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Friday, August 31, 2012

Going to the Next Level

Over the weekend, lying aimlessly over a couch, I was watching my younger 9 year old daughter playing a strange sort of game with a glass of water and a small plastic toy.

She placed the small plastic toy (actually a very small car) inside a transparent empty glass of water and then she started pouring water into the glass slowly. As the water level was slowly rising in the glass, the small plastic car started floating in the glass. Since it was a transparent glass, she was having fun seeing the car go up in the glass. She stopped sometime while the water level had reached the middle of the glass. I asked her why did she stop? As with kids, they are always so honest and pure in their responses. She told me that she is tired of holding the jug from which she is slowly pouring water in the glass. I heard it and kept silent waiting for her to take the next step, if at all. I kept lying in the couch and tried to keep an eye on her next action. There she was, after 2-3 minutes, with the jug back in her hand. She had gathered enough courage once again to take her experiment forward. She picked up the jug and started pouring more water. I was also observing her face reaction as the water level and the car kept rising in the glass. As the car was moving up, her face was lighting up with excitement. And then, there came a point when the car reached the top and the glass was full with water. Any more water would just spill it. I thought that she would stop now. How wrong was I. My thinking was more based on what is the right thing to do as per me. But we all know kids. She did not stop. She kept pouring water and the water started to spill over. The car came out of the glass. Not bothering about who would clean the water spill, she took the car in her hand and went and gave it to her elder sister in the other room. Though i was a little upset with the water spill, i just controlled my anger and asked her why did she gave the car to her sister? She responded very politely that she had enough of playing  with the car and she would rather let someone else play with it. As she uttered these words, my anger started to calm down and i realised what a powerful lesson this experiment had with our lives.

We all come in this world full of excitement, courage and motivation. We all start filling the glass of our lives with the things that we feel would bring us happiness. We all feel that we need money to do that, and there is nothing wrong in that thinking. But somewhere in the middle of our lives, we get tired, demotivated and somehow unable to take our lives to the next level. Most of us are at this stage now. The glass of our lives is half full, the car is at the middle of the glass and we are tired, demotivated or have lost direction. We have worked so hard to reach at this level. What is going to take us to the next level ? Where are we headed ? We gathered enough money but now, somehow, i cant grow it further. Either i have got contended or i have just given up. Most of us will stop here and will never have enough courage to pick up the jug once again and start pouring the water in the glass. The jug of water still exists. There are ample opportunities outside to earn money and to strive for the next level. But, instead of trying harder, we would prefer to take the easy path and give all kind of excuses. I have personally heard excuses like - it is too late for me, i am trying my best, this is what God has in store for me, and some even go to the extent of saying that money does not buy you happiness, so why to chase it at all. Whatever be our excuse, you will find a selected few always picking up the jug once again and carrying on from here to become millionaires and billionaires. Were they born rich? No. Were they lucky? No. They just had enough courage every time they felt tired and directionless.

And what happened to these millionaires when they became billionaires? Were they more happy? I do not know. But one thing is sure that as the glass became full and as they had more money, they had the potential to change things around their society, country, world and humanity. They had a tool in their hands which has the potential to change the world, for better. Some of them, like Bill Gates and Azim Premji, actually took their spilled over pastic cars and handed over to others. These people are working with the sole purpose of improving the world around them, for the better. Do you have to be a CEO to do that? No. Are they the only ones? No, there are many more whom you may not have heard of. But you definitely can do much more for the society once your own glass is full. You will definitely have a better chance to start helping others if your glass is overflowing. The glass, once full, will automatically spill over and the water will be available for others to enjoy.

These are the same facts that you can apply in your life if you have to reach to the next level
1. Make sure you have enough courage during the middle of the journey to carry on to the next level. You may have to try new things, you may have to come out of your comfort zone, you may even have to go back and look at the bigger picture. But if you really want your life to make a difference to this world, you better get ready.
2. You will have to get your glass full. There are ample opportunities available. You must get financially free to make sure that your own glass gets full, before you start helping the society and the humanity around you. Once you are financially free and your glass gets full, the water will automatically start spilling over and will touch so many in need.

Nothing will happen of its own. Life will continue to carry on. You will have to get up and change the direction. I can assure you that you have the capability to do it. The only thing pending is a "Decision".


Manoj Arora

Tuesday, August 28, 2012

Live your life !!

Now a days, it seems that going through Facebook every day morning is more inspiring and much more healthier for your mind than reading newspaper or watching morning news over television. I have made this as my routine now. Since i am used to reading in the morning, i connect to Facebook rather than grabbing the local newspaper.

There were two distinctly unique quotations referred by two of my close friends on Facebook today. Though these statements are unique, still they carried a bondage which attracted me enough to share the same with all of my friends.

1. Success doesn't come to have to go and get it (courtesy : Rashmi R Das)
My Facebook friend shares an example of a typical restaurant where most of us pay to get our stuff, and not only we have to pay, we have to get up and get our order, rather than the same being delivered to us.
Life is so much like that. You can get whatever you want out of life provided :
a) You are ready to pay the price, and
b) You are ready to get up, make the effort, take the pain and strive towards it.

