The Four Ashrams and the Overlap

The Four Ashrams and the Overlap

To my post yesterday on Men and Women, one of the gentlemen wrote the  reply below.

Very well written Sir ...
मैं आपके विचारों से सौ प्रतिशत सहमत हुँ। भले ही मेरी उम्र 30 वर्ष और वैवाहिक जीवन का अनुभव भी नही परन्तु मेरे विचारों से यह बात होकर गुज़री है और आपके उपरोक्त लेख में मैं उन्ही विचारों का प्रतिबिंब देख रहा हूँ। वृद्धावस्था से भय किस सीमा तक होना चाहिए या यूं कहें कि क्यों होना चाहिए। क्यों मर्द उम्र भर दिन रात एक करके काम करते रहता है कि अपने वृद्धावस्था के समय में  आनंद  ले सके । अपितु सत्य कुछ और ही होता है। जैसा कि आपने जीवंत उदाहरण प्रस्तुत किया। अपने परिवार के साथ  आनंद से समय व्यतीत करते हुए वृद्धावस्था यापन करना मिथ्या ही लगता है। वर्तमान में एक परिदर्शक के तौर पर समाज में होते बदलाओं से मुझे भी वृद्धावस्था का विचार एक असुरक्षा की भावना तो लाता ही है साथ ही साथ उम्र के इतने वर्ष काम करने के बाद एकान्त और उपेक्षित जीवन के विचार मात्र से सिहरन सी उठ जाती है।
 एक पिता को क्या परिवार का आर्थिक स्तम्भ ही माना जाना चाहिए? क्या जब परिवार आर्थिक रूप से सशक्त हो तो पिता को वृद्धाश्रम की शरण लेनी होगी? ऐसे और भी कई विचार जीवन की सरलता पर प्रश्नचिन्ह लगा देते हैं।

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His message was well intended and reflected his concern regarding his behavior for future. So I had to think and review what I have been doing since I turned Fifty and what is exactly in store for me. Nothing works like your own behavior....
Following is the Reply to Mr.Digvijay Chauhan...

मेरे ख्याल में इसका जवाब इंग्लिश में टाइप करके देना चाहूंगा ताकि सब लोग भी इन्हें ठीक से समझ सके.
Despite what I have written in the above article the fact remains one must do what one is destined and designed to do.
Very unfortunately the scriptures found in our country,  in the form of Vedas, Puranas and Upanishads have spoken a lot and have been passed on to us by our forefathers but unfortunately nobody ever followed them.
It is a very common philosophy often quoted in our country that our life is divided into four phases.
The first phase demarcated for 25 years is to be dedicated for acquiring knowledge and skills to pursue further life and is called Brahmacharya Ashram.
The second phase of 25 years upto the age of 50 is to be devoted in raising ones family and bringing up his progeny to be socially useful and socially productive.
After the age of 50 it wise to start detaching oneself and let the family members start taking their own decisions. One should watch from the sidelines how each member of not only his family but extended family and neighbourhood are growing up. He should by the virtue of his by now strengthened financial position and experience be able to influence the lives of those lesser privileged around him. And by lesser privileged does not mean in terms of money alone but also experience and Outlook in life.
During this 3rd phase from age of 50 to 75 one is expected not to interfere in the matters of running of the world and start acquiring skills and philosophies of his personal survival. What is expected to look inwards and see what he has done right and if he has done some wrong, then how we can connect them so as to be able to build himself as a more socially useful and productive animal.
This 3rd phase call VANPRASTHA Ashram IS ONE OF THE MOST IMPORTANT PHASES BECAUSE AS I OFTEN SAY, IT IS THE AGE WHEN THE BURDEN OF ONE'S EXPERIENCE HAS NOT REALLY SLOWED HIS ACTIONS.
This is also an age for most of us partly because this stage also includes the part of the later age which we call Sanyas Ashram.
Since lesser number of people go past the age of 75 , so naturally part of the Sanyas Ashram has to be practiced with vanprastha Ashram.
This third stage of the third quadrant of life has to be deeply understood and which is what my yesterday's post was all about.
During the second quadrant of one's life one must make himself so strong on one's path and determination that he can continue with the moment into the next 25 years or the part of remaining life.
Unfortunately that has not happened VANPRASTHA Ashram was designed so that the growing people should be able to reduce their off- take from the resources of the society and start consuming less and less.
But that is not exactly what is happening.
When I travel abroad I find more and more people who are on holidays are in the late sixties and seventies because they are the only ones who have sufficient money in today's world.
Even on domestic front I find the people in the third quadrant to be consuming most of a Nation's resources.
Japan is a clear example how and where the senior citizens start taking out from the society the country starts faltering.
That country has had almost two LOST decades because of lesser resources available to the younger generation.
In Indian government services earlier the retirement age used to be 55 to 58. In the armed forces it was even lesser.
And the reason for this was largely philosophical and embedded in our cultural psyche of the FOUR ASHRAMS.
Other countries have not understood this concept well and that is why Canada is set to suffer with it’s retirement age of 67 and similar in France where large amount of resources are spent on the aged frivolously.
So the answer to your Question about what as a 30 year old must be doing ? Is that just do what you are supposed to do . Once you start approaching the fifties try to increase the area of your influence and think beyond your own family. Be useful to your children’s children , neighbours and the city and then the country.
In such cases your children will be proud of having you as the Figurehead. They will look forward to take your advice instead of you thrusting on them.
That is my reply to your sensitive and intelligent question.

