We human beings deal with emotions day in day out. Emotions are very precious and they do communicate the feelings with accurately. I will make an attempt to stress on importance of controlling emotions in different scenarios
Professional:
In workplace no matter how much we try not to take things personally, we fail doing so all the time. There would be scenarios when you feel frustrated by lack of cooperation from a colleague impacting our work, lack of understanding from manager on our personal commitments or lack of respect from the customer. It is natural to feel emotional during situations but one need to understand impact of display of emotion before doing so. A colleague rightly commented in recent team meeting “Unless you know to control your emotions, there is no growth”. Very much true indeed!! It is the cool headed people who will win in professional world. The winners do not display emotional side when faced with adverse situations and are rather busy in working out a way out of the situation. Also for most people emotion dampens thought process and thus comes in way of though process and so it must be avoided in work place where we should be result oriented.
Personal:
In personal life we go through lot of emotions that we encounter in our day to day interactions. The display or control of emotions has its impact on the relations we hold and so this must be judiciously and carefully done. In work place lack of emotional intelligence can cost a career, in personal life it can be even costlier and can make or break a relation. A display of adverse emotion in a hurry can sometimes strain a relation beyond a point and the damage can at times be irrepairable. So control over emotions in personal life is extremely important.
Spiritual:
In spiritual progress control over emotion is a must. Story of Viswamithra highlights importance of control of emotions. His tapasya got corrupted because of lack of control over anger and sense desires and had to start all over again. So Adi Sankara said
Kama Krodascha Lobhascha
Dehe Thistanthi Taskarah
Gnana Ratnapaharaya
Tasmat Jagrata Jagrata
The control over emotions comes a big way in spiritual progress and with out this one would lose the grip over spiritual progress. We usually find spiritually matured person in serene and calm mood more often which supports the case.
Saturday, October 22, 2011
Wednesday, October 5, 2011
Financial Planning -- A Commoner’s guide:
I am by no means a financial expert by my qualifications. I will consider my self as a commoner who has learnt his bit on financial planning and trying to put things forward.
1. Contingency Fund:
Many of us ignore importance of having the contingency fund to meet day-to-day expenses in event of job loss or temporary situation when the bread earner is unable to work. But it is necessary to ensure we cover the family expenses for the temporary situation. Financial experts suggest that value of contingency fund should be no less than take 3month net salary. My view is contingency fund should be able to cover the family expenses and any liabilities like home loan for three months. It is not necessary for this fund to cover for the investment plans as investment plans can wait for temporary glitch in earning. It is important to keep the contingency fund in liquid form and in safe avenues like bank FDs.
2. Risk Cover/Insurance Cover:
Every young man who starts earning must first start his future plans with Insurance plans. Insurance comes cheaper when you are young and becomes premium as you grow old in age. I will try not to sound too pessimistic, but we don’t want our loved ones to face financial turmoil incase any unfortunate incident that happens to bread earner. This is the primary reason for going for insurance and tax benefit should be the secondary reason. Term Insurance or pure Risk Cover will ensure our loved ones are secure financially in case unfortunate death and it is the cheapest insurance. There are other plans which club investment with insurance like ULIPs. It is the discretion of the individual which plan to go for, even though lot of financial planners advice against clubbing investment and insurance. Adequate risk cover for a bread earner should be at least 100 times net monthly salary.
3. Own House:
Many of the people of this generation have taken home loans and purchased a house of their own, thanks to income tax clauses and real estate boom. Whether the property appreciates at the rate one wants or not is a different matter, but one’s first goal after marriage is to purchase a house. Many people think about it for years with out closing in on purchase due to
a) Not adequate money at hand for downpayment
b) Not able to withstand the pressure of long duration home loan & risky private jobs
c) House Rates look beyond reach
Apart from emotional satisfaction one has for living in own house, house also provides a shelter for us when we retire at absolutely no cost (rent). It is also collateral against which we can bank on during adverse situations that can arise in life. One house is mandatory and more than one can be a very good investment option.
4. Child Plans:
A new kid in the house changes entire perspective for the house. New mothers become very busy in attending to the VIP who has just come into the world. New fathers start thinking about how they can secure the future of the kid. Unfortunately most of the things get limited to buying a child plan. I am not trying to state that buying a child plan is bad. But banking just on child plan is bad. It is not always that the off-the-shelf child plans give necessary returns and so you also need to have backup options like gold, some debt schemes, real estate. These can come handy while paying for child’s education and planning for their future.
5. Lifestyle Funds:
Every one of us want to have a lifestyle which can keep us contend and satisfied with our lives. It is purely individual’s preference what this means. One person would be happy if he can visit romantic/tourist places in world where as other would be happy if he can lay his hand on every latest gadget available and another would want his car size/car brand to grow along with his age. Mark your lifestyle needs and have a separate planning for meeting these goals.
