Last night I was having a discussion with my neighbour about the spending patterns of consumers and what makes them buy the most frivolous of things. He said there was a time when he would himself buy things on a whim, especially through a credit card. Now, he says, he has turned over a new leaf. He has cancelled his second gym membership that he had paid thousands for, reduced eating in restaurants and has started investing in various plans in a systematic manner. “Live simply today to live lavishly tomorrow,” he calls this plan.
My friend, unknowingly, has managed to save more in three months, than he would usually have in several months, if he had continued his lifestyle. He got me thinking. Can it be that uncomplicated to save for the future? The answer is Yes. When you get money, do you save first or spend first or spend by borrowing?
Usually, when we spend on buying things, we end up borrowing. You may think, “How can I borrow when I am spending from my own pocket?” What you don’t realise at that moment is that every penny you spend on buying something that is more of a want than a need, you are borrowing money from yourself . You may think that you don’t have to pay yourself back, but this tendency pulls you away from your life dreams and goals since you do not have the money to save or invest.
An associate of mine recently presented me a study that analysed spending patterns.
An important fact put forth was that individuals forgo long term goals for instant gratification. Most of us just get a certain “high” while buying a particular product for e.g. a new pair of shoes, or going to the best restaurant in town. This habit increases borrowings.
A way to break this pattern is by making a clear demarcation between what you want and need. They are always two separate things. Though instant gratification is fun for the moment, on a long-term basis, it might not be what you need. Commit yourself towards creating reserves for your future, instead of just thoughtlessly spending money.
Investing for the future is not an easy task. I often suggest a simple trick to friends which helps them stick to their plan – I ask them to create a collage of pictures of their dreams and desires. It could have pictures of your dream house, holiday, retirement or anything thing else that you are working to achieve.
This will provide you the motivation that you need to turn these dreams into reality . But remember to not shape your future by borrowing. Make the distinction between good and bad borrowing. Any borrowing that can help you buy/build an appreciating asset (like house) is good borrowing.
Another important lesson that you need to understand is that you will need to downgrade on your current needs to move in on your future. You can cut down on some unwanted expenses and instead use that amount in a financial plan that can help you achieve your dream, goals and plan for emergencies.
The idea of downsizing now is to create a foundation to stabilise your future. Over time, this will help you become financially independent. And your dreams will be your own, no matter what...
Sunday, November 28, 2010
Sunday, November 21, 2010
What do financial planners really sell…and how should they sell it?
Many people in the financial services industry believe that financial planners sell advice, however this is simply not true. They charge for advice but this is not what they sell. The notion of selling advice is as irrelevant to planners as selling an hourly rate is to accountants. There must always be a ‘value gap’ between what is sold and what is charged for, as in the case of restaurants that obviously charge for food and drink but less obviously sell…’enjoyable experiences’.
What financial planners sell is not what they do, it is what they get done…for clients. And what financial planners get done should not be measured in terms of higher investment performance or lower prices for products such as insurances…although both of these benefits are of course most welcome to clients. What the financial planner is supposed to ‘get done’, or if you like what the planner sells, is the ‘avoidance of serious problems’ (involving great personal hardship and financial loss) and the ‘achievement of significant progress’ (involving great personal satisfaction and financial success). These two items for sale can be thought of as ‘brakes’ and ‘accelerators’ in the lives of people, arranged according to ‘personal needs’ by the financial planner.
The ‘avoidance of serious problems’ (or ‘freedom from pain’) covers personal issues such as ill health or serious sickness, untimely death, loss of earning capacity, living with too much debt and paying more tax than is legally required, etc. These issues in turn relate to insurances, such as life, income protection, trauma, and also matters such as control of household expenditure, tax minimisation and estate planning.
The ‘achievement of significant progress’ includes aspirations such as moving to a nicer home, perhaps owning a holiday home, providing kids with better education, being able to take holidays, improving the present home in various ways, arranging surgery to improve personal appearance…and the critical area of lifestyle in retirement. There are many more ‘desires’ to consider in this area, and objectives such as those listed are of course driven financially by superannuation, investments, savings and, again, more prudent control of household expenditure.
The next question concerns how the planner should sell these brakes and accelerators, and the answer is most certainly not the ‘fact find’! There are four stages the planner must manage, however these stages are preceded by the ability of the planner to sell himself. This means that he must genuinely be perceived by prospects, clients and associates as being pleasant, respectful and purposeful. A pleasant disposition involves obvious qualities such as personal presentation, punctuality, warmth, courtesy and a professional demeanour (the latter means that the planner is nice but also ‘on a mission’). To be respectful means acknowledging that a prospect is already dealing with one or more ‘service providers’, all of whom are likely to be seen as being ‘fine’, and the same applies to a partially developed client that the planner wants to do more for…all of which means that the planner will not aim to displace the current service providers, but rather to offer information that he feels will be of great interest. And to be purposeful involves making it clear that you have something of great importance to address, and of course you do…in the two key areas of life mentioned earlier. On this point I believe that it is necessary for the adviser to explain that he will aim to create ‘the third result’ for the client or prospect. The first result equals what the client has now, the second result equals a marginal improvement on what the client has now…and the third result equals a much better result than the client has now. Obviously, the first and second results hold no interest to clients at all. I am confident that most clients can achieve ‘much better results’ than they enjoy now! When the planner has sold himself, there are four selling stages to cover: THEM, YOU, ME & US…
• THEM! ‘Them’ refers to the community at large, as made up by people such as the person the planner is talking to. The aim at this point is for the planner to explain as graphically as possible what is happening in the community…in the two areas of problems and progress. In more specific terms the planner must divulge information concerning how only a few people in the community do well in both areas…and how most people fare poorly or very badly. The latter information should include the negative forms of impact on the lives of people who fail to do what must be done. Most people know a little about both areas but never enough, and if they did then financial planners would not be needed. By focusing on ‘them’ to start with, the planner can be sure that the person being served will soon be thinking ‘where do I/we stand in relation to the two areas covered?’ This initial stage in the selling process should ‘enlighten’ the client or prospect and create focus on the issue and concern
• YOU. After the ‘enlightening’ stage concerning THEM, the planner must focus attention on the person being served…hence the reference to ‘you’. This does not involve the official ‘fact find’ process, instead it involves what can be termed the informal ‘fact feeling’ stage, at which time the client or prospect is invited to indicate where they ‘feel’ they stand in relation to the two key areas of interest – namely the ‘avoidance of problems’ and the ‘achievement of progress’. A simple questionnaire is used by the planner to engage the client or prospect at this point. This device is called ‘Feelings on Finance’ and is very easy for people to complete, taking no more than perhaps 1 – 2 minutes! The questionnaire (which I present at seminars) involves just a few questions and when completed it becomes obvious that the client is by no means certain of where he stands in relation to both key areas. This process has the potential to ‘frighten’ people, in a constructive way, concerning what they really need to do…remembering that healthy fear is perhaps the greatest motivator of people. All of this is a valuable seed to sow concerning the need for the ‘fact find’…later in the process
• ME. The planner then briefly explains that the ‘fact find’ is a necessary process to determine actual areas of need, opportunity, etc., and then explains how the problems and progress issues can be successfully addressed by him (the ‘me’ factor)…in simple ways that will please the client or prospect. And part of what will please the client or prospect is that the cost of doing what must be done may not exceed the person’s current level of expenditure! The planner should explain that the ‘cost’ issue will be addressed later, and what is meant by this is that if more cost is involved to do what must be done, then ‘redirection’ of expenditure may be called for. If the issue of cost is not addressed at this early stage, then there is a good chance that the client or prospect will not be fully focused on the discussion…because they may be convinced that they cannot afford additional expenditure. At this point the planner must present the menu, not the recipe…meaning that ‘ideas’ are discussed, not ‘detail’. ‘Ideas’ relate to the potential use of insurances, investments, superannuation, etc., while ‘detail’ concerns specific insurance policies, specific investment strategies, specific super steps and so forth. The ‘me’ stage does not involve specific advice for the client, it involves potential ‘ways’ to do what must be done, which gives the planner a professional opportunity to merchandise his range of knowledge and experience. This ‘display’ of ideas will impress the client that he or she is in safe hands, and that maybe, just maybe, there is the chance to do the right thing without great additional cost
