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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
Credentials & Awards   Awards & Credentials

Corporate & Family Gifts   Corporate & Family Gifts [NEW]

Amazon Author Page   Visit Author's Page at Amazon
Flipkart Author Page   Visit Author's Page at Flipkart

Thursday, August 29, 2013

Why Gold is almost always a good investment

Traditionally, Gold has always been considered a safe bet and a great investment option to rely on, in case of financial crisis. However, can it give you a combination of safety and returns better than most other investment and options that you are aware of? 
You will understand more once you realise the factors which have an influence on the Gold price.
Read on..

Saturday, August 24, 2013

What is current account deficit (CAD)

When dealing with equity, and in general the market and economy trend, one of the most commonly heard of terms to assess the country's creditworthiness is called as CAD (Current Account Deficit). A controlled CAD in general is a healthy sign for a growing economy. This is one of the macro factors to be looked at when taking a long term view of where you invest your hard earned money. So, let us try and understand more about CAD.

Tuesday, August 20, 2013

A DRDO Sr Scientist : The latest book fan

From the Rat Race to Financial Freedom was recently reviewed by Dr. T. V. Karthikeyan, a Senior Scientist at the Defense Research Development Organization (DRDO), and needless to say that he became the latest addition to the ever increasing list of fans of this book.

Producing some of the excerpts of his review. 

In case you are keen to read all details, you can go the below review page:
Dr. Karthik’s Review on 
  • The author Manoj Arora has very successfully brought out a very handy, useful and a ready reckoner on the road to financial freedom.  
  • With liberal doses of philosophy, myth busters on wealth creation tools, taxes savings the writer has provided practical examples from his own personal life as well.
  • Through this openness and transparency he has illustrated how a few very simple disciplined practices can put the layman common reader on the highway of financial and life well being 
  • Numerous quotations and sayings at the commencement of each of the eight chapters facilitate good food for thought to all classes of readers. These are good to ponder and ruminate over even after a long time after completion of the book.  
  • Time and money are two parameters for a successful life. Larger perspectives of life should be in the mind in the long run. Financial independence also springs from the true happiness of “giving” rather than “taking”. 
  • Several punching words at the beginning and end of each chapter are life worthy. 
  • A subtle message succinctly brought out is the difference between financial freedom and displaying social status and wealth.  
  • A personalized guidance facilitated by the author in furnishing his personal email ID and his website should be acknowledged and appreciated by the readers. 
  • Knowledge removes fear. Understand the principles of wealth accumulation and live by them. A “To do” approach is provided by the author. 
  • Financial freedom gives you added ability to pursue hobbies and other interests of life.  Life becomes happier and worthwhile.  
  • The book gives a personalized reading and makes you feel as if it is written only with you in the mind.  
  • Ample illustrative examples of achievements of how and when the interest overtakes the Principal, compounding with time and discipline are inspiring. 
  • Financial freedom is indeed a blessing to the invoked. 
  • Simple concepts but brilliant ideas! Have a plan even if you are unable to stick to it.  The author discusses various such ideas in one’s goal to financial freedom.  
  • The Pareto principle of mathematics is well analysed in these contexts.  The act of celebrating milestones is enjoyable to read.  
  • A good coverage of spirituality regarding “God Knows how to help you” is praiseworthy.

On the whole, From Rat Race to Financial Freedom is a book worth possessing for any household shelf, library stacks and short travel companionship.

As Dr. Karthikeyan also pointed out, it is not about the book alone, and it is definitely not about the money alone. It is about how you manage your life. It gives a completely new perspective with the time tested wealth management principles.

Some other pointers that give you insight of the momentum the book has been generating:

  • We are on the verge of getting the 200th Facebook page fan of the book . We are at 199 today. (Take me to the Facebook page)
  • We are very close to 200 registered freedom seekers on our Freedom portal. We are touching 190 right now. These are the people who are committed to make a difference to their overall life via financial freedom. (Take me to the Freedom portal)
  • We are adding more freedom seekers / day today than what we ever added.
  • Book is running its 5th successive week of being in Top 20 Finance Books as well as Top 10 Personal Success Books on Flipkart
  • The book recently got listed in the Top 0.1% ranked books on Amazon India (on a base of more than 1.2 Crore books).
  • We are exceeding 72,000+ blog hits and counting. (Subscribe me to the blog)

All the above data apart, what gives me even more satisfaction is the fact that i am able to personally connect with hundreds of freedom seekers and guide them (with no charges) on their journey to financial freedom. The kind of appreciations and thanks messages from them fills my heart with bliss. 

