Knowing It All

As we get older, most of us assume that we get wiser. This is seen to be true for both individuals and organizations. We may call it different names – learning, experience, insight, etc. Some of us may accelerate the process by learning from others’ experiences (through books and training), or by exposing themselves to changing environments (think travel or shifting industries). Others may see themselves as a “lifelong student”, constantly seeking out ways to add to their knowledge base, or challenging themselves to step outside their comfort zone.

But, what does this “wisdom” really mean? Why do we assume that being wiser means having all the answers? Why do we take it for granted that while we are doing the right thing, others (those whose actions are not in sync with our’s) are on the wrong path? Again, this is often true for both individuals and organizations.

Let’s take a look at some of the issues that business enterprises face today: Should it be scarce or abundant? Should it be free or expensive? Should it be about what used to matter or what really matters today? What should we do when our hunches don’t match the data that’s pouring in?

We live in a complex, interconnected world. And, organizations of all shapes and sizes struggle with questions to which they do not have the answers – even if they bring all their experience to bear on the issue. So, why pretend that we know it all?!

The way I see it, knowing what you don’t know is an essential attribute of being wiser. And, working on filling those gaps only means that we are on our way to becoming a better version of ourselves. To me, continuous learning means having the humility to ask a lot of questions, being receptive to other (dissimilar) perspectives, and developing the ability to synthesize them suitably.

We’ve all heard of IBM predicting a world market of “maybe five personal computers”. We know that Kodak missed the bus with digital photography standards, even after inventing the digital camera! And yes, “uberization” is a word now. In other words, just because someone (including your competitor) is on a different path, it doesn’t mean they are wrong.

Believe it or not, organizations can admit – to their employees, customers, stakeholders – that they don’t know every thing, but that they have learned a few things along the way about what works (and doesn’t work) in their unique context. And, so can individuals. Yes, even those in “leadership” positions!

Let me end with the words of a wise Economist who once remarked: “When the Facts Change, I Change My Mind. What Do You Do, Sir?”

Mumbai-Pune Puncture Scam

If you live in any of the major cities of India, and own a vehicle, you’re more than likely to have heard of many popular cons that happen in and around the city to unsuspecting motorists. Typically, they involve someone flagging your running vehicle down, and pointing out a problem you need to get fixed. Then, another helpful someone shows up out of the blue, and attempts to “fix” the problem, eventually making it worse, and making you shell out thousands before you can be on your way again. One variant of this also includes throwing out sharp nails on your road stretch, causing some punctures, and then going about fixing them.

Since I was aware of many of these, I thought that I would be insulated from such scams. But, I was wrong.

On a recent trip with the family to Pune, just as we entered the Pune city limits on the Mumbai-Pune expressway (near Hinjewadi), a man on a bike signalled that I should get my front-left tyre checked… and rode away without stopping.

Since he didn’t stop to “help” me, I took his warning as genuine, and soon stopped the car by the kerb. The tyre pressure in my tubeless tyre did look a little lower than normal, so I thought I should get it checked as soon as possible. As it turns out, close to where I’d stopped was a roadside tyre repair shack, so I headed there and asked him to check it.

Again, note that there was no way for me to link the biker who rode away without glancing back, and the tyre shack who was supposedly minding his own business when I drove upto him.

Anyway, he jacked up the wheel and starting checking the tyre in question with some soapy liquid for air bubbles. I did ask why they use soap (which would froth and bubble on its own) instead of plain water, but he said they help him spot the puncture leaks better. I wasn’t too worried since I was keeping a sharp eye out for what was a real air bubble from inside the tyre, and what was on the surface.

During the conversation, repeating the process through the entire surface of the tyre, the good man found (and showed me proof of!) 8 different puncture leaks – big and small. The physics seemed sound: Unless the leaks are fixed, they would keep increasing in size. Plus, I was travelling with kids and the trip hadn’t even begin yet. Plus, I was 200 kms from my home city (and trusted garage). So, all things considered, I asked him to go ahead and fix all of them at 150 bucks a pop.

All the way home, I couldn’t shake the feeling that something was amiss. So, when I returned, I went to have a word with my local garage, who I have known for years and has yet to cheat me in any way. Here’s what he told me…

This is a very common scam on the Mumbai-Pune expressway. In all likelihood, while the chap at the tyre shack was “checking” for a puncture, as soon as I glanced away, he probably used his poker to make more tiny holes which later he could prove as punctures, so that he could charge me for each fix. Checking for punctures in tubeless tyres should be done by dismounting the wheel, putting it in a bath of liquid and filling it with high pressure.

