Living beings and the Lifeless things......

Today while looking out of my balcony while I was looking at the mountains, and this thought crossed my mind.

The rocks, the wood, the metal, the deadflower, the rotten food and many such things.... they all appear as lifeless... but are they really?

The rocks from the mountains are used to consruct house in which we live, the wood is used to make furnitures which we use for our comfort, the metal is used for making car which helps us travel, the deadflower turns into manure, the rotten food is food for the microscopic and sometimes macroscopic organisms.... and so on... its like there is no end to this.

These all things may not be having life in themselves but they surely make our life easy. I appreciate and acknowledge these lifeless lives and this realization has added a new perspective to me for looking at everything from a new dimension, and that new dimension is 'LOVE'.... Love for all, the living beings and the lifeless things.

Ownership of House Vs Rental stay…..

There is a big debate when it comes to making a decision pertaining to House. Some believe owning a house is best thing to do, while few others feel staying on a rental flat is better.  If you are in the same dilemma this post will shed some light in helping you make an informed decision.

Let us first take a look at what happens when you buy a flat?

The first thing is how you want to buy this flat, meaning from own funds fully or will you be taking a loan? If own funds then there is not much to think go ahead and just buy it. However, if you are planning to raise a loan then you need to consider the following:

·         What will be the quantum of loan?

·         Whether your income supports this quantum?

·         What will be the loan tenure?

·         Will this be your last property purchase for self-use or is it the first?

Why above questions are important to answer, you will find out soon…

Typically it is observed that if you are buying 1^st property at an early age you probably do not have very high income to take up a 2 BHK apartment and hence will settle for 1 BHK flat. Over a period of time your income rises and so is the family… right? Now with this surplus income you are in a better position to move in a 2 BHK apartment. So in say 5-7 years you probably will sell your 1 BHK. After clearing the outstanding loan if any, the balance amount you will utilize to make down payment for new 2 BHK flat. This flat is also bought on loan most likely. If yes, you are again under burden of loan. As the flat is big so will be the EMI, property tax, maintenance and other related expenses.  In some cases people go a step ahead and buy 3BHK or 4 BHK after another 5-7 years. Typically this will be your last property for self-use, as you may be in your late 50’s or sixties.

Now, if you analyze the above scenario you will notice that in about 15-20 years of time horizon you change anywhere between 2- 3 houses. All the houses were bought on loan. Since in former years of loan most of the EMI (Equated Monthly Installment) goes towards interest payments you end up paying only interest in first 5-7 years. Not to forget the amounts you had spent on registration and stamp duty, and other relevant taxes, maintenance which you paid for the society, property taxes, and repairs and renovation and interior decoration if you did any. When you sell the property the money spend on these never comes back only property appreciation is what you get. One major change which happens during this phase is that children are growing and maybe after education will take up job and move out. Now only you and your partner is left out in this big 3 or 4 BHK. So now this big house is too big for just 2 people.

What happens when you stay on rent?

The rent amount is always less than the EMI amount. For e.g. if you decide to stay in a decent society in 1 BHK and if you decide to buy, you may end up paying about say Rs.38, 000/- as an EMI plus maintenance and property tax, etc. So typically if the cost of the flat is say rupees fifty lakhs, then close to 15 lakhs goes towards down payment and Stamp duty and registration charges. Whereas the same flat in same society will be available for a monthly rental of about Rs.12, 000/-You end up saving about Rs. 30,000/- every month. Start an SIP of this amount, and increase it over period of time as your earnings grow and as long as you wish to stay on rent.

When you stay on rent there is always a concern about changing the flat every 11 months, yes?

Well this is really not as big a concern as you may think. Why? Most of the investors buy flat for rental incomes. These investors are cash rich and may not be looking forward to sell their flat any time soon. Also these investors are open to enter into 33 months to 55 months of rent agreement. This helps you both in saving the cost of brokerage payment every year. The brokerage is paid only once in 55 months. Yes the rent increases typically by 10% every 11 months but then you do not have the burden of EMI. As your family size and income grows you may at any time decide to move to a bigger flat. When your responsibilities towards yours kid’s education and marriage is over they probably will move out and would like to stay on their own maybe in same city, or any other location depending upon their job placement.  Now when only you and your partner are left behind you may take a call how big a flat you people actually need, and take decision accordingly.