Most of us keep waiting for the opportunities to land in our laps...which does not happen in most cases. Opportunities would come and knock, provoke us to get up and then will see if we are ready to make the effort to get up or not. 

So, if you have a dream, get up my friend. 
Take the first step. This is the time.

2. Do not live someone else's life (courtesy : Arvind Khurana)
Though this was shared by one of my friends, he gave due credit to the owner of these lines (Steve Jobs). This is how it goes: 
Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma - which is living with the results of other people's thinking. Don't let the noise of others opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.
The unfortunate reality is that each one of us is stuck in our own rat race. We have forgotten to listen to our inner voice, we have stopped appreciating and chasing our dreams, we have stopped thinking about doing what we really want to do in life. We want to be with the crowd, perhaps because we feel that is safer. But the fact remains that it is only if we follow our heart and have the courage to take decisions, even if they are against the popular sentiment, we would be happy and peaceful.

I am leaving you with these 2 messages that have shaped my life as well - from an engineer in a rat race to a financially free man to an author to a social activist. 
I am taking steps every day that helps me chase my dreams. Are you ??



Sunday, August 26, 2012

You have no choice but to get into Stocks

Whether to seriously get into stocks or not - is a very debatable topic, not only with the Indian middle class mindset but also with investors across the globe.

Myths about Stock Market
Traditionally stocks have been associated with huge risks, losses, bankruptcy and many more negative aspects. Rarely, have we heard of stories where someone has consistently made good positive returns from the stock market, beating those from the traditional

Monday, August 20, 2012

Grace Period in your Life Insurance Policy

What is Life Insurance Policy?
A contract under which an insurance company agrees to pay money to a designated beneficiary upon the death of the policyholder. In exchange, the policyholder pays a regularly scheduled fee, known as the insurance premiums.
What is a Grace Period?
Typically, all insurers of life insurance companies provide for a grace period for the payment of the premium towards the policy. Grace period is typically 30 or 31 days from the due date of the insurance premium. You must check your policy documents for the exact grace period applicable for your policy. No penalty - either as interest or delayed payment - is required to be paid if full premium is deposited during the grace period.

What happens in case of death during the grace period?
The policy stays in force during the grace period. If the insured dies on the premium due date or during the grace period, the premium due for the policy month in which the insured dies will be subtracted from the death benefit. Apart from this, there is no other impact on the death benefit of the policy as long as the death happens during the grace period.

What happens if you do not pay by the end of the grace period ?
If you do not pay any premium by the end of the grace period, this policy will lapse as of the premium due date. You may put the policy back in force by meeting the requirements of the Reinstatement provision. In such a scenario, the beneficiary is not applicable for any death benefit. For re-instating the policy, it is advisable to read the policy documents and comply to the stated requirements.

What if you are moving from one insurance provider to another ?
Never cancel a policy that you are replacing until the new policy is in force. If you actively cancel a policy THERE IS NO GRACE PERIOD. You can let it go into the grace period if your new policy is close to going in force, but you and your agent should be very careful not to let it lapse until the new policy is in force.

The grace period is a very generous thing insurance companies provide. Make sure you understand it and always keep track of when the premium reminder should be coming and don’t hesitate to call the company or your agent if you think you should have received a premium reminder, but haven’t.

Take care


Manoj Arora

Sunday, August 19, 2012

Come out of Comfort Zone : A Tale of 2 seeds

Once upon a time, a person sowed two seeds in the lawn of his house. A few days passed by and the person took care of the seeds by giving them adequate water. After some time, one of the seeds was gathering all the courage and energy it needed to bust out of the earth's surface while the other was silently sitting behind and seeing what the first seed was attempting to do.

Saturday, August 18, 2012

Know more about Mutual Funds and their hidden costs

What are Mutual Funds
An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers (mostly on a chargeable basis), who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.

Are they part of your Portfolio
If you are new to your journey towards financial freedom, you may be having some inhibitions

Thursday, August 16, 2012

GOD will take your Unit Test

How many times have we started a new thing and then left it with the first obstacle we faced ? How many times have we created new year resolutions only to be broken by the evening of the first day of the year? We have even gone to the extent of saying to ourselves that resolutions are meant only to be broken. How many times have we decided that we would exercise from the next day, and realise that in the very first or second day, either we are not feeling well or it is raining outside or some one in the family is sick and therefore you cannot go today.

You and me and all of us face these situations almost everyday in life. Then why is that a very limited set of people only (less than 1% of us) are able to achieve what we thought of achieving and the remaining majority just resets the goals and try to start all over again waiting for the ideal situation or a circumstance or an auspicious occasion to get started. My experience says that all this is because of the absence of Step-1 in all our goals. When we create any goal, we always start from Step-2 and just skip Step-1 assuming that either it is not important or is a waste of time considering the fact that you want to achieve your goals rather quickly. It is just like saying that i do not want to waste time building the foundation of my house because i am in a hurry to finish the construction of my house.

