6 important financial lessons from the King of Pop

The King of Pop died. Michael Jackson may go down in the history as one of the most successful entertainers the world has ever seen. The world will remember him for his albums “Thriller”, “Dangerous”, “Black or White”; or his various controversies and lawsuits; or his ranch “Neverland”. But, I think the world may also remember for the huge debt he left unpaid.

While dying at an early age of 50 years, he reminded us of some very basic but extremely important lessons in personal finances.

Let us look at each of these lessons:

1. Income, assets, expenses and liabilities are the four most important components of one’s personal finances. Whereas he did a great job with income and acquisition of some income generating assets, the liabilities and expenses did him in. However much you have on the income or assets sides, the expenses and liabilities can wreck havoc.
2. When one gets financial success at a very early age, it is important to check whether the same is sustainable. Projecting the current income assuming the same will continue could prove to be a costly mistake. This is especially true in cases where the income is on account of natural talent rather than acquired skill. The difference between the two is “hard work”. Whereas natural talent may not have to work very hard to get success, acquired skill requires lots of perseverance. It is this ability to continue sweating it out that helps when one passes through bad times.
3. Extrapolating the current income into the future is a common disease among many. Human beings are by nature optimist about their own future. Such a tendency often leads one to upgrade the lifestyle to such levels that it becomes impossible to fund it through one’s income. Then one resorts to debt. Debt, while giving instant access to cash, increases the cost of living through interest payments. The year 2008 came a rude shock for many, who had projected their income to grow and borrowed for houses larger than they needed. It was just stretching one a bit. In 2008, job security became a foreign word, incomes were cut and some people went through extremely tough periods.
4. Your possessions are not your assets. A huge house, the latest car, designer dresses and accessories may increase your social acceptance. But somewhere you need to stop. All may not be lucky to find support from friends and relatives when the party gets over.
5. How does one know whether a possession is an asset or not? The answer is simple – an asset has to pass at least one of the two filters: ability to generate income above the cost of servicing or possibility of price appreciation in future. And, the appreciation part should be explained by economics and not wishful thinking.
6. How much one borrows needs to be a function of one’s ability to service the debt. Only the Governments are privileged to borrow to repay old debt. Individuals must stay away from the debt trap.

Let us learn the personal finance lessons from one of the finest entertainers in the history. May his soul rest in peace!

Source: http://moneycontrol.com/india/news/mf-experts/6-important-lessons-fromkingpop/405946

good conversation

One day I decided to quit...



One day I decided to quit...
I quit my job, my relationship, my spirituality... I wanted to quit my life.
I went to the woods to have one last talk with God.
"God", I said. "Can you give me one good reason not to quit?"
His answer surprised me...
"Look around", He said. "Do you see the fern and the bamboo?"
"Yes", I replied.
When I planted the fern and the bamboo seeds, I took very good care of them.
I gave them light. I gave them water.
The fern quickly grew from the earth.
Its brilliant green covered the floor.
Yet nothing came from the bamboo seed.
But I did not quit on the bamboo.
In the second year the Fern grew more vibrant and plentiful.
And again, nothing came from the bamboo seed.
But I did not quit on the bamboo. He said.
"In the third year, there was still nothing from the bamboo seed. But I would not quit. In the fourth year, again, there was nothing from the bamboo seed. "I would not quit." He said. "Then in the fifth year a tiny sprout emerged from the earth.

Compared to the fern it was seemingly small and insignificant... But just 6 months later the bamboo rose to over 100 feet tall.

It had spent the five years growing roots.

Those roots made it strong and gave it what it needed to survive. I would not give any of my creations a challenge it could not handle."

He said to me. "Did you know, my child, that all this time you have been struggling, you have actually been growing roots."

"I would not quit on the bamboo. I will never quit on you. " Don't compare yourself to others .." He said. " The bamboo had a different purpose than the fern ... Yet, they both make the forest beautiful."

Your time will come, " God said to me. " You will rise high! " How high should I rise?" I asked.

How high will the bamboo rise?" He asked in return.

"As high as it can? " I questioned.

" Yes. " He said, "Give me glory by rising as high as you can. "

I left the forest and bring back this story.

I hope these words can help you see that God will never give up on you.

He will never give up on you.

Never regret a day in your life.

Good days give you happiness

Bad days give you experiences;

Both are essential to life.