Of Men And Women The Eternal Question

 Of Men And Women The Eternal Question

The other day while I was driving out of the club an elderly gentleman waived and asked me for a lift to the nearest taxi point.
While driving to the point during the course of conversation he revealed that his wife had gone to US to be with the children as a grandson was born and he had come from Delhi to stay in the senior citizen Complex where he has a room.
After the gentleman got off the car it set me thinking. Do men lose their utility as they grow  older?
Is that what they are scared of as they move towards retirement, that now what will they do because the skills that they had learnt will come to an end with the job.
Is that the secret fear of insecurity.
With a little more thinking and basis of my discussions with a lot of older friends I found that a man by gender is largely a monochrome personality.
And by monochrome I mean even if he is a Renaissance man of lot of skills he still does not have the ability by nature to be able to contribute to the society in more than 1 ways.
Even in the process of raising a family he may be a successful personality in his profession and may have achieved Heights but his contribution to family largely (and by largely I mean percentage wise when we speak of data) , his contribution rests by way of his monetary input or giving the financial stability. This financial support or stability indeed is important and without which not many things can happen and by the virtue of driving that point home a number of times does he really contribute to the making of his family?
Does is really find time for his family?
Historically even if he has found time for his family what were the skills by way of which over the period of Thousand Years he has been able to enhance the process of evolution.
In a very male-dominated way, we always say the early man- man discovered fire- man made the wheel- man developed from Hunter to agrarian animal etc.
Even in a history books we always see the picture of a man doing everything the woman is shown somewhere in the backdrop.
What were the skills that man imparted to his progeny over so many thousands of years. Were those skills imparted by man alone and were not in the domain of the women?
More often than not and in terms of actual generalization when a person sits down he always remembers his mother and her contribution in the enhancement of his evolved and developed life. He always remembers the compassion and patience that his mother had imparted and shown during his upbringing and not the manliness that was preached by his father.
So if gentleness, compassion and love were the domain of the women then what has been that of man?
If only fending for food was the main point of his life then does he not become less useful as he grows old.
Is that not why a woman finds herself more useful to the society even to the last day of her life. So isn't the women still imparting the skills that she had learnt from nature AND because of her nature to teach the children and their children's children, the natural skills just like that of a elephant  or a bird or a tigress teaching their offsprings to stand, walk and hunt.
Now doesn't the question once again  arise that in such a case weren't the skills of food also imparted by the woman.
And then again I ask what were those which were imparted by man?

पुरुष बुनियादी तौर पर बांझ होता है|
न की शारीरिक रूप से अपितु मानस से भी .
जब एक पुरुष ने करुणा हुए प्रेम व मैत्री की बात की तो उसे बुद्ध , महावीर और क्राइस्ट कह दिया। 
जबकि नारी तो अनंत काल  से  करुणा और प्रेम अपने अंदर समाये हुए थी। 
    न् कि वह स्वयं संतान की उत्पत्ति के लिए अनुपयुक्त है अपितु  वह अधिकांशत संतान के लिए कुछ भी रचनात्मक योगदान करने में असमर्थ होता है|
अपनी जिस संतान की उत्पत्ति के लिए वह जीवन भर  अपने लहू की दुहाई देता रहता, उस संतान की उत्पत्ति में भी उसके शरीर का सबसे सूक्ष्म cell ही प्रयुक्त होता है जबकि बालक के जन्म में नारी  के शरीर का सबसे बड़ा cell प्रकृति प्रयुक्त करती है।
 

