The Risk of Living Dead

I know the Title Sounds Scary (almost like a horror film). But this article could prove to be of utmost importance to almost all of us.

In our Basic Financial planning, we mainly focus on 3 risks

  1. Risk of Dying Early – We Buy a Term Plan to cover this risk.
  2. Risk of Living Too Long – We create a sufficient Retirement Wealth for ourselves to cover this risk.
  3. Risk of huge hospital Bills – We Cover ourselves with Mediclaim (Or Health Insurance) to cover this risk.

Apart from this, there is something called a “risk of living dead”, wherein a person is Alive, but he / she is in such a state that they cannot work and cannot earn any income. In such cases, neither they get money from their term plan nor health insurance (as health  insurance only reimburse hospital expenses).

Such situation may occur due to 2 reasons

  1. Accident –  Mr. John meets an accident and becomes handicapped. He is not able to work and his income stops.
Silhouette of handicapped Man sitting on wheelchair in front of a large  panoramic window in hospital,He is sad and lonely. Stock Photo | Adobe Stock

2. Critical Illness – Ms. Nazma develops a critical illness (like Cancer, Brain Tumor etc). She is not be able to work and earn similar income as earlier.

Guiding you through Brain Tumor
A Sick Young Woman with Stock Footage Video (100% Royalty-free) 25746680 |  Shutterstock

Both these situations are termed as “The Risk of Living Dead”.

How do we manage the Financial risk associated with this?

  1. Mr. John could have bought an accident cover policy. This policy would cover not only accidental death, but also cover Permanent Total Disability, Permanent Partial Disability etc due to accident. It would give a lumpsum amount to Mr. John in case of a mishap due to accident. This Lumpsum amount can help to supplement the income that Mr. John is not able to earn now. The cover amount should be ideally 10 times of the annual income of Mr. John.
  • Ms. Nazma could have bought a Critical Illness Cover Policy. This policy would cover all the major critical illnesses. It would give a lumpsum amount to the policyholder on the diagnosis of the critical illness. This Lumpsum amount can help to supplement the income that Ms. Nazma is not able to earn now. As soon as the amount is paid, the policy ceases. The cover amount should be ideally 10 times of the annual income of Ms. Nazma.

How to Choose the Right Company and Policy ?

There are several insurance companies which offer accident cover and critical illness policy . Below Factors should be considered before buying the policy :

  1. Scope of Coverage – What all Critical illnesses are covered, what all disabilities are covered.
  2. Exclusions – Are there any exclusions ?
  3. Claim Settlement Ratio
  4. Premium
  5. Ease of Service

While the covering “The Risk of Living Dead” is extremely important, it could be a good idea to seek professional guidance if there is a confusion. The biggest mistake would be to procrastinate the same. The people who are suffering from these, had never thought in their dreams that this could ever happen to them.

Its always better to be safe than sorry !!

The Author Prof. Saurabh Bajaj (BE, MBA, FRM, CFGP, AFGP) is CEO with Nidhi Investments, Mumbai. His articles have a readership from 78 Countries across the Globe. He may be contacted on CEO@nidhiinvestments.com if you have any questions.

(The views mentioned in the article are personal opinion of the author)

Why Most Start-ups Fail ?

We see a deluge of Startups coming everyday. Most of them follow a business model, wherein

  1. A group of youngsters come up with an idea,
  2. Present That idea to a VC (Venture Capitalist) to get Funding.
  3. Use the VC money to offer discounts to gain customers at a fast pace.

Most of the Startups you see, grow their business by offering discounts as compared to your neighbourhood vendor.

But they are doing so, at the cost of burning VC money. They are incurring huge losses. Interestingly, many a times their purpose is not to run the business. Most of them just want to build customer database, sell away the business to someone and run away.

The reason for failing is very simple. They are not gaining customers because of better quality of products or services. They are gaining customers by offering artificial discounts, which cannot be offered lifelong.

The day they remove discounts and start offering at market price, they start losing customers. Their only hope is, your neighbourhood vendor doesn’t survive till that time, so that they can monopolize.

Now the question is, whether this situation will be desirable for customers and investors.