• US. At this point the planner presents a plan of action for moving forward together (hence the ‘us’ factor), which will involve accessing information and completing the ‘fact find’ project, etc. However, because of the gradual impact of the previous 3 stages, the client will now face the fact find challenge with the right attitude and motivation. When the planner has arranged for information to be compiled he can prepare a plan that is a mixture of ideas, options, advice and ‘product’…all of which should represent a gradual path towards satisfaction in the two areas of ‘need’. And it is at this point that it may be necessary for the planner to invite the client to consider redirection of expenditure, in the event that the solution appears too difficult to manage financially
The final stage must of course revisit what was said at the start and through other stages, concerning what was needed in both areas. In other words the sale of a plan must never become a clinical process. And of course the fees to be charged by the planner can now be seen in the same light as the price of a book – the last thing to be considered. When people want to buy a book they do not enter bookstores and say ‘have you got any $10 thrillers?’ The purchase of a book is predicated on a simple and powerful premise: pleasure first…price last. Surely, financial planning involves the same human process: sell the pleasure of achievement first…and fees last.
What financial planners sell is not what they do, it is what they get done…for clients. And what financial planners get done should not be measured in terms of higher investment performance or lower prices for products such as insurances…although both of these benefits are of course most welcome to clients. What the financial planner is supposed to ‘get done’, or if you like what the planner sells, is the ‘avoidance of serious problems’ (involving great personal hardship and financial loss) and the ‘achievement of significant progress’ (involving great personal satisfaction and financial success). These two items for sale can be thought of as ‘brakes’ and ‘accelerators’ in the lives of people, arranged according to ‘personal needs’ by the financial planner.
The ‘avoidance of serious problems’ (or ‘freedom from pain’) covers personal issues such as ill health or serious sickness, untimely death, loss of earning capacity, living with too much debt and paying more tax than is legally required, etc. These issues in turn relate to insurances, such as life, income protection, trauma, and also matters such as control of household expenditure, tax minimisation and estate planning.
The ‘achievement of significant progress’ includes aspirations such as moving to a nicer home, perhaps owning a holiday home, providing kids with better education, being able to take holidays, improving the present home in various ways, arranging surgery to improve personal appearance…and the critical area of lifestyle in retirement. There are many more ‘desires’ to consider in this area, and objectives such as those listed are of course driven financially by superannuation, investments, savings and, again, more prudent control of household expenditure.
The next question concerns how the planner should sell these brakes and accelerators, and the answer is most certainly not the ‘fact find’! There are four stages the planner must manage, however these stages are preceded by the ability of the planner to sell himself. This means that he must genuinely be perceived by prospects, clients and associates as being pleasant, respectful and purposeful. A pleasant disposition involves obvious qualities such as personal presentation, punctuality, warmth, courtesy and a professional demeanour (the latter means that the planner is nice but also ‘on a mission’). To be respectful means acknowledging that a prospect is already dealing with one or more ‘service providers’, all of whom are likely to be seen as being ‘fine’, and the same applies to a partially developed client that the planner wants to do more for…all of which means that the planner will not aim to displace the current service providers, but rather to offer information that he feels will be of great interest. And to be purposeful involves making it clear that you have something of great importance to address, and of course you do…in the two key areas of life mentioned earlier. On this point I believe that it is necessary for the adviser to explain that he will aim to create ‘the third result’ for the client or prospect. The first result equals what the client has now, the second result equals a marginal improvement on what the client has now…and the third result equals a much better result than the client has now. Obviously, the first and second results hold no interest to clients at all. I am confident that most clients can achieve ‘much better results’ than they enjoy now! When the planner has sold himself, there are four selling stages to cover: THEM, YOU, ME & US…
• THEM! ‘Them’ refers to the community at large, as made up by people such as the person the planner is talking to. The aim at this point is for the planner to explain as graphically as possible what is happening in the community…in the two areas of problems and progress. In more specific terms the planner must divulge information concerning how only a few people in the community do well in both areas…and how most people fare poorly or very badly. The latter information should include the negative forms of impact on the lives of people who fail to do what must be done. Most people know a little about both areas but never enough, and if they did then financial planners would not be needed. By focusing on ‘them’ to start with, the planner can be sure that the person being served will soon be thinking ‘where do I/we stand in relation to the two areas covered?’ This initial stage in the selling process should ‘enlighten’ the client or prospect and create focus on the issue and concern
• YOU. After the ‘enlightening’ stage concerning THEM, the planner must focus attention on the person being served…hence the reference to ‘you’. This does not involve the official ‘fact find’ process, instead it involves what can be termed the informal ‘fact feeling’ stage, at which time the client or prospect is invited to indicate where they ‘feel’ they stand in relation to the two key areas of interest – namely the ‘avoidance of problems’ and the ‘achievement of progress’. A simple questionnaire is used by the planner to engage the client or prospect at this point. This device is called ‘Feelings on Finance’ and is very easy for people to complete, taking no more than perhaps 1 – 2 minutes! The questionnaire (which I present at seminars) involves just a few questions and when completed it becomes obvious that the client is by no means certain of where he stands in relation to both key areas. This process has the potential to ‘frighten’ people, in a constructive way, concerning what they really need to do…remembering that healthy fear is perhaps the greatest motivator of people. All of this is a valuable seed to sow concerning the need for the ‘fact find’…later in the process
• ME. The planner then briefly explains that the ‘fact find’ is a necessary process to determine actual areas of need, opportunity, etc., and then explains how the problems and progress issues can be successfully addressed by him (the ‘me’ factor)…in simple ways that will please the client or prospect. And part of what will please the client or prospect is that the cost of doing what must be done may not exceed the person’s current level of expenditure! The planner should explain that the ‘cost’ issue will be addressed later, and what is meant by this is that if more cost is involved to do what must be done, then ‘redirection’ of expenditure may be called for. If the issue of cost is not addressed at this early stage, then there is a good chance that the client or prospect will not be fully focused on the discussion…because they may be convinced that they cannot afford additional expenditure. At this point the planner must present the menu, not the recipe…meaning that ‘ideas’ are discussed, not ‘detail’. ‘Ideas’ relate to the potential use of insurances, investments, superannuation, etc., while ‘detail’ concerns specific insurance policies, specific investment strategies, specific super steps and so forth. The ‘me’ stage does not involve specific advice for the client, it involves potential ‘ways’ to do what must be done, which gives the planner a professional opportunity to merchandise his range of knowledge and experience. This ‘display’ of ideas will impress the client that he or she is in safe hands, and that maybe, just maybe, there is the chance to do the right thing without great additional cost
• US. At this point the planner presents a plan of action for moving forward together (hence the ‘us’ factor), which will involve accessing information and completing the ‘fact find’ project, etc. However, because of the gradual impact of the previous 3 stages, the client will now face the fact find challenge with the right attitude and motivation. When the planner has arranged for information to be compiled he can prepare a plan that is a mixture of ideas, options, advice and ‘product’…all of which should represent a gradual path towards satisfaction in the two areas of ‘need’. And it is at this point that it may be necessary for the planner to invite the client to consider redirection of expenditure, in the event that the solution appears too difficult to manage financially
The final stage must of course revisit what was said at the start and through other stages, concerning what was needed in both areas. In other words the sale of a plan must never become a clinical process. And of course the fees to be charged by the planner can now be seen in the same light as the price of a book – the last thing to be considered. When people want to buy a book they do not enter bookstores and say ‘have you got any $10 thrillers?’ The purchase of a book is predicated on a simple and powerful premise: pleasure first…price last. Surely, financial planning involves the same human process: sell the pleasure of achievement first…and fees last.
