&C Apply. OCTOBER 2022 | VOL.17 Who may want to invest in Equities directly? Investors who have developed expertise in securities market should consider investing directly in stocks, as managing an equity portfolio needs time, knowledge, resources and inclination. Time Fundamental & Technical Analysis Knowledge & Experience Tracking market developments Reading Balance Sheet and P&L A/C Regular monitoring of the portfolio Interpretation of Fundamental analysis & technical charts Risk & Valuation ratios Inclination Regular monitoring Resources Stock as well as market level developments Access to company specific financial reports Review & rebalancing or regular intervals Software for technical charts OCTOBER 2022 | VOL.17 Who may want to invest in Equity Mutual Funds*? Beginners or those who do not have adequate time or willingness to devote time to this activity may find investing in equities through mutual funds more convenient. Beginners Build long term wealth Managed by professional Fund Managers Backed by the research team Diversification Tax Efficiency** Tax saving u/s 80C for ELSS Funds Administration Easy & convenient administration Lesser time and expertise needed No daily tracking is needed Tax efficient structure Some of the benefits of investing in Mutual Funds over direct equity are: Professional management of funds Portfolio diversification Convenient administration Tax advantage *ICICI Bank Limited is a AMFI Registered Mutual Fund Distributor. Mutual Fund investments are subject to market risk. Read all scheme related documents carefully. T&C Apply. **Tax Benefits are subject to amendments in tax laws from time to time. The material in this document is derived from sources ICICI Bank believes to be reliable but which have not been independently verified. In preparing this document, ICICI Bank has relied upon the information available from public sources and claims no ownership of the same. ICICI Bank makes no guarantee of the accuracy and completeness of factual or analytical data and is not responsible for errors of transmission or reception and hereby disclaim any liability with regard to the same. OCTOBER 2022 | VOL.17 We hope you liked this volume of We would really appreciate your feedback. CLICK HERE to share your feedback and suggestions. Thank you. Connect with us for banking solutions: : Call us on 1800 1080 : WhatsApp ‘Start’ to 86400 86400. Click here to view the disclaimer OCTOBER 2022 | VOL.17