inscriptions 16

WALL NO: 3 PANEL NO: 4 6 January 2017

INSCRIPTIONS 16 TRUTH NEVER FADES

HIGH LIGHTS OF THIS ISSUE

1) SCULPTOR INSCRIBES: DISCIPLINE 360

2) GURUS SPEAK: NET WORTH METHOD FOR LIFE INSURANCE EVALUATION


R.GOPINATH

[email protected]

I “DID” IT

1) SCULPTOR INSCRIBES

mailto:[email protected]

mailto:[email protected]


I “DID” IT

One young parent came to me recently, complaining that his 8 years old boy is not concentrating on studies. He is not disciplined. He is always whiling away his time watching some comic serials on TV, or on youtube, has too many friends for his age. He does almost everything else other than his studies. The boy according to father is brilliant. Even if he studies for a few hours before the exams he scores well. If only he studies his subjects regularly then he will be school topper. He asked me if i can counsel his son and advise him the importance of education, career, future and all.

I did not venture advising the young boy, instead i thought i will spend some time with the parent only and see if i can help the family to resolve an important issue that is bothering them. This article has its manifestation from that episode.

First let me define what is Discipline. When our actions are in total alignment with what we had planned to do, that quality is called discipline. When we follow someone else’s advice or instructions that quality is called obedience. Pictorially Discipline is:


One of the wise saints Thiruvalluvar had written the epic “Thirukkural” about 2500 years ago. That scripture contains 1330 poems (in couplet format) of worldly wisdom on various topics. I quote from one such couplet here:

For any human being life is the biggest possession, therefore he should always protect it well. But in the above mentioned poem Thiruvalluvar says that discipline has to cared for and protected more than what a human being will do to protect his life. Why so?


Look at this picture:

This shows a tapering cone. Let me explain this picture:

Every human being is endowed with energy. We are a store house of multi kilo watt energy. But it is potential energy. For example our knowledge, intellect, creativity and so on on and on. This energy is sufficient to even transform a country, what to talk about transforming self. But mind you it is just potential energy, that can be converted into kinetic energy triggering movement. For example the fuel in the fuel tank of a motor car. This is like the coal thrown into a steam engine which moves the train

What converts this movement is “DESIRE”. Without desire this energy will remain dormant inside the self. Desire ignites this. Desire for bigger levels of life style, in Career, business ambitions, are like big fires. The velocity of our movement is directly proportionate to the intensity of our desire.


By and large a majority of the population do have a desire for improvement in their lives. What gives a path to this movement is our “INTELLECT”. Our intellect suggests to us the path to be taken to fulfil our desire. For example the intellect guides a person that he should pursue textile business, and he should focus on wholesale dealership. A life insurance agent desiring to become a Million Dollar Round table member (MDRT) his intellect gives him a path that he must develop 40 new contacts every month, pursue with them to make 30 appointments, should explain with reasons after collecting data/information for 20 people and should be able to make 10 deals every month with a certain average size of the policy he will qualify for MDRT.

INTELLECT designs the track for the train to reach its desired destination.

The tip of the cone is “DISCIPLINE”. This quality alone helps the train to stay on track. The small group of such people who have this quality keep the train on the track, while a vast majority of the people who lack this quality get off the track and get back to track often and on. That is why they do not reach their destination or even if they reach it is vey late by then.

Let us get back to the picture that we had seen in the beginning.

The plan was designed by us, they why would we not stick to the plan. We desire to reach there, we know what will take us there, but then why would we often get off the track and delay or even deny our reaching the desired destination.

What distracts us? Why would a person who has a list of 20 prospects, instead of calling them to seek appointments, postpone calling them? Or why would he be watching a movie during that allocated time? Or why would he be busy uploading selfies on FB? at that time.


To understand this phenomenon, let us start with a hypothesis,”Our body is a tool of our mind” Our hands, legs, limbs, arms, eyes every part of our body is a like a tool of our mind. It uses it to achieve what it intends to.

So we must understand how our mind functions, then only we can control our mind that controls our body that acts to produce the results that we achieve.

Let us assume our mind a vast space. Like the space in this universe. Our mind contains infinite number of things, like our experiences, information about things, memories, records of our weaknesses, our strengths, emotions like anger, love, and so on. Even though it contains almost infinite number of records and things at a given moment it can handle only one, two or a very few number of things.

How does it handle things?

The mind is operational by the principle called “Awareness”. Let me explain this with the picture shown below. Assume that the awareness is like a big spot light, as we turn this on some thing or some record, that gets illuminated, visible and the mind is busy handling that.

The following pictures show on a sample basis how our awareness illuminates things and we get busy handling them. Mobile phone, Social media videos, movies, and a few other samples. All these are there in the space of our mind and many more also. The same is the case with other people also. But because we turned the spot light on phone, it became visible and it invites us to handle it. The pleasure of making calls to our friends, or open an app in that, or see an email, or respond to a message. Another person whose mind also contains phone, at that moment their spot light was on a text book that contains lessons of physics was not handling the phone, because it was hidden in the space one among so many other things in the space.


The very knowledge about the functioning of our mind will sensitise us to turn the spot light called awareness on the items in our plan of action towards our goal and keep us aligned with the pan. But it is not that easy for us now. It is easy for wise people, not for us. Why so?

Because we have been allowing our awareness to wander and highlight the pleasure of handling things which are not in the plan for many times in the past. As as the saying goes “You become an expert in things that you practise often, because it has become a habit now and no more a cognisant action” We have been unknowingly practising distraction from our plan by turning the spotlight on things that are not in the plan. By doing this often we have made it into a habit.