Friday, November 19, 2010
Life Insurance: How To Get the Most Out Of Your Policy
Life insurance can be a very important investment for you, especially if you have a growing family. You can get hassle-free wealth distribution among your children, emergency loans at low interest, assured benefits and in the end, a death benefit. All you need to do is to work out a sensible plan with your insurance advisor, through which you can avail yourself of these aspects of your life insurance policy.
In this article, we'll show you how these life insurance concepts can make a huge difference in your life now.
Tutorial: Insurance 101
BeneficiariesThe most prominent feature of a life insurance policy is the beneficiary clause, which facilitates the easy transfer of your money to your successors. (For more information on the beneficiary classes, see Life Insurance Clauses Determine Your Coverage.)
However, you need to be aware of the different kinds of beneficiaries in life insurance:
Multiple Beneficiaries You can have your children as multiple beneficiaries. All you have to do is to indicate the names of these recipients and the amount of proceeds that they are going to get.
Contingent BeneficiaryNaming a contingent beneficiary is always practical. Suppose that your first (primary) beneficiary dies near the time of your own death. In this case, your children will qualify for your insurance money if you nominate them as contingent (secondary) beneficiaries. A contingent beneficiary can get life insurance proceeds if the primary beneficiary dies before he or she can receive the assets.
Minor as a BeneficiaryIf you have named your minor child as a beneficiary, you will have to appoint a guardian/trustee who will administer the insurance proceeds upon your death.
Revocable BeneficiaryHere, the recipient can be changed any time during the policy.
Irrevocable beneficiaryIn this type of beneficiary class, you cannot change your beneficiary's name unless they consent to it. With an irrevocable beneficiary, creditors cannot touch the policy proceeds as these monies are not considered to be a part of your assets.
LapseIt can happen that due to certain circumstances you forget to pay your premiums, even in the specified grace period. Unfortunately, because you have missed the deadline your policy will lapse.
Consequently, your insurance company can stop covering you or may provide you reduced insurance coverage equivalent to the total premiums paid formerly (also calledpaid-up policies). Nonetheless, a lapsed policy may be renewed in some plans, although the exact renewal procedure varies among different insurers.
Cash Surrender ValuePermanent life insurance policies like universal life insurance, whole life insurance and variable life insurance are more attractive thanks to the presence of built-in cash value. (Term life insurance policies do not offer cash values). The interesting aspect of these policies is that you can surrender your policy and get the accrued cash value in your hands provided you have a substantial amount of cash value.
Cash ValueHere, a part of your premium is put in savings or another investment account according to the type of policy you purchase. As a result, the ongoing interest you receive from your investment account gradually increases your cash value.
Non-Forfeiture OptionsIn permanent life insurance policies, if you fail to pay the premiums in the grace period, you won't lose your life insurance - your accumulated cash value will come to your rescue with the following options:
It is always easy to terminate (surrender) your policy and get the entire cash surrender value, which will solve your liquidity problems. However, you need to consider many factors before surrendering your policy, such as the increase in the cash surrender value if your policy is maintained for the full term. Consult your insurance advisor to about the full consequences of these issues before deciding whether the policy should be cashed or kept.
Policy LoansAnother positive characteristic of a life insurance policy is that you can take out a policy loanagainst your policy to cater to your emergency needs. The interest is relatively low and the policy loan can be repaid in a lump sum or installments.
If you are incapable of repaying your policy loan, your insurance company will use your cash value to settle the loan.
Participating Vs. Non-Participating PoliciesYou can opt for participating policies in which you participate in the profits of your insurance company and get dividends annually. Here, the premiums are somewhat higher.
Conversely, non-participating policies do not participate in the profits of the insurance company and therefore do not have the dividend option. Here, the premiums are relatively lower.
Unlike permanent life insurance policies, term life insurance policies are non-participating policies. (To further explore the differences between term and permanent life insurance, seeBuying Life Insurance: Term Versus Permanent and What is the difference between term and universal life insurance?)
Policy DividendsDividends are the earnings paid out by the insurer to its shareholders and/or policyholders. You are entitled to enjoy the fruits of your insurance company's labor, for example, dividends if you own a participating policy.
If you do receive a dividend, it is up to you to decide how to make use of it. Here are some common options:
In this article, we'll show you how these life insurance concepts can make a huge difference in your life now.
Tutorial: Insurance 101
BeneficiariesThe most prominent feature of a life insurance policy is the beneficiary clause, which facilitates the easy transfer of your money to your successors. (For more information on the beneficiary classes, see Life Insurance Clauses Determine Your Coverage.)
However, you need to be aware of the different kinds of beneficiaries in life insurance:
Multiple Beneficiaries You can have your children as multiple beneficiaries. All you have to do is to indicate the names of these recipients and the amount of proceeds that they are going to get.
Contingent BeneficiaryNaming a contingent beneficiary is always practical. Suppose that your first (primary) beneficiary dies near the time of your own death. In this case, your children will qualify for your insurance money if you nominate them as contingent (secondary) beneficiaries. A contingent beneficiary can get life insurance proceeds if the primary beneficiary dies before he or she can receive the assets.