I know they can now hope for a better future, a future where they can start thinking of something more value adding in life than just earning money for survival.


Manoj Arora
Lead a Financially Free Life !!

Sunday, August 18, 2013

What are Direct Mutual Funds in India

Mutual fund investors have definitely turned smarter. An increasing number are taking the direct investments route to spice up their returns. Indeed, going by a Crisil report, direct plans now constitute 25% of the assets under management (AUM) of mutual funds. If you invest in mutual funds and plan to do so, you better understand what is a Direct Plan for every mutual fund scheme.

What is a "Direct Plan"?
SEBI has directed Mutual Funds vide a 2012 circular to provide a separate plan for direct investments, In the direct investment route, the investor goes to the fund house directly, thereby cutting out the distributors and other middlemen. This, in turn, brings down the administration and distribution expenses, which pulls down the expense ratio and makes your fund’s performance better. This is valid for existing as well as new schemes.

When have the "Direct Plans" been launched?
The "Direct Plans" were launched with effect from January 1, 2013.

What was the need for a Direct Plan?
As your agent/advisor was being paid on every sale, his motivation would be to make you constantly buy more mutual funds and this would be possible by churning your portfolio. On his recommendation, an investor would buy some units of a mutual fund today, sell them after some time, buy another mutual fund, sell that too after some time and so on; so that the agent/advisor/distributor keeps earning commission. Further as the commission was different for different schemes of mutual funds, it was quite common to see the agent community advising schemes with higher commission to investors over other schemes, irrespective of whether the scheme was any good for the investor or suited his requirements or not.

Who can apply under the Direct Plan?
Investments under the Direct Plan are open to all categories of investors who choose to invest without routing the transaction via a distributor.

How many plans will be available with effect from January 1, 2013?
All Plans / Options / Sub-Options offered currently under "Existing Plans" of the Schemes are also available for subscription under the "Direct Plan". Thus, there shall be 2 plans available for subscription under the schemes viz. Existing Plan and Direct Plan.

What is the difference between the "Existing Plan" and "Direct Plan"?
The "Direct Plan" has a lower expense ratio as compared to existing plans in the same schemes, as there is no commission to be paid to the distributor under this plan. Expense ratio refers to the amount of money that an asset management company charges investors towards operating and administrative expenses. If you choose to invest directly, the expense ratio of a direct plan will be 0.25-0.75% lower. The Crisil report points out that as a result of choosing the direct route, investors have gained an additional 0.08-0.76% compared with the regular plans.

Is there a difference in the NAVs between the Direct and the Existing Plan?
Yes. Since there is a difference in the expenses charged by the Direct and Existing Plans under every scheme, there will be a difference in the NAVs for both these Plans.

Will the scheme characteristics change in the "Direct Plan"?
No, scheme characteristics such as Investment Objective, Asset Allocation Pattern, Investment Strategy, risk factors, facilities offered and terms and conditions including load structure will be the same.

Was this not available earlier?
Investment via the direct route was allowed earlier too, but the Securities and Exchange Board of India has incentivised this route since the start of this year. Since January, fund houses are supposed to declare separate net asset value for regular and direct plans.
Originally, till a few years ago, when you made an investment of Rs.100 into a mutual fund, between Rs.1 to Rs.2.50 used to be deducted as an entry load. This entry load was primarily the commission that was paid to the intermediary you went through to invest in this mutual fund your distributor, agent, online portal, financial advisor, bank etc. So in effect you were actually putting in only Rs.97.50 to Rs.99 into the mutual fund.

What will happen to my existing investments which are not routed through distributors?
Such investments will continue to be under the "Existing plan". In case you wish to transfer them to the Direct Plan of the same scheme, you may submit a switch request. Such switches may not be subject to exit load. However, investors should consult their professional tax advisor before initiating such requests.

