Category: Sales

Investing at an Early Age

I was about to leave office when a junior colleague came to me seeking help in financial planning. Though I was in a little hurry I couldn’t stop myself helping him with my suggestions pertaining to financial planning. I am in my mid 30’s and now sometimes I think I should have started financial planning a bit early in my life and could have accumulated a substantial wealth till now. Saving and Investing at an Early Age is always difficult as we have so many temptations around us viz branded clothing, electronic gadgets or freaking out with friends etc. By the time people realize the value of savings and investment they are hardly left with time for the magic of compounding to make substantial additions to their investments. Here you can read why compounding is known as the 8th Wonder of the World. Following are some simple but powerful tips to save and start Investing at an Early Age and at any age: Understand You are not Going to Work Forever: Average life expectancy in India is around 67 years and if you start working at an age of 25 years you will have 35 years to work and plan for your life post retirement. One can’t plan his retirement at an age of 45-50 and even if one plans he will surely land short of money required to maintain a similar life style post retirement. The Sooner the Better: The sooner one starts investing the better the returns would be as the compounding will not add but multiply the return on investment in long run. Start with a Small Amount: You can start with a small amount but keep increasing the investments every month or quarter by 5-10%. This way you will be able to manage your expenses efficiently and will be able to utilize the funds in a better way. Have a Financial Goal: Have a financial goal before starting investing. Without a goal it will be like shooting without an aim. Financial goal will help you decide the amount of money you will need to invest, type of fund and tenure of the investments. Diversify: As they say one should not put all eggs in one basket similarly one should not invest all his money in a single or similar kind of funds. There are various Investment Avenues wherein you can invest your money e.g. Debt funds, Equities, Mutual Funds etc. Understand the risk associated with different investment funds before making any investment. Education Loan: If you have taken an education loan don’t rush to pay it fast. Banks offer education loans at discounted rates and there are many investment avenues which offer higher rate of return than the rate of interest charged by banks on your education loan. The RoI will further discount your education loan. Insurance Planning: Insurance is amongst most important investment avenues these days as it not only insures your life against any peril but also helps you make a big corpus in long term. The cost of insurance is lesser if you buy insurance at younger stage of your life and goes on increasing as you grow older. High Risk Appetite: At young age people have time in hands and their risk appetite is usually high so one can invest in funds with high volatility but high returns and make good fortunes in long run. But this luxury ceases to exist as you grow old. There are some temptations which attracts people to commit Beautiful Mistakes without worrying about their ill effects on their financial health in long term. One should avoid spending or spend carefully on the following: Credit cards/ Personal Loan: Credit cards offer hassle free shopping and are user friendly as you don’t have to pay in cash and offer to buy stuff even if you have a nil bank balance. This is where one need to be careful as people tend to spend more and impulsive buying usually is of no use and they end up buying products which will be of little utility. Similarly Personal loans comes with very high interest rates and people end up paying substantially very high than the actual loan. Though Credit cards and personal loans help to meet sudden expenses but after all you have to return the money to the bank and even an extra spend of one single time can severely affect your financial goals. Electronic Gadgets: Youngsters love to buy expensive gadgets with maximum no. of features/apps. A high resolution DSLR camera does not mean it will click better pictures. If you know how to manage shutter speed, ISO, aperture etc. then even a simple camera can click good pictures. A mobile with 256 Gb memory with 40 MP camera and 1000s of apps is of no use if you are keeping even those pictures/videos which you would have hardly watched if you had phone with lesser memory. Similarly if you are not using all the on your mobile, there is no point in spending money on such expensive mobiles just for the sake of show ups. Same goes for other gadgets. Understand your requirement and then only buy. If you can’t take care of your electronic gadgets or you get bored very easily then you must make it a point not to buy expensive ones. Car: Car is a luxury but also a big liability. Entry segment car costs more than Rs. 3 Lacs and if you take 100% loan for 5 years you will need to pay around Rs. 6600/- per month as installments for next 60 months. Plus add another Rs. 5000/- per month as running cost of the car to it. The total cost per month would be Rs. 11,600/-, and in 5 years you would spend 6,96,000/- for owning a car, which is quite big amount for anyone with no financial back up (Assuming you purchased the car in the very first month or year of your professional life). If your company is… Continue reading Investing at an Early Age

