An Oscar nominee's feedback on our Wealth Management Course

For those of you who do not know who Bombay Jayashri Ramnath is, she happens to be an Oscar nominee, the best Female Playback singer (Tamil) apart from being a sought after classical performer across the globe. 

Why she happens to appear on this Blog? 
She just went through our Wealth Management Course on Classle and was all praises... Read on..

Four levers that create wealth for you

Most of us feel that increasing our income will make us wealthy, and that is why we focus most of our energy on getting a higher salary or getting more profitability of our organisation. We forget that increasing our income is just one of the levers to wealth creation, and NOT a very significant one. Ignore the other three levers at your own peril...read on...

Top 10 Wealth Management Principles - An online Course that can decide your financial destiny

You can do it form the comfort of your home, at your convenient timing, from your mobile or I-Pad. It is amazing how fast technology has changed over the past few decades. What has not changed are the principles that the wealthy have been using to make wealth.

I am going to show you the Top 10 Wealth management principles that the wealthy use to manage and build their wealth..Come with me..read on...

Understanding and Creating an Indian Will

Creating wealth is just one aspect of financial planning . On the other hand, death is a reality. Ignore this reality at the peril of strained relations among your family and relatives post you are gone.

An assumption that you need to write a will only if you are sick or old is as correct as the assumption that people die only of old age. You should create a will early in your life. So, here is all that you should know about your Will.

Article # 3 in CWB magazine : Make your children money-minded

After our articles published in the "Complete Well Being" magazine in their July 2014 and Sep 2014 editions, we got a stupendous response and the magazine wanted us to publish more articles for them. The below article then appeared in the November 2014 edition of the magazine, which also happens to be the 8th anniversary edition of the magazine.

Your assets are your employees

You are the CEO of this company called as 'Life'. Your assets are your employees. If you treat them any less, the results will not be surprising. Ignoring your assets, not paying attention to what they are doing for you, what returns they are giving and can potentially give, and not investing time on them is the worst treatment you can give to your employees...read on...

Open your mind : Increasing your income is not the only way to get wealthy.

This blog post is a part of the article already published in Complete Well Being magazine. 

When people think about getting wealthy, what they usually focus on, is increasing their income. Well, increasing your income is definitely one of the ways to get wealthy, but is definitely not the only way.  Let us look at some other avenues.

Do you need a written plan to build wealth?

(A part of this article was published in 'Complete Well Being' magazine - July 2014 edition by the name - '5 Financial Fallacies we follow').
(You can read the complete article by clicking here.)

"OK, we have just signed a 1 year project with a new client." Rohit informed his team during the team meeting.
"Congratulations sir !!" and the team applauded the success.
Everyone clapped and basked in the glory of the moment.

How important it is to formally track your monthly expenses?

I overlooked monthly expense tracking for 10 years of my earning life, and am still paying a heavy price. Simple things have immense power. You may decide to ignore them at your own peril.

Save Taxes on Capital Gains

Capital Gains are different from money gains. These are the biggest gains that you would ever earn in your life. Understand how to get smarter with capital gains and saving taxes arising out of such gains.. Read More.

4 Things you may be missing to plan in your lives, at your own peril

We recently had a wonderful and interactive workshop on Financial Freedom last Sunday (12th Jan 2014). This was organised by Sartrac Global in Faridabad (NCR). During my interaction with the audience, i realised that most of us tend to miss out on these 4 vital things in our lives..and of course, we do so at our own peril.... Just if someone could point us towards these things, life can take a completely different dimension...Read on...

Financial Wisdom for Youngsters

When it comes to teaching money management habits to our children, we either procrastinate the entire subject, or we feel it is not the right time to talk about money to our children. Unintentionally, we lose the most significant element that makes most people wealthy across the globe i.e. Time leverage.....read on..

What is CTS (Cheque Truncation System) 2010 Compliance

Background

You may have heard a lot about being mandatory to have cheques which are CTS 2010 compliant. There has been a revolutionary change in how cheques are being processed now a days and it is important to keep abreast with the change. Since banks have already moved to daily interest calculation, each day saved earns you more interest now a days.

8 Thumb Rules and Ratios you need for your personal budgeting

Making your personal finance work is important, and there are some rudimentary ratios and multipliers that give you a fair idea of where you stand with respect to your budgeting decisions at your home. Let us have a look at those.

What is KYC ("Know" Your Customer)

Background

The main purpose of KYC norms was to restrict money laundering and terrorist financing when it was introduced in late the 1990s in the United States. The US government turned very strict after 9/11 and all regulations were finalized before 2002 for KYC.Taking a leaf out of the US book, the Reserve Bank of India (RBI) too directed all banks to implement KYC guidelines for all new accounts in the 2nd half of 2002.

