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From the Rat Race to Financial Freedom... A common man's journey
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Happiness Unlimited...How to be happy..always !!
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Dream On...Every setback is a little nudge from HIM to Dream On
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The Autobiography Of A Stock
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Manoj Arora    About Me
Author Mission    My Mission
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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 you..you 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
instruments, be it Mutual Funds, Fixed Deposits, Insurance, ULIPs. Someone like Warren Buffet seems more like a phenomenon rather than a common occurrence. Yes, the successful stories are heard less often in the stock market arena because most people consider stocks to be a quick rich scheme where one can buy on lows and sell on highs and make money within a few weeks, if not days. If you think, act or consider stocks like most people do (a quick money making machine) and think that you can earn money without making enough efforts or acquiring enough skills,then you are a part of the crowd - who will surely not succeed, at least in the long run.

You actually have no choice
I am here to tell you that investing in stocks is much more a science rather than luck. You not only need to learn, study, understand and get into it but you also need to understand as to why is it really important or necessary to invest in stocks given the fact that there are so many equity related investment options available today.

The reason for this post is to tackle with the last point. Why should you invest in stocks? In fact, i should re-word this statement as :"Why you have no choice but to get into stocks ?" - yes, this question makes much more sense. Actually, you have no choice. You need to get serious about investing in stocks. Lot of my friends do invest in stocks - but more for the sake of it or give themselves and their colleagues a false sense of belief that "Yes, they have invested in stocks". Somewhere at the bottom of their heart, they are still afraid of stocks and hence do not want to to invest the portion of their portfolio money that is required to be invested.

Investment Options
Let us look at what investment options are available to all of us and whether they are suitable enough for anyone to grow rich or to get financially free. Forget about growing rich or financially free, we would just analyze whether these options are suitable enough just to maintain your current standard of living.

1. Savings Account - Most countries pay less than 1 to 2% interest on the money kept in savings account. In India, most banks pay 4% while some banks pay a max of 6%. Even if you assume that you can get a consistent 6% rate of interest from your savings account, it is nowhere near to the current rate of inflation of 8-9% in India. This essentially means that you would continue to lose your buying power from the money that is kept in a savings account. This would ultimately lead to the money depreciating to such an extent that it will become worthless to hold that money, thanks to the inflation monster

2. Fixed Deposits / Recurring Deposits - The max that i have heard in the recent months of a Fixed / Recurring Deposit providing returns in India is around 10%. Let us assume that you are able to ride on this 10% returns deposit every single time. Here comes the tax dracula. Unfortunately, you will have to lose around 30% of this earned interest to the taxes, which ultimately yields an in-hand return of 6-7% only after tax deduction. This is similar to what savings account gives you and can never match the inflation figures. Again, this option is ruled because you would continue to lose the value of money with time.

3. ULIPs / Insurance Plans / Mutual Funds - This option has gained ground over the last decade or so, and seems to have attracted a lot of customers, probably because we understand that we can get high returns from stock market and that too also, without taking much risks. To some extent, this may be true. But remember that all such insurance and market linked products have their own hidden fees structure. and why not ? They are deploying highly experienced professionals to invest the money in stocks, and who will pay those professionals ? Ofcourse, we have to pay. More than this expenses ratio, there are entry and exit loads which not only make such investments inefficient, but all the returns are taxable as well.

4. PPF / Post Office Schemes / Employee PF / Other Govt savings - These are some of the options where you are likely to get close to 9% tax free returns. These are good options but remember they have huge lock in periods - minimum being 5 years. Also, these options will keep you just abreast to the inflation rate running currently. In fact, as a common man, one should consider inflation in specific areas like health, education, food etc...- all these inflation rates are running well above 12-15%. If that is the case, even these investments are not going to be of much use in the long run.

5. Real Estate - This is the only investment (other than stocks) that has the "potential" to give you returns higher than 15% an an annual basis and also do so fairly consistently (at least in developing countries like India). I know that some of my US and European colleagues would be surprised to see these numbers, but that stays a fact. There are a couple of drawbacks associated with such investments though. The first major drawback with this investment type is that it needs a "big initial investment", and the second issue is that the investment is not so easy to get liquified when in need. So, one must definitely go in for Real Estate investment options, but one must do it only after one has attained financial freedom. At that time, you will have the money to invest, time to study on the best available option, plus you would not be too bothered about immediate liquidity.