What happens to the house which is started in a hurry without building a foundation (that is from Step-2)? With the first rain or the first storm, you will see the result. It is the same way in our lives. Lot of people come and ask me to tell the steps for financial freedom. They keep asking me why i am i not telling them all the steps needed to achieve financial freedom so that they can just follow the steps in order and get financially free rather fast. My response to them is that achieving financial freedom is just like constructing your own house. While i understand that you are in a hurry to achieve financial freedom, you cannot skip Step # 1 of laying a strong foundation. In any of our life goals whether the goal is to be financially free or the goal is to reduce your weight by 10 pounds in a month or the goal is to leave cigarette smoking, this first step is the key. The first step is to lay a very strong foundation of your dream as to why do you want to achieve the goal, think about it day and night, think about how would you feel when you achieve your goal, picturise it, document it, keep dreaming about it...make it strong, live with it, sleep with it, make it so indispensable for you that no person, no situation can take it away from you.

Take your own time in building your dreams for whatever you want to achieve because the moment you step out to Step-2, GOD will come and take your unit test. HE would want to test whether you are good enough to achieve your goal or not. HE will throw situations, people at you and will try to assess the strength of your decision which is primarily driven by the strength of your dreams. If you are passionate about your goals, if you had spent enough time dreaming about it and making it strong enough, you would be able to pass this unit test and move on towards your goals. On the other hand, if you had directly moved on to Step -2 which is execution, then the chances are that you might fail in those tests and might think to start it all over again very soon. So, when people ask me the next steps on financial freedom, i have to go back and ask them as to why they want to be financially free, what all they are ready to sacrifice to achieve their own personal freedom, for freedom needs sacrifice - it will not come free.I have realized that achieving financial freedom has been more a wish rather than a dream with most of us and that explains why most cannot get to the end of their goals.

Well, no one stops us from trying once again but the worst part with this starting over all again is that for most of us it becomes a "habit" to leave a goal in  between and start all over. We have done it so many times that it becomes a part of our unconscious thinking and this "habit" is a recipe for disaster because this habit is then not constrained to a specific goal or a specific part of your life. This will impact your personal, financial, professional, spiritual and social life..all in equal proportions.  We are all under the impression that we have unlimited time in our lives, and we can continue to retry as many times as we want. Once failing in a Unit Test becomes a habit, then it is very difficult to come out of it..

So get set with your goal, spend enough time in dreaming about it, thinking about it, writing and reading about it, discussing and sharing about it. Do it with yourself and even with your close friends and family, spend time making it very very strong. Once you are done with this, ask yourself whether you are ready for the Unit Test that GOD will take immediately as you step over to the next step of execution. If your inner voice says YES, then go one can stop you know, for once you have cleared the GODs unit test, you are invincible !!


Manoj Arora

Related Posts : Dreams

Wednesday, August 15, 2012

How to decide whether to Pre-Pay your Home Loan

What is a Home Loan
A home loan is a useful financial vehicle that gives birth to many a middle class dream. Home loans are one of the biggest commitments from common man’s perspective. With long tenures these loans, sometimes outlive the individual.

What is prepayment of Home Loan
There is one option through which an individual can bade adieu to his loan and become the complete owner of his/her house. Loan prepayment is an option where the person pays a sum higher than his regular installments to reduce the principal amount of his loan. If the prepayment amount is high enough it can also reduce the tenure of the loan.

Should i pre-pay my home loan or not?
Well, this seems to be confusing a lot of my friends...more than what i expected. Any such decision regarding pre-payment of home loan would depend on a simple Return On Investment (ROI) Analysis. (To know more about ROI, please refer to the post :Do you know your Return on Investment (ROI) )

To put in simple money terms, if you have an amount X available with you which you want to use for loan pre-payment, you must consider this as a simple investment decision. You need to look at all investment options which can maximize the return on this X amount over a defined period of time,  and one of the additional options you should consider now is "Loan Pre-payment"

Options to consider before taking a decision
Lets consider some of these options as an example

Option 1 : Pre-pay the current home loan
If you go for this option, you need to calculate how much money do you save on principal+interest by prepayment. So, if you pay X amount as prepayment, then depending upon the interest rate that your bank is charging, what is the interest (lets assume Y1 amount) that you will save till the end of the loan tenure (lets assume this to be 10 years). Lets assume that you arrive at a figure of a total of say Z1 (where Z1=X+Y1) So, this is option 1 where you invest X amount today and get back (or save) Z1 after 10 years. So, Z1 becomes your return in  Option 1 after 10 years.

Option 2: Invest amount X in equity or debt funds
If you have been calculating your ROI through each mode of investment over the past few years, and lets say you can get an average 12% annualized returns on your equity investments (Stocks, MFs etc), then in that case, X amount invested for 10 years @ 12% compounded rate yields an amount Z2. So, Z2 becomes your return in Option 2

Option 3 : Invest in another Real Estate
This is another option that people look at. Instead of prepaying the current home loan, people tend to invest in new real estate property. Again, depending the likely returns on real estate in the specific location where you are investing, you would need to get a reasonable idea for the likely returns and arrive at an amount Z3, which would be the market value of the real estate investment after 10 years. In India, the chances are that those would still be higher than the returns that you are getting through Option 1.

Depending on what gives you the max returns out of Z1, Z2 or Z3, you can take an informed decision. 

The book "From Rat Race to Financial Freedom" gives details on how to invest in real estate and at what stage of your financial freedom life cycle.