As mentioned earlier should you had invested the balance amounts available since no EMI’s were paid over these years, you will have enough corpus to buy the desired property from your own funds. The other benefit of this is you get upper hand in negotiations since you have the capacity to pay the entire amount in one single go J

So give some careful thought to the above two scenarios if you are looking forward towards making a decision of owning or renting a property. See which of the above two makes more sense to you based on your current financial position and family requirements, and just go ahead with your decision. 

We all need Motivation and Inspiration.....

Dear readers,

As I have mentioned in my profile, this blog is to express my thoughts, share my experiences and learnings. So keeping in tune with the same, today I wish to share this learning which I had learnt at some point of time but somehow had forgotten all about it.

Today I saw this really interesting video “Expect Divine Intervention” week 7, by Priya Kumar.

I have been following this 52 week series video for some time now. Priya is so committed in helping people achieve their goals that she has taken it unto herself to inspire and motivate all the aspirants who want to do something big in their life. Through her “Youtube” videos 52 week series which she calls “Creators of the future workshop” Priya is giving her best to ensure that you stay focused, and on track in achieving your goals. In order to do this, every Friday Priya posts one video wherein she shares a story, an idea or her personal experience, and at times advice. The idea is to keep us motivated and inspired and stay focused in achieving our goals. Be it becoming successful or grow rich or aspire to being the best in whatever one wants to do.

In this particular video with the help of an old story she has very beautifully explained that how everybody and every event that happens in our life is not merely an accident but a “Divine Intervention” in itself.

I got instantly connected to this particular video. My life experiences has also taught me the same and reached the same conclusion a long ago which Priya shares in this video.

I always try to keep an open mind, and indulge myself in experiencing the life as it happens. I meet wonderful people, exchange ideas, share stories and life experiences. From my personal experiences in this life so far, I am so very grateful to all the people whom I have met so far, as they have all directly or indirectly contributed greatly to my life. They have all helped me grow and evolve in to being whatever I am today. Although, I try every day to be conscious of my actions, sometimes I do go off track. Today this video by Priya helped me notice one such point.

While seeing this videos, it dawned on me that at times I start rambling only about myself without even asking the other person about his or her interests. Thank you so much Priya for your message, got it and absorbed it 

About Priya….all I know is that she is doing a great job and if you want to know more about her, as to who she is and what all she does, please log on to“www.priya-kumar.com”

I am sure her work will not only touch you, but will also inspire and motivate you all too, as she inspires me. I believe in appreciating and promoting the good work. I am doing my bit, and if you all too share the same feeling I humbly request you to please help her reach out to more lives.

Apologies

Dear All,
In my Post "Risk of not taking risks" published on16th October 2017, in the last line I had mentioned the title of my next article as "Good SIP, Bad SIP"
It is actually "Good EMI, Bad EMI"
I deeply regret the miscommunication and sincerely apologise for the same.

Good EMI, Bad EMI.....

It’s so strange the way people in general are dealing with money. In my interactions when I ask people I meet what they like, paying interest or earning interest? Almost all of them want to earn interest, and yet they end up paying one. Why is it happening?

As students while we were in school we have all learned in economics that wants are unlimited.  It is practically impossible to have everything we want. Yet we are overtaken by the innate desire to satisfy our wants.  The other big factor is, instant gratification and pride of ownership. New car is launched and we want to buy it, or a new phone is come into the market and we want to have it, the list is endless. And also practically everything today is available on EMI, be it mobile phone, or travel and tourism, electronics, automobiles, house, even insurance is now available on EMI the list is long. Some even come with zero down payment schemes.  So then how do we decide if buying things on EMI is good or bad?

I guess the following case study will help you understand this better.  Aman and Ajay decides to purchase a car. They both pay a certain down payment and balance amount is raised through loan. Let us say they are both paying an EMI of Rs.8600/ month for a 5 years loan tenure.