Minor as a BeneficiaryIf you have named your minor child as a beneficiary, you will have to appoint a guardian/trustee who will administer the insurance proceeds upon your death.
Revocable BeneficiaryHere, the recipient can be changed any time during the policy.
Irrevocable beneficiaryIn this type of beneficiary class, you cannot change your beneficiary's name unless they consent to it. With an irrevocable beneficiary, creditors cannot touch the policy proceeds as these monies are not considered to be a part of your assets.
LapseIt can happen that due to certain circumstances you forget to pay your premiums, even in the specified grace period. Unfortunately, because you have missed the deadline your policy will lapse.
Consequently, your insurance company can stop covering you or may provide you reduced insurance coverage equivalent to the total premiums paid formerly (also calledpaid-up policies). Nonetheless, a lapsed policy may be renewed in some plans, although the exact renewal procedure varies among different insurers.
Cash Surrender ValuePermanent life insurance policies like universal life insurance, whole life insurance and variable life insurance are more attractive thanks to the presence of built-in cash value. (Term life insurance policies do not offer cash values). The interesting aspect of these policies is that you can surrender your policy and get the accrued cash value in your hands provided you have a substantial amount of cash value.
Cash ValueHere, a part of your premium is put in savings or another investment account according to the type of policy you purchase. As a result, the ongoing interest you receive from your investment account gradually increases your cash value.
Non-Forfeiture OptionsIn permanent life insurance policies, if you fail to pay the premiums in the grace period, you won't lose your life insurance - your accumulated cash value will come to your rescue with the following options:
- Terminate your policy and get the cash surrender value in hard cash.
- Go for reduced coverage for the remaining term of the policy with no future premiums. (i.e. paid-up policy)
- Use your accumulated cash value to pay the future premiums (also referred as automatic premium loan).
- Buy an extended term insurance with the remaining cash surrender value. (no further premiums required)
It is always easy to terminate (surrender) your policy and get the entire cash surrender value, which will solve your liquidity problems. However, you need to consider many factors before surrendering your policy, such as the increase in the cash surrender value if your policy is maintained for the full term. Consult your insurance advisor to about the full consequences of these issues before deciding whether the policy should be cashed or kept.
Policy LoansAnother positive characteristic of a life insurance policy is that you can take out a policy loanagainst your policy to cater to your emergency needs. The interest is relatively low and the policy loan can be repaid in a lump sum or installments.
If you are incapable of repaying your policy loan, your insurance company will use your cash value to settle the loan.
Participating Vs. Non-Participating PoliciesYou can opt for participating policies in which you participate in the profits of your insurance company and get dividends annually. Here, the premiums are somewhat higher.
Conversely, non-participating policies do not participate in the profits of the insurance company and therefore do not have the dividend option. Here, the premiums are relatively lower.
Unlike permanent life insurance policies, term life insurance policies are non-participating policies. (To further explore the differences between term and permanent life insurance, seeBuying Life Insurance: Term Versus Permanent and What is the difference between term and universal life insurance?)
Policy DividendsDividends are the earnings paid out by the insurer to its shareholders and/or policyholders. You are entitled to enjoy the fruits of your insurance company's labor, for example, dividends if you own a participating policy.
If you do receive a dividend, it is up to you to decide how to make use of it. Here are some common options:
- Get your dividends in cash.
- Use your dividends to reduce existing premiums.
- Keep the dividends on deposit with your insurance company where they will steadily earn and accumulate interest.
- Use your dividends to purchase extra coverage, such as a one-year term insurance or whole life insurance, that matures along with your original policy.
by Pooja Dave
The 5 Biggest Factors That Affect Your Credit
A credit score is a number that lenders use to determine the risk of lending money to a given borrower. Credit card companies, auto dealerships and mortgage bankers are three common examples of types of lenders that will check your credit score before deciding how much they are willing to lend you and at what interest rate. Insurance companies, landlords and employers may also look at your credit score to see how financially responsible you are before issuing an insurance policy, renting out an apartment or giving you a job.
In this article, we'll explore the five biggest things that affect your score: what they are, how they affect your credit, and what it all means when you go to apply for a loan.
In this article, we'll explore the five biggest things that affect your score: what they are, how they affect your credit, and what it all means when you go to apply for a loan.
Tutorial: Credit And Debt Management
Credit BasicsYour credit score shows whether you have a history of financial stability and responsible credit management. It can range from 300 to 850, but the higher the score, the better. Three credit agencies - Experian, Equifax and TransUnion - compile credit scores (also known as FICO scores) based on the information in your credit file. Each agency will report a slightly different score, but they should all paint a similar picture of your credit history. (For background reading, see The Importance Of Your Credit Rating.)
- Payment History - 35%The most important component of your credit score looks at whether you can be trusted to repay money that is lent to you. This component of your score considers the following factors:
- Have you paid your bills on time for each and every account on your credit report? Paying bills late has a negative effect on your score.
- If you’ve paid late, how late were you - 30 days, 60 days, or 90+ days? The later you are, the worse it is for your score.
- Have any of your accounts gone to collections? This is a red flag to potential lenders that you might not pay them back.
- Do you have any charge offs, debt settlements, bankruptcies, foreclosures, suits, wage attachments, liens or judgments against you? These are some of the worst things to have on your credit report from a lender’s perspective.
- Amounts Owed - 30%The second-most important component of your credit score is how much you owe. It looks at the following factors:
- How much of your total available credit have you used? Less is better, but owing a little bit can be better than owing nothing at all because lenders want to see that if you borrow money, you are responsible and financially stable enough to pay it back.
- How much do you owe on specific types of accounts, such as a mortgage, auto loans, credit cards and installment accounts? Credit scoring software likes to see that you have a mix of different types of credit and that you manage them all responsibly.
- How much do you owe in total, and how much do you owe compared to the original amount on installment accounts? Again, less is better.
- Length of Credit History - 15%Your credit score also takes into account how long you have been using credit. How many years have you been using credit for? How old is your oldest account, and what is the average age of all your accounts?A long history is helpful (if it's not marred by late payments and other negative items), but a short history can be fine too as long as you've made your payments on time and don't owe too much.
- New Credit - 10%Your FICO score considers how many new accounts you have. It looks at how many new accounts you have applied for recently and when the last time you opened a new account was.The score assumes that if you've opened several new accounts recently, you could be a greater credit risk; people tend to open new accounts when they are experiencing cash flow problems or planning to take on lots of new debt.For example, when you apply for a mortgage, the lender will look at your total existing monthly debt obligations as part of determining how much mortgage you can afford. If you have recently opened several new credit cards, this might indicate that you are planning to make a bunch of purchases on credit in the near future, meaning that you might not be able to afford the monthly mortgage payment the lender has estimated you are capable of making. Lenders can't determine what to lend you based on something you might do, but they can use your credit score to gauge how much of a credit risk you might be. (For more on home loans, see 6 Tips To Get Approved For A Mortgage.)