When we handle things which are not in our plan, we get less time, less resources to execute our plan. If the weeds get more water the crops are deprived of that much and they grow weak. Disciplie is a state when the picture appear likes this:


Indiscipline is also a form of concentration but on useless things. It will appear like that this.

If we have developed an habit of indiscipline we need now create an habit of discipline. How to create a habit?

How do pedal bicycle for 10 kilometres easily nowadays. We started riding 100 meters at one time and then 500 meters and then a kilometre and then two and so on, now it is 10Kms. The same way we will make it a habit to get aligned with our plan.

What are the major distractions today? What derails us often. Let us start moving away our spotlight awareness on them for a little while and then for some more time till a time that we know we turn on the spot light on them only when we want to.

For example a few decisions in that direction: One by One

1) we will not touch the mobile phone while we are eating our BF/Lunch/Dinner. Even if it rings we will ignore it.

2) We will not touch the mobile pone, laptop, Ipads/tabs while we are speaking to our spouse and children.

3) We will remove all push alerts and notifications alerts in our mobiles, laptop and other devices.

4) We will visit social media networks only at times that we have allowed for that purpose and will not be 24 hours online.

5) We will reply/respond to messages only at certain frequencies and need not respond instantly.


And in the same manner all other things that we feel that we are getting distracted with, or those that take away part of our time and resources to things not in our plan.

Slowly we will escalate all the above mentioned points.

Then at one point when we have become experts in turning on spotlight awareness then we will restore all the push alerts and notification alerts but will not respond to the alerts, This is to test our habit of aligning with our plan.

While a vast majority of the people dream about better lives only a decimal percentage of them realise it. Because if you see the cone it tapers up and only those at the top of that cone who are disciplined get to reailse their dreams.

Please be aware that your capacity to be disciplined not helps just you but also your spouse, children, family, company, society, the nation and God himself. The vast energy hidden inside us when gets converted into kinetic energy can transform countries and make our lives and others around us a paradise.


NET WORTH METHOD FOR ESTIMATING LIFE INSURANCE NEED

2) GURUS SPEAK


WEALTH THAT GROWS AND LASTS FOREVER

PRINCIPLE NO: 6“FINANCIAL PYRAMID”

“PROTECTION- THE FOUNDATION”

continued from the previous issue [email protected]

One of the primary methods of assessing the insurance cover a person will require is called “Net Worth” method. Net Worth is the difference between the assets a persons owns and the liabilities he owes. Let us start with the primary concepts related to Accounts and Finance.

There are 5 elements of Finance, just like there are 5 elements of Nature. The 5 elements of Finance are:

The details of Income and expenses are sown in the Profit and Loss Account (P&L Account) and the details of assets a liabilities are shown in the balance sheet. That is why these two statements are considered as the eyes of accounts by the Chartered Accountants. The cashflow statement is the heartbeat of finance. It takes a planner to draw that, because it needs some estimates about the future commitments and the maturity of the assets also.


Out of these, in a personal financial situation, Income is generated by a human being by using his body, mind and time. There can be other sources of income as we have seen in A/H formula. The expenses of the person can be capital expenses and revenue expenses. The details of the expenses can be read as seen in the capital need analysis.

Let us have a look at overview of a personal balance sheet of a person:

This indicates that there are only two ways in which assets can be purchased 1) by incurring liability (Examples: housing loans, mortgages, motorcar loan etc.) and 2) by the excess of income over expenses in that year or previous years.


In my experience i have seen a major portion of the income people devote to acquiring personal assets. These are assets which are bought for use, not intended to sell. The primary reasons for buying these assets are 1) Comfort, 2) Image and 3) Happiness. For example a person may buy a car, for the comfort that it gives. A person might buy a costly wrist watch, that it gives him a good image in the society or someone might buy jewellery because wearing them makes them happy. Even though these things can be sold later to make some cash out of it, they were not intended to be sold. Such assets are “Personal assets”

Now let us take a specific case as an example and see how much Net worth that needs to be covered

Mr Kumar, his age is 42, He is a businessman, his wife is a home maker. They have two daughters.

His P&L A/C :


Now let us look at his Balance Sheet. But before that, let us take a few explanations into consideration:

Whatever we consider as our responsibilities, Accountants account them as our liabilities in our balance sheet. Here in this case we have considered some of the major responsibilities of Mr Kumar. Like for example the cost in present value of the education of their children is estimated as 50Lakh (5M), The amount to be provided for their marriage functions is estimated as 50Lakhs (5M). The settling down amount shown in this balance sheet pertains to that amount that he needs to set up a clinic in for their daughter who wants to become a Doctor, that is estimated as 1Crore (10M). Even for other persons also there can be some commitments that they need to fulfil that their children will settle down in life.


Now we notice that the liabilities are in excess of assets by 1.35 Crore (13.5M).

There are two ways to balance this balance sheet, 1) By reducing the liabilities. On discussion with Mr Kumar on item by item in the balance sheet, we agreed that it is not possible to reduce any portion of it. Now the only option available is 2) to increase the assets. As we had seen earlier that assets can be acquired only in two ways 1) By liability (availing loans/credits) or 2) by Net Profits of the previous year. In this case it is just 24L (2.4 M). This is not sufficient to balance the balance sheet. The only way to balance this is by buying a life insurance cover of 1.35Crore (13.5 M). By doing so we can instantly balance the balance sheet.


His balance sheet after availing the life insurance cover for 1.35 Crores (13.5 M) will appear like this:

In the next issue let us see a detailed analysis of this balance sheet, in terms of solvency ratios, the types of assets.


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inscriptions 16

Economy & Finance