Related Posts:

Manoj Arora

Tuesday, August 14, 2012

Know more about Home Loans Pre-Payment

This particular post (Know more about Home Loans Pre-Payment) is to specifically make my readers aware of various key terms and rules concerning home loan and home loan prepayment. The next post tomorrow (How to decide whether to Pre-Pay your Home Loan) would talk in detail about how to take a decision whether to pre-pay the home loan or not?

What is a Home Loan
A home loan is a useful financial vehicle that gives birth to many a middle class dream. Home loans are one of the biggest commitments from common man’s perspective. With long tenures these loans, sometimes outlive the individual.

What is prepayment of Home Loan
There is one option through which an individual can bade adieu to his loan and become the complete owner of his/her house. Loan prepayment is an option where the person pays a sum higher than his regular installments to reduce the principal amount of his loan. If the prepayment amount is high enough it can also reduce the tenure of the loan.

What is prepayment penalty
Many banks would charge you a loan prepayment penalty if you decide to pay a sum of amount to the bank that is more than your Equated Monthly Installments (EMIs). This always sounded very strange to me - one, i pay more money to the bank and second, i am penalized for the same. Well, banks may have their own reason to do so - including the fact that they lose out on a portion of the interest they were supposed to earn.

Does pre-payment penalty still exists?
Partially, yes. Pre-payment penalty has been abolished on specific types of loans. Several factors contributed to the prepayment penalty being abolished, with concerns regarding the various practices by banks being the primary factor. While old customer was charged higher interest rates, the new customers were lured often, with lower rates. This meant loyal and old customers were punished with higher rates. Abolishing prepayment penalty meant, the old customers could move to other banks and enjoy lower interest rates.

Fundamental Rules regarding Pre-payment penalty
1) On 9th October 2011, the NHB (National Housing Board) had given a directive to scrap penalty on pre-payment of housing loans. All the 54 housing finance companies had to abide by the directive.
2) The pre-payment penalty is abolished for floating interest rate loans only. This enables the borrower to either prepay his loan or move his loan to other housing finance company that offers better terms by refinancing the old loan.
3) The pre-payment penalty on fixed interest rate loan is not abolished. However, if pre-payment is done with own sources, then the penalty is not levied. "Own sources" here refers to other than borrowing from a bank or a financial institution.

The book "From Rat Race to Financial Freedom" would talk in detail about Home Loans and how to effectively invest in real estate to speed up your goal of financial freedom.


Manoj Arora

Monday, August 13, 2012

Ladder your Fixed Deposits

What is a Fixed Deposit
(Fixed Deposits) FDs are the deposits that are repayable on fixed maturity date along with the principal and agreed interest rate for the period. Banks generally pay higher interest rates on FDs than the savings bank account, but may also charge you penalty in case of pre mature withdrawal.

What is the issue with doing Fixed Deposits
We all know that the interest rate on Fixed Deposits keep varying over time. While that is true with most investments, we must have a strategy to make sure that we get an almost consistent rate of return so that our income from our corpus is not impacted heavily because of change in interest rates.

How do we ensure consistent returns year on year from FDs
We can make sure that we get a consistent stream of income from Fixed Deposits by leveraging a concept of Laddering of Fixed Deposits

What is Laddering of FDs
Laddering is a process by which an annual stream of FDs is created for a long period. Let us take an example. If you create a stream of 5-6 FDs each year (one FD every 2 months interval), and do this for 5 years and after the 6th year, when they start maturing, you can re-invest them at the prevalent market deposit rates. This makes sure that your rate of return from FDs is reasonably consistent.

As a long term investment, Laddering will give you an average return and help you prevent your corpus from maturing at the lowest interest rate cycle. This concept of laddering applied to FDs is very similar to the concept of SIP (Systematic Investment Plans) applied to mutual funds or stocks.

The book "From Rat Race to Financial Freedom" will talk in detail about Fixed Deposits and how is this debt based investment tool different from other investment tools - its advantages and disadvantages

Happy investing


Manoj Arora

Sunday, August 12, 2012

Which race are you running?

One of my blog followers (and my former boss) forwarded an article from the local newspaper to me which referred to a management alumni taking a "sanyas" in a remote small flat and leading a peaceful life thereafter, completely cut off from the modern world and perhaps leading a more peaceful and relaxed life. He was perhaps trying to say that each one of us have a limited time span in this life and are running our own race to reach one or the other milestone before our time on this planet comes to an end.

Well, that raised a very interesting train of thoughts in my mind - each one of us is busy, each one of us is running a race, then what is the difference among all these different races..Who is running a rat race and who is i was pondering over these questions through the afternoon today, i finally had the answer by the end of the day, and this happens to be the topic of my post today

To me, Rat Race is just another race. The key attributes associated with Rat Race are that it is "mindless", the end result is not worth running the race for and the worst of all, it makes you "compete" with other racers in this race. The last point happens to be the source of our unhappiness as well. Whether we like it or not, most of us are running this kind of race whether we are in a job or run our own business. It is a world of competition - as we hear it. The Rat Race has just been becoming more global as we start competing globally as a business or as an individual. We are stuck in this. There seems to be no way out of it. Can we do anything about it? Wouldn't life be boring if we were not competing? What have we come here for?