- Types of Credit In Use - 10%The final thing the FICO formula considers in determining your credit score is whether you have a mix of different types of credit, such as credit cards, store accounts, installment loans and mortgages. It also looks at how many total accounts you have. Since this is a small component of your score, don't worry if you don't have accounts in each of these categories, and don't open new accounts just to increase your mix of credit types. (For information on reining in credit card spending, take a look at Take Control Of Your Credit Cards.)
What Isn't In Your ScoreThe following information about you is not reported to credit bureaus and is not reflected in your credit score:
- Marital status
- Age
- Receipt of public assistance
- Salary
- Occupation
- Employment history
- Rental agreements
- Participation in a credit counseling program
What It All Means When You Apply for a LoanFollowing the guidelines below will help you maintain a good score or improve your credit score:
- Watch your credit utilization ratio. Keep credit card balances below 15-25% of your total available credit.
- Pay your accounts on time, and if you have to be late, don’t be more than 30 days late.
- Don't open lots of new accounts all at once
- Check your credit score about six months in advance if you plan to make a major purchase, like buying a house or a car, that will require you to take out a loan. This will give you time to correct any possible errors and, if necessary, improve your score.
- If you have a bad credit score and lots of flaws in your credit history, don't despair. Just start making better choices and you’ll see gradual improvements in your score as the negative items in your history become older. (For more insight, check out 5 Keys To Unlocking A Better Credit Score.)
The Bottom LineWhile your credit score is extremely important in getting approved for loans and getting the best interest rates available, you don't need to obsess over the scoring guidelines to have the kind of score that lenders want to see. In general, if you manage your credit responsibly, your score will shine.
by Amy Fontinelle
Thursday, November 18, 2010
TAX Planning- We are planning taxes for you 2010-2011
As the year is closing towards the financial year end, following are some of the best tax saving investment options for the current assessment year [AY 2010-2011]. We are financial planners looking forward to serve you best Tax Planning services.
Brief introduction about the company, we are independent financial planners, known as CELEB FINANCIAL PLANNERS Global and not an agent or an advisor, our vision is to act as financial doctors to clients and diagnose the disease or problem in the existing portfolio, recommend and implement the best services to take your personal Networth to a next level altogether.
It is generally observed that during the last few months of a financial year people make last moment impulsive decisions to invest in tax saving instruments. In the process they may end up buying products that are actually not right for them. Tax planning is something that needs to be done a few months in advance so that one has ample time to understand & evaluate different options available to suit his/her financial situation. You can begin your tax planning now for the Assessment Year 2010-11. Following are a few simple tips for planning your taxes for this financial year:
I. Utilize the Income Tax exemptions
Section 80C
Under this section one can claim up to Rs. 1 lakh in deductions. The options in this section include
- Employee Provident Fund (EPF),
- Public Provident Fund (PPF) - up to Rs.70, 000 per annum,
- National Savings Certificate (NSC),
- 5-year bank fixed deposits,
- Life insurance policies,
- Equity-Linked Savings Schemes (ELSS),
- Unit Linked Insurance Plans (ULIPs),
- School fees, and
- Home loan principal repayment.
Section 80D
One can claim deductions up to Rs 15,000 incase you have taken a medical insurance plan for yourself or your spouse or dependant parents or children (and an additional Rs.15, 000 for your parents' medical insurance) under Section 80D for premiums paid. This limit has now been enhanced to Rs 20,000 for senior citizens on the condition that the premiums are paid via cheque.
Section 80DD
Under Section 80DD, expenses related to the medical treatment of a dependent having disability qualifies for tax benefits. This section allows deductions up to Rs. 50,000 or 75, 000 to be claimed depending on the severity.
II. Interest on home loan
Interest component of a home loan is allowed as a deduction under the head ‘income from house property' U/s 24(b) up to a limit of Rs 1.5 lakhs a year for a self-occupied house. The claim can also be made on loans taken for repair, renewal or reconstruction of an existing property.
III. Shuffle and switch strategy
Shuffling is a popular strategy that is used by ELSS [Equity Linked Savings Scheme] investors. They have a mandatory lock-in period of 3 years. Incase you have been investing an amount Rs 50,000 for last few years but don't have cash to invest this year, then you can easily redeem the investments made 3 years ago and re-invest that amount this year so as to claim the benefits. You need not pay any long term capital gains as you will be redeeming after more than one year. Hence you will be enjoying tax benefits without making any fresh investments. The only risk here is the NAV that can go up or down in the shuffle process which may lead to a small profit or loss.
Some fund houses also allow switch option for tax benefits. Suppose an investor with previous ELSS investments doesn't have the money to make further investment in current financial year. In such a case, he can consider switching it to a liquid fund and then back into the ELSS fund within a short period of time like 10-15 days to avail the tax benefits.
IV. Tax smart charitable donations
You can get a tax relief if you donate to institutions that are approved U/s 80G of the Income Tax Act. The rate of deduction is either 50 or 100 %, depending upon the type of the charity fund. There is no upper limit on the amount given to a charity. However, donations should be made only to the specified trusts and only donations of up to 10 per cent of the total income qualify for such deduction. Please note that tax exemption is only an added advantage of charity and this should not be the primary reason for doing so.
V. Divide your income
Generally, if you invest either in your wife's or child's name, then the income generated from these investments will be clubbed with your income & taxed accordingly. But, if you transfer money by way of a deed to a child who is a major i.e. over 18 years of age and invest in his name, then the income generated from this investment will not be clubbed with your income. Instead, it will be clubbed with the income of your child/wife and will be taxed accordingly. Cash gifts that are received from specified relatives are tax exempt and there is no upper limit. Also, cash gifts of any amount from anyone received during child birth, marriage or any other specified event are totally tax-exempt. But, any cash that is received from a non-relative where the value of gift is in excess of Rs 50,000 in a particular year will be considered as income and taxed accordingly.
In a nutshell remember the following:
- Combine Tax Planning with your Financial Plan for the year so that the products which you invest in will match your risk profile as well as your future goals
- There's no need to consider a home loan as a bad debt. Consider getting a loan for buying a home.
- Charity is good for both – the receiver as well as the giver. Do check on the validity and the receipts before claiming deduction u/s 80G
- Take advantage of the tax benefits under sections 80C, 80D and 80DD
- Insurance policies provide tax benefits on the premiums paid as well as on the returns received.
- By way of medical insurance, you not only take care of your family against medical expenses, but also receive a tax deduction u/s 80D
- Remember to file taxes on time
--
“The only way of finding the limits of the possible is by going beyond them into the impossible"
Thanks & regards
Ajit Panicker | Chief Financial Planner |CELEB FINANCIAL PLANNERS Global | +919811536424| ajitkpanicker@cfpglobal.com | www.cfpglobal.com
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Excellent story..modern day interview
This is a powerful message in our modern society. We seemed to have lost our bearing & our sense of direction.
One young academically excellent person went to apply for a managerial position in a big company.
He passed the first interview, the director did the last interview, made the last decision.