Now, Aman needed car because he uses his car every day for commuting to and fro for work and on week end’s he takes his family for outings too. Ajay on the other hand travels by train for his work place and never takes his car to office. Once a month he goes to shopping mall for grocery purchase, and in a fortnight he goes for outings with his family.

In Aman’s case since he is using his car to optimum his paying EMI is justified. But in Ajay’s case he is hardly using the car for 5 days, and almost 25 days of month his car is not used. On these 5 days when Ajay goes for outings or grocery purchase, even if he takes an air conditioned cab on all these days his total expense will be much lower than what he is paying as EMI. This my friends is a bad EMI. There is no visible need for him to own a car. The difference money could be used for something more useful.

This is just one example, there are so many things where money is spend unnecessarily. What is needed is the sensibility to ask your own self every time you want to buy something especially on EMI are these questions…… Do I really need this? How important this purchase is? And lastly whether it can be postponed? If the answer to these are all positive then by all means buy things on EMI, but if even one of the answers is negative please avoid the purchase.

Temptations are always there but how to take charge of them and not get carried away by them is something you need to learn and bring in to practice. It is not easy but if you are determined and want to live stress free life in the long run, this is precisely what you really need.

Risk, of not taking Risk…..

Most of the prospects I meet, are very reluctant when it comes to investing in Mutual Funds or shares. Their usual answer is “Even if I get l less returns it is fine, but I want safety” Are you too in the same boat? If yes, please continue reading….
I am taking help of this recent meeting which I had with one of my friend’s dad. This gentleman is in his 70’s and has never invested in Mutual funds or Shares. According to him these are very risky investment avenues. He is a big fan of Postal Schemes and Bank Fixed Deposit’s (FD’s). I know his son for some time now, who is a good friend of mine. I had suggested him several times in the past about starting Systematic Investment Plan (SIP) in Mutual Funds. Somehow he never did it. Recently when we met, I asked him why he is not investing in SIP’s. He said his father is very conservative and that he is not in favor of it, and he will not do any investments without his father’s approval.
So with this backdrop, I asked my friend to arrange my meeting with his father. We all met at his residence about two days later in the evening. Everyone was sitting in front of me. My friend, his wife, parents and his brother. This is what happened….
After initial greetings I asked his father’s view about investing in Mutual Funds. He immediately said “Nahi re baba humko kuch maloom nahi hai iske bare mein, paisa doob gaya tou” (No no….. we don’t know anything about mutual funds, what if we lose money?) I understood the problem, the problem was lack of knowledge and understanding of the product, and hence unwillingness to invest in it. Now I could have spoken lots of things supporting my statements but I tried using a different approach. This is what I asked … Uncle, is it not true that people die on road due to accidents, some even while walking and some while driving, so is it not risky to walk or drive on road? And even when you see accidents happening why still you go out on road? He said yes accidents do happen and I am aware of this, but I am careful and keep an eye while walking and crossing the roads. I said, well that’s right uncle, because you have identified the risk, you take all the necessary precautions while walking on the road and hence it is not that risky now, yes? He agreed to this point. Then I asked his wife, aunty fire is very dangerous and yet you use it in your day to day life in your house to prepare food and light candle in the house temple, why? She said yes she is aware of it but she knows how to control the flame of the gas and so it is not that dangerous anymore. To this I said, that is exactly what my point is. Everything has an inherent risk. But if we know and understand the risk it can work in our favor. With these two explanations, they were now in the listening mode and wanted to know more. 
His father asked, but Mutual Funds are private funds, what is the guarantee if they close the shops tomorrow (Now, this was a valid concern). So I asked him, if he worked in a government organization or private? He said private organization. Then, I asked him why he worked in a private organization, even when he knew that there is no job security in private sector companies? He explained how large and good the company he worked for was. He also told that he had several senior friends and relatives who were working in private sector companies.  Talking to them and seeing them working for several years gave him the confidence, of joining a private sector organization. Knowing this, I then explained to him how well regulated and transparent Mutual Funds industry is and hence safe. 
His next concern then was that the returns are not guaranteed in mutual funds. Again a very valid question. This time I asked him about something which he knew well. What about the bank or Post office interest rates, are they the same now as it was about 5 years back, or increasing? He said it has come down. Yes, it has come down and he knew this because he has seen this happening to his investments. Next I asked him, will the current interest rate remain same going forward in future? He said possibly no. So is it not a risk you are taking, I asked. He was speech less. 
I then told him that the bank or post office FD’s guarantees the rate of interest only for the time for which it is taken. No one can say with surety what the interest rates will be 2 or 3 or 5 years down the line. Also the interest rates for PPF has changed several times in the past. It has come down from as high as 12 % per annum  in the year 2000 to present interest rate of 7.80 % per annum. Knowing these facts you still continue investing in FD’s and PPF, why? He said he only knew about these two investment avenues as there is not much to understand.
The lack of awareness and understanding about Mutual funds has kept him away from trying or investing in these wonderful product. I assured him that he need not worry because I know and understand financial products and the risks associated with each of them, as this is what I have been doing for almost 16 years now. I told him that I will take all necessary steps to ensure that his son’s investments in Mutual funds are managed well and that he will make some good money in long run if he follows my guidance and advice.
Uncle was relieved, as by now he understood that I know and understand the Art and Science of managing risk associated with Mutual Funds and other investments products. That day, I left their house carrying signed cheques and application forms of his son to start investments in Mutual Funds SIP’s. 
My friends, not knowing something is a “RISK”. But, when you know the risk, all you have to do is understand how it can be managed. And if you do not have enough time and energy to understand or learn it, please do not feel hesitant to take help of an expert.  Just like having a family doctor is important so is having a family financial advisor. 
I hope you enjoyed reading this article as much as I did writing it. For more information and knowledge on investing please keep reading my posts. Next article coming out soon…. “Good SIP, Bad SIP”.