Your TIME is your most valuable ASSET

Rohit and Sapna have been happily married for the last 10 years. They have an adorable 5 year old daughter who has just started going to school. Both of them work for top notch multinational companies. Money is not a real problem for them. They earn well, and spend well. 

14 ways to know if you are stuck in the rat-race and 1 way to come out

Many of my friends and colleagues understand that they should not be in a Rat Race for the rest of their lives. But in most cases, confusion harbingers clarity. How would any of them know whether they are on the right path in their life or they are also a part of this dreaded and mindless rat race?

The irony is that most of them are in the rat race and don't even know this. If i tell them the fact on the face, no one is going to believe me. On the other hand, i am also shirking my duty as a friend if i am not letting them know that they are a part of this vicious circle which has no end. I want that they should have a fair opportunity to come out of this race. They will keep running throughout their life and in the end would not achieve anything substantial to be proud of. They ought to take decisions and do something different in their lives else the time is running out for them. They can make an impact on this world, it is just that they need to wake up to the fact that they are also a victim of how we were brought up in our society. They need to take charge of their lives before it is too late.

Faced with this dilemma, i thought of giving a list of symptoms of being stuck in a Rat Race. How do i know these symptoms? I have been through each one of them at some point in my life, and so i have a first hand experience. These symptoms will help anyone find out whether they are also running this meaningless race. So, here we go..

If you face one or more of the following situations in your personal or professional life, you are very likely running a Rat Race - a race which may not yield anything worthwhile in the end in spite of all the hard work you are putting in.

1. You work long hours at a job you are not truly passionate about.

You may have friends at your workplace, you may be able to work through your day happily but do you truly get charged up by thinking about what you do at your job everyday? Does each morning bring excitement to you when you think about your work? There is a very simple way to find out whether you are truly passionate about your work or not. Assume for a moment that you do not have any financial worries in your life. Would you still opt to go to your workplace everyday even if it does not pay you anything ? If the answer is No, then you are surely a victim of this social setup which trains you to be a rat in this rat race. You better try and find a mission of your life. You are working hard but you do not know where you are headed. It is just like driving a car at a great speed but don't know where to go. It is like paying any game with no target in mind, which would ensure victory. What will happen if you keep doing what you are doing today? You life will end up in frustration and you will not achieve anything meaningful. You will only regret at the end of your life.

2. You hate traffic.

You are one of those who spend at least an hour commuting to and from office. I often hear my colleagues cribbing about it, but they wont do anything other than cribbing. They never start thinking about what they can do to change the situation. They are all driven by situations.

3. You worry about the next day at office.

At the end of the day, you do not fancy cooking. You just want to have a drink or have a dinner and go to bed, because you have a planned set of activities for the next day. Your mind is planning for the next day as you go to bed. You have stopped finding happiness in smaller things in life.

4. Hobbies !! What are they?

You used to have a few hobbies, which you feel, are a thing of the past. You may say that you would revive them some day but nothing is going to change unless you change what you do on an everyday basis.  If you look at the last few years, you have just gone busier by the day. The competition at your workplace just got a little more, as you climbed a few corporate ladders. To climb further, it needs more of your time and energy. With all this, who has the time to pursue the old hobbies, which you have come to believe are only a children's forte.

5. You have stopped finding happiness in smaller things.

With all the hours that you and your spouse work, you have forgotten the habit of doing things together. The joy of making a meal together, the joy of watching the TV together, the joy of playing with the kids together, the joy of just chatting and spending time together - all these do not seem to have a great value in your life anymore.

6. The children are more a burden than joy.

Kids want your time, not the jazzy toys. They can happily play with a broken and a shabby toy if you are ready to spend your time with them. Instead, we go the other way. We do not have time for them though we have money and are ready to buy a new fancy toy for them. Sad, doesn't work that way at all. The equation just needs to be reversed.

7. You feel that you are becoming more and more alienated from your family.

Family vacations, once or twice a year, is the only family time you spend with the joy, assuming you do not carry your office mobile or laptop with you during the vacation. You deserve the same joy everyday in your life.

8. You believe in TGIF.

TGIF (Thank God Its Friday) has become synonymous to your Freedom today. The excitement,  energy and bliss that you get on Friday evening are some of the traits of what a financially free person experiences everyday in life. How good would that life be?