The director discovered from the CV that the youth's academic achievements were excellent all the way, from the secondary school until the postgraduate research, never had a year when he did not score.
The director asked, "Did you obtain any scholarships in school?" the youth answered "none".
The director asked, " Was it your father who paid for your school fees?" The youth answered, "My father passed away when I was one year old, it was my mother who paid for my school fees.
The director asked, " Where did your mother work?" The youth answered, "My mother worked as clothes cleaner. The director requested the youth to show his hands. The youth showed a pair of hands that were smooth and perfect.
The director asked, " Have you ever helped your mother wash the clothes before?" The youth answered, "Never, my mother always wanted me to study and read more books. Furthermore, my mother can wash clothes faster than me.
The director said, "I have a request. When you go back today, go and clean your mother's hands, and then see me tomorrow morning.*
The youth felt that his chance of landing the job was high. When he went back, he happily requested his mother to let him clean her hands. His mother felt strange, happy but with mixed feelings, she showed her hands to the kid.
The youth cleaned his mother's hands slowly. His tear fell as he did that. It was the first time he noticed that his mother's hands were so wrinkled, and there were so many bruises in her hands. Some bruises were so painful that his mother shivered when they were cleaned with water.
This was the first time the youth realized that it was this pair of hands that washed the clothes everyday to enable him to pay the school fee. The bruises in the mother's hands were the price that the mother had to pay for his graduation, academic excellence and his future.
After finishing the cleaning of his mother hands, the youth quietly washed all the remaining clothes for his mother.
That night, mother and son talked for a very long time.
Next morning, the youth went to the director's office.
The Director noticed the tears in the youth's eyes, asked: " Can you tell me what have you done and learned yesterday in your house?"
The youth answered, " I cleaned my mother's hand, and also finished cleaning all the remaining clothes'
The Director asked, " please tell me your feelings."
The youth said, Number 1, I know now what is appreciation. Without my mother, there would not the successful me today. Number 2, by working together and helping my mother, only I now realize how difficult and tough it is to get something done. Number 3, I have come to appreciate the importance and value of family relationship.
The director said, " This is what I am looking for to be my manager.
I want to recruit a person who can appreciate the help of others, a person who knows the sufferings of others to get things done, and a person who would not put money as his only goal in life. You are hired.
Later on, this young person worked very hard, and received the respect of his subordinates. Every employee worked diligently and as a team. The company's performance improved tremendously.
A child, who has been protected and habitually given whatever he wanted, would develop "entitlement mentality" and would always put himself first. He would be ignorant of his parent's efforts. When he starts work, he assumes that every person must listen to him, and when he becomes a manager, he would never know the sufferings of his employees and would always blame others. For this kind of people, who may be good academically, may be successful for a while, but eventually would not feel sense of achievement. He will grumble and be full of hatred and fight for more. If we are this kind of protective parents, are we really showing love or are we destroying the kid instead?*
You can let your kid live in a big house, eat a good meal, learn piano, watch a big screen TV. But when you are cutting grass, please let them experience it. After a meal, let them wash their plates and bowls together with their brothers and sisters. It is not because you do not have money to hire a maid, but it is because you want to love them in a right way. You want them to understand, no matter how rich their parents are, one day their hair will grow gray, same as the mother of that young person. The most important thing is your kid learns how to appreciate the effort and experience the difficulty and learns the ability to work with others to get things done.
One young academically excellent person went to apply for a managerial position in a big company.
He passed the first interview, the director did the last interview, made the last decision.
The director discovered from the CV that the youth's academic achievements were excellent all the way, from the secondary school until the postgraduate research, never had a year when he did not score.
The director asked, "Did you obtain any scholarships in school?" the youth answered "none".
The director asked, " Was it your father who paid for your school fees?" The youth answered, "My father passed away when I was one year old, it was my mother who paid for my school fees.
The director asked, " Where did your mother work?" The youth answered, "My mother worked as clothes cleaner. The director requested the youth to show his hands. The youth showed a pair of hands that were smooth and perfect.
The director asked, " Have you ever helped your mother wash the clothes before?" The youth answered, "Never, my mother always wanted me to study and read more books. Furthermore, my mother can wash clothes faster than me.
The director said, "I have a request. When you go back today, go and clean your mother's hands, and then see me tomorrow morning.*
The youth felt that his chance of landing the job was high. When he went back, he happily requested his mother to let him clean her hands. His mother felt strange, happy but with mixed feelings, she showed her hands to the kid.
The youth cleaned his mother's hands slowly. His tear fell as he did that. It was the first time he noticed that his mother's hands were so wrinkled, and there were so many bruises in her hands. Some bruises were so painful that his mother shivered when they were cleaned with water.
This was the first time the youth realized that it was this pair of hands that washed the clothes everyday to enable him to pay the school fee. The bruises in the mother's hands were the price that the mother had to pay for his graduation, academic excellence and his future.
After finishing the cleaning of his mother hands, the youth quietly washed all the remaining clothes for his mother.
That night, mother and son talked for a very long time.
Next morning, the youth went to the director's office.
The Director noticed the tears in the youth's eyes, asked: " Can you tell me what have you done and learned yesterday in your house?"
The youth answered, " I cleaned my mother's hand, and also finished cleaning all the remaining clothes'
The Director asked, " please tell me your feelings."
The youth said, Number 1, I know now what is appreciation. Without my mother, there would not the successful me today. Number 2, by working together and helping my mother, only I now realize how difficult and tough it is to get something done. Number 3, I have come to appreciate the importance and value of family relationship.
The director said, " This is what I am looking for to be my manager.
I want to recruit a person who can appreciate the help of others, a person who knows the sufferings of others to get things done, and a person who would not put money as his only goal in life. You are hired.
Later on, this young person worked very hard, and received the respect of his subordinates. Every employee worked diligently and as a team. The company's performance improved tremendously.
A child, who has been protected and habitually given whatever he wanted, would develop "entitlement mentality" and would always put himself first. He would be ignorant of his parent's efforts. When he starts work, he assumes that every person must listen to him, and when he becomes a manager, he would never know the sufferings of his employees and would always blame others. For this kind of people, who may be good academically, may be successful for a while, but eventually would not feel sense of achievement. He will grumble and be full of hatred and fight for more. If we are this kind of protective parents, are we really showing love or are we destroying the kid instead?*
You can let your kid live in a big house, eat a good meal, learn piano, watch a big screen TV. But when you are cutting grass, please let them experience it. After a meal, let them wash their plates and bowls together with their brothers and sisters. It is not because you do not have money to hire a maid, but it is because you want to love them in a right way. You want them to understand, no matter how rich their parents are, one day their hair will grow gray, same as the mother of that young person. The most important thing is your kid learns how to appreciate the effort and experience the difficulty and learns the ability to work with others to get things done.
Wednesday, November 17, 2010
Unique ID will help remove loopholes: Pilot
BUSINESS STANDARD
Mansi Taneja / New Delhi November 17, 2010, 0:25 IST
The Unique Identification number (UID) will help in addressing the loopholes in the system, including the mobile health segment, besides adding value to the existing mechanism, Minister of State for Communications and Information Technology Sachin Pilot said.
