Author: animeshjmathur

Self Trust

Habits, self esteem, Trust

One of the biggest boost for self esteem is when you achieve those small small targets on a daily basis.

When you don’t hit a commitment which you made to yourself, it is more damaging to your self esteem and you start doubting yourself .

If you sub consciously start doubting yourself on your ability to achieve the small things, then you will not trust yourself to achieve the big things.

As Stephen Covey writes in his book the Speed of Trust, the onus of creating Trust starts with the self.

I have written multiple times earlier also, if you can take micro steps that B. J. Fogg talks about in his book Tiny Habits, the compounded impact is massive for your own self esteem. Once your self esteem grows , you create new capabilities and you tend to start getting more confidence. Once you get more confident you start looking at even bigger challenges to achieve.

That is a positive snowball effect and it all starts with your self trust.

This is all for today.

Till next time then.

Carpe Diem!!!

Life Insurance is a 4 Letter word…continued

cash flow, compounding, Insurance

Yesterday I wrote about whole life and term life and why I think whole life is good and how I have started appreciating the benefits of whole life as I have aged.

One of the argument which I used to hear against endowment plans and whole life plans was that you could take the same life cover at a much lower value by taking a term plan and the difference can be invested in a mutual fund which will give a much higher return.

There are a few challenges that I have been able to figure out in this logic. If you know of others please let me know in the comments below.

1. With term insurance you don’t get any money if you survive the term, that’s a complete loss.

2. Mutual fund or stock market returns are not guaranteed. In the endowment policy you are guaranteed a minimum value at the end of the term. You may get a higher sum because of bonuses, but a certain minimum is assured.

3. When you sell your stock the amount attracts long term capital gains tax. The money you get from the insurance policy is generally tax free in quite a few countries both for you and after your death for your survivors

4. In most countries investing in mutual funds or stocks does not get you a tax rebate while investing in insurance does.

If you don’t have the financial capability to take an endowment or whole life plan, take a term plan. Take it as early as possible and take it for the highest value feasible. Getting the highest coverage on your life is absolutely necessary. Don’t ever think that Mutual Funds can cover that risk.

However once you have some lee way in your finances, start whole life and endowment plans to create predetermined cashflows.

Use mutual funds or stocks to give you growth in the very long term where the compounding kicks in.

This has been a learning for me and I would not like you to make the same mistakes that I did.

Till next time then.

Carpe Diem!!!

Life Insurance is seen as a 4 letter word.

Insurance, Leverage

There’s so much of bad mouthing on insurance of any kind. I have consistently maintained that you should be adequately covered.

The situation is so bad that even my insurance advisor was suggesting me a term plan when I was evaluating a whole life policy.

In my opinion, term policies are a low value method to cover risk and should be used as a primary method of insurance, especially when you are very young and starting on your life journey.

On the other hand whole life policies not only give you tax free returns while you’re alive – in India at least – they also ensure that your family gets a good coverage. In addition on these policies you can take a loan at much lower interest rates. A term policy will not allow these benefits.

So you’re getting a tax break for investing in insurance, you get a tax free amount after a certain period, your family is also protected and you can also take low interest rate loans.

The biggest thing is that you are ensuring that you are adequately mitigating risk and also ensuring predictable cashflow in the future.

When I was young I used to think of the insurance amount as a burden, but as I have grown older, I have realized its value more and more.

Till next time then.

Carpe Diem!!!

You cannot have financial freedom without financial discipline- Part 3

compounding, Financial Independence, Habits, Human Brain, mindset

In yesterday’s post I wrote about how the urgent tasks took over my schedule and missed out on buying the asset whose deadline was yesterday.

Actually the middle class / service class people mistake busyness for success. For us the incoming email or phone is more important than taking financial education.

We keep watching the mail as if the next PO or promotion or next big challenge, is just about to come and it does not come that day, then it does not come the next day and we end up wasting one more day and another and suddenly we realize life has just passed us by.

The rich on the other hand first and foremost understand the discipline they have to follow. And it has nothing to do with education. Even if you discount the likes of Bill Gates, there are lots of others who don’t have college education but have become millionaires.

One of the reasons I think is that a University Degree makes us specialized in some specific area and we like to solve challenges in those areas. The human brain is wired to get attracted to familiar faces, familiar environments. So when we see an email with a familiar topic, we get immediately attracted to it.

Compounding only works in the long term, so you have to ensure that you start very early in life. If like most of us you start late then you have to ensure you are systematically investing over long durations without a break. Financial freedom takes discipline.

To bring in that discipline you need to ensure you eliminate the usage of your brain. Things should happen without your brain taking a decision. That’s where an automatic system helps. Today technology allows it so you should take advantage of it.

Till next time then.

Carpe Diem!!!