9. Your weekend just flies by.

Come the weekend, by the time you have fixed the dripping tap, cleaned the messy areas of your house, done the grocery shopping, watched the TV soaps, caught up on washing and ironing, dealt with the paperwork in preparedness for Monday morning's presentation at your workplace, your weekend has gone. As it happens every week, it turned out to be an anti climax. You have to now wait for the weekend once again for another 5 days.

10. You are always connected.

There is no escape either on the weekdays or the weekends from some thread at your workplace because the new technology ensures that you can be intruded in any part of the world at any time of the day or the night.

11. You never have enough money.

You earn good money but it never seems to be quite enough. There is always something extra to buy - for your spouse, for your kid or for your house. The bills just drill a bigger hole in your pocket every month. You are always waiting for the next salary credit in your bank account. Perhaps, if you changed jobs or got the promotion or worked something extra, it would have helped you meet your expenses. Sad, but you know that this change is not going to help. It has not helped till now and is not likely to work in future also.

12. You have a lifestyle (disease).

Though long working hours have brought in a nice car, a nice house and a nice overall lifestyle, it is very likely to also bring stress, and with it , all the lifestyle diseases. It has helped you stay ahead of your friends, both in lifestyle and lifestyle diseases.

13. You don't know how to effectively deal with the money you earn.

You are earning a lot, but you are not dealing with what you are earning. You always seem to be short of time to think on how to invest and manage your money wisely. Sad but true, you leave your family and your health to earn money but do not know what to do with the money you earned. Isn't it sad and ironical ?

14. Your gadgets are more a stress than help.

You have accrued a lot of modern gadgets, with the assumption that would at least bring some comfort to your life, if not happiness. They definitely did bring excitement for some time. But as your greed for the latest gadget went spiraling up, you see yourself spend most of your weekend time dealing with these gadgets and the issues that come with them.

Now, if you sit back and think through all of the above points, you might feel like you are on a hamster treadmill. You are running hard, very hard, just to stay at the same place. 

It is not necessary that you are experiencing all the above traits, but even if you are experiencing a few of them, you are a part of this race, which is self defeating.

You can continue to stay in this race as long as you want. It is a very comfortable zone, because you have got used to it. You can spend your entire life in this because that is what you see the colleagues around you doing. But in case you want your life to have a some meaning and do not want to regret at the end of your life, you need to come out of this race.

Financial Freedom provides one such way to come out of this race. I have shared my learning during my journey from rat race to financial freedom in a book with the same title. You will have to chart your own path and walk your own journey. You have to face your own challenges and you have to find your own ways to deal with your situations. But you can definitely reap the benefits from what i experienced and documented in the book.

Key is to take a decision and take the first step. Rest will follow. I wish you all the best

Cheers

Manoj Arora

Why you also need Financial Freedom

 

Many people make the mistake of thinking that all the challenges in their lives would dissipate if they just had enough money. Nothing could be further from the truth. Earning more money, in and of itself, rarely frees people.

It's equally ridiculous to tell yourself that greater financial freedom and mastery of your finances would not offer your greater opportunities to expand, share, and create value for yourself and others.

Financial freedom does not end at collecting a huge corpus of money. Accumulating money is a means to attain a sense of security. It is a pre requisite to get freedom, and not freedom by itself. It is NOT THE END. You start exercising your freedom after you have taken care of the money part in your life, else most of your life would be devoted in the worship of money and related pursuits.

For a moment, let us forget about the money part.

Let me ask all of you a very simple question:

"What does financial freedom mean to you ?"

Close your eyes and imagine for a moment that all your household expenses were met through "some" source of money other than your job, business or wherever else you are actively involved with today, and there was still some left over money at the end of the month. If you get that kind of security, what change would that bring to your life? How would that change what you are doing today?

"What would you stop doing? and what would you start doing ?"

Are there some old cherished forgotten dreams that flare up? To me, that would be real freedom...freedom to think, freedom of time, freedom of money, freedom to do what you truly want to do in your life, something that you are really passionate about. The passion could be about pursuing your old forgotten hobbies, helping others, contributing to the society, spending more time with your family or anything else that you have always been thinking about but unable to pursue because your family security or lack of money just did not allow you to.

This personal freedom from financial constraints in life can change the course of your life. Personally, i feel , it is the single most significant goal that everyone must strive for.

Here are some quotes from one of my favorite authors on this subject. I grew up reading some of his bestseller books which ultimately changed the way i used to think about money.