Speaking at a session in the India Economic Summit on ‘Shaping India’s Mobile Health Ecosystem’, Pilot said the government is open to discussions with state governments as well as private people to improve the mobile health system across the country.
“India in the coming years will able to provide the best possible healthcare at the cheapest possible price. This calls for coordinated engagement of the government and private sector in this price sensitive market,” according to Pilot.
The government plans to issue UID numbers to 600 million people by 2014. The project involves an expenditure of about '3,023 crore, which includes project components for the issue of UID numbers by March 2011, and recurring establishment costs for the entire project phase of five years ending March 2014.
“The UID will help in targeting leakages in the system, such as subsidy, the public distribution system (PDS) and kerosene, and make sure that the facility reaches the end consumer,” Pilot said.
“India is a price-sensitive market. Currently, 95 per cent of telecom revenue comes from voice services, which is rapidly moving towards data services. We will be able to provide the best possible healthcare services at the cheapest price. This calls for coordinated engagement of the government and the private sector,” he said.
Apollo Hospitals Operations Executive Director Sangita Reddy also said the UID could be beneficial in the mobile health system, as through it, the medical history of a patient could be maintained in a single card, which would help in a quick diagnosis of problems.
She also suggested improved efficiency of transactions and cost in healthcare service delivery. She added that the first stage of mobile health services could be provided at a nominal cost such as a dollar, which will enable maximum reach across the country.
The global mobile health technology market is expected at a growth rate of 25 per cent annually to $4.6 billion by 2014 from currently $1.5 billion, according to research undertaken by Price Waterhouse Coopers.
Telenor Group CEO and President Jon Fredrik Baksaas said India’s growing telecom sector has the potential to reach out to the sub-regional districts located at the periphery and the local panchayats.
Pilot further said there was a need to create customised services, by keeping in mind regional needs. The government intervention at appropriate levels was needed and there was a need for a symbiotic and transparent relationship between public and private players.
Jamie Ferguson, Executive Director, HIT Strategy and Policy Fellow, Kaiser Permanente, USA, added that there was a need to put in place the required infrastructure, financing based on pre-defined payments to professional healthcare service providers as well as a specific mechanism to customise data collection, starting with hospitals then reaching out to households.
David Aylward, Executive Director, mHealth Alliance, United Nations Foundation, Washington DC, stressed the need for trained professionals to make regular field visits to disseminate information and empower the poor to give them access to specialised healthcare services.
Tuesday, November 16, 2010
Bridging the GAP between the B-schools and the EMPLOYERS
The other day i was as usual discussing my thought process on the employment status in India, comparing it with the literacy in technical and management field in India.
My continuous introspection invites me for a discussion that there is a huge gap, there are lacs of students passing out of the management and engineering colleges, but are they employable?
if the various reports say that they are not employable, what are the reasons, the reasons which come to my mind, because of the experience i have had, while passing out of a B-school and getting employed in the biggest private sector bank in India, i found that there is a huge gap between the skills imparted to the students while in college and the expectations of the employer in terms of the roles and responsibilities given to the newly hired employee fresh from a B-school.
Can we bridge this gap?
Yes very much, by becoming a light ourselves, we at CELEB FINANCIAL PLANNERS Global would be more than keen to help such students and the employers from any diversified industry.
Ajit panicker
Director
CELEB FINANCIAL PLANNERS Global
mail me : ajitkpanicker@cfpglobal.com
My continuous introspection invites me for a discussion that there is a huge gap, there are lacs of students passing out of the management and engineering colleges, but are they employable?
if the various reports say that they are not employable, what are the reasons, the reasons which come to my mind, because of the experience i have had, while passing out of a B-school and getting employed in the biggest private sector bank in India, i found that there is a huge gap between the skills imparted to the students while in college and the expectations of the employer in terms of the roles and responsibilities given to the newly hired employee fresh from a B-school.
Can we bridge this gap?
Yes very much, by becoming a light ourselves, we at CELEB FINANCIAL PLANNERS Global would be more than keen to help such students and the employers from any diversified industry.
Ajit panicker
Director
CELEB FINANCIAL PLANNERS Global
mail me : ajitkpanicker@cfpglobal.com
Saturday, November 13, 2010
Selling INSURANCE is a noble profession
CFP Global
14.11.2010
Insurance is one highly paid job and one of the biggest income generating business for all those who are directly or indirectly involved with this profession. Talking about this profession and even having worked in this trade my experience has been really good as a salaried employee and at the same time now a practioner and self employed in financial planning, this give me the following every single day and one attribute in my personality get added because of it:
1.New Professional relationships
2.Excellent professsion of socializing
3.Great Netwoking business
4.New ideas and thought process gets ignited everyday
5.After becoming a regular visitor to the client , i get involved in making them take small decisions, so become an influencer.
6. Trust worthy friendship
7.New type of meals at different clients residence or office.
8.New learnings in varied industries,
9.Learnings about the national, international scenarios on different topics.
These are the few attributes which i add on a daily basis, many apart from these have not been discussed as the blog would fall short to write all advantages, what i basically want to express, is that the insurance agents, managers and officers are not DO NOT COME NEAR ME beings, they are all humans and believe in doing social service .
They are helping you understand the importance of insurance, which is , that the insurance need is not for the person who is living , it is for the people who would be left behind when the bread earner of the family has gone.
So friends let's welcome the people involved in insurance as social workers involved in a noble profession, because they are insuring your lives against probable unseen risk.
COMMUNICATION , an indespensable component to successful life
Every day, in many ways, we communicate with other people. Sometimes it is verbally, other times it is through the written word, and we even do it non-verbally through what we call body language. For that matter, we can use images to communicate, and even a scent can carry a message. If we expect to get our point, our message, our meaning across, it is important that we have good communication skills.
In order to work in an office, function at school or interact with people in any situation, communication is needed. Let us say that you are an engineer, and you have designed a new two hundred unit residential development. Well, to get approval to build that project, there are forms to fill out and permits to obtain.
You will need to fill in applications and probably write some sort of report to outline exactly what you intend to do. Maybe there is a swamp nearby, a beautiful pristine wetland that is home to endangered animals. If that's the case, people may protest your project; you may have to go before a city council or into court to argue that you should be allowed to build it. To do so, you will need to write up a clear, concise and easy to read report explaining every aspect of the development.
If a hearing is held, then you will probably have to get up in front of a crowd of people - some of them hostile - and verbally explain what you are planning, and answer questions. If you have pictures or computer graphics, and can show that your project will not hurt the environment, you will have a good chance of being approved.
On the other hand, perhaps you are engaged in something more mundane, like buying a car, or maybe a house. You will need to present yourself as speaking clearly, knowledgeably and with confidence. Here is where the ability to judge a person's attitude comes in very handy. If you are negotiating with a car salesperson, or a realtor or homeowner, and you ask a question that is something they do not want to answer, they may give off a subtle signal. A slight twitch of the eyebrow or the corner of their mouth; maybe they look down before answering. It can be any one of a number of things. The point is, it can be a signal to you that something is not as it seems.