The fact is that a selected few who decide not to run this rat race, are also running a race, but of a different kind. I realized that i am also in a race even if i am financially free, though i object to this being called as a Rat Race. Here is why i say so. My race is not against anyone or not in competition to anyone. I don't have to beat anyone but myself and the goals that i have set for myself. I am running a race against time where i have to make sure that i provide education to at least 1 million underprivileged children and also plant at least 1 million trees. I too have a limited life span. I am fully in this race..i have to run hard, i have to compete hard but only with myself. I am very likely to be more happy during the journey of this race (which is not a small one by the way) compared to so many others who are involved in the Rat Race.

Some of you may be running other different races. Each one of us runs a race that we feel provides happiness to us, though most of us are stuck in the mindless rat race, wanting to come out but not knowing how to. The book "From Rat Race to Financial Freedom" shows you the way - for the first time, it gives you a choice that it is possible to come out of the rat race and join a different race of your choice. You chose which race you want to run. The book gives you step by step method to start from scratch and attain financial freedom.

So, which race are you running now a days ? and which race would you love to run ?


Manoj Arora

Saturday, August 11, 2012

Tax benefits on donation to charitable institutions

Why bother about small tax savings?
Do not ever under-estimate the power of small. Every penny saved contributes to your financial freedom goal. I have seen so many people striving for higher income but not really concerned or excited about higher savings. If one has to attain financial freedom, one must remember that it does not matter how much you earn, but what matters is how much you save. Anyone serious about financial freedom understands that one has to reach a defined corpus amount, which is self sustainable and for that to happen, the key is "savings" that you do every day and every month rather than the income that you draw every month.

Income Tax Act - Section 80G
In this context, it is important to also look at one of the important tax saving mechanisms available to us. Section 80G of the Income Tax Act allows for tax relief if we donate to charitable institutions approved under the Income Tax act. You might have seen or heard with many such charitable institutions while giving your donation. Since more and more people around me are increasingly willing to donate for charity, this became an important topic for discussion.

What tax savings can i make if i donate
The rate of deduction in income tax is either 50% or 100%, depending on the approval provided to the charitable institution. This means that if i donate Rs. 100 to a charitable institution in a particular financial year, then under Section 80G of the Income Tax Act, i may be applicable for 100% tax relief (or 50% depending upon the institution) on this donated amount.
A 100% tax relief on Rs. 100 essentially means that this amount of my income (Rs, 100) becomes completely tax free. So, if, earlier, i was supposed to pay tax on Rs. 50,000, then now, i am supposed to pay taxes to the govt only on Rs. 49,900/-. If i was in the highest tax bracket, that saves me approx 30% of Rs.100 which is Rs. 30/-.

How do i actually save tax
Remember that you will have to apply for this tax rebate when you file for your annual Income Tax Returns. Also, remember to keep a copy of the receipt from the charitable institution for your donated amount as these documents are needed in case of any future verification check by income tax authorities.

How much can i donate
There is no restriction or upper limit to the amount of money that you can give to a charitable institution. You can, theoretically, therefore give all your salary as charity as well.

How much max tax rebate can i get
Though you can give any amount of money from your salary as charity, remember that donations only up to 10% of your gross total income qualify for tax rebates. Rest of the donation that you gave, over and above 10% of your salary is still fully taxable depending on the tax rate slabs applicable in your case.

What do i do now
So, if you donated anything last year and have not yet filed the income tax returns, then go and apply for this rebate to reduce your tax burden and contribute to your savings. This eventually contributes to your goal of financial freedom.

The Book
The book "From Rat Race to Financial Freedom" will talk in detail about what all tax rebates are possible that we are usually not aware of. Each such rebate, if fully utilized, can contribute to your savings immensely, and can lead you faster towards your goals.

Happy savings !!


Manoj Arora

Friday, August 10, 2012

Never Never Never Give Up

I read a short story while browsing through the internet today and i was able to immediately relate that to my current situation. I thought of sharing the same with you before i tell you how this related to my current situation.

"One day a young lady was driving along with her father. They came upon a storm, and the young lady asked her father, What should I do?"
He said "keep driving". Cars began to pull over to the side, the storm was getting worse. "What should I do?" The young lady asked "Keep driving," her father replied.

On up a few feet, she noticed that eighteen wheelers were also pulling over. She told her dad, "I must pull over, I can barely see ahead. It is terrible, and everyone is pulling over!" . Her father told her, "Don't give up, just keep driving!" Now the storm was terrible, but she never stopped driving, and soon she could see a little more clearly.

After a couple of miles she was again on a dry land, and the sun came out. Her father said, "Now you can pull over and get out." She said "But why now?"
He said "When you get out, look back at all the people that gave up and are still in the storm, because you never gave up your storm is now over. "

Just because everyone else, even the strongest, gives up, you don't have to...If you keep going, soon your storm will be over and the sun will shine upon your face again.

Never ever give up.
"Impossible is nothing" said Muhammad Ali.

"Easier said than done" - some of you may remark. Yes it is not easy, but who wants to do easy things. Easy things do not lead you to achieve extraordinary results in life.