My observations while Making Tea …..

Making tea in the morning is a daily chore for most of us. A refreshing cup of tea is a great way to start our day. But have you noticed something beyond, than just making the tea? Okay, let me take you through a virtual tour and the important lesson behind this tea making process.

The tea making process involves some basic ingredients. The vessel to contain the water, fire to heat and bring out the desired outcome from tea leaves, sugar and milk; a tea-cup or the mug ( I personally prefer drinking my tea in a coffee mug) and most importantly the filter. Why filter? Because we only want to have the tea in its purest form and not the contents which made it, right? As much as the contents are important in the making process but the desired intake is the tea which we want to drink. This is what we look forward for every day in the mornings…. the little joy of life and great way to start our day, a good cup of TEA.

Now, why so much fuss over this tea making process and the tea itself?

Well if we observe closely and apply this to our day to day life we will find that each of us wants to lead a good life and grow as an individual also, every day. But we are not leaving alone, there are others with whom we all deal in our day to life. Our mind is like that water for the tea which is inside the container over the gas flame. Throughout the day we meet various people of which some are sweet like sugar, while some are bitter like the tea leaves, and most importantly do not forget about those who make our blood pressure shoot up, just like the fire which makes the water boil. While dealing with all these people we also look upon someone who is bright as a milk and who inspires us to look at the brighter side of life. Each one of these people is important and contribute in our life, and in making us who we are.

Each one has a role to play and we need to develop the humility and grace to understand the teaching or lessons they impart. It is only when we learn and understand how to extract/ filter (just like we filter the tea from its ingredients) the lessons which they are imparting without even knowing it themselves, will we appreciate the art and science of tea making and our own making too.
Just as making a good and refreshing tea every morning is our ultimate goal in making it, and then discarding the unwanted stuff from these ingredients, similarly to grow as an individual and becoming a good human being we must look out for the good things in all and stay away from those who are bringing negativity into our lives. This filtering needs to be practiced every day consciously until it becomes our second nature. If we are open to learning and growing as a person, we need to start paying attention to everything possible. All important life lessons are everywhere, even in tea making ;)