Why Stocks?
This is the "only" investment option which has the "potential" to give you return in access of 15% (so that you can beat inflation and taxes), has immediate liquidity, and can be started with a bare minimum amount of money - even with what you have in your wallet right now. There is no other, yes absolutely no other investment option that has the potential to give you all 3 things in one go - high returns, min investment and fast liquidity. In fact, once you understand the fundamentals of stocks and stock related investments, you can even aim for consistent 30-40% annual returns over longer periods (say more than 5 years or so).

If you want to give yourself even an iota of a chance to get rich and wealthy in life, you have actually no choice but to get into stocks. The earlier we all realize this fact, the better chance we have to become seriously wealthy. Do not be afraid of it because of the stories you may have heard. Learn it, read about it, start slowly, do not get dissuaded by frequent market fluctuations, stay focused, give it 4-5 years of learning by practicing, slowly keep increasing the investments and you will not only start enjoying it but will also be able to make some serious money.

The book "From Rat Race to Financial Freedom" will teach you the fundamentals of stocks. It does not get into technical depths of specific stocks but definitely teaches you enough to get started on this most important and the "only viable" option to get rich.


Manoj Arora

Monday, August 20, 2012

Grace Period in your Life Insurance Policy

All insurers of life insurance companies provide for a grace period for the payment of regular premium towards your policy. However, what happens in case certain events happen during this grace period of the policy? Read on...

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.

"Why do you want to go out? Don't go !!" said the second seed to the first. "Because as soon as you go out, you will have to face the cold, the wind, the sun, the heat and above all the neglect and wrath of the humans."

"Look at me" continued the second seed, "i am so comfortable here. It is all so safe and secure in here. You would be a fool if you go out inspite of knowing all these facts."

Well, the first seed who had been patiently listening till now, expressed its views as soon as it got a chance. 

"It is a waste of life if you have not done something different and new. It is a waste of time if you don't go out and learn something new. It is a waste of one's whole existence if you have not added some value in someone else's life. It is the easiest thing to stay in your comfort zone and feel relaxed about it, but neither do you learn anything nor do you help anyone. Such a life is meaningless. So, come out of your comfort zone and try and do something unique, something different from which others can benefit."

The second seed heard all this but, as expected, did not react to this statement.

So, both seeds did what each of them thought was the right thing to do. At the end of their individual lives, the first seed had to whither sun, wind, storms, heat and uncaring mankind but had added tonnes of oxygen to the environment and consumed tonnes of CO2 from the environment. He had given fruits and shade to so many people around the area.. and what happened to the second seed who lay comfortably inside the soil...that seed just got dissolved in the soil. Both the seeds met the same fate in the end, but the impact each of them created during their life time was completely different.

I want to take the help of this story and motivate all of you to come out of your comfort zones, do something unique and different in your lives, dont just be relaxed and comfortable thinking as to why should you do anything for anyone when your life is going on just fine..for the whole purpose of your existence is to face the challenges and change lives of people around you in a positive manner...

We can all do the same after achieving financial freedom. You can decide how you want to add value to others lives but you must do something. And if you are someone like me who used to think that we want to contribute but where is the time, then you are at the right place now. If you are stuck in the rat race, then me and my book "From Rat Race to Financial Freedom" comes with a single purpose to enlighten as many people as possible on the importance of freedom in their lives and how this single factor can then change the lives of people around you.

Go on...it is possible...you have to take the first step and then me, my blog and my book will tell you how to take it forward from there.

My job is done even if one of the readers can take a decision to get financially free and make a positive impact on someone else's life.


Manoj Arora

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.

Friday, August 17, 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 ahead..no one can stop you know, for once you have cleared the GODs unit test, you are invincible !!


Manoj Arora

Related Posts : Dreams

Thursday, August 16, 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

Wednesday, August 15, 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

Tuesday, August 14, 2012

Ladder your Fixed Deposits

A simple technique like "Laddering" can not only help you make your Portfolio more liquid, but contribute quite substantially to building your Nest Egg faster...Read on..