Not only did I get conned for a thousand bucks, but I also ended up damaging a good tyre for the long run.

Shockingly, I came home to look this up on the Net and could hardly find any stories of similar experiences. Hence, this post to warn other unsuspecting motorists of what to watch for. If enough of us are armed with the correct information, it will be difficult for the scamsters to do their thing, don’t you think?

Hopefully, this should save you from ruining another good tyre and a few thousand bucks…


Financial Independence

“Financial Independence” means different things to different people. There may not be a universal definition for it, but it helps to understand the subject a little. I often mind myself debating these concepts with friends, and this post is my way of capturing some of my key learnings on the subject…

Tony Robbins captures the essence of Financial Independence in a five-point scale

#1. Financial security. This is achieved when you have sufficient passive income to cover the very basics in your life like the rent (mortgage), bills and basic food.

#2. Financial vitality. At this level of financial independence, your passive income can allow for more things like clothes, going out and having fun, and basic holidays.

#3. Financial independence. This is the level where your passive income is sufficient to allow you to have your current quality of life.

#4. Financial freedom. At this level of financial independence you can up-step your lifestyle to the one you desire.

#5. Absolute financial freedom. This is the level where money stops being an issue and you can do anything you want.

When I first encountered this, what struck me is that for Level One itself, Robbins speaks of a “passive” income that achieves these metrics. i.e. Income generated whether you show up to work or not. This may be via investments in real estate, securities or a business that you own – not one where you trade-off your time to earn money (as in a job!)

Now, if you are currently in debt and have little savings to show for your earning years, you may think that attaining even the first level with “passive” income is an impossible dream.

Why is that?

The Times of India featured an excellent article by Uma Shashikant on the (often mistaken) advice we give to our children when it comes to their future career, and financial goals. In it, Shashikant makes a very valid argument that “what is true of the parents’ world is not necessarily true of their children’s world.”

If you are an Indian, it is most likely that your well-wishers (parents included) brought you up on a steady diet of the age-old maxim: Buy a house!

Buying a house is not always “good advice”. It actually depends on a number of factors, including:

1. Your personal Life goals
2. Your current Life stage
3. The Rent vs Buy equation in your particular city / region

But, the social pressure to do it (for most Indians) is so much, that most do not take a step back and evaluate all the options objectively.

The fact is, having a primary residence (owned by you) is not necessarily a good “investment” for you. At best, it represents an asset for those you leave behind, but comes at a very high cost that you need to bear during your lifetime.

There are a few exceptions to this, of course:

1. It can be a part of your diversification plan, if you are talking about a second home as an investment opportunity, and have the disposable income (no financing needed) to be able to afford it.

2. You would like to start “investing” in a home, even if it is located away from your desired place of work/stay, and stay in a rented property in the meanwhile, to benefit from Real Estate appreciation. This works as long as your monthly mortgage (EMI in India) is less than 50% of your monthly take-home income and the Rent vs Buy equation is no more than 1:2 (not the 1:5 it presently is for most of developed India!). If you can tick those boxes, then years down the line you have the chance to sell off the remote property and “upgrade” to the one you could not afford at the time, having met part of the investment requirement through its appreciation.

However, that is not typically the case. And, in thousands of cities across the world (including in India), it is way cheaper to rent a house than to buy one – whichever way you crunch your worksheet.

If you depend on a monthly salary for income, it makes little difference if your current house – the one you live in – appreciates in “value” by several million. With increasing income, when we “upgrade” our lifestyle, it is often accompanied by moving to an even larger (read: more expensive) home with accompanying debt. And, that is precisely why you should think – ten times – before taking up a loan that you will need to service for decades to come.

If you are not riddled with a huge debt at this early stage, and have the discipline to put away 15-20% of your (ever growing!) income in a sound Investments Plan, you have a real shot at building a corpus. Combine this insight with the Power of Compounding, and you may just be on your way to a significant “passive” income.

And, that would be worth the reward, wouldn’t it?!


Note: This blog post is strictly an educational and informational service, and does not constitute personalized investment advice. The commentary, analysis, opinions, advice and recommendations represent the personal and subjective views of the Editor, and are subject to change at any time without notice.