Investment Avenues

In my last post ‘Compounding- The 8th Wonder’, I had shared how small investments can give you wonderful returns. In this post I’ll share what are different investment avenues available for you to invest your money. There are two types of avenues available for investment, Financial and Non Financial. The Financial avenues of investment can broadly be categorized in Debt, Equity and Insurance. The Non- Financial avenues of investment can be categorized into Real Estate, Gold, Commodities etc. To invest in non financial instruments of investment we require a large sum of money. In my current post I’ll explain the financial avenues of investment. Insurance: Insurance is the first step towards financial freedom and one should start his investment planning by investing in insurance. There are different insurance policies like Term Plan, Endowment Plan, ULIPs, Pension Plans, Health Insurance etc. Each insurance plan covers a specific risk of the assured. Term Plans cover the risk of life of assured.  Normally these are very low cost. Endowment Plans help plan mid to long term financial goals. ULIPs are market linked insurance plans and give very good returns in the long term. Pension Plans ensure you don’t change your life style even after retiring from work. Health Insurance takes care of all the medical emergencies of the assured. Investments done in life insurance and Pension Plans are eligible for deduction under Sec. 80-C of IT Act- 1961 and investments made in Health Insurance are eligible for deduction under Sec. 80-G of IT Act-1961. Debt and Debt Instrument: Debt is a loan you give to someone where as a debt instrument is one through which you lend money to a company. There are different types of debt instruments like Savings Account, Fixed Deposit, Bonds (Debentures), Govt. Securities, Post Office Securities, Money Market Instruments etc. Saving Account: One should keep an amount equal to at least six months of his salary in savings account at all point of time. This amount should only be used as contingency fund. If you get a hike in your salary you should also increase this fund by six time of your salary increment. Banks pay 4-8% annual interest on savings accounts. Fixed Deposits: FD’s has varied maturities but had assured returns. The longer the time period better the returns will be. Penalty is charged on the premature encashment. FDs done for a period of 5 years and above are eligible for deduction under Sec. 80-C of IT Act-1961 subject to a limit of Rs. 100,000/-. Recurring Account: Recurring deposit are term deposits in which a fixed amount is deposited every month. The interest paid is almost equal to the interest paid to FDs. R A/c helps you to build up their savings through monthly installments of a fixed amount over a fixed period of time. Bonds (Debentures): Bonds has fixed maturity date and provide regular income. The market price is sensitive to interest rate and credit rating. Corporate bonds offer higher returns than the Govt. bonds. The returns are of the tune of 7-10% per annum. Public Provident Fund: One can invest from Rs. 5,000/- to Rs. 100,000/- in PPF in a financial year. You can make deposits in lump sum or in 12 installments. PPF gives a return of 8.7% per annum (in FY 2014-15). Investments done in PPF are eligible for deduction under Sec. 80-C of IT Act-1961 subject to a limit of Rs. 100,000/-. Govt. Securities: Govt. Securities are issued by central or state Govt. with a fixed maturity of period of 2 to 30 years. These provide regular income and have high liquidity low volatility. Post Office Instruments: Monthly income scheme, Kisan Vikas Patra (KVP), National Saving Certificate (NSC), Time Deposit etc. are Post Office Instruments. They are low volatile and offer returns in the tune of 8-9% per annum. Money Market Instruments: They mature within a year. They offer high liquidity, low volatility and low returns (3-4%). Equity & Equity Share: Equity is ownership in a company where as an equity share represents proportionate ownership in the company. It means you own a part of the company. There are two types of equities, Equity Share and Preferential Share. Equity Shares: There is no maturity date of equity share. If you need money you can get it by selling your equity to another buyer. Shareholders get their returns on equity share in form of dividends and also by capital appreciation. These days equity Mutual Funds are very popular as they help the investors to get maximum returns of their investments by pooling their money to invest in diverse portfolio. Investments made in Equity Linked Saving Scheme (ELSS) Mutual Funds are eligible for deduction under sec. 80-C of IT act- 1961 subject to a limit of Rs. 100,000/-. Equity shares and MFs offer high risk and high returns of the investors. One should invest in equities and MFs only after reading the offer documents carefully. Preferential Shares: Preferential Shares are hybrid instrument of debt and equity. These shares pay a fixed dividend that doesn’t fluctuate. The major benefit of preferential shares is that the owner has a greater claim over company’s assets than any other shareholder. If the company becomes bankrupt, the preferred shareholders are paid off before the common shareholders. I have tried to cover most of the financial avenues available for investment. One should start investing early to reap the benefits of compounding and should take utmost care while investing and keep updating themselves about various avenues of investment to get better returns. In case you need any information on investment avenues feel free to write at rjdhir@gmail.com. Happy Investing !!