Robert Kiyosaki (of "Rich Dad Poor Dad" fame) has been an inspiration for me. Here is how he feels about money and financial freedom:

1. Never say you cannot afford something. That is a poor man’s attitude. Ask HOW to afford it.

2. Find out where you are at, where you are going and build a plan to get there.

3. If you want to go somewhere, it is best to find someone who has already been there.

4. Education is cheap; experience is expensive.

5. When going into business don’t just find great partners, BE a great partner.

6. When people are lame, they love to blame.

7. The hardest part of change is going through the unknown.

8. The only difference between a rich person and poor person is how they use their time.

9. Face your fears and doubts, and new worlds will open to you.

10. Your future is created by what you do today, not tomorrow.

I really like the last one - If you have been thinking about truly getting rich, you have got to start today. There is so much help available all around you. Push yourself. Motivate yourself. 

You are making your own future ...and you are doing it every day, this hour and this very single minute. Your actions today are defining your destiny of life.

Wake up and fight for your own personal financial freedom. It is truly worth it !!

Cheers

Manoj Arora

Are you paying TAX on your FD interest

As you approach Financial Freedom, you would realize that the world of money brings its own challenges. Someone once asked me : "There are 2 different sets of money problems in the world - One set comes with having no money and the other set of problems come with having a lot of money. Which one do you prefer?". I chose the latter.

Most of us who are still stuck in our rat race may have never realized that we are earning interest through various bank Fixed Deposits and even if we are earning a single rupee of interest, we are liable to include that as our taxable income and pay tax on the same. This might not seem to be a big issue while we are in the rat race because the amount of interest is not significantly high and you may feel that your bank is anyway deducting tax at source, but once you start dealing with millions of rupees of interest, you got to take a re-look at your entire approach.

While you would see comprehensive details around Fixed Deposits in the upcoming book "From Rat Race to Financial Freedom", let me give you a quick summary.

Fixed Deposits (FDs) are one of the most popular and traditional debt instruments. They are much more popular than other debt saving instruments like Provident Fund, Post Office Deposits etc because of the high interest rate and liquidity that these deposits offer. But so often, we fail to realize the tax implications of the interest earned through such deposits. Whether you are financially free or not, it pays to understand the tax implications arising out of Fixed Deposits.

I would try to keep these tax rules as simple bullets so that it is easy to understand and follow. so, here we go...

1. Every rupee that you earn through Fixed Deposits is taxable. Yes, every single rupee. Do not get confused if you have heard something like a interest limit of Rs. 10,000.

2. The income through FD interest is added to your total income under the header "Income from other sources" and then taxed as per the income slab you are in, for that specific financial year.

3. The interest income from fixed deposits are taxed on "accrual basis" and not when actually received. This means that the tax on interest income earned at the end of financial year have to be paid even if the interest is credited at a later year. For e.g. if you are investing Rs 75000 in a  fixed deposit for five years, you will have to pay tax on liable interest for all financial years it spans, even though the interest will be credited at the end of fifth year.

4. Tax Deducted at Source (TDS) is deducted by the banks on your Fixed deposit interests if the interest amount exceeds Rs 10000 from one or through multiple investments put together.

5. If you think that your total income does not fall under the tax bracket, then you need to submit Form 15G (non senior citizens) and Form 15H (for senior citizens) which instructs the bank not to deduct any tax at source.

6. These forms (Form 15G and Form 15H) have to be submitted every year to avoid TDS, if applicable. The reason is that your tax bracket may have changed from one year to another.

7. Even FDs in name of the minor attract TDS, if the interest exceeds the limit of Rs. 10,000.

8. The TDS deducted by the bank would be at a fixed rate of 10% (if you have your PAN no. registered with the bank) or at 20% (if your PAN Number is not registered). At the end of the financial year, bank will also issue you a tax certificate mentioning the tax it has deducted at source(Form 16A).

9. If you fall in a different tax bracket - lets say 20% or 30%, you would have to incorporate that as a part of your income tax returns that you are filing for that financial year.

10. The NRI's, who earn interest on their NRO's account, are subject to 30% TDS

11. Since TDS threshold of Rs.10,000 interest is calculated at the branch level, you can avoid TDS by splitting your FDs across multiple bank branches OR by submitting Form 15G/15H OR by opening a FD in someone else's name, but all these techniques are just delaying the inevitable. You are liable to pay your tax on every single rupee you earned as interest on FD during the year. In all such cases, you will have to pay tax and show the same at the time of filing your income tax return.

I have tried to cover as much around Fixed Deposit taxation. Do feel free to leave a comment if you need any clarifications.

Cheers

Manoj Arora

5 reasons why everyone will never get rich

 

"Happiness is a state of mind, and my mind stays in a healthy state if there is enough money in my pocket :)"

Don't worry, i just made this up. But this remains a fact with so many of us, at least definitely with me.