केवल अपने रोजगार और उसके प्रति हासिल किए हुए  कौशल को वह उपलब्धि मानता है, और परिवार को जीवनपार्जन के लिए दी धनराशि अपना योगदान मानकर सन्तोष कर लेता है।
इसमें उसकी कोई गलती नहीं है क्योंकि ऐसा उसे समाज और संसार ने समझाया है|
किंतु ऊपर अंग्रेजी में लिखी घटना ने जो मुझे समझने पर मजबूर किया कि एक सफल पुरुष के जीवन का, जीवन भर की उपलब्धियों का अस्तित्व कुछ ही पलों में सिमट जाता है।
यह वास्तव में एक सोचने वाला विषय है।
और मेरे साथ ही अन्य पुरुषों के लिए यह भी  महसूस करने का वक्त है कि उन्हें अपने नौकरी के अलावा भी कुछ हुनर सीखने पड़ेंगे यदि वे चाहते हैं कि समय के साथ में चल पाए और समाज में अपनी जरूरत बनाए रखें।
केवल नाईं की या चाय की दुकान पर बैठकर राष्ट्रीय और अंतरराष्ट्रीय मुद्दों पर चर्चा करना उनके हुनर में नहीं गिना जा सकता।

Notes for a New Investor

Notes for a New Investor

Very often through various social media forums or by email, comes a question – “I want to start my investment which is a good fund for SIP. “
Before I start finding the faults in the question itself let me point out how the people on the forum reply.
One says go to your bank and take the help of the bank manager.
Another says go to value research select the best performing funds from the start investing.
Yet another says take the help of a professional advisor distributor.

Now let us examine what was wrong with the original question itself.
Firstly the investor is not sure why he wants to invest.
Secondly the investor is not sure why he wants to invest in mutual funds.
Thirdly he is also not sure if SIP is some type of a fund instead of the method of investment.
The most important mistake in this case is that the investor does not have a plan why he wants to invest and what are his short or long term goals. This in plain language means that when would he like to redeem or sell his funds.

When a new investor wants to approach the world of investment through Mutual Funds more often than not he is completely unaware of the various types of mutual funds.
He does not know anything about large cap midcap and small cap or night-cap.
He does not know how much to invest and whether to invest at one go or distributed over a period of time.
If he starts going by the performance of the funds in the past one two or three years he may soon land himself in for unpleasant surprises.
It is very important to understand that the best performing fund may not be the best fund because we are not aware as to how much risk or AMD you risk the fund manager may have taken in order to deliver the return.
The same risk which he has worked for him for one year may not necessarily work in the next year.

Advice for a new investor:
 WHY: Before starting investment, please understand yourself and your money. Try to ask the question to yourself first. Why I am investing this money into mutual funds. Is it because everybody is saying or is it because the advertisements on the TV informing me to do so. Or have I discovered the fact that in the long term it is the equity class which normally performs best.

WHEN: before taking a step forward into investing your money in mutual fund ask the question when will I sell this fund. If the answer comes within one year within 3 years or even within 5 years then review your decision because you may be getting Better Avenue somewhere else to invest.
In my opinion you must invest that money into equity or equity Mutual Funds which you will -as good as never ever sell. Mutual Funds are designed so that the fund manager can take care of the market conditions and you do not have to worry. So unless you need the money really bad and as a matter of urgency you should try and never sell equity mutual funds.
The only exception to this is when you are fund is performing badly which we will discuss in another article.

WHO: Who meaning whose help will you take in your investment. Will it be a social media forum, Facebook or Whatsapp group OR are the tips from a magazine or the relationship manager at the bank.
Or are you going to go the way on your own by opting for the direct option.
For the reasons that I mentioned in the beginning of the article it is virtually impossible to conceive that a fresh investor will have much idea about the market capitalizations, fund managers and the funds themselves.
Hence it is very much required that a young and new investor takes the professional help for hand holding.
Do not be worried what your advisor is earning you should be interested in seeing that how much are you benefiting.
Sadly , we do not believe in paid professional service. We do not believe that to keep the economy moving we have to make sure that we pay for the resources that we use.
As a result even after quite a few years of investment people barely have few lacs in their portfolios.
It has also come to my attention that when people started investing on their own steam they have been quick to sell in times of market fluctuations.
It is the duty of a financial advisor or distributor to guide your investment philosophy and deter or encourage you to invest consistently.
The social networks and the social media should be used to confirm the action of the distributor and what he is asking you to buy is actually worth it.
But to think that you will have a good portfolio built up worth crores starting on your own is a little difficult and risky, but not impossible.
One heavily guarded secret that the AMCs would like to keep is the interaction that they have with distributors.
Most of the high performing distributors are taken into different locations both in India and abroad for two or three days and they are heavily grilled with the actions and information about what the AMC is are doing and plan to do.
Now whether this is ethical or unethical is a different matter but just like you attend the company's seminars where the company informs you about its future actions and then you take your career decisions based on that, it is same with the AMCs.