Compounding- The 8th Wonder

Once there was a king who was very kind. He was renowned for keeping his words and helping the scholars for their wisdom and knowledge. There was a poor poet who came to know about his generosity and came to meet him. He had written a poem which had very high literary quality. The King was impressed and asked the poor poet for reward he wanted for his literary work. The poet pointed towards a chess board which was lying there and asked to place 1 grain of rice on the 1st box of the chessboard, 2 on the 2nd box, 4 on the 3rd box, 8 on the 4th box, 16 on 5th box and double the no. of rice grains till 64th box. The king was surprised to know on his demand and asked the poet to demand something else as this was a petty demand. But the poet insisted on putting the rice grains on the chess board. The king ordered his servants to start putting rice grains on the chess board as per poet’s demand. The servants started putting the grains on the chess. On 20th box the no. of grains was 524,288, on 25th it was 16,777,216, on 30th the no. was 536,870,912, on 35th the no. was 17,179,869,184. On 40th the no. was 549,755,813,888. On 45th the no. was 17,592,186,044,416. On 50th the no. was 562,949,953,421,312. On 55th the no. was 18,014,398,509,482,000. On 60th the no. was 576,460,752,303,423,000 and on 64th the total was 9,223,372,036,854,780,000. The total number of rice grains which the poet won was astonishing 18,446,744,073,709,600,000. This was something which was out of the means of the king. To keep his words to the poet the king handed over his kingdom to the poet and went for meditation in the forest. This is an ancient story which explains the wonder power of compounding can do if one starts investing early, invests regularly and sticks to his investments for a longer period of time. Albert Einstein once noted that the most powerful force in the universe is not the gravitational force but the power of compounding. He even said, “The power of compounding is the 8th wonder of the world”. I am sure you must be wondering about compound Interest and what Compounding- The 8th Wonder can do to your investments. Compound Interest is an interest which is added to the principal amount and the added interest start earning interest. The addition of interest to the principal is called compounding. For example your investment of Rs. 1000/- per year with a rate of interest of 10% would become Rs. 1100/- at the end of 1st year and at the end of 2nd year it would become Rs. 1210/-. This difference may look very small if you compare it with simple interest (which will be Rs. 1200/- after 2 years @ 10% rate of interest). But remember even the no. was small when the servants were putting rice grains on the chess board but eventually compounding made all the difference and the king lost his kingdom. To get more clarity on the power of compounding let me give you an example of two friends Amit and Satish. They both started working at the age of 25 at a same salary package. Scenario-1 (Assuming RoI @ 15% per annum) Amit starts investing at the age of 25 and invests Rs. 5000/- per month till his retirement at the age of 60. He will get an amount of Rs. 5.70 Crore Satish starts investing at the age of 35 and he invests Rs. 10000/- per month till his retirement at the age of 60. He will get an amount of Rs. 2.77 Crore Scenario-2 (Assuming RoI @ 15% per annum) Amit starts investing Rs. 5,000/- per month at the age of 25 and keeps investing for next 15 years. He does not take his money out till his retirement age of 60. He will get an amount of Rs. 5 Crore Satish starts investing at the age of 35 and invests Rs. 10,000/- per month till for next 25 years that is till he’s 60 years of age. He will get an amount of Rs. 2.77 Crore Scenario- 3 (Assuming RoI @ 15% per annum) Amit starts investing at the age of 25 and invests Rs. 5,000/- per month till his retirement at the age of 60. He will get an amount of Rs. 5.70 Crore Satish starts investing at the age of 45 and he invests Rs. 50,000/- per month till his retirement at the age of 60. He will get an amount of Rs. 3.07 Crore The power of compounding is the secret behind the great returns for long term investments. If you have the patience and if you can save and invest, then the power of compounding can do wonders to the investments made. If you have not started investing yet, you can start investing now and can still make good corpus for your retirement. In my next post I’ll share the different avenues of investment. Stay tuned and Happy Reading !!