A happy and meaningful life requires our continuous input and creativity. It does not happen by chance. It happens because of our choices and actions. And each day we are given new opportunities to choose and act and, in doing so, we create our own unique journey." Keep going...



Happiness keeps you Sweet, Trials keep you Strong, Sorrows keep you Human,
Failures keep you humble , Success keeps You Glowing, but Only God keeps You Going!

Good one! please think over it....Current state of India

An Old Story:
The Ant works hard in the withering heat all summer building its house and laying up supplies for the winter. The Grasshopper thinks the Ant is a fool and laughs & dances & plays the summer away.



Come winter, the Ant is warm and well fed. The Grasshopper has no food or shelter so he dies out in the cold.

Indian Version:

The Ant works hard in the withering heat all summer building its house and laying up supplies for the winter.

The Grasshopper thinks the Ant's a fool and laughs & dances & plays the summer away.

Come winter, the shivering Grasshopper calls a press conference and demands to know why the Ant should be allowed to be warm and well fed while others are cold and starving.

NDTV, BBC, CNN show up to provide pictures of the shivering Grasshopper next to a video of the Ant in his comfortable home with a table filled with food.

The World is stunned by the sharp contrast. How can this be that this poor Grasshopper is allowed to suffer so?

Arundhati Roy stages a demonstration in front of the Ant's house.

Medha Patkar goes on a fast along with other Grasshoppers demanding that Grasshoppers be relocated to warmer climates during winter .

Amnesty International and Koffi Annan criticize the Indian Government for not upholding the fundamental rights of the Grasshopper.

The Internet is flooded with online petitions seeking support to the
Grasshopper (many promising Heaven and Everlasting Peace for prompt support as against the wrath of God for non-compliance).

Opposition MPs stage a walkout. Left parties call for 'Bengal Bandh' in West Bengal and Kerala demanding a Judicial Enquiry.

CPM in Kerala immediately passes a law preventing Ants from working hard in the heat so as to bring about equality of poverty among Ants and Grasshoppers.
Lalu Prasad allocates one free coach to Grasshoppers on all Indian Railway Trains, aptly named as the 'Grasshopper Rath'.
Finally, the Judicial Committee drafts the ' Prevention of Terrorism Against Grasshoppers Act' [POTAGA], with effect from the beginning of the winter.

Arjun Singh makes 'Special Reservation ' for Grasshoppers in Educational Institutions & in Government Services.

The Ant is fined for failing to comply with POTAGA and having nothing left to pay his retroactive taxes,it's home is confiscated by the Government and handed over to the Grasshopper in a ceremony covered by NDTV.Arundhati Roy calls it ' A Triumph of Justice'.Lalu calls it 'Socialistic Justice '.

CPM calls it the ' Revolutionary Resurgence of the Downtrodden '
Koffi Annan invites the Grasshopper to address the UN General Assembly.

Many years later...

The Ant has since migrated to the US and set up a multi-billion dollar
company in Silicon Valley ,

100s of Grasshoppers still die of starvation despite reservation somewhere
in India,

.
.AND

As a result of loosing lot of hard working Ants and feeding the
grasshoppers,

.

.

.

.

.

.

India is still a developing country?!!!

What is Sub-Prime Crisis - A Good Article

What is a sub-prime loan?

In the US, borrowers are rated either as ‘prime’ - indicating that they have a good credit rating based on their track record - or as ‘sub-prime’, meaning their track record in repaying loans has been below par. Loans given to sub-prime borrowers, something banks would normally be reluctant to do, are categorized as sub-prime loans. Typically, it is the poor and the young who form the bulk of sub-prime borrowers.

Why loans were given?

In roughly five years leading up to 2007, many banks started giving loans to sub-prime borrowers, typically through subsidiaries. They did so because they believed that the real estate boom, which had more than doubled home prices in the US since 1997, would allow even people with dodgy credit backgrounds to repay on the loans they were taking to buy or build homes. Government also encouraged lenders to lend to sub-prime borrowers, arguing that this would help even the poor and young to buy houses.

With stock markets booming and the system flush with liquidity, many big fund investors like hedge funds and mutual funds saw sub-prime loan portfolios as attractive investment opportunities. Hence, they bought such portfolios from the original lenders. This in turn meant the lenders had fresh funds to lend. The sub prime loan market thus became a fast growing segment.