Why are my existing investments not automatically transferred to the Direct Plan?
Existing investments cannot be transferred automatically under the Direct Plan, since plans are available for fresh / new investments only. Existing investments would continue to be a part of the existing scheme and you can switch them into the Direct Plan. Please note that such switches may entail exit load / tax consequences which need to be considered and understood before proceeding.

Can I invest in the Direct Plan vide the stock exchange platforms (BSE or NSE)?
Since the stock exchange platforms necessitate routing transactions through distributors, these platforms can not be used for investing in the direct plans. However, investors holding units in the demat mode can redeem units in these plans from their demat account using the stock exchange platforms.

Whats the trend?
Within six months of their launch, direct plans of mutual funds have cornered 25% of the total AUM of the industry. There has been a lot of institutional investors who have taken the direct route, but the direct participation from retail investors is still not very high. This is because most of them rely on financial advisors for suggestions regarding mutual funds. going ahead, as awareness increases, retail investors too could start shifting to these plans.

How have the direct plans been performing wrt NAV?
When mutual funds launched direct plans earlier this month, these schemes were expected to do better than the regular funds because of the lower charges. The difference was expected to show up after a few weeks, even months. However, within a week, the direct plans of some funds have raced ahead of the existing schemes. The extent of the out-performance is eye-popping. In some funds, such as Kotak Tax Saver, the difference is more than 1 percentage point. Even among 5-star funds, direct plans have outperformed regular funds by as much as 38 basis points. It's noteworthy that the degree of out-performance is high among equity funds.

Is there any catch?
You don’t have the expertise and experience of the advisor/agent to rely on for an appropriate and suitable selection of the mutual fund schemes. The difference in returns of a scheme that is in the Top 10 in its category and one that is say even the 17th or 18th can be large. So if you go the Direct Plan route you will need to equip yourself with the knowledge to understand how mutual funds work, how the share market is doing, evaluate track records of fund houses and fund managers and most of all you will need to have the time to devote to research to be able to invest well.

The Future...
As we move on, the change from a commission based model to a fee based model is inevitable as in developed economies of the world. At some stage while you invest directly in a mutual fund without any intermediaries, you will be doing so on the recommendation of a financial planner/advisor and paying a fee for his services.


Manoj Arora
Lead a Financially Free Life !!

Wednesday, August 14, 2013

Are we truly Independent?

As our nation celebrates its 66th independence day on 15th August, it is definitely time to rejoice, celebrate and look to the future, while we continue to learn from the past. We have come a long way, though there are miles to go before we sleep. Exactly 8 years ago, during one such celebration, a strange series of questions struck my mind - What is so great about freedom?

Why an independence day happens to be the most savored day for us, and for that matter, for any nation? What did we actually achieve by getting independent? Yes, we got rid of the British rule, but what was wrong with the British rule? Are we happier today than what we would have been under the British rule? All these questions were going through my mind and i was looking for answers.

As i was pondering more on the questions, i realized certain key attributes that independence brings to a nation:

We decide our own destiny
It is not a question of whether we fare better today or not, the point is that we should be able to decide our own destiny. That is what independence brings us. We should be able to decide what is right or wrong for us, we should be able to take our own decisions, do our own mistakes, learn from them and then take our nation forward in the direction that "we" feel is right. This was one strong reason for being an independent nation.

Slavery was a beautiful comfort zone
If any country has been slave for more than 200 years, I realized that it was such a beautiful comfort zone for most of the nation's population, till the shackles were broken by our leaders and freedom fighters starting from Rani Lakshmibai to Mahatma Gandhi to Chandrasekhar Azad to Bhagat Singh to millions of other known and unknown names. We were required to be awakened and shaken out of our comfort zones. If that would not have happened, we would have still been surviving as a "slave nation" comfortable with whatever we got at that point, because we would have never seen the other side of the picture.