When i started my blog, within 2-3 weeks, i started touching almost 300 hits per day. I was excited and overjoyed and of course, highly motivated. Then started the time when God wanted to test me and my powerful they are...and how strong they are. Suddenly the hit count started declining and went down to 50 users per day (less than 20% within 1 week). I don't know why. But i had to continue to write at least one post a day. Because if i stop writing that one post every day, that would mean i have given up. I knew that i have the knowledge, i knew the way to financial freedom and i knew that people will come and follow me. 
Since last 2 weeks, i am continuing to write one post a day though my page hit count touched its nadir at less than 40 hits a day. Today morning, i was informed by one of the major sites from where i was getting the max hit count (more than 50% of my hits were from that one site) that they have blacklisted my blog. When i inquired as to why, they mentioned that i am posting too frequently and only sharing my blog link, which is not as per the T&C of their policy. 

So, here i am  at 5AM in the morning, writing my post for the day after being down to 20 hits a day and blacklisted by one of the biggest hit providing sites. Do you think it is easy to continue to have the will and passion to write these post in spite of what has been happening over the last 2 weeks..absolutely not. 
But i know today that one day, this will be a big of the biggest hits because i know the way to financial freedom, i know everyone wants to achieve this and i know that i can guide people to cross this journey.

Muhammad Ali said once : I am the greatest, I said that even before I knew I was.

This blog and this book (From Rat Race to Financial Freedom) will be a big hit and i am saying that much before it has actually happened. I am saying that when this blog is at its nadir.. but there is only way forward rise  !!

I will never give up !!So, should none of you. If you have dreams in life and a passion to achieve extraordinary things, God will test you...but Never never never give up..the success is just round the corner.

Cheers !!

Manoj Arora

Thursday, August 9, 2012

Typical Car Insurance Claim Rejection reasons

Facing an insurance claim rejection is never easy. It can put your monthly or even annual budgets into jeopardy, depending on the loss.

In many cases, auto insurance claims are rejected because of mistakes or lack of awareness on the part of the owner.

Following are some of the typical reasons for insurance claim rejection:
1) Post accident, if the driver is found under the influence in alcohol, the claim is liable to be rejected
2) If the driver of the car does not possess a valid license, the claim can be easily rejected
3) If you car remains unattended following an accident and subsequently gets stolen, the insurance company would not honor such a claim
4) Any consequential claims would be rejected, which means when a car gets damaged and the owner does not get it repaired, then any further consequential damage is at owners risk. e.g. if your car hits a road bumper resulting in oil leakage, if you do not get this repaired soon enough, you could damage the car engine. If such a damage is established, it will not be covered under insurance.

There are many other reasons which you may not be aware of. Let us say your car gets stolen because of your negligence like you forgot your keys inside the car itself and the car gets stolen, then the claim would be rejected. The insurance company can find out about this. They would typically ask you to submit both the original keys of your car before they approve your insurance claim. If you cannot produce both the original keys, the assumption would be that you would have forgotten the keys inside the car.

To avoid such a situation, you should apply for a new car key with the dealer if you do not have all the original keys.

Small habits like these can help you save money and can also prevent from your budgets going into jeopardy. The book "From Rat Race to Financial Freedom" guides you through such practices which can help you save and grow your money.

Cheers !!

Manoj Arora

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Wednesday, August 8, 2012

"Free Look Clause" in your Life Insurance Policy

What is Life Insurance Policy?
A contract under which an insurance company agrees to pay money to a designated beneficiary upon the death of the policyholder. In exchange, the policyholder pays a regularly scheduled fee, known as the insurance premiums.

What is a "Free Look Clause" in your Life Insurance Policy?
As per the directions of the Insurance Regulatory and Development Authority (IRDA), every life insurer, while issuing the policy, is obliged to offer a 15 day grace period to the insured for going through the terms and conditions offered under the policy. This 15 day grace period starts from the time the insured receives the policy. It will be there in your policy as well.

What can the Insured do within the grace period?
If the buyer feels that the policy does not offer what he or she was promised at the time of discussions with the insurance agent, he or she can return the policy and claim a full refund of the premium paid till that time.

Such a clause has helped check the mis-selling of life insurance policies.

The book "Rat Race to Financial Freedom" will go through every aspect of Life Insurance and what policy you should look for that can provide security and coverage to your family. A wise decision in this often neglected area can yield you significantly high returns and provide maximum security to your family, thus bringing your financial freedom goals closer to you. Each penny saved is going to contribute to your goal.


Manoj Arora

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Tuesday, August 7, 2012

Keep your Focus !!

I was watching the quarter final bout between Mary Kom and her Tunisian opponent being held at the London Olympics 2012. Mary Kom from India won the bout to reach the semi finals and assure herself and India an Olympic medal. Well, you might say that one person out of the two anyway had to win. So what is so special about this bout that i had to mention it in my blog.

Let me give you a brief history of this famous boxing lady from India.  Mary Kom, is a boxer from Manipur, India. She is a five-time World Boxing champion, and the only woman boxer in the world to have won a medal in each one of the six world championships. She is a mother of two and ages close to 30 years as of this bout. She has been in the boxing arena for the last 13 years. She is the only Indian woman boxer to have qualified for the 2012 Summer Olympics.