People treat me as a Financial Advisor whereas I am not; I am just an investor like yourself. At best I could call myself a teacher who just imparts what he has learnt. Yes I did learn a lot and I learnt from the best in the industry and I paid for getting that knowledge- which I aim to pass on to you- for Free.

I can help you start your journey but soon enough you should find yourself, a finance professional. A professional who can do the running around for you, advise you of pitfalls, who makes sure that your investments continue even when you are on board. He will make sure that your family understands what you have started and why it is important that it should be carried through. You can always consult me or other knowledgeable colleagues on the Finworld groups if what you are being made to do by your distributor /advisor is correct.

OF LIFE AND LTCG AND LIFE AFTER THAT

                               OF LIFE AND LTCG AND LIFE AFTER THAT

There was a very irritating message on the social network regarding Income tax anomaly- it has been doing the rounds for last 3 years at least.
Some people may not have liked my calling that post about Income Tax  as Trash.

But the fact remains that in this age of free opinion , it is becoming difficult to see some good ideas or opinions and even less,  good creative writing.
Sometimes bare facts stare us in the face and we fail to see or recognise them.
Almost since 5 years ago , I was talking about the impending Capital gains tax on equities, simply because the deal was too sweet. Even though I was benefiting enormously out of the LTCG exemption, I was quite aghast at the difference in the tax treatment between the Small Savings which were ACTUALLY being used for Nation building and Stocks +Mutual Funds.

For a moment if you pause and think , how exactly and whom exactly is the Stock Market benefiting?
I purposely put a Question Mark to the above.

Apart from broadly spreading the awareness about the country's Stock Index so that the foreigners come and invest in it and also the country- what is the exact benefit to the country?
When a company's stock price zooms who benefits?
 The company!
It benefits in the sense that it becomes highlighted and recognized and more people start investing in it and the Share price zooms even higher. Now the company does some trading in it's own shares to earn that extra profit. It also uses it's enhanced Market Capitalization (which has gone up due to the higher share price) to secure some loans at attractive interests to further expand.
Now in this entire process investors like you and me and the Mutual Fund Managers (on our behalf) make money by buying and selling the shares of these companies.
That is all that a Stock Market serves a person in nation building.

The backbone of the economy on the other hand, is the - Debt market.
Whether you deposit money in FDs , Debt funds or Post Office schemes. All the money is diverted to the Debt stream for the Government and the Corporate world.
The Corporate uses it to enhance it's operations and the Government uses it to do development in the country.
All the NPAs that you hear about are part of this DEBT world.
As you can also find out from the eternal and omnipotent internet; the size of the Debt market is any day much much bigger than Equity.

Now let's consider the fact that how much of your savings are in the Debt. Include all your Bank accounts, FD, Debt Mutual funds, Post Office schemes; Gold Bonds & ETFs.
Further consider that since 2014 you are actually paying Capital Gains on the Debt funds.
If you are following my style of investment, your majority of the funds are parked in Liquid Funds while you are doing STP into equity funds.
Which means for every transaction you are having a Capital Gain and that too SHORT TERM; and if you are a NRI then the Capital Gains is being deducted AT SOURCE i.e. TDS.
Now tell me how much noise did you or anyone in the country make while paying the Capital Gains or Tax (on FDs).
As regarding LTCG on Equity which has been levied on 1st Feb 2018 but will come into force since 1st April 2018- you will not incur this tax unless you sell.
Which means that since this is your COLLECTION phase of wealth- you don't have to worry.
So who is making the noise about the ELTCG (or Equity Long Term Capital Gains)?
Naturally it is the Big Ticket investors and PMS holders and operators and traders who are making a noise because they sell often. They are the one's who provide the volatility and uncertainty to the market.
But no-one noticed that upto 11months and 364 days of holding you were already paying 15% as STCG (Short term Capital Gains tax).
So you see most of the times - news is misleading, it's eye wash.
Not one person asked the basic question , which is applicable to over 520 investors who move with me.
Will the MF managers pay LTCG separately on their Sale Purchase of shares and we will again pay LTCG when we sell our MF units?
Isn't that the more relevant question.
The idea of this article is that instead of reading other people's forwarded views, please read things in original and think originally.