Sane Customers and Investors will always look out for businesses that follow a sustainable business model.

Other than this, there are few more reasons, why most of these Startups fail ?

  1. Chaar Din Ki Chaandni : Their importance grows during particular crisis situation (Example Demonetisation, Lockdown etc). But once things are normal, their importance diminishes.
  2. No Customer Service : Many of them dont really bother about serving their customers well. This is because they see new customers coming in every day. This ignorance to customer service deprives them of loyal customers.
  3. Backstabbing the Customer: Some of them try to lure customers by offering freebies or low costs. But behind the scenes, they sell the crucial data of the customers which results in fraudulent transactions. This bursts their image overnight. Most of the discount brokerage houses fall in this category.
  4. Copy Cats with No Sharpness: Most of them just want to copy someone else and try to gain customers by selling at loss. But they do not have any competitive edge, and thus they fail.
  5. Doing it Just for Fun: It sounds counterintuitive, but many of them DON’T WANT to build a successful business. They just do it for thrill at the cost of VC money.
  6. Looking For Shortcuts: Some of them want to be an overnight success. There are companies who have become successful over 10-15-20 years. But if you look for shortcuts, you are most likely to fail.

It is definitely encouraging to see that the youth of India wants to become entrepreneurs. We need more entrepreneurs in the country. But to become a successful entrepreneur, you need some basic skills, a long term mindset and proper guidance. It could be a good idea to look out for an entrepreneurship mentor who can handhold you in your journey to build a successful business.

We look forward to your valuable comments and feedback.

The Author Prof. Saurabh Bajaj (BE, MBA, FRM, CFGP, AFGP) is CEO with Nidhi Investments, Mumbai. His articles have a readership from 78 Countries across the Globe. He may be contacted on CEO@nidhiinvestments.com if you have any questions.

(The views mentioned in the article are personal opinion of the author)

#ProfessorBajaj

#Nidhi Investments

#KnowledgeCircle

Johny Johny No Papa

Avinash : No Dude, My Father Does not Allow me to Invest in ELSS. He says he has always invested in PPF and it is the best.

Niraj : He is right Avinash. But we need to Move ahead with times. PPF was the best investment once upon a time. But now we have better options available.

Avinash : Can you please explain this ? I need to talk to my father regarding this.

Niraj : Till 1999, PPF interest rates were 12% p.a. If an instrument was giving you 12% returns, then obviously it becomes a no-brainer and one would invest in it. But From 1999 to 2020, the PPF interest rates have been falling. Now they are at 7.1%. Also, even if someone had invested Rs. 1 Lakh when the interest rates were 8%, this year they will receive interest of 7.1% only.

Avinash : Thats pretty shocking. But 7.1% is also somewhat good na. Bank FD is even lower than that.

Niraj : Absolutely right. Thats why I am not even recommending you Bank FD. The problem is, in future, PPF interests may further go down and we may even see interest rates of 5-6% on PPF.

Avinash : Oh My God !! That would be too low. Will talk to my father about this. But he is pretty against the equity markets. He says, they are risky.

Niraj : He is right. Equity markets are risky When,

1. You invest in them for short term

2. You invest in Stocks without research.

But in ELSS, there is a fund manager who chooses stocks after thorough research. Also, if you invest in ELSS for more than 15 years, the volatility is removed and you create more wealth than PPF.

Avinash : But in ELSS, the maturity is only 3 years.

Niraj : No. The lockin gets over in 3 years. But you can very well stay invested for 15 years (the way you stay invested in PPF for 15 years).

Avinash : This makes sense. I will talk to my father about this and tell him that he is wrong.

Niraj : He is not wrong Avinash. Its just that things have changed and he is not able to keep up with the new opportunities. He needs your help.

We look forward to your valuable comments and feedback.

The Author Prof. Saurabh Bajaj (BE, MBA, FRM, CFGP, AFGP) is CEO with Nidhi Investments, Mumbai. His articles have a readership from 78 Countries across the Globe. He may be contacted on CEO@nidhiinvestments.com if you have any questions.