Monday, August 13, 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 not..as 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

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 dreams...how 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 hit..one 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 now..to 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

Friday, August 10, 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

Facebook : http://www.facebook.com/RatRaceToFinancialFreedom
Twitter : @manoj_216
Blog : http://ratrace2freedom.blogspot.in/

Thursday, August 09, 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

Facebook : http://www.facebook.com/RatRaceToFinancialFreedom
Twitter : @manoj_216
Blog : http://ratrace2freedom.blogspot.in/

Wednesday, August 08, 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

Tuesday, August 07, 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 dream..do not let your life wander away... God has created a way to chase your specific dream..go find the way !!!


Manoj Arora

Facebook : http://www.facebook.com/RatRaceToFinancialFreedom
Twitter : @manoj_216
Blog : http://ratrace2freedom.blogspot.in/

Monday, August 06, 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.

Saturday, August 04, 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

Facebook : http://www.facebook.com/RatRaceToFinancialFreedom
Twitter : @manoj_216
Blog : http://ratrace2freedom.blogspot.in/

What and when to teach Kids on Money Management

We saw in Part-I of this post that how important it is for all of us to teach our kids about money management. This time, we would cover on specific aspects of what they should be taught by what age so that they are ready to face the world with confidence by the time they start their jobs / own businesses.

Open their individual savings accounts
- By the age of 2 years, make sure that every kid has his or her own Savings account.
- These account(s) can be linked to your own savings account for monitoring and control.
- Make sure you are transferring some minimum fixed pocket money to the kids account every month. You can do this online as well or you can also opt for auto transfer of this pocket money.
- This sets up the base for all future education on money management that you going to impart to them.

Show them their account balance and interest credit every month
- By the age of 4 years, make sure that you have a regular habit of showing them their account balance every month.
- Show them the interest capitalised and credited to their account balance every month
- This would help them understand that savings grow to a healthy amount if you collate them and also that more the savings, more is the interest credited by the bank.

Tell them about the Amazing Power of Compounding
- By the time they go to proper school (5-6 years), teach them the concept of Compound Interest. They need not know any formulae as yet but they should realise that the money grows exponentially if allowed to grow in an undisturbed manner.
- Show them that the interest getting credited every month is also getting invested and that they earn interest on interest next month.

Let them take their own decisions wrt Saving vs Spending
- By the age of 7 years, make sure that they are making their own decisions wrt what part of pocket money they are spending and what part they are saving.
- By this time, they would already have realised that the more they save, the more the money would grow by itself. So, they would be able to take informed decisions in life on Spending Vs Saving. 
- This habit and decision making would go a long way in their lives to help them in money management.

Explain "Inflation" to them
- While they are 8 to 9 years old, tell them how the price of things keep increasing with time and that the value of money keeps going down.
- Explain them that they have got to beat inflation if they want to maintain their same life style and buying power with the money they have in their accounts.

Expose them to other forms of "investment"
- Before they reach the age of 10 years, they should understand all other forms of investments whether Fixed Deposits (FDs), Mutual Funds or Stocks.
- These will give them the options to beat inflation.
- They should also start investing some part of their money in FDs (which can also be done online). 
- Show them how a Fixed Deposit earns more interest than a savings account and helps them beat inflation (to an extent).

Well, if you have done this much, you have done what no school or college would ever do to their lives. You will start seeing sparkling results very soon. I have realised this with my 2 daughters. Today, they know much more about money management than any other grown up adults around them. They may not be earning money yet, but they exactly know how the money can be managed well.

When asked about what she wants to be when she grows up, my elder daughter, who is now 11 years old, snapped "I will see Dad !!, I know that i would be financially free by the time i start my job - so i have to really think - may be a Sea Animal Trainer". You are amazed !!, I am not... I know kids are great at learning and can outclass you. Trust them and give them the opportunity they deserve.

Happy money management !!

Cheers !!

Manoj Arora

Facebook : http://www.facebook.com/RatRaceToFinancialFreedom
Twitter : @manoj_216
Blog : http://ratrace2freedom.blogspot.in/

Friday, August 03, 2012

Teach your kids to manage money (Part-I)

Are Kids capable of managing money?

How many times have you been surprised by a certain response form a child? I am sure that there may have been numerous occasions when you might have experienced that children are much more smart and intelligent than most of us truest them to be. They can do unexpected things, and then can do them surprisingly well. Why? Because they have a mind which can think positive and does not carry any restrictions, fear or boundaries in their thinking process. These fears and boundaries constrain so many of us from achieving great results. 
Well, if that is the case, never ever think even for a moment that they cannot manage money better than what you do.