What separates her from the rest of the lot ? It is her focus and passion on her goal which is boxing.

Any married lady with kids belonging to a middle class family would be struggling to meet her day to day routine challenges of life. But she also had 24 hours in a day, she also had the same challenges that each one if us had - and being a woman in a traditional Indian family, may be more..but she did not lose her focus on her passion. At every point in life, she would have got options to chose from and she chose her passion every single time. Not to mention the kind of support her family would have given her or the kind of hard work she would have put in to become a world champion.

There are so many paths that are available to all of us everyday in our life. We make a decision at each point. Decide what your path is and stay focused there. Don't keep wandering around in all directions. Take a decision and stick to it. There is no point running , even at a very high speed, if you keep changing directions every now and then. The end result would not be worth the effort you are putting in.

Everyday, every hour, every moment, our mind is taking decisions. You got to decide what is important for you, chose your path and stick to it. Keep your focus. Do not keep changing it. I know so many friends who want to do something special in life. They know what they want. They might also know how to start, some even would start but at the first big challenge, most of them would give up. Bring your dream in, stay focused and continue to work on your passion. There is only one life and that too, there is limited time available. When will you do it if not now.

Keep a carbon paper in the hot sunlight and there would be no result or impact that sunlight can have on the carbon paper. Bringing the focus through a lens accumulates the energy and this focused energy burns the carbon paper in the same sunlight. Simple logic. Energy is accumulated and focused on one spot and not wasted and wandered away. The same holds true with our life and the goals that we have. The same energy that you have today can give you mediocre results or exceptional results depending on how focused your energies are on your goal.

If Financial Freedom is your goal, you might have to do away your energy (money in this case) from other sources of expenditure like a big car or the latest gadget and keep your money focused on your goal of financial freedom. You will achieve the unexpected. Mary Kom was a normal small built lady from a remote village. If she can do it, so can we. We are all capable. God made all of us equal. We all have the same amount of time with us, We just need to stay focused on our goals.
Keep focused to achieve exceptional results !!

Cheers !!

Manoj Arora

Monday, August 6, 2012

Go, Chase Your Dream !!

While there can be lot of negative stuff in the newspaper now a days, it really depends on what your eyes are searching for. You will typically get what you are looking for.

I read the following story in today's newspaper

""In a past life, I used to make a living as a consultant, managing large projects," says Vandit Kalia in his blog. In his present life, Kalia is a scuba diving instructor and the founder of Dive India in Havelock, Andaman and Nicobar Islands, India. Life ended, and then restarted when Kalia turned 30 in 2003. "I was looking to do something different , and fell in love with the Andamans when I went there on a short diving holiday in 2000. The following year, I took time off work and spent six months out of that year diving there. I went back to work but kept thinking about the islands. Finally, I took the plunge and quit the corporate world and started a diving centre," he says.
Watching new people discover the underwater world — seeing them with big smiles on their faces when they come back to the surface — is a thrill that keeps Kalia going. While at heart his passion remains the deep shipwrecks of the North Atlantic, underwater photography, especially of nudibranchs (sea slugs with extraordinary colours and striking forms), gives him the most pleasure these days."

Well, Kalia chased his dream and achieved it. We all come to this world to carve out our own journey. Many of us stop short of taking that plunge that Kalia had the guts to take. What stops most of us? Our responsibilities? Our family? Or just that we are afraid of trying something new or trying and failing. 

Would Kalia be earning more than what he was earning earlier ? I do not know, probably not. Would Kalia be more happy than he was earlier? Most probably yes. Once your job becomes fun, it is no longer a job. If you do what you are passionate about, it gives your immense happiness. And ultimately, if you can remain happy doing what you love doing, then why do you need more money? Ultimately, most of us try to earn more money to ultimately buy happiness only. We try buying happiness in physical comforts - be it latest gadgets or cars or bigger houses and villas but unfortunately, the happiness is inside all of us while we are trying to look at it outside. Some call it as a "state of mind", and some by other concepts but the fact is that it is inside us.

If you are worried about your family and responsibilities, make sure you take care of them by being financially free before you take that plunge. But do plan out your life so that you take the plunge some day. Do not leave your dreams and passions for any excuse in life. If you start thinking and planning your dreams, you will surely find a way.

We spend our entire lives chasing money, chasing for our children's future, chasing for a better and a bigger house, chasing the latest gadgets and cars...but we do not seem to be satisfied or completely happy in spite of achieving all this. It is not worth wasting your life chasing anything that does not give you true happiness.

If there is anything worth chasing in life, then go and chase your dream that is inside your heart for long, something that brings a smile to your face even if you think about it for a moment with closed eyes, something that rejuvenates you, something that gives you a feeling of bliss, something that never gets you tired, something that you truly love.

Go, Chase your not let your life wander away... God has created a way to chase your specific dream..go find the way !!!


Manoj Arora

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Sunday, August 5, 2012

Do I need Life Insurance ?