3 Pillars of Wealth Creation

The world of Finance is full of products and services that entice you to part with your money, in an effort to create wealth on your behalf. They are as diverse in their risk-return offerings, as they are in the range of know-how required to profit from them.

Some of us find the task of spotting a good investment in equity shares or IPOs too daunting, while others operate effortlessly in exotic derivatives that “short” the market to make money even when it’s on its way down. Some speak of Real Estate as a sure thing, while others can’t even afford to pay their rent (mortgage), let alone dream of a second property.

Essentially, there are just three levers you can use to your advantage:

  1. Earn More
  2. Spend Less
  3. Invest Better

I know, I know. It sounds so simple and obvious. But, let’s examine them for a moment.

When faced with a situation of needing more money, we often tend to think of only one of these 3 levers to improve our current situation. The fact is that, at any point in time, all three choices are available to us – independently or in combination. What matters is a better understanding of our own Risk Profile, and the assumptions we are making in our decision process.

Let’s take an example. Say, you’d like to save up to buy a car in a few years time.

Your typical response would be to start blocking some of your money in a separate account, or start a Systematic Investment Plan (SIP), so that it is earmarked for the goal you have defined – in this case, buying a car. However, you have several options before you.

A. Invest Better
Since this is a specific, goal-based investment objective, you may be able to afford a slightly higher risk on this particular investment than the rest of your portfolio. For example, venturing into a more aggressive top-rated Equity-based Mutual Fund to improve your chances of earning returns.

B. Spend Less
In addition, you could also take on a target of going out for a meal, one less time than you normally do each month, parking that saving too in your goal-based investment.

C. Earn More
Finally, you also have the option of taking on a part-time assignment that utilizes your skills and helps you earn some extra bucks.

The possibilities are endless, but the concept remains the same; these three pillars are all that’s involved while evaluating any form of financial investment, however basic or advanced the underlying products may be.

When you start thinking actively about the levers at your disposal, you can make a more informed choice about the path you want to set yourself on, to achieve those financial goals sooner.

As always, understand your own risk appetite and the expected reward ratio for any form of investment, before you venture into a new category.

Note: This blog post is strictly an educational and informational service, and does not constitute personalized investment advice. The commentary, analysis, opinions, advice and recommendations represent the personal and subjective views of the Editor, and are subject to change at any time without notice.

Spend Less Than You Earn

I often find myself advising friends on the basics of personal finance. After all these years, it still surprises me to learn how little some of us know on the subject, given our advanced degrees in education. This post should serve as the first step towards bridging that gap…

We know about the good habit of “saving”, and do our best to practice it. As often as possible, we put away money in the bank for a rainy day or a future goal, telling ourselves that this is the best we can do under the circumstances.

After paying the rent (or EMI), the salaries of the domestic help, and other monthly household expenses, there is very little that remains behind.  Some months, we are unable to manage any surplus at all! After all, times are tough. And the price of nearly every thing keeps shooting upwards.

No wonder the size of our savings does not seem to keep pace with our needs and wants!

Is there a solution?

Fortunately, the answer is simple: Spend Less Than You Earn

It is a simple and effective way to remedy the situation. But few have the discipline to follow this advice. The biggest obstacle in its path is our impulse to “own” every shiny, new object we desire in a moment. Do this often enough, and you can say goodbye to any real savings you hope to accumulate in your early years.

The antidote? Spend some time thinking about the impulse purchases you tend to rack up, and eliminate those to start with. It helps to delay the purchase for a week and assess if you still want it. (Often, you will find that the feeling has passed!)

Then, focus on the biggest recurring expenses that form a part of your monthly budget. Remember, the 80-20 rule applies here. Focus on two or three major heads that contribute the most to your expenses for maximum impact.

Making changes will not be easy or without inconvenience. But, if you are constantly playing catch-up or desperately waiting for that salary cheque to come in, the rewards will be worth the effort.

You will need to figure out which trade-offs are acceptable to you and your family. For example, your rent or EMI payments may figure among the top three expense items – Can you afford to shift to a smaller place or find a house further away, to reduce this cost head?

Once you tackle the impulse expenses, and make a real dent in the top three recurring items, you should find yourself in a comfortable position to start accumulating some savings each month, without worrying about the next month’s bills.

And that’s a good place to begin from, isn’t it?!

Note: This blog post is strictly an educational and informational service, and does not constitute personalized investment advice. The commentary, analysis, opinions, advice and recommendations represent the personal and subjective views of the Editor, and are subject to change at any time without notice.