Coaching Sales Force

There is an old saying which says, “Give a man fish and you will feed him for one day; teach him to catch fish and you will feed him for a lifetime.” Performance of the sales team is of utmost importance to all the companies as sales is the driving force behind all the activities done by any company. If managed well it can surely change the fortune of the companies and if not managed properly even the biggest companies can scramble down and be out of the business. When it comes to the sales targets almost all the companies use upward down approach wherein the top management decides about the sales targets and gives these to sales force to achieve. So the performance of the sales force is very critical for the success of any company. The sales managers face a lot of challenges in managing the front line sales force as they are not only responsible for the sales productivity but also to coach their front line. Sales managers can’t achieve their sales targets if their teams are not fully equipped and are not ready to face the market realities. A lot of Sales Managers push their teams for the productivity and ignore the other part of their job i.e. COACHING the sales force. Sales Managers usually accompany their new recruits during sales calls and bring business and assume that their team member has seen him making a sales call and is ready to go on next call and even if they share the secrets/rules of the sales GAME they hardly keep a check on their force’s future performance during sales call. We have a point here – Just asking about the business and sales closures in not enough, we also need to check the experience, the problems faced and the learning. To coach and help sales force be efficient. Sales managers use many sales training programs focused on sales process and closing. Still find some gaps in their performance. All this happens due to the assumption if the sale executive has attended a training program on the sales process he is ready to sell in the market. But as it’s said TELLING IS NOT SELLING, selling involves a lots of other things which are usually left in a controlled training environment. So the question comes how to make the sales executives do sales calls properly. Hand-holding is good for a sales trainer. And it is amazing if you can do it individually. With that sales training tip, let us explore a very effective technique called ‘ODD- Observation & Demonstration Drill’ and Rule of 3 + 7 wherein the Sales Trainer/Coach accompany the sales executives and do 3 Demonstration Calls with them and during the demonstration process they follow all the steps of the sales process. After the demonstrations are over they accompany their executives on next 7 Observation Calls wherein the entire sales process is handled by the sales executive and the sales manager observes him selling. This is a wonderful practice as ODD’s not only give a firsthand experience of the sales calls to the new recruits but it immensely help them to understand the steps of sales process and enable bonding between the manager and team members. Rules for Demonstration Call: Brief the executive before the call and ask him to observe and if possible make notes. Follow all the steps of sales process properly. Don’t focus on closing each and every call as you are on a coaching mode and not selling mode. While your focus should be on the customer at same time sales executive should not be ignored. Post meeting ask the executive his feedback on the meeting. Ask him the good, bad and the areas of improvement. Also ask him what he would do in a similar meeting and what he can do differently to further improvise. Motivate the executive and tell he can do even a better job. Rules for Observation Call: Motivate the executive as he will be leading the sales call and will also be under observation. Tell him not to ignore the sales process at any point of time. Observe the executive make notes/mind notes and discuss it post the meeting. While debriefing discuss all the points of the sales process he followed and not followed. Use PCP (Praise-Criticize-Praise) technique during the debriefing. Always start with praising the executive and tell him all the good points of the meeting. Then share the grey areas he needs to take care during future meetings. Always end the debriefing session on high note by telling him how he could do better. Use touch technique during the debriefing session. Remember if call is not going the way it should be, don’t handle the call yourself. You may win the customer but will surely lose the executive. Let him learn from his mistakes. Hope this will help you in coaching the sales force and take them to next level. In case you need any more help feel free to write at rjdhir@gmail.com.

Networking – A Skill of Winners!

We all have played Mario then Super Mario – the amazing video game. In my case, the center offered many games likes Contra, Spartan, Car Racer etc. but I always liked a game called, ‘Super Mario’. I liked its sound, powers, jumps and lot many things in the game. However I never wished my Super Mario to die but I lost it in most of my attempts. After losing each game I used to restart and play, but lost every time I played. After my ninth standard, I hardly got any time to play the Mario but the question about the end of Mario always made me think. Life went on. Like everyone, I completed my studies and joined corporate world. In profession most of us do not have a God Father so we can say we have to work and learn by experience. We all commit mistakes make more enemies than friends but we always work hard to perform well, to excel. We get promotions and keep on rising on the corporate ladder. Many a times we fail, it is something like maintaining strong & long term relationships and networking. I always; still wonder about the magic of relationship building and networking skills. One fine day, I found Super Mario game from my school stuff and I started playing the same. After reaching the 3rd stage I lost my Mario and stopped playing the game. And that was the moment, it struck me that; it was not Super Mario who died but it is the player who kills Super Mario. Then I started thinking about all those things which I could have saved but lost due to ignorance or ABC reasons. The first thing which came to my mind was my relations, which started well but never nurtured to lifelong. I gave it a long thought and discovered: ‘Our Relationships Are Like Super Mario, They Will Never Die Until We Kill Them’. In a game we never wish the Super Mario to die, similarly no one ever wish the relations to end up with fights/misunderstandings/grudges and what not. If Mario needs to be nurtured with powers to clear different stages of the game, the same way relationships needs to be nurtured with love, care, and most importantly communicating with your friends even when you don’t get chance to meet regularly. With the world becoming faster, people are becoming vulnerable. Life is demanding and hence relationships start taking a second place in the run. Why? Because we are all busy, we have deadlines, targets, bosses etc. And then we want to have an attitude, a lifestyle, money, power and what not. We want everything. And in the chase all we start losing out on is focus. Like in Mario – once you lose the focus, shifts priorities you end up losing Mario. You only save a Mario when you cross all stages with him an earn points. Similarly, if you leave the skill of networking, it is difficult that you emerge a leader and if at all you do, you lose out on points. Most people do not realize when and where they end up breaking a network or a connection. This realization only happens when we need a person who we haven’t connected from a long time. Save the connection – don’t kill the Mario. Besides your network allows you to help people in a better way. It is a trait we must work on as a skill. Effective networking is like saving the Mario and winning the game.