What was the interest rate on sub-prime loans?

Since the risk of default on such loans was higher, the interest rate charged on sub-prime loans was typically about two percentage points higher than the interest on prime loans. This, of course, only added to the risk of sub-prime borrowers defaulting. The repayment capacity of sub-prime borrowers was in any case doubtful. The higher interest rate additionally meant substantially higher EMIs than for prime borrowers, further raising the risk of default. Further, lenders devised new instruments to reach out to more sub-prime borrowers. Being flush with funds they were willing to compromise on prudential norms. In one of the instruments they devised , they asked the borrowers to pay only the interest portion to begin with. The repayment of the principal portion was to start after two years. How did this turn into a crisis?

The housing boom in the US started petering out in 2007. One major reason was that the boom had led to a massive increase in the supply of housing. Thus house prices started falling. This increased the default rate among subprime borrowers, many of whom were no longer able or willing to pay through their nose to buy a house that was declining in value.

Since in home loans in the US, the collateral is typically the home being bought, this increased the supply of houses for sale while lowering the demand, thereby lowering prices even further and setting off a vicious cycle. That this coincided with a slowdown in the US economy only made matters worse. Estimates are that US housing prices have dropped by almost 50% from their peak in 2006 in some cases. The declining value of the collateral means that lenders are left with less than the value of their loans and hence have to book losses.

How did this become a systemic crisis?

One major reason is that the original lenders had further sold their portfolios to other players in the market. There were also complex derivatives developed based on the loan portfolios, which were also sold to other players, some of whom then sold it on further and so on.

As a result, nobody is absolutely sure what the size of the losses will be when the dust ultimately settles down. Nobody is also very sure exactly who will take how much of a hit. It is also important to realize that the crisis has not affected only reckless lenders. For instance, Freddie Mac and Fannie Mae, which owned or guaranteed more than half of the roughly $12 trillion outstanding in home mortgages in the US, were widely perceived as being more prudent than most in their lending practices. However, the housing bust meant that they too had to suffer losses — $14 billion combined in the last four quarters - because of declining prices for their collateral and increased default rates.

The forced retreat of these two mortgage giants from the market, of course, only adds to every other player’s woes.

What has been the impact of the crisis?

Global banks and brokerages have had to write off an estimated $512 billion in sub-prime losses so far, with the largest hits taken by Citigroup ($55.1 bn) and Merrill Lynch ($52.2 bn). A little more than half of these losses, or $260 bn, have been suffered by US-based firms, $227 billion by European firms and a relatively modest $24 bn by Asian ones. Despite efforts by the US Federal Reserve to offer some financial assistance to the beleaguered financial sector, it has led to the collapse of Bear Sterns, one of the world’s largest investment banks and securities trading firm. Bear Sterns was bought out by JP Morgan Chase with some help from the Fed.

The crisis has also seen Lehman Brothers - the fourth largest investment bank in the US - file for bankruptcy. Merrill Lynch has been bought out by Bank of America. Freddie Mac and Fannie Mae have effectively been nationalized to prevent them from going under.

Reports suggest that insurance major AIG (American Insurance Group) is also under severe pressure and has asked for a $40 bn bridge loan to tide over the crisis. If AIG also collapses, that would really test the entire financial sector.

How is the rest of the world affected?

Apart from the fact that banks based in other parts of the world also suffered losses from the subprime market, there are two major ways in which the effect is felt across the globe. First, the US is the biggest borrower in the world since most countries hold their foreign exchange reserves in dollars and invest them in US securities.

Thus, any crisis in the US has a direct bearing on other countries, particularly those with large reserves like Japan, China and - to a lesser extent - India. Also, since global equity markets are closely interlinked through institutional investors, any crisis affecting these investors sees a contagion effect throughout the world.

Source: By forwarded E-mail.

Ratan Tata's words of inspiration

today's environment:
I think it's a tougher environment from what it was about 15 years ago. The demands are far greater, many of the sectors are moving faster, and technology change is quicker. The luxury of having time to make decisions no longer exists. Decisions need to be taken faster and, unlike in the past, they have to be based on more on information and less on intuition. The impact of wrong decisions is greater today. Furthermore, people today are, if I might say so, more opportunistic, materialistic and rebellious. So you are managing a different type of environment: less protected, less feudal, and more demanding in terms of speed, in terms of technology.