Is there anyone reading this article who hates money? If that is the case, then this article is not the best one for money haters like you. This article is for those who truly wish to get rich in life. When i say rich, i mean really wealthy. What you do with the money after getting rich is totally up to you, and is not the point of discussion in this article.

Most of us want to get rich, with a few exceptions. But then why is that 99% of the worlds population is not rich. Why only 1% could get really rich? What stops us from achieving a real wealthy status? We want it, isn't it? We work hard for money, then what is missing?

While i was shooting for my promotional video for my upcoming book, i realized that there are few key traits that we lack, which results in most of us living a life of mediocrity. I analyzed and summarized 5 key reasons for most of us not being able to become rich

1. Wealthiness does not strike us

The fact that we have been born and brought up in an environment where we have hardly seen rich people around us, makes us believe that its a norm not to be extremely wealthy and wealth comes only as an exception to the fortunate few. We never had rich friends, rich neighbors, rich colleagues at office. So, how am i supposed to be different? I am normal. I am as most of us are. It never strikes us that we can be truly wealthy irrespective of what surrounds us. We can be that "exception". We deserve to be rich. 

2. We never "decide" to get wealthy

I love talking about this. Many of my friends come to me and ask me to list down the steps from 1 to 10 - whatever they need to follow so that they can get rich. Fine, i say, "Tell me your dream." They are confused with my response and re-iterate their wish to tell them the steps needed for achieving financial freedom. I have to keep reminding them that your dream is going to be your first step. If you have not yet identified a dream in your life, a single purpose in your life for which you are ready to sacrifice anything, you are not done with Step 1, and unless you are done with Step 1, all other steps are meaningless. In fact, all the subsequent steps after your dream are so common for everyone and available so easily in books and across multiple internet sites that anyone can learn from them and follow them. But your dream is something that will not be available anywhere else. It has to be searched and dug out from inside you. A dream would be something that excites you, that single purpose of your life that ignites you and makes you passionate about everything that you do. It took me 15 years to search for my own dream and purpose of life, but once i found it, financial freedom was a just a series of steps that took 7 years to execute. Most of us want to jump over the first step of identifying our true dream because identifying that takes time and effort. It takes a lot of time and lot of effort. Unfortunately, there is no short cut here.

3. We always have enough excuses

"I am too old to fight for my dream now", "I have a family to support and secure", "It is too early for me to talk about retirement or freedom", "I don't have time", "Money is not a very good thing to have", "Money cannot give you happiness", "I am busy", "Happiness is a state of mind",  etc etc etc....the list is endless. I only have one point to tell all my friends who have some "reason" for not getting wealthy - Either you can make excuses or you can make money, but not both. The choice is in your hands. the choices that you decide every day make your destiny.

4. We do not appreciate delayed gratification

Most of us understand the compound interest calculation but it is very rare for someone to truly appreciate the amazing power of compounding and delayed gratification, unless they have experienced it in life themselves. In this fast paced world, we are all looking for instant results, and if we do not see instant results, we want to change our goal itself. Well, nothing worthwhile in life can be achieved without spending enough time and effort. It takes time to get rich and the growth is exponential. You have to have patience in the first few years when it might seem that you would never reach the goal, and then suddenly you would start realizing the amazing exponential power of compounding. Do not quit your goal till the compounding power triggers off its magic.

5. We are all in our comfort zones

"Well, whats wrong with my life? It is going just fine...", said a fish to her peer, lying in the fish aquarium inside a house. Doesn't that sound familiar? Nothing wrong actually - they are being fed on time, they are being saved from their potential enemies, they are being taken care of with clean water - then why should they try anything different. Perhaps, they forgot the real meaning of life - to "live" and "experience" life and the situations it poses on you. It is a very similar story for most of us. We have got used so much to our comfort zones that it pains to make an extra effort to "live" life. Is it easy to come out of such a comfortable zone? No, not at all. Is it worthwhile? Definitely yes. what is "living" life unless you have your personal freedom in your hands.

So, while most of us want to get rich, only 1% of us who will learn the skill to manage the above 5 constraints, will actually get rich. It is a fact that not everyone can get rich...Rich would always be divided in the ratio of 1% to 99%. 

But you can definitely decide the category you want to be in. The choice is in your hands !!

Cheers

Manoj Arora

Related Posts

What hell will break loose by the "Amazing Power of Compounding"

Come out of Comfort Zone : A Tale of 2 seeds

Dont be Frog in the Pan

Do I need Freedom when life is going on just fine?

Never Never Never Give Up

Go, Chase Your Dream !!

One person can make ALL the difference

Your Dream is your First Step

Have Hope.. and Dare to Dream !!