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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
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Tuesday, April 28, 2015

'The Week' magazine interviews yours truly - Buying Happiness

Last week, a special reporter from 'The Week' magazine connected with me to understand what is driving some of the authors like us to make people financially literate and generally interested in finance. 'The Week' happens to be the largest selling English news magazine in India followed by India Today and Outlook...read on...

After a series of articles in the Complete Well Being magazine which impacted so many lives, last week - a special reporter from 'The Week' magazine connected with me to understand what is driving some of the authors like us to make people financially literate and generally interested in finance.

Subsequently, the interview got published in the latest edition of 'The Week'.

to read the interview


Related Posts:


Cheers

Manoj Arora
Freedom can buy you.... what money cannot !!

More on "From the Rat Race to Financial Freedom"

Friday, April 24, 2015

A pigeon's priority

In the race to earn money, we kept following the herd mentality and started building our so called 'careers'. We got so sucked up in our professional lives that we forgot why we started to earn money at the first place. Are you defeating the very reason you wanted to earn money? Find it out from a pigeon...read on....


"Yes, this is the exact spot. You have to take a left turn from here." 
I recommended Priya, as she was driving us towards her sisters place.

This is the spot which I just cannot forget. Just a month ago, when we stood here last, we watched hundreds and thousands of pigeons flocking in towards the ground to pick up their grain of food. Radhey, the person who feeds them, allowed us to have the privilege of feeding them too. There were perhaps 20 more people like us who were feeding them. Radhey gets the grains in a sack and continues to feed them through the day. He charges a very nominal amount for the grains and lets you spend as much time with the pigeons as you would like to.

It is actually an overwhelming experience considering the number of pigeons. They are just so many of them - must be more than a thousand. A small disturbance or a noise, and all of them rise together in such unison, and create such a beautiful fluttering noise, that no passer by can afford to ignore them.

They will fill the sky and fly just above your head while landing or taking off. It is just like the experience of watching a plane taking off and landing just above your head - just that they are in thousands. 

The only thing you got to be a little careful about is the poop drops. The chances are quite high that one of the poops may just land at the top of your head or somewhere on your clothes. If you can take care of poops or be oblivious of the same, you can easily spend your rest of the day there - just watching those thousands of birds landing and taking off in quick successions, feeding them, and just enjoying nature.

"Are you sure Rahul, this is the same point?"

"Yes Priya. I am sure."

"But I don't see a single pigeon today."

"You are right, may be their food is finished, and they have no more reason to come back." I made my guess.

"May be." Priya wondered in agreement.

"But see there Rahul...I see that the food is still there...and there is Radhey..lets ask him what is the issue. Where have the birds disappeared in spite of the fact that the food is still there?"

"Hey Radhey ji" I shouted.

Radhey listened and smiled at us from the distance. I do not think he recognized or remembered us, but he was a cheerful face anyways. We parked our car on the side and were curious to understand more from him.

"Radhey ji..what happened to all your pigeons. We don't see even a single one today. What happened? Where have they gone?"

"Nothing sir !! They are all fine."

"But where are they? I see the food but I don't see a trace of any pigeon. Have they moved to a new place?"

"No no, they come here every morning and leave at sunset. Every species in nature follows this routine, except perhaps humans."

"Even the greed for food is not motivation enough to keep them longer?" I wondered.

"Not even for a moment, sir !! They are very particular about following natural laws." explained Radhey, as both of us listened in a strange dis-belief.

"See Priya. No rat race here. No late night stretching. Food or money cannot make them disobey the laws of nature. And look at us - the human beings - the so called most intellectual species of all. If someone offers an attractive pay packet or if the client offers an incentive which requires us to sit late, we don't even blink an eye before agreeing to trade off our valuable time for that extra money or appreciation."

"You are right Rahul. Come to think of it, the entire concept of a 'career' is misleading, unless of course one is in it for the sake of his or her passion."

"What do you mean when you say that the concept of a 'career' is misleading ?" I was curious to understand more of Priya's thought process.

"I mean, we grow as human beings, we have a family, we start earning 'for' them - and then, I don't know what happens suddenly - we start building our 'careers' by taking away 'their' time 'from' them. I don't know when this 'for them' changed to 'from them' and why." explained Priya.

