Sunday 20 July 2014

Financial Basics 1


    Having understood the importance of insurance, the question arises as to how much of             insurance does one need and where does it fit into the financial planning. To make matters     worse you have a whole lot of insurance products being pushed by agents of all  insurance      companies.  You have the endowment policies, money back policies, Ulips  and  also the           term insurance. Very  few  Life insurance agents actually promote the term insurance ,           which  gives pure protection. Term insurance gives a lump sum  to the nominee on the             death of the person who has taken insurance.  There is no maturity benefit in this                     product…
         As we all know that for any building to be strong, it should have a strong foundation. In      exactly the same manner for any financial planning to be stable and robust, the base should    be made up of  term insurance and health insurance. This can be anything between 5-7% of    the total investments. After protecting the family and dependents ,  in the next stage , your    investments can be in less risky instruments like, endowments, NSC, PPF, FDs etc.  These      investments can take about 10-15% of your investments. The returns here are low but are    fairly stable.
        In the next stage more risky instruments like Ulips, MFs, shares can be a part of our          planning.

                     
      It is also essential to have at least 6 times of monthly expenses as a contingency fund in         liquid form  for unforeseen emergencies…
    We will go into all the aspects in detail in the subsequent  weeks…


Sunday 11 May 2014

My Promise

My Promise to My Family



That day, I decided to return home from work early. I had promised to play a game of shuttle badminton with my daughter – something I’d been promising and postponing for months. Every day before I left for work my little one would ask, “Daddy, when are you going to play with me?” and I would promptly reply, “Today for sure, dear. I’ll come home early and we’ll play to your heart’s content.” Her eyes would light up at this. But each day, I reached home late, long after my daughter had gone to sleep exhausted from waiting for me.

This was a sore point with my wife. Most of our quarrels were over my broken promises.  I had not taken my family out for a dinner or a movie for months, although I’d never forget to promise to do so every day.

But today was going to be different, I thought, as I rushed home from office. In my mind’s eye I could see my wife and daughter smiling as they saw me back home so early. I was tempted to call them and tell them I would be coming home early, but discarded the idea in favor of surprising them.

As I reached home I saw a huge crowd in front of my house. All my friends were present, and although I tried catching their attention, no one even bothered to look at me. The atmosphere was funereal.  I pushed through the crowd and ran towards my home. My heart sank as I saw my wife wailing beside a dead body. My daughter sat close by, a shuttle racket in her hand, shaking the body on the floor, “Daddy, wake up. Let’s play.” 

I was shocked and began to scream at the top of my voice, “I am alive, I am alive. Look at me,” but nobody heard me and none turned to look in my direction. I edged closer and saw for myself that it was indeed me lying dead.

A month after my death all my relatives left and my wife and child were left on their own.

For the first time I watched my daughter go to school. When I was alive I had never dropped her to the bus stop, as I was either sleeping or too busy at some meeting or the other. Now, however, I wished I could carry her heavy school bag. I wished I could gently hold her hand and drop her at the bus stop.

I hear her ask my wife, “Mummy, Daddy is never going to come back, is he”? I see tears roll down by wife’s cheeks. She has no answer and I have no way to console her.

One day there is a knock on the door. It is an official from the bank. He’s come to issue a notice for non-payment of my home loan. This is soon followed by people from the credit card company, who tell my wife that she needs to pay up all the dues or face the consequences. That expensive watch, the laptop sitting on my table - were all bought through my credit card. To compound matters, that evening my daughter comes home from school, crying. “Mummy, teacher sent me out of the class today for not paying the school fees. I won’t be allowed to attend classes tomorrow if I don’t pay the fees.”

My wife has always been a strong lady. But today, I see her dissolve at the enormity of her tragedy. She is broken and no longer has any confidence left. She takes out all the gold ornaments she owns. A quick calculation shows her they are not enough to pay off all our loans.

Another day. Another knock on the door. This time my wife is too scared to open the door, but open it she must. It’s a person from an Insurance Company and he’s come to hand her the claim cheque of the policy I had taken. I see tears in my wife’s eyes. But I know this time they are tears of happiness, as she comes to my photograph on the wall and says, “I have quarreled with you for not keeping any of your promises – for not finding the time to play with the child, for not taking us out for dinners. But you have fulfilled a bigger promise of keeping us happy even in your absence.”


I realized then that I had indeed done something worthwhile for my family. I could now rest in peace.