(The views mentioned in the article are personal opinion of the author)

#NidhiInvestments

#ProfessorBajaj

#ELSS

Disclaimer : Mutual Fund investments are subject to Market Risks. Please read offer documents carefully before investing.

Tu Doctor Hai Na ?

Imagine a Cab-Driver who keeps watching market movements while driving. Would you be comfortable riding in this car ? Eventually, he will be out of business.

Imagine a Doctor who keeps doing intra-day trading while talking to his patients. Would you be comfortable getting treated by him ? Eventually, his patients will start looking for another Doctor.

Lets focus on our Karma I.e. our core competency. Lets outsource our non-core activities to the experts.

If we try to become a Jack-of-all, we will be Master-of-None.

We look forward to your Valuable feedback.

We look forward to your valuable comments and feedback.

The Author Prof. Saurabh Bajaj (BE, MBA, FRM, CFGP, AFGP) is CEO with Nidhi Investments, Mumbai. His articles have a readership from 78 Countries across the Globe. He may be contacted on CEO@nidhiinvestments.com if you have any questions.

(The views mentioned in the article are personal opinion of the author)

#ProfessorBajaj
#NidhiInvestments

Whom Are You Punishing ?

Story 1

April 2020

Discussion between Manoj (Client) and Niraj (His Advisor).

Manoj (Shouting): Why Didn’t You inform me that the markets are going to fall ? I would have booked some profit.

Niraj : Nobody can predict such short term movements Sir. And such falls are temporary. We will soon see recovery in next 12-18 months. If Possible, we should invest more at these levels.

Manoj : I don’t know all that. As an advisor, you are supposed to predict all this. I am unhappy with your services. My Investment of Rs. 10 Lakhs has become Rs. 8 Lakhs due to your ignorance. I am not going to invest a single rupee more.

August 2020

Manoj : I can see that the markets have risen. My Rs. 10 Lakhs is now back to Rs. 10.10 Lakhs. Please redeem my investments as soon as possible. I don’t trust the markets nor I trust you anymore.

Niraj : If we can stay invested for another 6-8 months, we can see good growth.

Manoj : No Way. I just don’t want to listen to you anymore. Just do as told.

Niraj : No Problem Sir. We will redeem your investments.

December 2020

Manoj (Crying): If I had stayed invested, my Rs. 10 Lakhs would have become more than Rs. 14 Lakhs in 4 months. In an attempt to punish my advisor, I ended up punishing myself.

Story 2

Mr. Harish Wanted to buy a health insurance plan for his family. His Wife was having some medical history. Thus, the insurance company gave a counter offer to cover Mr. Harish and the two kids.

Listening to the counter offer, Mr. Harish Got agitated and he asked the company to cancel his proposal and refund his money.

Harish : How dare they deny my wife’s health insurance proposal?

Niraj : Sir, insurance companies cover only standard lives. They cover slightly substandard lives at higher premium and if it is a more risky case, they can deny.

Harish : Is this the way they treat their customers ? I don’t want to buy health insurance from them.

Niraj : Ok Sir.

Three months later, Mr. Harish met an accident and ended up paying Rs. 1.60 Lakhs towards hospital bill. If he had taken the counter offer, at least other 3 members would have been covered. In an attempt to punish the insurance company, he ended up punishing himself.

Story 3

Year 2015 : Mr and Mrs Singh bought their first health insurance policy at the age of 58. By this time, Mr. Singh had already developed some health conditions and there was a 48 months waiting period in the policy for pre-existing diseases.

Year 2017 : Mr Singh had a hospitalisation related to his pre-existing diseases. Health Insurance company rejected the claim as it was a pre-existing disease and had not completed the required waiting period.

Mrs Singh Got Angry. She asked the agent to close the policy immediately and get a new policy for them. The agent also didn’t bother to tell her the repercussions. He got them a new policy with fresh 48 months waiting period.

Year 2020 : Mr Singh again had a hospitalisation. This time again it was declined by the new health insurance company as the new policy had still not completed the 48 months waiting period. Had they stayed in the same policy, they would have got the second claim of 2020 settled. 

In all the above cases, we see a common pattern. The emotions take over logic. The urge to punish someone, compels the person to take some action. But as the action is based on anger (and not logic) it harms the person himself than anyone else.