Fight was on because everyone wanted to be a part of the solution
When Rani Lakshmibai fought her first battle, do you think she was not aware that she stands no chance of winning any battle against the mighty Britishers? She knew it. Then why was she trying to fight? Was it suicidal? She knew she cannot solve this problem (of slavery), and she was never fighting for that end result. She was fighting because her inner voice told her to be a part of the solution rather than to stay a part of the problem. She was ready to die being a part of the solution rather than live a luxurious and comfortable life as a queen, being a part of the problem.

Most of us never realized we were slaves
At that time, when freedom struggle was beginning to erupt, life was going on fine for so many of us Indians. We never realized that we were slaves. We were working, earning money, feeding our families. Why the hell should we risk our family's future and fight for freedom? There were no major issues with what we were doing. It is only after some enlightened souls showed us the reality that the nation woke up and realized that we were living as slaves and that slavery was no more acceptable.

I was pondering over the above four points and i had a strange co-relation of a nation's independence with our own personal independence. So, i thought, though our nation is now independent, are we , as individuals, truly independent? 

To find the answer to this question, i asked a few questions to myself, considering the same 4 points above. I earnestly recommend all of you to answer these 4 questions for yourself and see whether you are truly independent or not?

(1) Am I able to decide my own destiny?Or is it driven by the options given to me by someone else? What if i love to help my society and do that full time, or for that matter pursue any of my long cherished passions? Am I "free" to do that? or am I bound to do something because money is needed to feed my family?
Am I truly independent as a person?

(2) Am I in a comfort zone?
Salary is coming in, family is getting fed, this has been happening for the last few generations and therefore it so comfortable being here in this zone. Is there a zone outside this, which is much more beautiful and rewarding? Am I open to new ways of thinking, new ways of living life? And for that, 

Am I ready to push myself out of the comfort zone and fight for my personal freedom?

(3) Can i break free from this rut of earning money?
And do something beautifully value adding in life? I may not know whether I can finally achieve it or not, but can I at least attempt to be a part of the solution even if i cannot believe that i can solve the problem? 

Can I at least start working on a plan which can take me towards freedom?

4) Do I even realize that I am actually a slave?
A slave who is trading off my time and getting paid for that? If I stop spending time, I stop getting paid. Period. Thats slavery. Time is my most important asset and I am compromising more and more of it to earn money. Can I break this cycle of rat race? Can earn time? Because it is time that I need to build relationships - with myself, with my family, with my society and this world.


That is when i started on my journey towards financial freedom, and today, i feel blessed to be working with such great freedom seekers from all walks of life, from all parts of the globe, who have also realized that they need freedom.

I am helping them get on the other side of the fence and see how beautiful this world can be...
  • a world where you have enough time and money to decide what you want to do with your day, your week, your month & your life.
  • a world where Mondays are no more scary. They are as beautiful as any other day of the week.
  • a world where you are the master of your time - the most precious commodity in the universe.
  • a world where you can relive your childhood days.
  • a world where happiness and peace is more important than the next client meeting.
  • a world where you can start pursuing your passion, your dreams and what you truly love in life.
  • a world where you are TRULY INDEPENDENT.

Friends, time is limited for everyone in life. No one can earn a second more than 24 hours, and therefore, it is very precious. If you cannot decide what you do with your every minute, every hour and every day of life, and someone else is deciding that for you...it is high time you realize that independence is still far away. 

It is not impossible to achieve independence but you must make efforts to move forward towards your own financial independence.

Decide what your true independence day is going to be....... all the best !!

Sunday, August 11, 2013

Difference between Sum-Assured and Guaranteed-Returns in Life Insurance Policies

'Sum assured' and 'Guaranteed Returns' are the two commonly used terms when it comes to life insurance plans. Although both the terms are linked with monetary benefits of a policy, there is a significant difference between the two. Understanding the difference can help us make the right choice of the insurance policy for ourselves and our family members...Read on.

Thursday, August 08, 2013

Opening Multiple PPF Accounts in India

There is widespread confusion regarding how many PPF accounts can be opened by an individual on his / her name or in the name of their minor children? How much money can be invested in these accounts in one financial year? How much tax can be saved by opening multiple accounts?..Read on..

Sunday, August 04, 2013

What is a Credit Score

A Credit Score [including Credit Information Report-CIR], is your detailed credit history and acts as a full evidence of your credit worthiness.