"Very good point Priya. Actually, I think it is only the herd mentality which keeps us in that zone of building a career, looking for a good position or role, and continuing to grow vis-a-vis our colleagues. Everyone around is doing that, so we tend to believe that it should be the only correct option. 
We started to compete in the herd by snatching our time from children, and then wondered why our children do not tell us everything that happens in the school. We followed the herd, even if we knew the entire herd may be headed to hell. We took time away from our parents and then repented when suddenly one day - they existed no more. We took our spouse for granted, and then wondered where is the spark that once existed between us. We forgot that every relationship needs time."

"Bang !! You hit the bulls eye Rahul."

We went back to our car and were about to drive away to Priya's sisters home. We were getting a little late. As we steered the car away from the scene, we saw Radhey also packing his bags and moving towards his home. 
Not sure about others, but at least Radhey has learnt to be in tune with nature, just like his birds. But we, as humans, were a long way to go. 

At the same time, we were absolutely clear that a professional career is to be able to feed your family and to be able to spend a lot of time with them, to take care of them, to live our life with them. We were not going to allow the herd mentality or money to reverse it for us. Life's best lessons are usually learnt in such simple and common incidents, which often go unnoticed.

The book Happiness Unlimited shows you many such lessons to lead a happier, contended life.

Cheers


Sunday, April 19, 2015

Your passion Vs Your profession

This is the question which would have haunted you at some stage of your life, or is it still haunting? Your heart wants to chase your passion and calling of life, but your mind restricts you to your profession - for the risks involved are higher, money assured is lower & the initial social acceptance is meagre while chasing your passion. Is there a way out? Why not make our passion our profession?

Wednesday, April 15, 2015

Love comes in different forms

Love is pure. At the same time, expressions of love can vary from person to person, or from one relationship to another. Are we ready to accept love the way it comes to us, or we have some preconceived notions of how love should be?
Let us get it clarified as Sneha gets a scold from her Dad...read on...

Sunday, April 12, 2015

Understand Health care provisions (Section 80D) for you post Budget 2018

[Last Update : 09-March-2018]
Section 80D of the Income Tax Act provides provisions for us to claim deductions in taxable income for the health insurance policies, medical expenses and preventive medical checkups that we do throughout the year. Make sure you are aware of the latest provisions as per Budget 2018, so that you can save on taxes for the money you pay on covering your health.


With Budget 2018, there has been a long awaited change in the Health Insurance related deductions that can be claimed to save taxes. These changes were long overdue, and indicate the increasing costs towards medical expenses and health insurance.

Here are the list of new deductions allowed as per Budget 2018:

SECTION 80D

The deductions that can be claimed under Section 80D are as follows. 

Case 1 : No one in the family has attained the age of 60 years
Self, Spouse and Dependent Children : Rs.25,000/- (Budget 2015 : Same; Prior to 2015 : Rs.15,000/-)
Parents : Rs. 25,000/- (Budget 2015 : Same; Prior to 2015 : Rs.15,000/-)
Total : Rs. 50,000/-

Case 2 : Assessee and family is less than 60 years but parents are above the age of 60 years
Self, Spouse and Dependent Children : Rs.25,000/- (Budget 2015 : Same; Prior to 2015 : Rs.15,000/-)
Parents : Rs. 50,000/- (Budget 2015 : Rs.30,000/- ; Prior to 2015 : Rs.20,000/-)
Total : Rs. 75,000/-

Case 3 : Assessee as well as parents are above the age of 60 years
Self, Spouse and Dependent Children : Rs.50,000/- (Budget 2015 : Rs.30,000/- ; Prior to 2015 : Rs.20,000/-)
Parents : Rs.50,000/- (Budget 2015 : Rs.30,000/- ; Prior to 2015 : Rs.20,000/-)
Total : Rs.1,00,000/-

Example:
Assessee is 40 years and parents are 65 years. Assessee has paid Rs. 23,000 as his family's health insurance premium and also Rs. 48,000 as his parent's insurance premium. In this case, Assessee would be allowed a deduction of Rs. 23,000 for himself and Rs. 48,000 for his parents. So, the total deduction that can be claimed on health insurance premium under Section 80D by the assessee would be Rs. 71,000/-. 

