Making your crores

You are well paid, well off, have a good lifestyle. But can you afford to stop working? If your answer is 'No', then you are just financially stable - as long as you get your monthly cheque - but far from being financially independent. You're also not alone - a large number of people retire without being financially independent.

Financial independence is a state where you are free from all liabilities and have created sufficient wealth that can generate a constant stream of income that allows you to maintain your lifestyle without having to work them. Getting there requires meticulous planning and disciplined investment.

It also means revisiting your portfolio and investment strategy to ensure that your plan is not getting derailed by external factors like market forces and interest rate variables. Swatantra Kumar, 33, who works with a multinational firm in New Delhi, is a perfect example of a man moving towards attaining financial independence. Married to Shelly who also works, Kumar feels that he would need Rs 75 lakh for his three-year-old son, Lakshit's higher education, marriage and their own retirement. Swatantra invests Rs 24,000 per month in a disciplined manner in mutual funds, Public Provident Fund and National Savings Certificate to meet these goals.

To be financially independent you need just six simple steps - finding out how much money you have today, knowing how much you need for tomorrow, getting adequate life cover (through a pure term plan only, do not buy any other insurance product), investing the surplus as per your risk taking ability, and writing a Will.

Home buying tops the priority list of all individuals and also is one of the most important asset that one builds. Also, with the availability of loan, which offers tax benefits, it becomes more beneficial.

While experts advise not to take loan for a depreciating asset, they say that individuals should careful while taking a home loan and not over-leverage in a bid to build the asset.

"One should not stretch to buy the house, buy only when the income is sufficient to support the purchase and keep headroom to meet increase in EMI (equated monthly installment)," said Amar Pandit, a Mumbai-based financial planner. The EMI should be such that it offers room for saving. "Ensure that you save 10-30 per cent of your income after you have paid your EMIs as it will act as a cushion in rainy days and you will be able to pay the EMI from the corpus built," said Lovaii Navlakhi, managing director of the Bengaluru-based financial planning firm International Money Matters.

Once basic needs are covered, it is time to plan for wealth creation. Simple projections show that you do not need millions to make millions. All you need to do is begin investing - and begin early. An investment of Rs 5,000 per month started at age 25 can become Rs 1.6 crore by the age of 50 if invested in an instrument that returns an annual rate of 15 per cent.

"While equity and debt investment will differ individually, as a thumb rule one can allocate 100 minus your age in equity and the rest in debt," said Surya Bhatia, principal consultant at the Delhi-based financial planning firm, Asset Managers. "Gold can also form a part and one can invest 5-10 per cent in it."

How my handwriting has changed since Kindergarten

 

 

Why I hate Sachin Tendulkar? Still wish for Bharat Ratna!

Everytime the day starts off with the dazzling smile when I dream about sachin..He is the guy who made the whole nation stand on their feet.There are reasons to hate him...These are some to the person who lived his last 21 years in loving him...

1. He always plays a brilliant innings before my exam and hence doesn’t let me study. 

2. Every time that I think of becoming an atheist, he gets into the nineties and I have no choice but to pray.

3. Every time I take a resolution not to bite my nails, he gets into the nineties and I am left with no choice but to chew on my nails.

4. He costs way too much on ‘super selector’ but since I have to pick him, the rest of my team gets weakened.

5. During a match, invariably when I want to go to the bathroom, he hits a boundary and hence I have no choice but to sit and watch the replay. Even my father/friends wont allow me to change the sit when Sachin is batting. No one cares about my agony.

6. As soon as I convince myself that God does not exist, he plays a straight drive and proves me wrong.

7. He brings the whole country to a standstill whenever he bats.

8. And the last and the biggest reason why I hate Sachin Ramesh Tendulkar … He is going to retire sometime in the future .. A slightest thought about his retirement brings tears in my eyes .. When he will retire, I feel that my life will come to a complete standstill .. How will I live without watching him on the field, without seeing him scoring tons and tons of runs, without hearing his baby voice .. Uffff , why Sachin why ?? .. Why were you born In India and why did you play cricket ?? .. I just love you so much that we cant see you going ..

As they say, commit all your crime when Sachin is batting, coz even GOD is watching his batting. That he can feel more pain than the youngest team member and the oldest fan, is a fact that deserves a story by itself. But for me, that is enough to forget my pain and stand in unreserved applause for the man who makes me feel more Indian than any other. So true !! Hats off to the master !! I strongly recommend and pray for Bharat Ratna to him.

