New Year Resolutions

I was reading the interview with CEO of a well known stock brokerage firm. This firm is in business from 1980s. I was wondering how much money these people, staff and management of these kind of companies, would have made out of share market. In 1980s people were not much aware of the stock market. I wish I invested some money in the equity market in the initial years of my career. But, I was fully unaware of these things on those days. But these people are lucky, they have been working in equity business from 1980s.

But I was surprised when this CEO told the interviewer that he is not in the habit of investing in equity market. He even started purchasing mutual funds from last year only. I thought it is like some old small restaurant owners. They cook for the community, but never have food from their own shops. Their lunch was brought from their home. Is it like that? This CEO advises all people to invest in shares, but never invests by himself.

But this news relieved me. I am not only person, who is not practicing what he preaches. Yes, I am not practicing many things I write in this blog. Shocked? But, I started thinking about money just two years ago, and I promise you in next two years, my finance will be better managed. I am on my way.

Then what I need to improve? I think about it, as the new year is around the corner. Yes, it is time for new year resolutions. Usually, I don't believe in new year resolutions. If I find some thing is bad, I will stop it immediately. Similarly, if I find some thing is good, I will start immediately. I will not wait for a new year to stop or start new things.

Still, I think what I can improve in the new year, financially. These will be my new year resolutions. Not in any particular order.

• I will setup enough emergency fund, just in case any thing goes unexpected.
• I will get enough insurance coverage.
• I will get enough medical insurance for me and my family.
• I will stop using my credit card.
• I will start tax planning from the start of the year.
• I will reduce my monthly expenses, so that expenses are well below earnings.
• I will start goal based investments. Now I have only one goal for my investments, get rich.
• I will diversify my portfolio by including some of the areas, where I do not invest. 
• Work hard, improve my competency at work, and do some apple polishing to my manager.

Enough? You can pick up any from these for your own new year resolutions.  New year is, of course, a great time for a new start.

Happy New Year!

Lies in the Tax Planning Session

We are into last month of the year, and people will soon start thinking about tax. In this month and in the first quarter of next year, we can see lot of seminars, articles on newspapers and magazines, speeches flooded everywhere. Ideally, the best time to start tax planning was last April, start of the last finance year. All these magazines should publish articles on tax planning during last April. So that people can join to Mutual Fund Systematic Investment Plans (SIP), Public Provident Funds (PPF), or even to insurance plans and keep on investing the entire year. But now we need to invest all money altogether. Some private employers will collect the investment proof to avoid TDS in December itself. So, we need to invest Rs 100,000 now to get full advantage of 80C.


People who are lucky to have Rs 100,000 in their Savings Accounts are lucky species. They can comfortably invest for tax saving. For others, what can we do now? Get personal loans? Go for Gold Loans? I have seen people are doing all these. If you have no money to invest for tax saving, just be a happy tax payer. I know losing a major part of your salary is painful. But, suffer that for long term advantage and promise to yourself that you will not repeat this again. Repeat what? Ignoring tax planning the entire year. Next year, start tax planning from April itself.

By the way, can we blame all publications for not reminding us about tax planning during the start of financial year? No. They publish what readers want to read. If they publish tax articles on April, who is going to read? We dig the well only when we are thirsty.

These thoughts came to my mind when I went for a tax planning session recently. That session turned out to be a canvassing by an LIC agent. The trainer quickly touched Home Loans and PPF to make it a tax planning session rather than an LIC session, and soon reached to his favorite LIC policies.

I am listing out some of the lies he shared in the session.

• Home loans are the best investment method, because it saves tax and real estate will always appreciate.
• Gold prices will never come down, so it is the safe investment.
• Never go for term insurance, you will not get any maturity benefits.
• Always go for LIC for insurance, because India Government is the guarantor for your investment in LIC.
• Income from Mutural Funds are taxable even if you sell after holding one year.
• Types of insurances - Money Back, Endowment and ULIPS. (Like any insurance agent, he will not speak about term insurance unless asked)
• Money back insurance policy is the best investment method (it contradicts with first point). If you join 5 policies regularly for next five years (one policy this year, another one next year, etc). So after five years the money back paid by first policy can be used to pay other policies. 
• Finally, the biggest one. Insurance and investment are same, so you can mix both.

I am not going to explain why I call these lies. Research and find out by yourself, if you want to. Or simply believe these and invest your money in endowment policies, money backs, ULIPS, wherever you like. After all, it is your money.You can do whatever you want with it.

Are You Working for Money?

Years ago I went for a job interview to a multi national company. One of the questions asked was "What do you work for". It did not take a moment to think, I answered "Money". The interviewer did not ask for an explanation then. But now recalling that question, I ask to myself, am I really working for money?

I have worked on many days 10 or 12 hours. There is no overtime pay in our company, so the company always pays for 8 hours a day. So, why do I work more hours? If I was really working for money, I would not have worked that extra time.

Not only me, I have seen many people working extra time ex-gratia. There are different reasons for this, passion for the job, satisfying their ego, insecurity feeling, competition, work culture, workaholism, you can name many. But if you say you are working the extra time for money, that will be a big lie.

Some companies have a grading system, which puts their employees in a rat race. For example, at the end of the year each employee is given a grade like A, B, C and D. So, every employee try to get an A, by beating other fellow employees. The employees are forced to work more time than their co-workers to get an A.Usually, these grades are linked to the percentage of salary hike the employees get. So, if they work extra time, they get an A. and A gets more money. So they are working more time for money?

But if you want to make more money, the easy and sure proof method is work 8 hours in your primary job, and for rest of your time work for a part time job. If you don't like to work for a part time job, start a business, where you can spend minimum time. But these methods are not comfortable as working long hours for your job.

If you are a workaholic, my advice for you is to start your own business, rather than working for some one else. Because, if it is your own business, as you work long time, you will be benefited. On the other hand if you work for some one else, you work hard, and he will make more money.

If you can strictly stick to the policy working-for-money, that has lot of advantages. For one, you will not care to work extra time, unless there is extra payment. For another, you will not care much about a confrontation with your manager, for another you will not care much about the rat race.

The primary reason for we are all working is money. Then we should not forget this primary reason due to the challenges and pressure we face at work.