Lets remember Friends. It is natural to get angry when things don’t go our way.

But when you are taking the action, ask this question to yourself

“Whom am I punishing?”

Is it the Insurance Company ? Is it the Advisor ? Or is it you and your Family ?

Lets Ensure that, in an urge to punish the insurance company or the advisor, we are not putting our families to risk.

We look forward to your valuable comments and feedback.

The Author Prof. Saurabh Bajaj (BE, MBA, FRM, CFGP, AFGP) is CEO with Nidhi Investments, Mumbai. His articles have a readership from 78 Countries across the Globe. He may be contacted on CEO@nidhiinvestments.com if you have any questions.

(The views mentioned in the article are personal opinion of the author)

#NidhiInvestments

#ProfessorBajaj

#SIP

#HealthInsurance

Markets at 47K !! What to Do??

“Oh My God!! Did You see the Sensex?? It has crossed 47k!! These are all time high levels. I am getting scared. Looks like I should redeem all my investments.” Said Sameer, a 34 years Old IT Professional.

“Yes, it has crossed 47k. But what makes you scared? And Why Would you want to redeem?” Asked Niraj, his friend.

Sameer : Aren’t you scared ? This is an All-Time-High that the market has hit.

Niraj : No, I am not scared. And lets re-frame it. Its not “All-Time-High”. Its “Till-Date-High“.

Sameer : What’s the difference ?

Niraj : If you observe the markets from last 30-40 years, they have always been making higher tops and higher bottoms. So whenever people exited thinking it is “All-Time-High”, market proved them wrong by making a new high. Let me give you some examples :

1. In January 2000, The Sensex hit a high of 5721 and then it fell to 2600 levels in Sep 2001. Thus, when the markets again crossed 5721 and hit 6000 in Jan 2004, many people thought that this is an “All-Time-High” and sold their stakes, thinking that they will buy again when it falls below 5721 levels.

2. Unfortunately (or fortunately), the market did not fall. On the contrary, it rallied upto 21,000 points in Jan 2008. This was where the markets fell, but still the bottom did not touch the previous “All-Time-High”. It fell upto 8,966 points in Mar 2009 (way above the previous high) and from their it again started rallying. (The people who had redeemed at 6000 levels, came back at 8966 levels only to enter at a level 50% higher than the level at which they redeemed).

This time it grew and surpassed the previous high of 21,000 in Feb 2014. Many people again thought that this is “All-time-high” and sold their stakes, thinking that they will buy again when it falls.

3. Once again, they were disappointed. Because from there, the market again rallied till 41,681 points in Jan 2020 and then fell to 25,981 levels on 23rd March 2020. This bottom of 25,981 was still much higher than the top of 21,000 at which people had sold with the hope of buying back.

In all the 3 examples you see a common pattern. 

A – Whenever market surpasses a previous top, people get scared and start selling with a hope to buy when it falls.

B – The Market falls, but it still falls at a level that is way too high than the previous top. So those who sold, re-enter at a much higher price than the price which they sold. 

Thus, in my opinion, any such temptation to “time the market” should be avoided. 

Sameer : Thank you so much Niraj. Many people were telling me to redeem and re-enter later. But you have showed with real examples that such attempts to “Time the market” can actually backfire.

Niraj : Right. Also, your purpose of investments in the market is wealth creation, not quick money. If the purpose is wealth creation, then stay invested and let the experts do their job. The Fund Managers are already booking profits on your behalf so that you can create wealth.

Sameer : Thank you so much Niraj. But I am still curious to know. How do you have all this knowledge with you ? We are working in same company and are of almost similar age. Still you have all this knowledge and not me.

Niraj : Its very simple. I have a trusted advisor with whom I am regular touch. He explains all these things coolly and calmly to me. You don’t have an advisor. You keep relying on TV Experts, Newspapers, Google and random friends who themselves do not have clarity on all these things. They think they are saving advisor fees, but it is costing them more by making such mistakes. Depending on such sources creates lot of fear and anxiety in your mind.