What is Credit Bureau?
Credit Information Bureau (India) Ltd; CIBIL is India’s first Credit Information Company, also commonly referred as a Credit Bureau. They collect and maintain records of individuals and non-individuals (commercial entities) payments pertaining to loans and credit cards. These records are submitted to them by various banks and other lenders on a monthly basis. Using this information a Credit Information Report (CIR) and Credit Score is developed, enabling lenders to evaluate and approve loan applications. A Credit Bureau is licensed by the RBI 
What is a Credit Score?
Your credit score is a three-digit number generated by a mathematical algorithm using information in your credit report. It's designed to predict risk, specifically, the likelihood that you will become seriously delinquent on your credit obligations in the 24 months after scoring.

Why is your Credit Score important?
Your Credit Score plays a critical role in any loan application process. After an applicant fills out the application form and hands it over to the lender, the lender first checks the credit score and credit report of the applicant. If the credit score is low, the lender may not even consider the application further and reject it at that point. If the credit score is high, the lender will then look into the application and consider other details to determine if the applicant is credit-worthy. 
The credit score works as a first impression for the lender, the higher the score, the better are your chances of the loan being reviewed and approved. The decision to lend is solely dependent on the lender and CIBIL does not in any manner decide if the loan/credit card should be sanctioned or not.

How can you maintain a good Credit Score?
You can improve your Credit Score by maintaining a good credit history. This will be viewed favorably by lenders and it can be done with 6 simple rules:
1) Always pay your dues on time. Late payments are viewed negatively by lenders
2) Keep your credit balances low, Always prudent to not use too much credit, control your utilization
3) Maintain a healthy mix of credit. It is better to have a healthy mix of secured (such as home loan, auto loan) and unsecured loans (such as personal loan, credit cards). Too many unsecured loans may be viewed negatively.
4) Apply for new credit in moderation. You don’t want to seem Credit Hungry; apply for new credit cautiously
5) Monitor your co-signed, guaranteed and joint accounts monthly. In co-signed, guaranteed or jointly held accounts, you are held equally liable for missed payments. Your joint holder’s (or the guaranteed individual) negligence could affect your ability to access credit when you need it
6) Review you credit history frequently throughout the year. Purchase your CIR from time to time (may be once in 2 years or so, depending upon your credit usage) to avoid unpleasant surprises in the form of a rejected loan application

Can CIBIL update your Credit records?
CIBIL cannot delete or change records reflecting your CIR on its own; they simply collect records of individuals provided to them by their members (Banks and financial institutions). There are no ‘good’ and ‘bad’ credit or defaulters lists either. So, if you defaulted earlier and now want to make amends, you will have to approach the lending institution, pay your dues, and ask them to send an updated record to the Credit Bureau

What does it mean when your Score is "NA" or "NH"?
A Score of “NA” or “NH” is not a bad thing at all. These mean one of the below:

a) You do not have a credit history or you do not have enough of a credit history to be scored, i.e. you are new to the credit system

b) You do not have any credit activity in the last couple of years

c) You have all add-on credit cards and have no credit exposure

    It is important to note that while these Scores are not viewed negatively by a lender, some lenders’ credit policy prevents them from providing loans to an applicant with Scores of “NA” or “NH” (applicants with no credit track record). Hence, you may have better chances applying for a loan elsewhere.

What does it mean by an Index of 1-5?
This means that the individual has a credit history which is less than 6 months, hence a risk Index is returned. Higher the index, lower the risk

What is a good Credit Score?
Based on your credit history, CIBIL gives you a score between 300 and 900. The higher your score, the greater are your chances of loan approval. all banks check your Credit Score before approving your loan application? 

How can i get my Credit Score?
You can apply for your Credit Score online at http://www.cibil.com/.
You will be asked to fill an Online Credit Score Request Form, pay the application fees (approx Rs. 470/-) and then you can access your Credit Score after authenticating yourself by answering a series of simple questions.

As Credit History becomes more and more important in India, and as loans become an integral part of our lives, it is a good practice to be aware of your current credit score and continuously strive to maintain a good score.


Manoj Arora
Lead a Financially Free Life !!