Real Vs Perceived returns…

I have come across people who often complain about their money not growing. This is a very common thing, and today I will try to shed some light on this issue.
All the investments products comes with its merits and demerits. Some are high on risk and so give better returns as well. While with the safer investments returns will always be low. Now when I speak about returns, please note that there are two kinds of returns. One is the perceived returns other is the real return.
Ok, so what do I mean by this?
The answer is quite simple. Let me put it this way, supposing one decides to make investment in Bank Fixed Deposit and, say the bank is offering an interest rate of 8.25% per annum on its fixed deposit for a period of say three years. This 8.25% is not the actual returns on your investment, it’s a perceived return. You have not factored in the tax implication and the inflation on this. When you apply these two parameters your actual returns will be different. To illustrate this let me consider the following example.
Suppose you want to invest Rs. 100, 000/- for a period of 3 years @ 8.25% per annum (simple interest) in a bank fixed deposit. So the amount you will receive on maturity is Rs. 124, 750/-, this will be mentioned in your fixed deposit certificate.
Now if you are in 30% tax bracket you will have to pay tax on the interest earned, which comes to about Rs. 8167.50/- (including cess & surcharge) thus now the interest earned has come down to Rs. 16,582.50/- To this amount when we apply an inflation which is Rs.15,122.50/-  (from Year 2014 through 2016) the actual amount that works out is Rs. 1,460 /-
So you see, Rs. 24,750/- which you initially saw is the perceived returns while Rs. 1,460/- is the real return that your investment actually will give. So how do you decide which investment product should you choose? Well that depends on the time you want to invest for and also the amount of risk you are willing to take. If your investment horizon is short term, say less than three years, better stick to fixed deposits or Mutual funds debt funds. If it is between 3 to 5 years you may opt for balanced and or diversified equity mutual funds. For tenure more than 5 years you may consider investing in equity oriented mutual schemes and shares. These my friends is only a general guideline and not an investment advice or recommendation. The idea is only to make you aware of the fact that please factor in the inflation and tax implications before you make any investment decision when planning for your various financial goals. And, please consult your financial advisor before making any investments decisions.
I hope you will choose wisely where you invest your hard earned money, so that your money works harder for you, than you work to earn it.


P.S:- Cost Inflation Index (CII) for each year is published by The Government of India, Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, and can be accessed online.

Soulmate….

As a person we all have the mind to think (Intellect), varied sense of feelings (Emotions) and the body (Physical being). The band or spectrum of these three may vary in different people as with others.

We connect with different people at different levels. It can be intellectual, emotional or physical. If any one of this connection is established we say we have a ‘connect’.

This first level of connection may or may not lead to the second level connect. But if connection is established at any two out of the above three levels, there is a very high possibility that third level connection can also come into force.

Look amongst the relationships you have or have had, be it with friend, relative, colleague, people you have come across in life so far. With each one of them you connect at some level. With complete stranger you may develop one someday.

So in our life there are some people with whom we can talk anything as far as it is intellectual, but with other we only talk personal and or emotional stuff, yet with others it is more of physical connect something like hand holding, kissing, cuddling, walking together, etc… which involves more of bodily connect (not necessarily sexual). One of these connect will always be dominant with some while with limited few all is well balanced. Thus, when we connect with people at all the three levels they are our Soul-mates, they stay in our life forever 

The possibility is that there may be either no one, while sometimes we may have one or even more Soul-mates. Anyone can be our soul-mate, possibility is endless……

Having said that, there is one more kind of soul-mate, that ONE very special person with whom we already are or may someday connect at one higher level which is above these all soul-mates. You will know in your heart of hearts, this is the one. With this awareness and realization, the connection is absolute, and the circle is complete. This special person is your “SOULMATE”.

With this special person you will develop a level of bond which is above everyone and everything else. No matter what, you will always be together. Growing together as individuals and as a couple. This is your companion for life the one with whom you want to share everything….. Your experiences, your ideas, your feelings, your needs, nothing remains incomplete.

You might be surely knowing such a couple. One look at them and you know they are complete “A Perfect Couple”. Married or not married, the only thing that matters to them is being together. Some get lucky very first time either knowingly or unknowingly…. while others are in search or might start their search someday.

Have you found your “SOULMATE” yet?

Appreciating Assets….. Depreciating Assets.

