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Investment Plan: Use the KISS Principle

Simple works. Complicated designs make your systems, your life decisions complicated. The US Navy discovered this simple fact in 1960, and what better way to remember the same but through an acronym:

KISS for “Keep It Simple, Stupid”!

Your lives need not be complicated. Your day-to-day life decisions need not go through a complex analytical process. Investment decisions, more so.

To make your investment decisions simple, here are some pro-tips:

  1. Do not invest in any device that you do not understand fully.
  2. Do not invest in policies that offer too many things. One policy, one offering. Let that be your mantra.
  3. Do not trust agents selling policies, and investment ideas blindly. They have their own agenda.
  4. Study. Google. Bing. Research. Spend at least one hour a week studying about personal finance. That is it. Take notes, if possible. A page a week. That is all.

Keep-It-Simple-Website.png

If the tips are self-explanatory, you need not read any more, and can better invest your time reading up something else. If not, read on:

Do not invest in any device that you do not understand fully. 

With the investment market maturing, we have a plethora of opportunities in the market. You have insurance policies, mutual funds, shares, future, options, ULIPs and tens of others types of opportunities floating all around. So, which do you invest in?

Each device serves some definite purpose, but if you think about it, you invest or spend your money in these devices for two specific purposes:

  1. Minimise risk: It may be health risk or death risk or accident risk. We want risk to minimised. Remember, risk can never be eliminated. (We would talk about risk more in subsequent articles.)
  2. Maximise return: You want to retire comfortably, and make your money do all the hard work. The harder your money works, the more are your returns, the more relaxed you would be.

Try and understand what purpose a particular device serves. Click here to know the purpose that is to be served by Insurance Policies. 

If any device “claims” to serve both the purposes – high return with minimum risk – be aware, and read the next point.

Do not invest in policies that offer too many things. One policy, one offering. Let that be your mantra.

There are these insurance policies for which you pay a high amount of premium, and they provide you both insurance coverage and also some nominal return over the tenure. Trust me, you would have done better to take a term insurance (life coverage) paying a fraction of the premium required for the all-offering-policies, and investing the remaining amount in a PPF (Public Provident Fund) account. [Read about Retirement Plan: Just PPF! by clicking here.]

Likewise, you have this Unit-Linked Insurance Plan (ULIP) which claims to provide investors “both insurance and investment under a single integrated plan”. Really? Just find about the administrative charges. In its stead, you would be better off taking a term insurance and investing the rest in Mutual Funds.

One device, one offering. Term insurance for hedging risk, mutual funds for healthy returns. No complications.

Do not trust agents selling policies, and investment ideas blindly. They have their own agenda. 

To be fair to agents, they have a family to run, and obviously they would push policies that maximise their return, their commission. These agents can be physical agents or online platforms. That does not mean that you do not consult them, if need be.

But just do not trust them blindly. Ask them questions like:

  • What are the assured returns?
  • What would be volatility like?
  • What are the inherent risks?
  • What are the administrative charges? Are their companies providing the same policies for a lower administrative charge giving a bigger bang for your buck?

But to ask these questions, and appreciate their dodging answers better, you need to:

Study. Google. Bing. Research. Spend at least one hour a week studying about personal finance. That is it. Take notes, if possible. A page a week. That is all.

Personal finance is interesting. That you are reading this, means you are interested. Who is not interested in money! Just read more. Take notes. Discuss with your peers. There is no shame in discussing mistakes you made, or learning from the mistakes of somebody else.

Not that complicated, is it now?

Just Keep It Simple. 

Amartya Dey, India

Other Similar Articles by the Author:

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Word: Schadenfreude

Schadenfreude [Noun]

Sentence: Finance Minister Sammy Wilson can bask in the approval of business leaders today, as his draft Budget received considerably more bouquets than brickbats. There was some sense of schadenfreude as private sector bosses can now look on and watch civil servants face the pay and recruitment freezes which have beset private business for close to two-and-a-half years.

(Source: www.belfasttelegraph.co.uk)

Meaning: Malicious joy; Damage-joy; Pleasure derived by someone from another person’s misfortune

How To Remember?

Whenever you hear the word “Schadenfreude”, imagine a psychiatrist named Freud (Sigmund Freud was actually an Austrian neurologist and the founder of psychoanalysis), who is sitting by his table and laughing at the troubles of his patients. Why, you ask?

The more problems they have, the more mentally afflicted they would be, and the more would be his income from their frequent visits!

Remember thus!

For more words, click here! 

Schadenfreude

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Org.Schema: Do not hire!

In the article “Org.Schema: Creating Redundancies“, I argue how for every position, you need to have a succession plan. You need to prepare the second employee, through job rotation, and I have conveyed that message through a case study.