Sameer : This is So True Niraj. Please share the details of your advisor with me. Even I would avail his services so that I remain composed like you in these situations and create wealth for myself. Today I have learnt below lessons :

  1. Our investment decisions should be based on our goals and not market levels.
  2. Trying to time the market can backfire. Stay invested for long term.
  3. Don’t follow the herd by listening to media advice. Have a Trusted Advisor.

We look forward to your valuable comments and feedback.

The Author Prof. Saurabh Bajaj (BE, MBA, FRM, CFGP, CIA, AFGP) is CEO with Nidhi Investments, Mumbai. His articles have a readership from 78 Countries across the Globe. He may be contacted on CEO@nidhiinvestments.com if you have any questions.

(Disclaimer : The views mentioned in the article are personal opinion of the author. Mutual Fund investments are subject to market risks. Please consult your Financial Advisor before making investment decisions)

#NidhiInvestments

#ProfessorBajaj

#SIP

#YourTrustedWealthPlanner

तूने गर्वित किया है माँ

जन्म दिया , प्यार दिया,
हर अच्छा संस्कार दिया,
कदम कदम पर मुझको मार्ग-दर्शित किया है माँ

कहत सौरभ, सौरभ को तूने गर्वित किया है माँ ।

बेटी, बहन, पत्नी, माँ, दादी
हर किरदार तूने बखूबी निभाया है
कितना खुशनसीब हूँ मैं,
मुझपे तेरे आँचल की छाया है
परिवार के हर सदस्य को तूने हर्षित किया है माँ,
कहत सौरभ , सौरभ को तूने गर्वित किया है माँ ।

सुना था, “पुरुषों की इस दुनिया मे, महिलाओं को ऊंचा स्थान नहीं,
काम भले ही महिलाएं करें, होता उनका गुणगान नहीं”,
सब के दिलों में ऊंचा स्थान, तूने अर्जित किया है माँ
हर निंदक को अपने गुणों से अचम्भित किया है माँ

कहत सौरभ, सौरभ को तूने गर्वित किया है माँ ।

– सौरभ बजाज

Budget 2020 : What’s in it For Me ?

As soon as the budget is presented, We see a deluge of analyses and memes coming our way. However, readers of this blog know that we choose to wait for clarifications and finer details so that readers get the right perspective for themselves.

A Large number of people were left confused because of the 2 Tax Regimes that the Budget talked about. Different People would have different opinions about the budget depending on their own profession and field. However, from investor and taxpayers point of view, we have made an attempt to list down few good things and few not-so-good things about the budget.

What’s Good ?

  1. If you are earning less than Rs. 5 Lakhs p.a. then life has not changed much for you. You can relax.
  2. If you are someone who “hates” to save money, the option of moving to new tax regime is for you. (Provided you earn more than Rs. 5 Lakhs p.a.)
  3. If you are earning more than 20 Lakhs p.a. then the new regime saves some tax outflow for you. So, it could be sensible for you to move to the new regime. (What could be insensible is, you stop saving money)
  4. The Deposit Insurance is increased from Rs. 1 Lakh to Rs. 5 Lakhs. For those who don’t know, this is Rs. 5 Lakhs “per depositor”. Some “smart” people try to make Rs. 5 Lakh FD in different banks so that entire amount is insured. Unfortunately, its not. And if you try to make it in different names, clubbing provisions will be applicable.
  5. Other than above, there have been certain measures taken which would contribute towards overall growth of the economy. This could result in equity markets giving good returns in the long term. Thus, investing systematically in diversified equity could be helpful in wealth creation.

What’s not so good?

  1. If you want to move to the new Tax regime, you have to forego most of the deductions (Like 80C, 80D, HRA, Standard Deduction etc).
  2. If you are earning between Rs. 5 Lakhs p.a. to Rs. 20 Lakhs p.a., life is not that simple for you. There are a various calculations that you might have to do, whether you want to go for old or new tax regime. It will also depend on your preference (or compulsion) to make several tax saving investments. Thus, its better that you spend some time with your advisor (although the FM thought otherwise), and find out what works better for you.