On employees:
The way to hold employees today is to make their work and their day-to-day activities in the company exciting enough for them to stay. Not everyone will stay, but I think if we can empower more people and are willing to pass on the responsibility for that, and if people are satisfied and motivated, there's less chance of them wanting to leave and go to a competitor.

low-cost products:
It should not be, cannot be, that low-cost products come to mean inferior or sub-standard products and services; definitely not. The aim is to create products for that larger segment -- good and robust products that we are able to produce innovatively and get to the marketplace at lower costs.


On customers:
We should be treating the customer in the same way that we would want to be treated as customers.

On business:
Business, as I have seen it, places one great demand on you: it needs you to self-impose a framework of ethics, values, fairness and objectivity on yourself at all times. It is easy not to do this; you cannot impose it on yourself forcibly because it has to become an integral part of you.


feedback:
Market feedback is very important, but it has to be stripped of its colour. You have to be able to strip away the vested interest or the bias that sometimes comes in. You have to view it objectively, not defensively.

This was take from rediff.com. You can find the details at:

http://specials.rediff.com/money/2008/aug/26sli3.htm

Businesss Rules

I found some business rules while browsing thru some business magazines. I hope, these rules may help you out in your personal life and your work environment.

They are as follows:

Rule One: CHECK YOUR EGO AT THE DOOR

In order to keep dialogue open, realize you don’t know everything. Without a heightened awareness of the development of your own ego, healthy characteristics and unique, powerful talents can become destructive and degenerate into weaknesses.

Rule Two: CREATE CURIOUSITY

What you currently know sometimes gets in the way of what you need to
know, but don’t know. Be a sponge for information and use it to refresh your experience and knowledge rather than allowing yourself to feel as if new information puts you at risk.

Rule Three: MOVE OFF THE SOLUTION

Don’t prematurely focus on the solution itself. You need to get to the underlying business issues and work from there. Remember, a solution is worthless unless and until it creates business value, prevents a problem or invents a new result the business needs. Otherwise, a solution ismerely an event.

Rule Four: GET EVIDENCE

Some of the best businesspeople ask the obvious questions, the answers to which are almost never obvious. In fact, it’s the obvious questions or the politically sensitive questions that many are afraid to ask. Collect soft evidence and then turn it into hard evidence that the business can measure.

Rule Five: CALCULATE THE IMPACT

Businesspeople never let cash out the door that doesn’t strictly ultimately bring more cash back. You must convert hard evidence into a financial equivalent; a move from ‘the could’ to ‘the should’ that shows the basic economic return.

Rule Six: EXPLORE THE RIPPLE EFFECT

It is imperative to figure out who or what else in the company is affected by the current problem or the opportunity under consideration. The people who get sucked into isolated and exclusionary thinking lose sight of the big picture of the business as a whole.

Rule Seven: SLOW DOWN FOR YELLOW LIGHTS

If the problem or opportunity is so big, ask what has stopped us in the past from doing something about it, and what could stop us in the future. If

you get a yellow light early, take your best shot at resolving it. Even if you fail and get to a red light, you’ll have saved time and money at the very least.

Rule Eight: FIND THE CAUSE

Simply asking why will give you the tools to dig for the underlying reason for the problems, and to make sure you’re treating the source, rather than the effects. Having proof you need a solution (the effects), and knowing what solution you need are two different things.

Winners... Not Quitters...

A candidate for a news broadcaster post was rejected because of his voice. He was also told that with his obnoxiously long name, he would never be famous.

He is Amitabh Bachchan.



A small boy- the fifth amongst seven siblings of a poor father, was selling news papers in a small village to earn his living. He was not exceptionally smart at his school but was fascinated by religion and rockets.
The first rocket he build crashed. A missile that he build crashed multiple times and he was made a butt of ridicule. He is the person to have scripted the space Odyssey of India single-handedly.
He is Dr. A.P.J Abdul Kalam.


In 1962,four nervous young musicians played their first record audition for the executives of the Decca recording company. The executives were not impressed.

While turning down this group of musicians, one executive said,
"We don't like their sound. Groups of guitars are on the way out".

The group was called, "The Beatles".



In 1944, Emmeline Snivel y, director of the Blue book modeling agency told modeling hopeful Norman Jean Baker,

"You'd better learn secretarial work or else get married".