Currently, I am in a job profile which also includes taking care of physical assets alongside helping my organization appreciate its human capital. The physical assets side of my profile has helped me appreciate some simple truths which may well be applied even in the case of human capital:

Do not invest in assets which you cannot possibly maintain. 

There is this tendency in large organisations to invest in large physical assets, larger even relative to their requirement. The asset does not receive the attention it deserves, and is left to decay with zero maintenance. Soon enough, it becomes a liability.

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Gif Credit: media.giphy.com

Because it is their in the books, and although the organisation may not be using it, still the depreciation costs are helping it “save” some taxes, although it isn’t really saving. So you need someone to just keep a track of the same, maybe invest in some security for ensuring that the asset is not misused in any way – BIG COSTS.

In the case of human capital: Do not hire, if you cannot assure the welfare of the employees. If you cannot ensure that they are put into proper projects or work that fit in with their career aspirations.  If you cannot provide good learning and development opportunities. If you cannot provide safety and security to the families of your employees.

Do not hire. Because in the long run, not only would those improper hires suffer along with their families, but also the organisation which may well be the biggest loser.

Cut off the extra fat, if you cannot possibly burn it. 

Having worked in two Public Sector Undertakings (PSUs), I have understood that one of the biggest strengths of the PSUs is the amount of land they have under their possession. But they do not always require that amount of land! And they spend enormous amounts of money on litigation, security and boundary walls to protect that. Wouldn’t it better to sell those extra land, and be asset-light when you cannot possibly put the extra land for the creation of organisation-value?

On the human capital side: Use your human capital for value-creation, and if you cannot, actively train & develop them or help them get more rewarding careers in another organisation. Your organisation would benefit much more than those employees. The employees would thank the organisation for not killing their careers.

But first, DO NOT hire if you cannot buy the right assets at the right time for the right amount at the right cost. 

You would not have to face the two problems listed before, if you just buy the right assets at the right time for the right amount at the right cost. Because of the right amount, the assets would be maintained. And no need for shedding off the extra assets, because you would again have the right assets for the right amount, right? (Too many rights, the lefts would mind!)

On the human capital side: Hire right. Hire trainable employees, who can add value not only in the present but also in the future. In this VUCA (Volatile, Uncertain, Complex & Ambiguous) business environment, you do not need the best for the present, but best for both the present and the future. Having the skills to learn both easy and fast (the motto of this blog), and having the right attitude to keep on learning always. 

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Comic Courtesy: dilbert.com

What other variables do you think affect power relations? Share your thoughts in the comment section below.

Amartya Dey, India

Other Articles by the Author:

Word: Obstreperous

Obstreperous [Adjective]

Sentence: The nineteen‐sixties, that obstreperous decade in the international art scene, saw the rise and fall of several movements, each new style following hard upon the heels of the other. It was a great opening‐up period, beginning with pop art, followed by op art, the various forms of minimal sculpture, kinetic art, the whole art‐and‐technology syndrome, multimedia extravaganzas, funk art and the beginnings of conceptual art, in which “ideas” about works of art triumphed over the physical forms themselves. (Source: www.nytimes.com)

Meaning: Noisy, clamorous and difficult to control

How To Remember?

Obstreperous” may be thought of as a combination of the words “Obstruction+ Onerous“. Think about an unruly kid who creates obstruction by being very loud and clamorous, making him very difficult to control. 

Remember thus!

For more words, click here! 

calvin_bad_mood_answer_1_xlarge

[Calvin appears to be in a obstreperous mood. Beware!]

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Questioning Outsourcing – Part I

A boss of mine once famously said in an audience of two, how “outsourcing is the new normal“. You have a special, once-in-a-decade project? Outsource it. Do not have in-house expertise? Outsource it. No idea about how to go on about it? Well, again, you may just outsource it.

Outsourcing.jpg

Outsourcing helps an organization keep its immediate costs in check, also while reducing potential future liabilities. You do not have to worry about a lot of other peripheral things too if you outsource the work – medical benefits, salary slips, performance appraisal, and a lot more!

But while you do not worry about these peripheral things and rising employee costs, that also means letting go of certain amount of control that an organization might have to retain so that it has the requisite talent/skill pool for gaining and retaining competitive advantage in a fierce market.

These aspects raise certain pertinent questions:

  1. What do you outsource?
  2. How much do you outsource? Fully or partially?
  3. To whom do you outsource?

There are no correct answers. The answers would change vis-a-vis the context of the business challenge at hand. In this series, we would try to answer the questions and more.

Would love to know your opinion on the above questions. What do you think about them?