(The Table Shows Old regime and New Regime considering 80C, 80D and Standard Deduction. We have not considered HRA and other deductions in this table as they would differ from person to person. Thus, the decision to choose the regime will differ from person to person even if they have same income.

IMG-20200206-WA0004

3. The new tax regime suggests that there is no need to save for tax saving. There are many people who are happy that now they do not “have” to save. They will save tax anyways. For them, I have few questions.

  • If you ride a bike, why do you wear a helmet? Is it to save fine? Or is it to save your life?
  • Why do you use a pedestrian bridge? Why do you not cross the railway track? Is it to save penalty? Or is it to save your life?

When you invest money for your future, don’t do it just for tax saving. Do it so that you create wealth for your own future.

When you buy a term plan, don’t do it only to save tax. Do it so that your dependents are not left stranded if something unfortunate happens to you.

Tax saving is just an additional incentive given to you for your own good. It does not mean you stop doing your own good, just because the additional incentive is gone.

4. The Dividend Distribution Tax (DDT) is “Abolished”. This is quite tricky. Because it will now be added to the investors income and will be taxable as per their slab.

This needs to be evaluated based on whether it’s a Debt Mutual Fund or Equity Mutual Fund, what is the income slab of the investor and so on.

Those in low tax slabs, will “mathematically” benefit from this. (Psychologically, they will be uncomfortable as now they will feel the tax going from their pocket)

But those in higher tax slabs, evaluation needs to be done on a case-to-case basis. (Again, consulting an advisor might be needed – Something contrary to what the FM had thought).

Also, the DDT is gone, but there will be a TDS on payment of dividend above Rs. 5,000. So, while the cashflows might not improve to a great extent, the onus of tax liability is definitely shifted from the corporates to the recipients (which could be individual investors).

What Should be our Plan of Action ?

We might argue that there could have been a several things which could have done much better in this budget. But as they say, there is no point in crying over spilled milk. Investors now need to tweak their strategies and see how they can benefit (or at least reduce loss).

  1. Saving or Investing money for your future is still important, even if the tax incentive seems to have gone away.
  1. The FM has already hinted that government intends to move into a “No-Exemption, No-Deduction” era. Do not commit yourself to something like an additional home loan, just to save tax. This is because, in future, the tax incentive might go and the loan will still be sitting on your head. In simple words, do not buy a property by taking a home loan, just to save tax.

2. Do not buy random insurance policies, just to save tax. Again, the tax incentive might go away, and you will be “forced” to continue paying the premium. Choose a non-compulsory product like ELSS for your 80C investments.

3. Your decision to buy a Term Plan or a health insurance, should have no dependence on tax saving. Buy them so that you are financially protected from unforeseen mishaps.

All-in-All, the budget comes with a mixed reaction. But that’s how life is. We can’t expect every day to come with a good news. We can only have a positive and receptive mind, which accepts every challenge as an opportunity, and take best possible advantage of the same.

We look forward to your valuable comments and feedback.

 

The Author Prof. Saurabh Bajaj (BE, MBA, FRM, CFGP, CIA, AFGP) is CEO with Nidhi Investments, Mumbai. His articles have a readership from 78 Countries across the Globe. He may be contacted on CEO@nidhiinvestments.com if you have any questions..

(The views mentioned in the article are personal opinion of the author)

#NidhiInvestments

#ProfessorBajaj

#SIP

#YourTrustedWealthPlanner

The Secret of Keeping Patience

Ravi: Hey Niraj, I was reading about an interesting research today. It is called the marshmallow Test.

 

Niraj: Sounds Interesting. Please tell me more about it.

 

Ravi: This Test was carried out to check the patience level of children. Some children were given 1 Marshmallow each and were told not to eat it for 15 minutes. Those who would wait for 15 minutes were promised a second marshmallow. Only few kids (less than 20%) could keep patience for 15 minutes. Others ate the Marshmallow before 15 minutes were over. It was also inferred that the kids who did not eat in 15 minutes, are expected to do very well in life as they exhibited patience which is a very important quality. Other kids showed impatience which will show in their future life too.

 

Niraj: Wow!! That sounds interesting. But if I were to conduct that test, I might have taught all the kids to practice patience and get a second marshmallow.