She went on to become,

Marilyn Monroe.


In 1954, Jimmy Denny, manager of the Grand Ole Opry fired a singer after one performance. He told him,

"Your ain't goin' nowhere...son. You ought to go back to drivin' a truck".

He went on to become,

Elvin Presley.




When a gentlmen invented a cmmunication machine in 1876, it didn't ring off the hook with calls from potential backers. After making a demonstration call, president Rutherford Hayes said,

"That's an amazing invention, but, who would ever want to see one of them?".
He said this to, Alexander Graham Bell.



In the 1940s another young inventor named Chester Carlson took his idea to 20 corporations, including some of the biggest in the country. They all turned him down.

In 1947, after seven long years of rejections! He finally got a tiny company in New York, the Haloid company, to purchase the rights to his invention - an electrostatic papery copying process. Haloid became Xerox corporation.

He is, Chester Carlson.


A 4 year old girl, the 20th of 22 children, contracted double pneumonia and scarlet fever at a very early age, which paralyzed her left leg. Thereafter 9 year of age, she removed her left braces and started walking without them. At 13 she decided to become a runner but kept failing miserably in all races that she entered in. she kept trying in spite of several detractors and finally started winning every race she entered.
She is,
Wilma Rudolph, who went on to win three Olympic gold medals.


A school teach scolded a boy for not paying attention to his mathematics and for not being able to solve simple problems. She told him that he would not become anybody in life. His mother, however believed in him and coached him in maths.
The boy went on to become,

Albert Einstein.


A winner is not one who never fails, but one who NEVER QUITS.

Enjoy the game... Instead of avoiding challenges, jump into them

It is worth spending time in reading it and charging yourself !!!

The Japanese have always loved fresh fish। But the waters close to Japan have not held many fish for decades। So to feed the Japanese population, fishing boats got bigger and went farther than ever. The farther the fishermen went, the longer it took to bring in the fish. If the return trip took more than a few days, the fish were not fresh. The Japanese did not like the taste.

To solve this problem, fishing companies installed freezers on their boats। They would catch the fish and freeze them at sea। Freezers allowed the boats to go farther and stay longer। However, the Japanese could taste the difference between fresh and frozen and they did not like frozen fish। The frozen fish brought a lower price. So fishing companies installed fish tanks. They would catch the fish and stuff them in the tanks, fin to fin. After a little thrashing around, the fish stopped moving. They were tired and dull, but alive. Unfortunately, the Japanese could still taste the difference. Because the fish did not move for days, they lost their fresh-fish taste. The Japanese preferred the lively taste of fresh fish, not sluggish fish.

So how did Japanese fishing companies solve this problem? How do they get fresh-tasting fish to Japan? If you were consulting the fish industry, what would you recommend?

As soon as you reach your goals, such as finding a wonderful mate, starting a successful company, paying off your debts or whatever, you might lose your passion। You don't need to work so hard so you relax। You experience the same problem as lottery winners who waste their money, wealthy heirs who never grow up and bored homemakers who get addicted to prescription drugs।

Like the Japanese fish problem, the best solution is simple। It was observed by L. Ron Hubbard in the early 1950's.

"Man thrives, oddly enough, only in the presence of a challenging environment."- L. Ron Hubbard
The more intelligent, persistent and competent you are, the more you enjoy a good problem. If your challenges are the correct size, and if you are steadily conquering those challenges, you are happy. You think of your challenges and get energized. You are excited to try new solutions. You have fun. You are alive!

To keep the fish tasting fresh, the Japanese fishing companies still put the fish in the tanks. But now they add a small shark to each tank. The shark eats a few fish, but most of the fish arrive in a very lively state। The fish are challenged.

Instead of avoiding challenges, jump into them। Beat the heck out of them। Enjoy the game। If your challenges are too large or too numerous, do not give up। Failing makes you tired। Instead, reorganize। Find more determination, more knowledge, more help। If you have met your goals, set some bigger goals.

Once you meet your personal or family needs, move onto goals for your group, the society, even mankind.

Don't create success and lie in it. You have resources, skills and abilities to make a difference.

Put a shark in your tan. If you have met your goals, set some bigger goals. Once you meet your personal or family needs, move onto goals for your group, the society, even mankind. Don't create success and lie in it.

You have resources, skills and abilities to make a difference. Put a shark in your tank and see how far you can really go!