As my Guru, A N Shanbagh had told me often; never consider yourself less than any professional of any field. As a fresher starting with no pre-conceived notions will probably lead you to better discoveries than a professional whose livelihood depends on it.
Fair enough, with my own thinking and conviction I have charted my Nirvana and helping few others to achieve theirs.

Always be future Proof: By thinking originally in your own mind's eye, always weigh the possibilities objectively; and howsoever they may seem improbable or impossible don't discount them; But prepare for them well in advance.
I had taken LTCG into my account of things almost 5 years back- and had told you in every seminar- that as of now you are having this advantage; when the rule changes- we will see.
Well now the rules have changed- so we take that into account - and move forward.

Instead of posting on social media and and creating unnecessary debate I have sent the following suggestion to PMO.
In addition to the LTCG of 10% after 1 year; please consider modifying the law as follows: LTCG is reduced to 7% after 2 years of holding, it is further reduced to 3% after 3 years of holding and ZERO after 4 years of holding.

This step if accepted by the FM will provide stability to the market and giving advantage to the true investor and weed out short term opportunity seekers.
In a similar way I look forward to some creative ideas from you.

On a parting note I wish to leave you with a unsettling feeling. Please prepare for the Government doing away with Tax exemption for NRIs within next 5 years.
Now don't tell me that it will never be done. You already know my viewpoints about governments of the world.
 Ciaao!!!

Red Alert- Few mistakes that I commonly observe with fellow investors

Red Alert- Few mistakes that I commonly observe with fellow investors

In the last 6 months we  had two seminars and four of them in last 18 months.
After every seminar I am inundated with phone calls WhatsApp messages and emails.
It is very encouraging to see each time people taking interest in in the future however I am also amazed to see the kind of mistakes  people have made before they attended the seminars.
The objective of this write-up is to point out the mistakes that I am seeing randomly but consistently with most of the investors.

1. First issue is about investing from a savings account. Since most of the people reading this article will be NRIs I need not remind them at all the Investments must take place place from either there NRI account or NRO account.
If they have been NRIs for one or two years they must have their n r e and nro accounts in place and must close down their savings bank account.
There has been a very complex case where a person is the first holder in a folio but is investing from his wife's savings account , the funds into which are flowing from his own NRI account. This is not only untenable but also a grossly inefficient way of planning ones finances.

2. Second issue which I have commonly observed is having too many folios in the same fund house and for the same scheme. This is normally happening if you are investing through some Bank where the relationship manager keeps changing and every time you wish to invest in the same scheme he or she creates it under a different folio this creates gross complexity of your Investments.
Hence please remember that if you have ANY number of funds under 1 AMC then you need to have only one folio if the first holder of all the plans is same.
In case you you have investment in the same AMC from NRE and NRO account,  in that case only you need to have different folios.

3. Another common thing I have observed is people having invested far little money but into too many funds. Since you are one of the  higher salaried people you can start with just one fund in the beginning and need to have not more than 5 to 6 funds distributed across 3 to 4 AMCs. As a Thumb Rule you can continue in this way till you have a total Corpus of about 50 lacs. Then if you feel you can increase 1 fund  for every 10 lacs. With time you will realise that it’s not really beneficial to have more than 8-10 Equity Diversified funds.

4. Next case very commonly which I have found is people investing mostly in the NFOs(New Fund Offers) and closed ended funds. This obviously is due to the miss selling by agents or distributors.
So please remember not to invest in any NFO or a closed ended funds. Also avoid sector funds. There are plenty of well reputed open ended funds funds, diversified equity funds which have excellent track record over a period of 10,15 and even 20 years.

5. Another instance is of people who are familiar to me having a very poorly constructed investment plan. Some of the people who are known to known to me for years , talk to me and consult me in such a  way that I assume that they are looking after the finances properly.
However after few years I normally and commonly find that not only have they invested wrongly but also created a corpus far less than should have been expected with their financial well being.
Please understand just by being my good friend your finances will not start improving unless you plan yourself.
As you know very well I do not make open recommendations. Hence after taking the consultation from me you must look for a professional distributor through whom you should proceed to make a well constructed portfolio. Familiarity in these cases causes your loss.
I consider myself as a humble teacher who just passes some information that I possess. What you make of that information will depend entirely on you.

I have created various forums like Whatsapp group called Finance at Sea ; Facebook Group called Kaushik’s Finworld and my own blog called holisticrajeeve.blogspot.com. Apart from this I write for Marineinsight.com .

All these forums provide you with a platform to make your queries and also assist new investors get something out of your experiences.

So please avoid these pitfalls and build your own secure future at your own pace and comfort. There must be no one between you and your money- as I often say.