What is Life Insurance?
There are many complicated definitions about Life Insurance, but in subtle and simple terms, life insurance, as the name suggests is to economically , insure a life. This means that if a person whose life is getting insured, dies because of any unforeseen circumstances, the insured sum is handed over to his nominees as per the insurance contract between the two parties.

Is it necessary to have Life Insurance?
Family Security is the key motive behind life insurance. Though Vehicle Insurance is mandatory in India, some critical elements to be insured like Health Insurance and Life insurance are not. This discretion does not mean that we should not get our lives insured. In most cases, my recommendation would be to make sure that the family is secure, at least from an economic point of view, under any eventuality.

What kind of Life Insurance should be done?
There are so many insurance products available in the market that it can definitely become confusing on what insurance product is right for which family member. The book "From Rat Race to Financial Freedom" digs deep into what kind of insurance products should we buy to have maximum security with min investments and what should be the amount of insurance for each family member. There is logical reasoning and common sense in buying life insurance but most of us buy the wrong insurance products at the wrong time and pay unnecessarily high premium. The book will explain you what you need exactly.

Why do we do Life Insurance?
The whole objective of doing life insurance is to make sure that that the family whose bread earner has been lost unexpectedly, does not suffer at least on an economic front and the family is able to take care of its financial needs to a large extent in the unfortunate eventuality of the bread earner's death.

Whose Life should be ensured?
Since the aim of life insurance is to maintain continuity of incoming money to the family with or without the presence of the income earner, it has to be the person(s) in the family who is contributing to family income whose life must be ensured.

Does a Financially Free person need Life Insurance?
That was a very interesting question that came up during one of the discussions on my blog. Once you become financially free, you are no more a source of income for the family. Sounds difficult to gulp, but this is the fact !!. Yes, this is the fact that a financially free person is not a source of income. This is exactly that person comes out of the Rat Race. The source of income in such a case is the portfolio or the nest egg that has been built. It is the nest egg that is generating family income and not the person who created the nest egg. Thats the magic of financial freedom. 
In such a case, if something needs protection or security, it has to be the nest egg and not the person who created the nest egg. In nutshell, if you are financially free, your family is not dependent on you trading your time with income for the family and hence you need not get any life insurance done for yourself !!. This happens to be one of the bi-products advantages of being financially free !!

Post your comments on the blog if you have any queries and i would be happy to answer.


Manoj Arora

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Saturday, August 4, 2012

Do you know your Return on Investment (ROI)

What is Returns on Investment (ROI)?
Almost everyone i know "invest" money in some or the other investment tools. Some of us may not know whether they are investing in equity based or debt based tools, but we do surely invest money to get better returns on our investment

Why do we invest?
The returns that we get from our savings accounts in the banks is around 3-4% while the inflation running in India would be around 7-8%. So, in effect, you are losing money every day (in terms of its purchasing power) if it continues to stay in your bank savings account. So, if we got to beat the "inflation" monster, you do not have a lot of options but to effectively "invest" the money

Do we know the returns on our investment?
Sometimes, we do know the annual rate of returns or the rate of interest that the Fixed Deposits offer, but that is not what i am trying to ask. Because the rate of return that you get from the Fixed deposits is subject to income tax before it becomes your Annualized Rate of Return. So, the rate of return that you get on your money in your hand is the interest minus the tax deducted. If you are in the top tax bracket, it would be roughly 30% lower than the annual interest rate that the bank has offered. Only after deduction of taxes, can you compare it with the Inflation figure and see if your investments are making any sense.
Add to this the complexity of the fact that you do investments not only in one type of investment tools. We do also invest in Mutual Funds, Recurring Deposits, may be in Gold and Stocks as well - all of them of different tenures with investments happening through SIP - monthly quarterly or annual, returns coming at different times of the year. Add to this another factor of different tax slabs on your returns depending on the time for which the amounts were invested. With all these complexities, do you think do you know what are the exact annualized returns on your investments ? Sadly, most of you would not know it because it is a pretty complicated exercise.
The book "From Rat Race to Financial Freedom" would provide you with the formulas and freely downloadable templates needed to quickly calculate your annual returns on investments for each type of investment that you can possibly do.

Why we must calculate the Returns on Investment ?
This is like asking why should i know my body temperature when i am having fever? I mean, i know i have fever but why should i measure it at regular intervals? 2 simple reasons - you need to monitor whether the temp is going up or down to understand whether the medication is working or not and second, if it is going still higher, i may need to change the medication itself. Unless i measure the temperature regularly, i am taking a big risk in my life.

The same applies to money. You are taking a big risk in your financial life if you are not regularly measuring the returns on your investments. If i do not know how much is my annual rate of returns on the money i have invested under various investment options, there is no way i can know whether my investment selections are correct or i need to do some changes. I do not know whether i am growing faster than inflation or not - which means that i do not know whether my money is actually growing in "true value" or is it depreciating each year. I also do not know what changes i need to do in my investment portfolio - whether to invest more in Mutual Funds, Golds or Stocks or in FDs.

If i have to have a measure and grip on money management (which is so critical to be Financially Free), i must know what each of my investment tools is giving me on an annual basis, and then only i will be in a position to arrive at some conclusions and take investment decisions for the next year.

Happy calculating !!

Cheers !!

Manoj Arora

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