How To Buy Insurance

If you are over 30 and an Indian, chances are you already have “some insurance cover”. Chances are also pretty good that you are ‘under-insured’, which means you do not have enough Insurance cover to safeguard the interests of your dependents.

According to John Nelson, chairman of Lloyd’s, the world’s largest insurance market, “India is the second most under-insured market in the world“.

So, what’s going wrong?

Two things, we think. First is the relatively poor understanding of the buyer. Second is the selling practices of the Insurance service providers.

First things first – you need to understand what you are buying.

The point of taking “insurance” is to insure against risk, so that your loved ones are taken care of, even when you are no more.

Imagine you earn about Rs. 50,000 per month. Your annual income, therefore, amounts to Rs. 6 lakhs. If your current expenses are more or less being met by your income, with a modest surplus being generated each month, your family will need that annual figure of 6 lakhs per year, if you are no more.

Assuming a thumb rule of 10x to provide for roughly 10 years of their living, that amounts to Rs. 60 lacs. Even with a modest inflation rate, that figure is likely to be closer to Rs. 90 lacs, in order to provide for the cost of living in the future.

Therefore, an adequate amount of Insurance cover for such an individual would be close to Rs. 1 crore as sum assured. And that’s just with a take-home salary of Rs. 50,000, to accommodate 10 years of your family’s expenses. If you earned double of that, the target sum assured would be Rs. 2 crores.

In addition to the standard calculations shown above, you would also need to add to the insured amount when your life-stage changes e.g. a new addition to the family, or when you take up a large home loan. But, most of us don’t factor these variables into account, and merely end up buying “some insurance” as a tax-saving instrument.

So, if you do not have adequate insurance cover, don’t go down the path of buying exotic, hybrid products that offer insurance cover plus the promise of market-linked investments. Instead, choose a “term” product to cover your basic risk at the lowest cost possible. Then, look for other options to add to your portfolio.

Tip: Insurance agents may not talk about such products unless probed, because they earn very little commission on such products.

Note: This blog post is strictly an educational and informational service, and does not constitute personalized investment advice. The commentary, analysis, opinions, advice and recommendations represent the personal and subjective views of the Editor, and are subject to change at any time without notice.

Inception: MindBlowing

The Rolling Stone described it as “James Bond meets The Matrix”, while Wired wrote that it is “Dense, intense, brainy and beautiful to look at”. Yes, I’m talking about Inception – the hottest sci-fi entertainer of 2010, and the newest entrant to the “Top 10 movies I have ever seen”!

I went in with huge expectations, considering the last I’d seen of Christopher Nolan’s work was The Dark Knight (my review of which is still pending).  His body of work is small but very, very impactful.  If you’ve seen Memento, Insomnia, The Prestige or The Dark Knight, you know what I’m talking about.  (If you haven’t seen any of these, stop reading right now, and go get yourself the DVDs.) 

By the end of Inception, I was left with one overwhelming feeling – Nolan is a genius! 

Inception has a twisted storyline that takes some effort to grasp, but the journey is so worth the effort that the 2 hours and 22 minutes pass by in a flash.  I’m not going to bore you with the details of the plot and its main characters.  You can get all that on Wikipedia or on the Warner Bros’ official site.  What I’m here to tell you is this…

Inception is an incredible piece of work. 

Narrating a story that transcends multiple layers of the “dream state” is no easy task for any storyteller.  But, with Inception (and The Dark Knight), Nolan proves that he’s achieved artistry in his profession of choice.

Brilliant performances by DiCaprio and the rest of the cast, a huge canvas for Nolan to paint, spectacular special effects that add to the story, appropriate use of visual elements (and Hans Zimmer’s music) to heighten the drama and tension, and finally, enough science to make it all seem believable.  I especially liked the restraint shown by Nolan in his use of special fx and dramatic devices, so they don’t end up being overbearing, but instead, weave their place in the story as it progresses in complexity.

Don’t miss Inception.  It will blow your mind!!!


So often, I find that movie critics and reviewers in India fail to recognize the merits of any thing that lies outside of mainstream cinema.  Typically, there is such little understanding of the art of story telling, and such little regard for the nuances of movie making, that the essay turns out to be nothing more than a detailed storyline, sometimes accompanied by a thrashing down of whatever the reviewer deemed unsuitable in the movie.