 

Ravi: What are you saying?? How can someone do that? Patience is a trait we are born with. Right?

 

Niraj: Not really. Patience is more of an art or a skill which can be learnt, practiced and developed. By birth, most of us are impatient, which also means, we are curious. We are curious about details, results etc. When this curiosity grows beyond acceptable limits, it becomes impatience and interference.

Also, we are born with a desire of instant gratification. When a child cries for milk, it wants that the demand should be fulfilled immediately. When it grows up, it extends this logic to toys, entertainment and other things that it demands. If you ask them to wait, they would refuse as a natural reaction. Most of them would prefer (rather insist) for their demands to be fulfilled immediately.

 

Ravi: Wow!! You sound logical. But then how would you teach Patience if we are naturally programmed to be impatient?

The Secret of Keeping Patience

 

Niraj: Well, there is a secret for that. We are impatient because it’s difficult for our mind to stay idle. It constantly seeks some activity or entertainment. Whenever we want to keep patience, most of us keep the mind idle. Our mind finds this waiting period boring and thus it keeps forcing us to check again and again and makes us impatient.

 

For example, in the marshmallow test, the children were given marshmallow and were asked to do nothing but watch the marshmallow and not eat it for 15 minutes. Now, their mind is idle for 15 minutes. For these 15 minutes, it keeps forcing them to do something. Take some action. If no other action is available, they will succumb to impatience and will eat the marshmallow.

 

If they are given an activity, wherein their mind is busy, they wont even realise when 15 minutes got over. This way, all the kids could have kept patience for 15 minutes and got another marshmallow.

 

In our lives too, most of us struggle for keeping patience. This is because, we don’t know how to keep patience. We think that, Patience means “Doing Nothing”. However, fact is, “Doing Nothing” is the most difficult thing for the mind (For Mind to do nothing, we have to practice meditation, which is again a learned art).

But even without meditation, we can keep patience. For example, if you appear for an exam, and are waiting for result, the right thing to do is, find out something interesting to do during that waiting time.

If you make an investment, which is expected to create 10-fold wealth in next 15-20 years, there is no point in watching it every day. People wonder how do we keep patience for 15-20 years. Actually, you don’t have to consciously keep patience. Just involve your mind in doing something else. Best would be, involve your mind in your own work, your family, your hobby, your health etc. Let Wealth be created in the background.

If you want to lose weight and build health, if you exercise one day and start measuring your weight, you might not see any result. This might make you lose heart and you might give up. Rather, continue doing your part and check the result only after 3-6 months. Possibly, you might not even check it on weighing scale. Your mirror will give you a good idea of the result.

In most waiting areas (Doctor’s clinic, Salons etc), magazines etc are kept for the same reason. If the visitors are not kept engaged, they will get bored and will repeatedly ask, “how much time more?”. When they are kept engaged, a 15-20 mins wait becomes easy for them.

 

Ravi: Superb!! That’s like an in-depth research. But tell me, is it important to have patience in life? I mean isn’t it true that there are no results without action?

 

Niraj: That’s a valid question.

First, Patience is not about doing nothing. Patience is about continue doing your part, and being patient about the results.

What we think as action, is actually checking results. So for example, if you are waiting for the train, it wont arrive faster because you are impatient. Yes, once it comes, your part is to board it. That time you can’t skip action. But once you board it, you have to again keep patience till the time you reach your destination. Just because you are bored of the journey, the train won’t reach faster.

 

Also, by learning to keep patience, you can manage your stress better. Just because you want things to happen faster, it wont happen. But your impatience will unnecessarily give you stress and might affect your blood pressure. By keeping patience, you can keep your cool and thus have a positive health.

 

Ravi: Thank you so much Niraj. Now I know the secret of how to keep patience. I also realise what is the importance of keeping patience in my life. I will keep my mind busy in some productive action than getting impatient and affecting my health.

 

We look forward to your feedback and comments on the above article.

The Author Prof. Saurabh Bajaj (BE, MBA, FRM, CFGP, CIA, AFGP) is CEO with Nidhi Investments, Mumbai. His articles have a readership from 78 Countries across the Globe. He may be contacted on CEO@nidhiinvestments.com if you have any questions.