On the flip side, if you are the salesperson, you will want to be able to speak or communicate in a way that answers a question, but does not leave you open to suspicion. A classic example is the old question about a house: "Does the roof leak?" And you reply: "Only when it rains". That kind of answer will sink your efforts at a sale. So, you have to learn how to put a positive spin on what you say or write. A house is not:"in the city," it is: "conveniently located to the vibrant downtown district."
When dealing with issues in your personal life, good communication is vital. If you are in a relationship with someone, communication is what keeps the relationship alive! More important than agreeing on everything is just the fact that you can talk, write, even IM each other and respect each other's views. As a relationship deepens and expands, children may come into the picture. Once you are a parent, you face the difficult task of (eventually) trying to communicate with a teenager. Shudder! A sub-species of humans that often communicates via grunts and head shakes - at least to adults.
If you are intent on convincing your son / daughter to not smoke, not do drugs, not drink etc. then very good communication skills are vital. And, you cannot only use the verbal skills. Teenagers are experts are tuning their parents' voices out. They have been hearing them since childhood, they can do it. You want to keep your teen from drinking and driving, talking is not enough. A pile of newspaper articles showing the horrid aftermaths of many such instances speaks volumes. There is the old saying: "A picture paints a thousand words." Keep that one in mind, especially in dealing with teens on many issues.
So, whether in work, in your dealings with life, or in your personal life; the importance of communications skills cannot be underestimated
.
In order to work in an office, function at school or interact with people in any situation, communication is needed. Let us say that you are an engineer, and you have designed a new two hundred unit residential development. Well, to get approval to build that project, there are forms to fill out and permits to obtain.
You will need to fill in applications and probably write some sort of report to outline exactly what you intend to do. Maybe there is a swamp nearby, a beautiful pristine wetland that is home to endangered animals. If that's the case, people may protest your project; you may have to go before a city council or into court to argue that you should be allowed to build it. To do so, you will need to write up a clear, concise and easy to read report explaining every aspect of the development.
If a hearing is held, then you will probably have to get up in front of a crowd of people - some of them hostile - and verbally explain what you are planning, and answer questions. If you have pictures or computer graphics, and can show that your project will not hurt the environment, you will have a good chance of being approved.
On the other hand, perhaps you are engaged in something more mundane, like buying a car, or maybe a house. You will need to present yourself as speaking clearly, knowledgeably and with confidence. Here is where the ability to judge a person's attitude comes in very handy. If you are negotiating with a car salesperson, or a realtor or homeowner, and you ask a question that is something they do not want to answer, they may give off a subtle signal. A slight twitch of the eyebrow or the corner of their mouth; maybe they look down before answering. It can be any one of a number of things. The point is, it can be a signal to you that something is not as it seems.
On the flip side, if you are the salesperson, you will want to be able to speak or communicate in a way that answers a question, but does not leave you open to suspicion. A classic example is the old question about a house: "Does the roof leak?" And you reply: "Only when it rains". That kind of answer will sink your efforts at a sale. So, you have to learn how to put a positive spin on what you say or write. A house is not:"in the city," it is: "conveniently located to the vibrant downtown district."
When dealing with issues in your personal life, good communication is vital. If you are in a relationship with someone, communication is what keeps the relationship alive! More important than agreeing on everything is just the fact that you can talk, write, even IM each other and respect each other's views. As a relationship deepens and expands, children may come into the picture. Once you are a parent, you face the difficult task of (eventually) trying to communicate with a teenager. Shudder! A sub-species of humans that often communicates via grunts and head shakes - at least to adults.
If you are intent on convincing your son / daughter to not smoke, not do drugs, not drink etc. then very good communication skills are vital. And, you cannot only use the verbal skills. Teenagers are experts are tuning their parents' voices out. They have been hearing them since childhood, they can do it. You want to keep your teen from drinking and driving, talking is not enough. A pile of newspaper articles showing the horrid aftermaths of many such instances speaks volumes. There is the old saying: "A picture paints a thousand words." Keep that one in mind, especially in dealing with teens on many issues.
So, whether in work, in your dealings with life, or in your personal life; the importance of communications skills cannot be underestimated
.
Friday, November 12, 2010
Difference of opinion at G-20 summit over what ails the global economy
| India disagrees that China's current, capital account surpluses are causing global predicament |
Seoul: As a further indication of the fact that the pre-Summit negotiations of the G-20 are not going very smoothly, India has said that “there are no universally agreed upon diagnoses of what ails the global economy.”
Prime Minister Manmohan Singh conveyed this to British Prime Minister David Cameron, and President Philip Calderon of Mexico on Thursday during his bilateral meetings with them. This indicates that it disagrees with the United States' perception that only China's current account and capital account surpluses are to blame for the global economic predicament.
Dr. Singh also met the Prime Minister of Ethiopia in a bilateral meeting.
According to informed sources, the final G-20 communiqué could run to about 70 pages, reflecting the divergent views.
It has been evident that far too many differences of opinion on key issues of who has to do what have emerged and delegates have even been heard to “raise their voices,” according to an informed source.
The main issue is an old one, namely, that the U.S. and its allies do whatever they want to and then expect others to adjust their policies accordingly. The American decision to pump in $600 billion over the next few months has left everyone jumpy as to the consequences for their economies.
Brazil has already spoken out sharply against this. A Chinese official said on television that if America catches a cold it can't look for Chinese medicines.
China has already taken pre-emptive action against capital surges by asking Chinese banks to deposit more money with the Central bank. Many G-20 members have already put sand in the machine so that destabilising dollar inflows do not cause problems for them.
As a result of the U.S. decision, there are not many takers for the latest American proposal which seeks, as it were, to walk on four legs. In a letter to the G-20, U.S. Treasury Secretary Timothy Geithner, along with Tharman Shanmugaratnam, Singapore Finance Ministerand Wayne Swan, Finance Minister of Australia, have spelt out the four things that the world needs to do.
First, they say, global economic growth must be strengthened; second, in a manner of reminiscent of national policies, they say, global growth must also be balanced across countries so that some countries do not grow at a breakneck speed, while others languish; third, the first two objectives require the world to create “a new framework for cooperation to allow exchange rates to reflect economic fundamentals and support needed structural reforms;” and fourth, no protectionism, please.
The first and the last items are the only ones on which there is no disagreement. But the second and third suggestions are causing problems.
Informed sources told Business Line that India is sitting pretty during all these negotiations as it does what economic theory prescribes, namely, run a deficit on the current account which is financed by a surplus on the capital account. This is in contrast to “some countries” which run a surplus on both accounts.
India is, therefore, focusing on development by asking the developed world to invest in infrastructure in the developing countries. This is a relatively non-controversial issue.
However, India is being asked to endorse the currency adjustment suggestions and is looking for alternative and more ambiguous wording.
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