One word that can make you RICH

I am sure you are all dying to hear what is this word…..well the word is NO. Nahi chahiye. Nyet. Nein. Vendam. Nako. Nathi Jothu. Do not want…..

the single word is NO. When I was reading an article recently I saw an article with similar headlines…it was an article in Newsweek and it said 'One word Can Save Your Life: No'.Make no mistake this article was written by a doctor. She was not trying to save on deductibles, she was not trying to save money….AND THEY WERE APPLYING it to THEIR LIVES.

I could not but nod my head in agreement.

Cut. Come to India. With so many financial planners, quasi financial planners, quacks, banks, life and general insurance companies, mutual funds, portfolio advisors, portfolio managers, etc. fairly obviously somebody would have got you!

It is also so difficult NOT TO SEE THE ADVANTAGES when confronted by a good salesman (hopefully trained by me!!). Who can deny the need for focus, asset allocation, pension plan, child plan, neighbour's wife plan, own mother in hospital plan, funeral plan, broken dentures plan, cancer plan, kidney failure plan, tiger eating you on the highway plan, ….- given the right name, selling it to the retail 'prospect' seems like selling toothpaste.

If you have teeth, you have to buy toothpaste, right?

So if you have a child you need a child plan, if you have a body you should have a medical plan, if somebody you knew got cancer, you need a cancer plan. Like they say anybody with a forehead thinks he can plan, so be it! If you will retire you need a retirement plan. ….so on and so forth.

So you agree to a Wealth plan, a Child plan, a pension plan, a medical insurance plan, an endowment plan, a ULIP, and an income replacement plan. Then the next word 'Asset allocation'…sir you need to be in equities, gold, land, bonds, bank fixed deposits, post office savings, ppf, blah blah blah. Of course you need a few credit cards too.

Then the other word 'leveraging'. So you need a home loan, a car loan, a personal loan (taken to make the down payment of the house which you anyway cannot afford!), a travel or foreign tour plan, children's education loan, OMG these guys are innovative are they not?

Then the dreaded word diversification again. Large cap fund, banking fund, pharma fund, gold fund, midcap fund, small cap fund, elss.

Now that you have said yes to all this — he says sir you need to be in different fund houses too — so a Hdfc, Prudential Icici, Reliance, ….and a few more fund houses as per the distribution targets of the 'advisor'.

So now you have a fairly simple request converted to 4 pages of holdings, some as a SIP, some ULIPs, ….and the client is completely confused.

Frankly what does the customer need?

Well if he has the ability, need and willingness to invest in education he should look at a couple of well managed multi cap funds like Hdfc top 200, Hdfc equity fund, Pru I discovery, Franklin India Bluechip…one term plan, one credit card..or to make it even simpler an index fund.

And sir do not invest in a lumpsum — do a systematic investment plan, a systematic transfer plan, a trigger option, a variable investment plan, a weekly transfer, a monthly transfer plan……..another list of options!

Once he has the basics in place, he should learn the art of say NO. No to channels, magazines, websites, blogs, planners, …just keep it simple dude.

Read the article and you will be able to relate to the financial world what that article says about the Medical world.

PS: My doctor has kept me off medicines for the past 28 years. I love him. Not sure if I can say about all the doctors….I have a few friends, a few clients, a few readers of my blog, …..I just drew a parallel from a Newsweek article to our noble profession of advise!

The Roadies contestant and the Balochistan connection

He must have known what to expect. The auditioning panel always dishes out unhealthy dose of humiliation. So he smiles, seemingly unflappable.

It’s been so long since I saw television that I’m stunned at the sight of a young man being insulted on national television. I’m squirming on behalf of this aspiring Roadies contestant, angry at the ‘judges’ who are calling him stupid to his face.

But the next minute, the young man loses my sympathy when he says that he agrees with the ‘Ayodhya verdict’, though he doesn’t know what the verdict is. He doesn’t know what the Ayodhya issue is. He thinks Ayodhya is where a ‘war’ happened and confuses it with the big one in Kurukshetra (which features in the Mahabharata). This strapping young man also doesn’t know who the president of India is, but assumes she is male.

By the time the video clip ends, the interview panel is falling about laughing. They are calling him ‘cute’. How else do we deal with the fact that young, school-educated, urban Indians don’t know a thing about themselves or the forces that are shaping their nation? They’re so ignorant, they’re like children.

And what does the unfortunate Roadies aspirant have to say for himself? “I don’t watch the news much.” Yeah, why find out about politics or history when you can watch Roadies on TV, or even better — be on TV!

I wouldn’t have cared about his refusal to read newspapers, or choosing to spend his life in the gym. But the thing is, he has a vote. Sooner or later, he will look around and notice that things aren’t okay. He will be angry and will want to fix things. But he will not know about Ayodhya. And because he doesn’t read the news, he will not know how, despite a high-profile investigation being underway, official documents that could have told us about the Gujarat government’s handling of the riots might have been destroyed. And so, he will not use his vote wisely.