(The views mentioned in the article are personal opinion of the author. The characters used in the article are imaginary).

 

#NidhiInvestments

#ProfessorBajaj

#BestWealthPlanner

#YourTrustedWealthPlanner

Why Ratings and Rankings Won’t Work in Most Cases?

Rahul : We are facing a “Problem of Plenty” these days. Thank God, we have ratings and rankings to our rescue.

 

Niraj : Sorry I didn’t understand clearly. Can you please explain ?

 

Rahul : Most of us search for the stuff we are looking for, on internet. The moment you try to search, internet throws so many options that you get confused rather than getting a clear answer.

 

Niraj : Yes, you are absolutely right. So what solution did you find for your rescue ?

 

Rahul : The Ratings and Rankings. They help you a lot.

 

Niraj : Ok. Who gives these ratings and rankings ?

 

Rahul : I don’t know.

 

Niraj : So this is where it becomes interesting. Most of the times, these ratings and rankings are given by media portals who are looking to earn from higher traffic. Also, more than often, they have an “arrangement” with the service provider or product seller to give a particular rating or ranking.

 

Rahul : What !! I didn’t know this !! But does it impact me in any manner ?

 

Niraj : Of course it does. There are researches being carried out, that these ratings and rankings impact the decision making of customers. Thus, any flaw in these, leads to incorrect decision taking.

 

Rahul : Is there a possibility that these ratings and rankings are honest ?

Niraj: Yes, possible. Let’s assume that they are given honestly. But it may still be the case that they are not the best fits for everyone.

For example, a film critic who is fond of a socially responsible movie, might give a 1-star or a 2-star rating to a comedy movie. But if you are a comedy fan, you may happen to like that movie for yourself.

A food critic, who gives lot of weightage to ambience and service, might give a 5-star rating to a fine dine restaurant, but for you, a roadside Panipuri might be a better pick.

why ratings and rankings won't work in most cases _

Rahul : You are right. So what is making these ratings and rankings so popular, even though they have lot of flaws in them?

 

Niraj : The Illusion of Quick Assessment !! Most of us feel that we should take an informed decision by doing some “research”. But the fact is, we neither have the time, patience or resources to do in-depth research for everything.

As a result, we fool ourselves by saying that we are doing research; whereas all we are doing is, looking at ratings and rankings given by someone and blindly believing it.

You would be surprise to know that, there are many businesses coming up these days, who solely survive on this model. They provide ratings and rankings to “some” products and “attract” visitor traffic. Then depending on the number of “visits” on the website, they contact the product sellers and demand a “premium” to give higher ranking / rating to them.

 

Rahul : This is so shocking !! So what should we do?

 

Niraj : First of all, come out of the illusion of doing research. If you really want to do research, do it in your core area. For other areas, identify an expert from your known circle and ask him/her. Make sure that the expert understands your need and then advises you accordingly.

 

Second, stop expecting free lunch. If someone is actually taking some pains to research and provide ratings and rankings, why should they be offering it to you for free? If you are not paying for it, you are the product.

 

Last but not the least, Segregate crucial and non-crucial issues. Be experimental in Non-Crucial issues and Non-experimental in Crucial issues. For example, if you want to visit a restaurant or watch a movie, you can experiment. But if it’s a medical issue, or an investment issue, then don’t experiment or blindly go by ratings. Look around for some experts, references so that you don’t land up in trouble.

 

Rahul : Thank you so much Niraj. I have realised my mistake. I will not go by rankings and ratings from now on.

We look forward to your feedback and comments on the above article.

 

The Author Prof. Saurabh Bajaj (BE, MBA, FRM, CFGP, CIA, AFGP) is CEO with Nidhi Investments, Mumbai. His articles have a readership from 78 Countries across the Globe. He may be contacted on CEO@nidhiinvestments.com if you have any questions.

 

(The views mentioned in the article are personal opinion of the author. The characters used in the article are imaginary).

 

#NidhiInvestments

#ProfessorBajaj

#BestWealthPlanner

#YourTrustedWealthPlanner