What is an Asset? Simply speaking it is an item or a product or a thing bought for a particular price, which increases in value with the passing of time.
A good example of this type of an asset is “Property”. Generally it is seen that the value of property increases over period of years. Thus investment in property can be called as an appreciating asset. Similarly an investment in purchasing a car for example is a classic example of a depreciating asset. Why? Because when you want to sell this car you do not get the price at which you bought it, forget about getting more over and above the price at which you bought it.
Knowing this basic fundamentals, why do people still end up investing in depreciating asset? One probable answer could be that they do not know the difference between them or two they do not know the difference in affordability and sensible spending.
As humans we often get tempted and this leads to impulsive buying. We do not think if the purchase is going to add value or not? If you sit and analyze about all the purchases you made in say last 5 years, you will find that most of them which once you bought are not even being used.  And if you agree with this, then don’t you think it is time for you NOW to take charge of your buying behavior and spending decisions.
So how can that be done? Well it may sound simple but in reality it is not that easy. First of all you need to know the difference between both an Appreciating asset and a Depreciating Asset. As seen above any purchase which adds value or increases in value over and above its purchase price over a period of time is an Appreciating Asset. Few classic and general example of an appreciating assets are Investments made in Property or real estate; financial products like Mutual Funds, Shares, Public Provident Fund, Unit Linked Plans etc. Precious metals like silver, gold and diamonds; collective items like Arts and antiques etc. Similarly some of the best examples of depreciating assets are Vehicles like Car and Bike, Electronic items, Gadgets like phones, laptops etc. Amounts spent on unwanted furniture and interiors done at home.
Having explained the above I am not trying to dictate what you should buy or what you should not, this decision is something which you all need to make. But what I am trying to bring to your attention is the fact that you must carefully analyze your needs and requirements before you make your purchases. In the world and times that we are living there are few things which we need to do in order to stay with times, and we need to spend on these depreciating assets too, so how can a balance be achieved?
I have this approach in most of the purchasing decisions I take, it helps me have the best of both worlds. And you know what? It works for me, may be it will work for you too. No harm in trying, right? Recently I had to change my cell phone. Smartphones are available at every price point nowadays. So this is what I asked myself before making my purchase…. What is it that I am looking for in a phone? I need the following basic things in my phone….making and receiving phone calls, using text message application, whatsapp messenger for sharing videos and pictures, and yes being a person on the move always I have to have continuous access to my business emails. So with these parameters set, I narrowed down my search for a decent Smart phone which not only served all my above mentioned purposes, but also was friendly on my pocket. Affordability is not the question here, being sensible with your purchases and money is 
My idea of writing these stories is not to impose my views on you all, but to educate you all on the basic concept of using your money in your best interest. If you adopt or try any or all of these ideas which I share and if it helps you manage your finances better than before, then my job is done as we can be much happier and stress free.

The Piggy Bank story……

All of us wants to be Happy and successful….. Yes????
But is the case so???
Hmmm, I pretty much thought so and if you are in sync with me, then I guess I might be able to help you out to some extent
Let me take you down memory lane. Do you remember that Piggy Bank which your parents got for you? Rings any bell…… Yes??? The “Piggy bank” which they gave you, well that piggy bank was not just an object, it was a medium which helped bring in Happiness to you.
The monies you got from your parents and sometimes relatives when you visited them, and during festivals and birthdays was asked to be put in this piggy bank. Sometimes which you did willingly and sometimes you were forced to do. Here my friends came the first lesson they taught you- “Save small and consistently”
While putting in this money you will also recollect number of times you would lift and shake that piggy bank to check how heavy or light it was. This check was to see for the time it will take for you to get that money and thus your object of desire. The second key thing they tried to teach you here was - “Time & Patience”
And then one day when the piggy bank is full, it’s time to open it and Voila…….. Happinesssss
Achieving financial success is no rocket science, but a really very simple philosophy…. Anybody and everybody can achieve financial success provided these simple steps are followed ….. "Start early, save small and consistent, give your investments time to grow and most importantly have patience"
If you liked this post, share it and forward it. Post your comments, it will help me to write and address your concerns better (if any) in my forthcoming posts.
Last but not the least…. if I can be useful in any way, please do not hesitate to ask. Backed with my rich experience of 16 years and with fair knowledge of investments and insurance products…..if I can make contribution to your life, I will be happy to help.