There was another video doing the rounds on Facebook a few months ago. A BBC (Urdu) reporter goes about Lahore, in Pakistan, asking people what they knew about Balochistan. Most people didn’t know anything, not even the names of Baloch towns. But they say, ‘It’s part of our country’. Others excuse themselves saying, ‘I’m not interested in politics’.

Sounds familiar, doesn’t it? We know there’s trouble in Manipur and Kashmir. But not much about the people there. Try talking to people in Mumbai or Delhi about why things are so bad in Kashmir, and you inevitably hear: “It’s an integral part of India!”

But we don’t want to know why there are questions about this integrity of India. Why get into the details, eh? We are not interested in politics. And we don’t like to read newspapers. We watch Roadies; we go the gym. And if things get bad, heck, for the sake of our nation/religion, we will use our muscles.

Watching the Roadies audition reminded me of some young men, volunteers for the Bajrang Dal in Mumbai, who wanted a Ram Mandir in Ayodhya. So I asked if they had read the Ramayana.

They hadn’t, and didn’t want to. They just wanted to take a train to Ayodhya and do whatever their leaders demanded. I also asked them if they had Muslim neighbours, friends, colleagues? The answer was: no.

A few months after this interview, Gujarat 2002 happened. I always wondered how young people become part of hate pogroms. Now I think I know. It comes from not knowing, not wanting to know.

An act of Teaching

 

A chemistry professor decided to teach his students a different lesson one day. Holding a glass of water in his hand, he asked the students, “How much do you think this glass of water weighs?” “500 grams!” came a voice from the back. “600,” said another student. “I don’t really know!” said the professor, holding the glass up to make sure everyone could see it. “And unless we weigh it, we won’t know.” With the glass still in his outstretched hand, the professor continued, “What will happen if I hold it like this for a few minutes?”

“Nothing!” came the reply. “Right, and if I hold it for an hour like this, what might happen?” “Your hand will begin to hurt,” said a student. “Indeed. And what would happen if I held the glass in my hand like this for 24 hours?”

“You would be in tremendous pain,” said one student. “Your hand will probably go numb,” said another. “Your arm will be paralyzed and we’ll need to rush you to the hospital!” said a student on the last bench.

“True,” said the professor. “But notice that through all this, the weight of the glass did not change. What then causes the pain?”

The class went quiet. The students seemed puzzled.“What should I do to avoid the pain?” asked the professor. “Put the glass down!” said a student.

“Well said!” exclaimed the professor. “And that’s a lesson I want you to remember. The problems and worries in life are like that glass of water. Think about them for a while and nothing happens. But think about it a bit longer and they begin to hurt. And if you think about them all day long, you will feel paralysed – incapable of doing anything. It’s important to remember to let go of your problems. Remember to put the glass down!”

We may not have been in that classroom that day, but it’s a lesson we would all do well to remember. Put the glass down! Always. It’s not just problems and worries. Sometimes, we feel hurt and betrayed by a friend. And we carry that grudge through our lives. It grows and causes us anguish and pain. Learning to forgive – and forget – is not just good for the other people, it’s great for you. Nelson Mandela spent 27 years in jail and when he was finally freed, you can understand how angry and vengeful he must have felt. But guess what? When he became President, he invited his jailers to be present at the inauguration – in the VIP seats! If he could forgive after 27 years of suffering, surely we can too.

It is the same with our fears too. A failure or an incident in early childhood becomes a deeply entrenched fear over time. Fear of public speaking, fear of Maths, fear of rejection. You name it, and chances are, we have it. Someone gave us that glass to hold when we were little kids – ‘you are clumsy, you are no good, you can’t do it’ - and we have faithfully held on to it all our lives. ‘I can’t’ - becomes a thought that stays in our mind and grows – leading us to complete paralysis. Time to put the glass down!

The story goes that there was a hardworking man who lived a contented life with his wife and children. Every evening when he returned from work, he’d follow a ritual. Outside the door to his house were three nails. On the first one, he’d put his hat. On the second he’d hang his coat. And on the third nail, he’d unwrap an imaginary turban from his head and ‘put’ it there. A friend happened to see this and inquired what he was putting on the third nail every day.

“Those are my problems, my worries and my anger,” said the man. “I have lots of that at work, but when I come home, I remember to take it off – and leave them outside. I don’t take them home with me.” Maybe you should learn to do that too. Starting today. Put the glass down. And see the difference!