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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Updates, Enough and Club 99

Posted by Muthu on November 20, 2012

You would have been hearing about ‘Fiscal Cliff’ in US. I read a nice joke about this in the net. To quote: “We are heading for a fiscal cliff with a guy whose campaign slogan was forward”. 

Theoretically both US and India have the same freedom of speech guaranteed by constitution. But look how 2 girls were harassed by Maharashtra police for an ordinary remark. I could not stand watching the TV on Sunday. Death doesn’t make some one so good and extra ordinary. In India, popularity or crowd is never synonymous with quality or substance.

You would have been receiving communications (inbox flooded:-)) about change in KYC norms. When you did KYC earlier, we told you that it is once in life time. Now they want to it be done again for people who did KYC before January 1’st 2012. It is now said again that this is once in life time:-) Multiple identification proofs, address proofs, different requirement for different agencies… this is how India would be.

Firstly you ignore the flood of mails and sms on the above issue. This will not affect your existing investments, SIPs, future redemptions etc. Any new investment in the existing funds or fund house also would not be a problem. Only if you want to invest in a new fund house (which is not part of your existing portfolio), then this new KYC procedure is must. This rule is effective from 1’st December 2012.

However as a matter of caution and wanting to be pro-active, we would like to initiate this procedure for all our clients. We would start this some time in December and want to finish it for all clients before the current financial year, March 31’st 2013. Either me or my colleague Partha would co-ordinate with you in this regard.

Fidelity is being fully absorbed into L&T and the whole process would get completed by this month end. As we mentioned earlier, we suggest continuing your investments in the Fidelity (now L&T) schemes.  There has been no performance detoriation during the transition period. With a strong fund management team now in place at L&T, we believe that good performance would continue in future too. At the same time, we are closely monitoring these schemes just to be sure that there are no unpleasant surprises for our clients who have invested in Fidelity schemes.

In the ongoing clash between FM and RBI, I feel what RBI doing is appropriate. FM represents the voice of the ‘captains’ of Industry. RBI has to equally think about the rest 99% of the population who are being chocked by the inflation. Despite making EC a 3 member body (as Narasimha Rao couldn’t stand Seshan), it is functioning effectively and impartially. Undeterred, the Government wants to now make CAG a 3 member body. Who knows? Irked with RBI, FM may consider changing RBI in such a way, it has multiple governors:-) 

In general, our community, financial services industry, especially planners and advisors scare you a lot. Magazines, journals and blogs try to scare you as how nothing is enough for our future. Many readymade calculators would give that we need some thing like Rs.30 crore for retirement etc. While calculating, the school fee would be Rs.10 lakhs per annum, the higher education cost would be that of Harvard or any other Ivy League institute, cost of daughter’s marriage would be Rs.50 lakhs at current cost etc.

The assumptions are mostly exaggerated. Even now many good schools in Chennai charge only 30K to 50K a year. When you question the planner, they may quote the cost of  studying in an international school and having extra curricular activities like Polo. Ivy League is not the only place for higher education. Even accounting for inflation, the higher education cost assumed by planners are hugely over stated.

In a middle or higher middle class household, one doesn’t need Rs.50 lakhs for conducting marriage today. Going forward, in the decades to come, cost of marriage for parents of daughters may be nothing and parents of the son may have to shell a fortune to get a girl of their choice:-)  I feel that all my savings and wealth accumulation would just be sufficient for Vedu’s marriage:-) 

Our earlier generation had little of what material wealth we have now but still took care of us well and gave us a good education. You know how much I encourage savings, investments and not having debt. Once a person has life cover, medical cover, emergency fund, savings what is possible for him is good enough. There has to be a balance between current spending and future saving. I feel that a minimum of 25% of one’s income needs to be saved. The percentage would go higher for high income people and lower for the low income ones. The rest of the money is for current spending and EMI:-) 

‘Growth’ and ‘More’ is the way of our life. People with net worth of Rs.10 or 20 or 30 crores also tells me that when they achieve X amount which is usually 5 times more of their existing net worth; they would feel contended and happy. If some one is not contended at Rs.20 crore net worth; it is difficult to assume that he would say ‘enough’ when he reaches Rs.100 crores. 

The more money we have, we want more. There is a frightening thought that moment we feel contended, we would start to decay. And we never question these assumptions.

 I’m not against some one aspiring for more. But that has to be with the feeling that “what I have is enough and if my effort to earn more doesn’t fructify, I’m absolutely fine with my present situation.” Once we’ve enough, we some time take unnecessary risk for more. Adam Smith has put it so well:

“Examine the records of history, recollect what has happened within the circle of your own experience, consider with attention what has been the conduct of almost all the greatly unfortunate, either in private or public life, whom you may have either read of, or hear of, or remember, and you will find that the misfortunes of by far the greater part of them have arisen from their not knowing when they were well, when it was proper for them to set still and to be contented.”

Incidentally our client Mr.L.Suresh shared the below story with me which very well connects what we were discussing above.

Once upon a time, there lived a King who, despite of his luxurious lifestyle, was neither happy nor content.

One day, the King came upon a servant who was singing happily while he worked. This fascinated the King; why was he, the Supreme Ruler of the Land, unhappy and gloomy, while a lowly servant had so much joy. The King asked the servant, ‘Why are you so happy?’

The man replied, ‘Your Majesty, I am nothing but a servant, but my family and I don’t need too much – just a roof over our heads and warm food to fill our tummies.’

The King was not satisfied with that reply. Later in the day, he sought the advice of his most trusted advisor.

After hearing the King’s woes and the servant’s story, the advisor said, ‘Your Majesty, I believe that the servant has not been made part of The Club 99.’

‘The Club 99? And what exactly is that?’ the King inquired.

The advisor replied, ‘Your Majesty, to truly know what The Club 99 is, place 99 Gold coins in a bag and leave it at this servant’s doorstep.’

The King did as advised by his advisor.

When the servant saw the bag, he took it into his house. When he opened the bag, he let out a great shout of joy. So many gold coins! He began to count them. After several counts, he was at last convinced that there were 99 coins. He wondered, ‘What could have happened to that last gold coin? Surely, no one would leave 99 coins!’ He looked everywhere he could, but that final coin was elusive. Finally, exhausted he decided that he was going to have to work harder than ever to earn that gold coin and complete his collection. 

From that day, the servant’s life was changed. He was overworked, horribly grumpy, and castigated his family for not helping him make that 100th gold coin. He even stopped singing while he worked.

Witnessing this drastic transformation, the King was puzzled. When he sought his advisor’s help, the advisor said, ‘Your Majesty, the servant has now officially joined The Club 99.’

He continued, ‘The Club 99 is a name given to those people who have enough to be happy but are never contented, because they’re always yearning and striving for that extra 1, saying to themselves: ‘Let me get that one final thing and then I will be happy for life.’

Thank you Suresh. I enjoyed the story and would like to share your (email) signature line here. “The best way to have your friends get in touch with you is to get famous. For losers, there’s always Facebook.”

4 Responses to “Updates, Enough and Club 99”

  1. Vikas said

    Very nice article indeed… as always… But i don’t understand why some people are against facebook! 🙂

  2. Ash said

    KYC again and in person! Wha? BTW I say marital status and income networth fields in the KYC form. Why do they need to know my networth and income details? Will this not be misused? WHy should I give the right numbers? These minute details scare me…

  3. Vijay said

    There are some in world where only too much is ever enough, money, x, bandwidth, capacity etc.

  4. sendil said

    the life line of this story is really the best, s it happens with everyone and at every stage of life

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