Amartya Dey, India

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Stocks & Shares: Looking at Essel Propack

Essel Propack claims to be “the largest global specialty packaging company in the world”. Tell me, which product does not need packaging! Every product does.

ess

Essel Propack provides packaging solutions not only to Beauty & Cosmetics companies, and  pharmaceutical companies, but also to the food packaging industries.

Now what got me interested in EP? Two news points: 

  • A huge drop in crude oil price has benefited many companies from the industry, as plastic is derived from by petroleum refining products. Lower the cost of oil, lower is the cost of plastic raw materials used across product manufacturing units to produce finished goods. 

  • Essel Propack, the world’s largest laminated tubes manufacturer, is understood to design and manufacture tube packaging requirement of Patanjali, which is growing in triple digits and is expected to touch Rs 10,000 crore turnover in the current fiscal.

Additionally, if you look at the fundamentals, it does seem like pretty good, if not great, investment opportunity given the abundance of over-valued stocks around us. A P/E ratio below 21 in this investment climate seems pretty decent.

What do you think? 

P.S.: At the time of writing this blog (end of day 4th July, 2017), the share of Essel Propack had been trading at Rs. 242.00 in the NSE.

Word: Petrichor

Petrichor [Noun]

Sentence: Publishing in the journal Nature in 1964, Bear and Thomas proposed a name for the scent brought on by rain. They called it “petrichor,” a blend of the Greek words petra, rock, and ikhor, the blood of the gods in Greek mythology. But the scientists acknowledged that they were not the first to identify the stormy smell. They were not even the first to extract it. In fact, what they had dubbed petrichor was already a signature fragrance produced in Kannauj. Extracted from parched clay and distilled with ancient techniques, it is known as mitti attar—Earth’s perfume. (Source: www.theatlantic.com)

Meaning: The pleasant smell that frequently accompanies the first rain after a long period of warm, dry weather

How To Remember?

Any word having “petra-” in it, has something to do with rocks. For example, petroleum refers to “rock oil”. Thus, petrichor too has something to do with rocks. And “ichor” refers to the fluid that flows through the veins of gods in Greek mythology.

Picture fresh rain droplets on rocks, and imagine that wonderful smell which emanates then – a serious cure for bad mood.

Remember thus!

For more words, click here! 

Petrichor1.gif

Gif Credit: www.tumblr.com

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PMP: Project versus Operations

While both projects and operations are led and executed by “people“, and both add “value” to an organization, projects and operations are two different exercises.

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Comic Credit: nickandzuzu.com

  • Projects have a definite beginning and a definite end. A project does not keep on going. There is a start and a finish. Not so with operations. Operations are activities which are ongoing in nature. You complete one cycle to start another. It goes on!

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Picture Credit: www.wgsn.com

  • Ralph Lauren famously said: “You have to create something from nothing.” While projects do not normally entail any demand so dramatic, every project manager has a measurable and unique something to deliver at the end of the project delivery time. For example, a team might be entrusted with the job of coming out with the design of an electric car. There would be a definite time-frame within which the team would be expected to deliver the design – a measurable and unique something. Now this would be a project.
  • Again, once the design and other parameters have been fixed, suppose the company starts manufacturing the electric car after sufficient market research (another project) which show that the endeavour would be profitable. The manufacturing would be an “ongoing” process right. One after the other, the electric cars would be manufactured and sold off. This entire process would come under the ambit of “operations“.

A simple summary:

Project versus Operations.png

More articles on Project Management:

PMP: 3 Must-Haves to be a Great Project Manager

Great project managers are rare, but hey, they are there. And they are valued because they possess the right knowledge, perform efficiently, and marshal their troops  effectively showcasing superior personal skills.

Yes, if you can garner the right amount of the three must-haves listed above, no one can stop you from being a great project manager (PM).

The must-haves are summarised below:

Must haves to be a Great PM.png

 

Word: Verbiage

Verbiage [Noun]

Sentence: Information overload is everywhere, from non-stop news to rat-a-tat email inboxes. At the receiving end of this deluge of verbiage is the human brainyour brain— metaphorically endowed with a vacuum cleaner that sucks up information; a container for short-term memory; a blender for integrating information; a memory bank for storing long-term information; a garbage disposal for getting rid of information; and a recycling machine extraordinaire. (Source: hbr.org)

Meaning: Containing a lot of unnecessary words; Excessively lengthy or technical

How To Remember?

Too many “verbs“, too many words! And we don’t like too many unnecessary words, do we now?

Remember thus!

Synonyms?

Verbosity; Prolixity; Superfluity; Redundancy.

Antonyms?

Brevity; Pithiness; Succinctness.

For more words, click here! 

Verbiage

Picture Credit: www.askingsmarterquestions.com

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