General Guidelines for above Deductions:
We must understand the following general guidelines regarding the taxation rules of Section 80D:
1/ The Budget 2018 amendments will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 (Financial Year 2018-19) and subsequent assessment years.
2/ Section 80D deduction benefits are not available to group health insurance premiums paid by your employers.
3/ The benefit is available if payment is made in any manner except in cash. You can pay using any online mode like internet banking, credit or debit cards, or can even pay by a cheque.
4/ The benefits proposed in section 80D are in addition to those proposed under section 80C, which can be availed up to a maximum of Rs1.5 lakh.

Single Premium Benefit
With Budget 2018, any assessee (in any age group) can claim the Single Premium Benefit. Let us see how this benefit works for you.  Under this benefit, you can get the claim proportionately in multiple years for single premium policies. 
For instance, if your health insurance premium for a sum assured for a family of four (husband, wife and two children) in one year is Rs.20,000, you can claim this amount as a deduction under section 80D. However, insurance companies provide a discount if you take the policy for a period of 2 years, and your premium will be less than Rs.40,000 in that case.
Assuming that you get a 5% discount, you would pay Rs.38,000 for the 2-year cover. Under the current rules, you are only allowed to claim a deduction in the first year that too up to Rs.25,000 only. This was a big dampener to go for multi year health insurance by paying a single premium.
As per proposals in the 2018 Budget, you would be able to claim the total premium paid, proportionately, over the 2-year period, which would mean a deduction of Rs.19,000 in both the years.

Preventive Health Checkup
Under Section 80D, a maximum deduction of Rs. 5,000 is allowed on any preventive health checkups during the year. This is in addition to the deductions allowed for health insurance premiums.

For Very Senior Citizens
For very senior citizen above the age of 80 years who are not eligible to take health insurance, deduction is allowed for Rs 30,000 toward medical expenditure.


SECTION 80DDB - For Specified Diseases
Deduction towards medical treatment for senior citizens suffering from specified diseases raised from Rs 60,000 to Rs 80,000.  The deduction is for the medical treatment of specified critical ailments of certain chronic and protracted diseases such as cancer, thalassaemia and others.

SECTION 80DD - For Differently Abled
In order to provide tax benefit to those who are differently abled or those caring for dependents who may be differently abled, Under Section 80DD and Under Section 80U – where disability is 40% or more but less than 80% the fixed deduction. The deduction earlier allowed was Rs 50,000 which is now raised to Rs 75,000. And in case of more than 80% disability deduction allowed was Rs 1,00,000 which is now raised to Rs 1,25,000.

Make sure you make use of the revised limits and save on the tax related to your health. Remember that a rupee saved is five rupees earned.


Revision History:
Mar 2018 : Updated for Budget 2018 Provisions
Apr 2015 : Original Post

Cheers

Manoj Arora

Wednesday, April 08, 2015

Would you be happier without Facebook, WhatsApp, Instagram etc.?

Recently, a lady fell down in a drain while chatting on Whats-App. Kids are urging you to play with them, while you are getting irritated for not being able to read the latest joke that has been making waves in your Facebook group. Your friend has time to chat daily with her friend in the US, but no time to sit with her parents for 5 minutes face to face and tell them how the day went. Whom do we blame? Facebook? WhatsApp? Linkedin? Is running away from technology going to open the doors for your happiness?

Friday, April 03, 2015

Investing in the new NPS is akin to marrying Katrina Kaif

Investing in the new NPS re launched with the budget 2015 is akin to marrying Katrina Kaif. Looks so inviting, but hold on. Given a chance, would you really marry Katie? Really?


Surfing through the television channels and nothing great to watch after the sad exit of the Indian cricket team from the world Cup, my hands suddenly got frozen on the remote control. What I was seeing was a gorgeous looking, stunning face on the television screen. Wearing a black saree, against the back drop of Egypt pyramids, an almost perfectly carved figure was dancing to the tune of 'Teri Ore...Teri Ore'  from the movie 'Singh is King'. I am sure that there are many who became Katie's fan after watching that song.