Why do we not allow Kids to manage money?

There are two major reasons that i see why we do not normally allow our kids to handle money:

1) In most parts of the world, and especially in India, we traditionally keep children and money apart from each other for the major part of their growing and learning years. Probably, because money has not been considered such a "good thing" by our parents. In one of my earlier posts - Yes, Money can buy happiness :) , i explained that how money is a dead element and is neither good or bad. It depends on the person who is possessing it. So, as long as, your children are brought up in a morally and ethically sound environment at home, be assured that they will make the best use of the money that you ask them to handle. 

2) Add to this, the second major reason for the kids not managing their money is the issue of money management or personal finance not being taught in our schools and colleges. While schools do teach the concepts like simple interest and compound interest, shares and dividends, they never go on to show the impact and importance of implementing these concepts in their own lives. 

Because of both these reasons, our children go on to start their jobs and families and lead their lives with only theoretical knowledge about money and no idea on how to leverage that knowledge. Nothing different happened in my life. Well, later on, i went on to acquire the practical aspects of implementation of this knowledge is a different story that you would read in ore detail in my book "From Rat Race to Financial Freedom". I was one of the rare fortunate human beings who accidentally got into experiencing, reading and writing a lot of stuff around dreams, financial freedom etc, but that is not going to happen for most of us and our kids. The only way this will work out with our kids is by giving them deliberate exposure to this knowledge.

What if i can leave a big chunk of money for my kids ?

Many of us work hard to earn money. When i asked some of my friends as to what will they do with so much money at the end of their lives, many of them had an expected answer : " We will leave this for our children so that they can enjoy their lives" after we have enjoyed ours. I can understand the love and affection for that the parents would typically have for their kids, but do you think that the children would be able to sustain this inherited wealth and put it to right use, unless they know how to invest, manage and grow their money? Almost all the studies conducted on this topic has shown that 95% of the inherited wealth is lost within 10 years of inheritance, and the biggest factor responsible for this has been that the inheritor had no idea how to manage the inherited money. In most such cases, the inherited money either got invested incorrectly, or was lost in lottery or spent on unwanted luxuries, or was plainly outnumbered by the inflation monster. So, more important then collecting money is an effort to learn money management and money investing

How can i help my kids learn money management ?

Years would just fly by before you know it. By the time you decide to be doing something with your life, your life would have reached to a point of no return. You may decide to be different but this happens to more than 90% of the people in this world. Do you think something different would happen with your kid's life, unless you teach them something about money which you were not taught at that age? No, their life would be the same as yours. It has been said very wisely "It is insane to keep doing the same thing and expect different results".

So, start teaching your kids some fundamentals about money, have them open their own independent bank accounts, tell them the concept of bank interest, savings account, fixed deposits, compound interest and its power, give them monthly pocket money and then let them decide what they want to do with their pocket money - how much they want to spend vs how much they want to save every month. Show them how their money is growing in the bank and show them specifically when bank credits them interest, and then what happens to the interest, and what can happen if it is allowed to grow with time leveraging. Now a days, it is so easy to show all these things online to them. 

You got to take these steps when your child is still at a very young age - much before they are burdened with the pressures and responsibilities of life. If you have not done some of these things and your child is more than 2 years old, you are already late. You are late, but not everything is lost. You can recover. You can take a decision to start doing something about teaching them basic money management.

I know that some people would like this post, some would feel happy about it, some would also share it with their friends but what next? I am not sure how many but i am sure some of you would act now !!. Because knowledge without implementation is as good or bad as having no knowledge at all. Don't just read and appreciate the post. Act today..time is running..

This was Part-I of the post. In the next part of the post (Part-II), i will share with you as to what all i feel you can teach your child at different age groups so that the child learns money management in a disciplined and incremental manner. All that will be based on my personal journey with my kids.

Don't just leave money for your Kids... Teach them how to manage money

Happy teaching !!

Cheers !!

Manoj Arora

Facebook : http://www.facebook.com/RatRaceToFinancialFreedom
Twitter : @manoj_216
Blog : http://ratrace2freedom.blogspot.in/