However, when I go for some of these films, despite the warnings in the papers, I find myself being thoroughly rewarded for my time!  Recent such examples in Indian cinema include the fantastic “Road Movie, The Film” and the newly-released “Raavan”.

Raavan is a class act that is clearly not for the masses.  Yes, it has all the popular elements of a bollywood masala film – love angle, action, drama, etc., but the “treatment” is refreshingly unique.

Fundamentally, it is a tale of good versus evil, and about the shades of good and evil that lie dormant within us all.  Raavan’s main characters are clearly not on any one side of the spectrum, and that’s what makes the story interesting (and also probably unappealing for the common man).

I was impressed with Abhishek’s ability to “get into character” by way of mannerisms and expressions that I thought were remarkably consistent with the persona that he was playing.  I especially enjoyed his character’s ability to deal with his inner conflicts, whether he’s coping with new-found jealousy or experiencing fear for the first time.

I was also left impressed with the film’s canvas.  Almost the entire length of the movie has been shot in pouring rain – a feat that is not easy to pull off.  Yet, somehow, the green and grey palette works like a charm, helping the characters blend-in in places, and making them stand out in contrast, in other frames!

The cinematography is truly exceptional, and among the best I have ever seen coming from Indian movie makers.  The makers of the film seem to have taken the trouble to scout some of the prettiest natural locales of the country in which to set the story.  I thought that many of the shots were visually stunning, giving the film a very artistic quality.  Unlike typical bollywood fare, I was also pleased that the nuances of the film were more-or-less in sync with the way of life of the story’s setting – whether it’s the food they eat, their mode of transport or their attire and living conditions.

If I had to nitpick, I’d probably drop Govinda (allegedly the “Hanuman” element) from the story altogether, since he did not seem to add too much value to the plot.  And, it would have helped to see a little more build-up to explain to audiences why the two key characters are hell bent on destroying each other from frame one.

But, all said and done, Raavan is definitely a movie worth watching and represents Mani Ratnam’s best work till date.  Critics be damned!

Lost Art of Letter Writing

Many things change with time, but not every thing changes for the better.  One such phenomenon I can think of is the lost art of Letter Writing. 

For years, I have lamented about the fact that the only “mail” I receive (via snail-mail) any more is bills and receipts.  No letters.  None whatsoever. 

Aunts and uncles who used to send out letters once in a while, have switched to email.  Moms and Dads had to, simply to keep pace with their teenage sons and daughters.  Even the greeting cards you used to send out till just a few years ago, have transformed into free e-cards that do their dance on your computer screen, and die a painless death in 90 days or less.

I know, I know.  Electronic communication is so fast and friendly; so instantaneous in delivery.  Who would want to write letters?! 

Now, I love Technology as much as the next guy.  Maybe, even more.  But any one who’s ever received a well-written missive would agree that email could never replace the charm, the magic, of a handwritten note.  The use of appropriate grammar, the unhurried attention to detail, the choice of good stationery on special occassions… even words that were striken or revised would leave their mark on the note, for every reader to see. 

It was almost as if, every time you put pen to paper, you chose to bare your soul to the reader. 

Makes me think that we’re fast losing touch with an art form that was an important part of our heritage, without even pausing to ponder on it… 

In the decades to come, will our children even understand the antiquated practice of actually writing a letter using pen and paper?  Would Abraham Lincoln’s letters gain the legendary status they have, if he’d shot off some emails from his Mac instead?  Most importantly, in the absence of such cultural cues, how will we know what was really important and worth preserving?  What will History be “written” on?!

Worth a thought, isn’t it?

Happy New Year

Diwali (Deepavali) is a significant festival for millions of people around the world.  Wikipedia writes:

While Diwali is popularly known as the “festival of lights”, the most significant spiritual meaning is “the awareness of the inner light”… While the story behind Diwali varies from region to region, the essence is the same…

Just as we celebrate the birth of our physical being, Diwali is the celebration of this inner light, in particular the knowing of which outshines all darkness (removes all obstacles and dispels all ignorance), awakening the individual to one’s true nature.

Me?  I chose to celebrate this Diwali with a new beginning to my online presence.

I’ve been busy the past few weeks, working on the migration.  And, I am pleased to say that the entire process is now complete.

A new domain name and new email ids for the entire family.  New designs for both my blogs.  A completely new photoblog.  And, a new website for all my online initiatives.

My new web home –

Hope you make the most of them…