My wife had called me from the kitchen, while my eyes and ears and all other sense organs were glued to the television screen on that Sunday morning. I was unable to hear her noise (sorry voice), and this had its  obvious consequences, apparently visible over the next few weeks.

And this is exactly how the new NPS is for most of us. So many of our readers have come back to us virtually "demanding" that we give our consent to invest in the new NPS scheme now. It is so much more lucrative now. And there argument is no less relevant. They argue that what else we need to invest our money:
  • Risk free, government backed investment.
  • Decent returns.
  • And to top it all, the government has given a big boost to the National Pension System (NPS) by allowing a separate deduction of Rs 50,000 over and above the Section 80C limit of Rs 1.5 lakh (under Section 80CCD).

Well, this fatal attraction to get into the new Budget 2015 NPS scheme is no less than agreeing to a marriage proposal with Katrina Kaif. As inviting as it may sound, would you really go and marry her? For all the money, the fame, the looks she might bring in your life, you will still be wary of taking that decision, isn't it? Because when it comes to your life, more often that not, you tend to take a long term view of the consequences of entering onto a relationship.

But what about our investments? Do we really look at the long term relationship and consequences of investing our money? Why not think and analyse the above 3 distinct advantages of the new 2015 NPS scheme from a long term perspective and see if it still is really worth investing in NPS.

Risk free, government backed investment
Well, NPS is government backed pension scheme for sure, and the risk factors are truly very low. But so is EPF and PPF. For the moment, forget the taxation angle. We will come to that as well. But right now, we are discussing the risks involved. In fact, the NPS comes at a cost of worst liquidity of your money, and horrible returns whenever you exit the scheme.
Now, here is the key point. This is a debt based investment - just like EPF and PPF. Do not just blindly go and invest because it is safe or because it will save tax. First, you ought to find out whether you really need to put in more money in debt based investments. A ship is the safest at the harbor, but that is not what it is designed for. So, just investing for safety is a poor man's thinking. If you are 40 years old, and at least 60% of your money is not deployed in equity based investments, you are already losing on the returns of your portfolio. Any further exposure to debt will only further imbalance your portfolio.

Decent Returns
Really? 8 to 9% returns - you call it decent? Forget about all government data, and think what is the current annual inflation on education, vegetables, rents, and in general your cost of living. It is way into the double figures. So, being happy with 8 to 9 % returns is at your own peril. You will be losing money every year, in the true sense. And mark it here. The returns from NPS are fully taxable, unlike the EPF and PPF which work with EEE regime. The NPS actually works with EET regime. So, while one may get lured into marrying Katie, the exit is going to cost you heavily. All the entry benefits (and much more) are taken away at the time of exit of the NPS scheme. Worst, you cannot withdraw all the money you invested (which was supposed to be yours). As much as 40% of the money you put in, has to be mandatorily invested in government annuity schemes (which provide perhaps the worst returns)
Some readers also argue that though the exit is taxable, there is a good possibility that they would be in a lower tax bracket at the time of retirement. Well, I can only sympathize with such people because they are planning to retire poor. I would never plan my financial life that way.

Additional tax deduction
Now, if you tell me that you invest your money to save taxes, then this is the first blunder you do, and trust me, you are not alone. You should invest your money to get a good RoI on your money, rather than to save taxes. 
If you can get 15% return while paying 100% taxes as per your tax slab (thus reducing the effective returns to 13%), you should  still go for this option vis a vis getting 9% return and saving some money in taxes (thus increasing your effective return to 10%). Simple logic - 13% is much better than 10%. But then, you got to have the right perspective - to look at post tax returns on your investments, rather than blindly investing to save taxes.

So, in nutshell, I would still not give you a go ahead to invest in the new NPS unless you are already overshooting your equity allocation of 60% (for a 40 year old) in your portfolio and have already reached your limits of investing in PPF. Even after meeting the above 2 criteria, you may invest just to satisfy your inclination to follow the herd - nothing else.