6. Retirement Planning:
Whether we like it or not, we age and become old. We would not be having the necessary energy or avenues to earn at that point. If you are working in private sector, you would not be entitled to pension during retirement like our dads did. So we need to plan ahead to ensure we get adequate corpus when we retire. I will try to list some few options and this is by no means exhaustive list
a) EPF: 8.5% return. Tax free interest. Safe investment with government guarantee. You can increase your contribution to EPF any time by consulting your employer.
b) PPF: 8% compounded return. Tax free interest. Safe investment with government guarantee. Locking period of 15 years.
c) Pension/Annuity Plan: Long term plan. No lumpsum payment except on unfortunate event of death.
d) NPS: Long term plan. One third of the annuity amount can be withdrawn in lumpsum and rest will be paid monthly on maturity. Flipside is returns are taxable.
e) Equities/MF: High risk and thus chance of high return. Good for young investors and choice of fund has to be made as per risk appetite. Need to monitor a bit to ensure the required returns are accrued. When nearing goal, one needs to withdraw and park amount in safer avenue so that no surprise can come up later.
f) Real Estate: A very good avenue for long term. Invest in this avenue for both value appreciation and regular income in terms of rent. Like all high return investments this also comes at its own risks like fluctuation of real estate rates.
g) Gold: Glittery Investment. Investment can be made either in form of physical gold or via Gold ETFs. Physical gold has risks like security and purity of the material where as in ETFs one would not get to see the gold at all physically. Due to fluctuating prices, this can also be categorized as high risk avenue.
h) Fixed Deposits: Low risk and low return. Money would be safe in custody of a bank but the yield may not be adequate enough to beat inflation. Another minus is returns are taxable.
1. Contingency Fund:
Many of us ignore importance of having the contingency fund to meet day-to-day expenses in event of job loss or temporary situation when the bread earner is unable to work. But it is necessary to ensure we cover the family expenses for the temporary situation. Financial experts suggest that value of contingency fund should be no less than take 3month net salary. My view is contingency fund should be able to cover the family expenses and any liabilities like home loan for three months. It is not necessary for this fund to cover for the investment plans as investment plans can wait for temporary glitch in earning. It is important to keep the contingency fund in liquid form and in safe avenues like bank FDs.
2. Risk Cover/Insurance Cover:
Every young man who starts earning must first start his future plans with Insurance plans. Insurance comes cheaper when you are young and becomes premium as you grow old in age. I will try not to sound too pessimistic, but we don’t want our loved ones to face financial turmoil incase any unfortunate incident that happens to bread earner. This is the primary reason for going for insurance and tax benefit should be the secondary reason. Term Insurance or pure Risk Cover will ensure our loved ones are secure financially in case unfortunate death and it is the cheapest insurance. There are other plans which club investment with insurance like ULIPs. It is the discretion of the individual which plan to go for, even though lot of financial planners advice against clubbing investment and insurance. Adequate risk cover for a bread earner should be at least 100 times net monthly salary.
3. Own House:
Many of the people of this generation have taken home loans and purchased a house of their own, thanks to income tax clauses and real estate boom. Whether the property appreciates at the rate one wants or not is a different matter, but one’s first goal after marriage is to purchase a house. Many people think about it for years with out closing in on purchase due to
a) Not adequate money at hand for downpayment
b) Not able to withstand the pressure of long duration home loan & risky private jobs
c) House Rates look beyond reach
Apart from emotional satisfaction one has for living in own house, house also provides a shelter for us when we retire at absolutely no cost (rent). It is also collateral against which we can bank on during adverse situations that can arise in life. One house is mandatory and more than one can be a very good investment option.
4. Child Plans:
A new kid in the house changes entire perspective for the house. New mothers become very busy in attending to the VIP who has just come into the world. New fathers start thinking about how they can secure the future of the kid. Unfortunately most of the things get limited to buying a child plan. I am not trying to state that buying a child plan is bad. But banking just on child plan is bad. It is not always that the off-the-shelf child plans give necessary returns and so you also need to have backup options like gold, some debt schemes, real estate. These can come handy while paying for child’s education and planning for their future.
5. Lifestyle Funds:
Every one of us want to have a lifestyle which can keep us contend and satisfied with our lives. It is purely individual’s preference what this means. One person would be happy if he can visit romantic/tourist places in world where as other would be happy if he can lay his hand on every latest gadget available and another would want his car size/car brand to grow along with his age. Mark your lifestyle needs and have a separate planning for meeting these goals.
6. Retirement Planning:
Whether we like it or not, we age and become old. We would not be having the necessary energy or avenues to earn at that point. If you are working in private sector, you would not be entitled to pension during retirement like our dads did. So we need to plan ahead to ensure we get adequate corpus when we retire. I will try to list some few options and this is by no means exhaustive list
a) EPF: 8.5% return. Tax free interest. Safe investment with government guarantee. You can increase your contribution to EPF any time by consulting your employer.
b) PPF: 8% compounded return. Tax free interest. Safe investment with government guarantee. Locking period of 15 years.
c) Pension/Annuity Plan: Long term plan. No lumpsum payment except on unfortunate event of death.
d) NPS: Long term plan. One third of the annuity amount can be withdrawn in lumpsum and rest will be paid monthly on maturity. Flipside is returns are taxable.
e) Equities/MF: High risk and thus chance of high return. Good for young investors and choice of fund has to be made as per risk appetite. Need to monitor a bit to ensure the required returns are accrued. When nearing goal, one needs to withdraw and park amount in safer avenue so that no surprise can come up later.
f) Real Estate: A very good avenue for long term. Invest in this avenue for both value appreciation and regular income in terms of rent. Like all high return investments this also comes at its own risks like fluctuation of real estate rates.
g) Gold: Glittery Investment. Investment can be made either in form of physical gold or via Gold ETFs. Physical gold has risks like security and purity of the material where as in ETFs one would not get to see the gold at all physically. Due to fluctuating prices, this can also be categorized as high risk avenue.
h) Fixed Deposits: Low risk and low return. Money would be safe in custody of a bank but the yield may not be adequate enough to beat inflation. Another minus is returns are taxable.
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