While getting married to Katie may sound exciting and lucrative, think of your life over the next 10 years before you get into this long term commitment of marriage. 
It is just the same with NPS. The entry may look fascinating, but think of your life at the time of your retirement when you need your own money. You might just be able to make a wise decision because now you know that you will be taxed and paid back only 60% of your investment.

Cheers

Manoj Arora
Freedom can buy you.... what money cannot !!

More on "From the Rat Race to Financial Freedom"

Thursday, April 02, 2015

Discipline....A game of energies

Whether your child wants to achieve extraordinary results in his or her school, or you have a career ambition to fulfill or you have some extraordinary goals to be achieved in life - each of these will require a lot of effort and hard work - which needs immense energy reserves within you. And if you haven't learnt to optimize the energy reserves within you, it becomes all the more difficult to achieve those goals. Let us see what optimizes this energy level within us...read on...

"Dad, how do you drive your car so efficiently? I mean, when I tried to learn it last week, I thought it needed so many factors to be controlled simultaneously - the clutch, brakes, gear, steering, looking in front as well as rear, indicators and above all this - mistakes from other drivers as well as pedestrians. Isn't it just too much to handle at the same time?"

I just passed on a smile.

"Dont just smile Dad, and you know by the end of my 15 minute training session, I was dead exhausted, and I see that you drive 2-3 hours every day without any sign of discomfort. What do you do Dad. Tell me please."

"Your observation is right dear...That has become possible because my car driving process has been optimized and has been made very efficient, so as to lose less of energy during driving."

"Optimized? To conserve energy? How do you do that?"

"It is simple. Practice, Practice and Practice. Once our body practices the same thing over and over again, our brain neurons understand the repeat-ability of the actions and then learn to preempt the next action and therefore require less of decision making effort. Essentially, our brain trains itself as per the skill needed, it creates new shortcuts and makes the entire process very energy efficient, optimized and automated."

"Wow !! Are you joking?"

"No dear, I am not. This is our body's natural intent to optimize everything that is done repeatedly, so that it can do it efficiently"

"This sounds so cool Dad."

"And the beauty is that it does not only apply to car driving. It applies to every aspect of life."

"Like?"

"I mean, you can make your brain work more efficiently while performing your day to day routine tasks, thus saving immense energy which you can then utilise in your studies or any other constructive activity."

"Wow, How?"

"Discipline. That is the key. If you do the same act every day at the same time - and repeat it for days and months and years together - your brain automates the entire process of performing those tasks and creates short cuts to optimize the energy usage to perform those tasks. This act of repeating the same tasks everyday at the same time is what our ancestors termed as Discipline."

"But Discipline is boring Dad, we all need change, we all want a break from the routine. At least I feel the need."

"Well, we must take breaks and go on vacations and so on. That happens once in a few months. But what I am talking about is daily discipline."

"How can we optimize ourselves in our daily routine life?"

"By having a fixed time everyday for the same task - however small the task may be."

"I think it will make my day very boring, isn't it?"

"That is just a mindset. It is all about saving your energy from routine tasks and then investing them to achieve our actual goals. It is just simple common sense. If you do not discipline, your brain will not be able to automate tasks and continue to work inefficiently and thereby losing energy on the way of performing those routine tasks - energy which it could have very well utilized in something more constructive."

"Hmmm. I am getting your point, And how detailed these routine tasks need to be?"

"As detailed as you can get. There is no upper limit to the efficiency that your brain can achieve. Even if you plan to go for morning walk or playing outside or even brushing your teeth, do it in a fixed routine at a fixed time every day. With time, our body will save energy - a lot of energy when multiplied by the number of times that you are expected to do that task in your life. The impact of this saved energy will be seen in all other aspects of life, like your studies. You will find that you have become more efficient in your studies and other areas of work."

"OK, let me give it a try Dad. And its 10 pm now. Time to go to bed. This is going to be my time everyday for the rest of my life, Dad. I hope my brain gets more efficient on this aspect."

We smiled and went off to sleep. Everyone gets 24 hours. Everyone gets some or the other constraints. But some people rise to the zenith while most get confined to the nadir, or an average life at the most. Small and simple changes like these can bring a huge transformation in our lives.


The book Happiness Unlimited shows you many such lessons to lead a happier, contended life.


Cheers