wealthymatters

E. Sarathbabu In His Own Words

January 29, 2014 1 Comment

wealthymatters

I was born and brought up in a slum in Madipakkam in Chennai. I have two elder sisters and two younger brothers and my mother was the sole breadwinner of the family. It was really tough for her to bring up five kids on her meagre salary.

As she had studied till the tenth standard, she got a job under the mid-day meal scheme of the Tamil Nadu government in a school at a salary of Rs 30 a month. She made just one rupee a day for six people.So, she sold idlis in the mornings. She would then work for the mid-day meal at the school during daytime. In the evenings, she taught at the adult education programme of the Indian government.She thus did three different jobs to bring us up and educate us.Although she didn’t say explicitly that we should study well, we knew she was struggling hard to send us to school. I was determined that her hard work should not go in vain.I was a topper throughout my school days.

In the mornings, we went out to sell idlis because people in slums did not come out of their homes to buy idlis. For kids living in a slum, idlis for breakfast is something very special.

My mother was not aware of institutions like the Birla Institute of Technology and Science, Pilani, or the Indian Institutes of Technology. She only wanted to educate us so that we got a good job. I didn’t know what I wanted to do at that time because in my friend-circle, nobody talked about higher education or preparing for the IIT-JEE. When you constantly worry about the next square meal, you do not dream of becoming a doctor or an engineer. The only thing that was on my mind was to get a good job because my mother was struggling a lot. Read more of this post

Filed under Entrepreneurship Tagged with advice to entrepreneurs, E. Sarathbabu, food business, food entrepreneur, postaday

Heartwarming

January 29, 2014 2 Comments

wealthymatters

Filed under Tidbits Tagged with postaday, relationship advice

Assets Declared By The Tharoors

January 28, 2014 Leave a comment

wealthymatters If you keep up with the financial press,you’re bound to be familiar with the asset allocations that ‘financial advisers’ recommend.Personally I believe that they are often the beliefs of the financially struggling imposed on financially unsophisticated people,looking for assurance and approval.

The financially well off report asset allocations that are very different from that of the “ideal”recommended by financial advisers.Of course it could be argued that they are only reported assets and unreported assets can’t be ruled out and the total bears a greater resemblance to the “ideal” .Alternatively it could be said that there ought to be one allocation for those hoping to be wealthy vs. that suitable for the wealthy.

My belief is that the well-to-do get that way by doing things substantially different from the masses. Their asset allocation is the reason for their wealth not a result of it.My belief is reinforced by the case of the Tharoors.Link

Just observe the large cash equivalents,preference for real estate and alternative investments like antiques,high quality watches etc. along with the more conventional Indian preference for gold jewelry.Mutual funds and insurance products are conspicuous by their absence.Their asset allocations might be far from the “ideal” but their net worth is nothing to sneer at,especially as they have no businesses to help earn their incomes.And one way or another,both have had to earn their fortunes.

Filed under Tidbits Tagged with asset allocation, financial adviser, postaday, Shashi Tharoor Assets, Sunanda Pushkar Assets

Managing Capital Gains Taxes While Transferring Properties

January 26, 2014 1 Comment

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You cannot avoid tax on short-term capital gains. However, you can claim deductions to lower the tax liability on long-term gains.

Long-term capital gains from selling a house get tax exemption if they are invested in buying or building a new house. The new house has to be bought one year before the transfer of the first house or within two years after the sale. The deduction allowed is equal to the actual investment or the capital gain, whichever is lower.If you plan to use the gain to build a house, it has to be done within three years of the sale of the property. When you buy a plot to build a house, the cost of land is included in the construction cost. Even buying an under-construction property entitles you to tax deduction, provided its construction is completed within three years of the transfer of the first property. If the new property is sold within three years of purchase or construction, the deduction is reversed and taxed as short-term capital gain.So if you purchase a new house for Rs 15 lakh and claim a deduction of Rs 10 lakh,the exempted amount will be deducted from the purchase cost for calculating the capital gain in the next three years (Rs 15 lakh-Rs 10 lakh). Now suppose you sell this house after two years for Rs 25 lakh. Your capital gain will be Rs 20 lakh (Rs 25 lakh-Rs 5 lakh), even though the actual appreciation is only Rs 10 lakh. If you buy an under-construction independent house and resume construction, the cost incurred in further construction will also be eligible for tax exemption under Section 54 of the Income Tax Act. Read more of this post

Filed under Alternative Assets, Tool Kit Tagged with Capital Gains Account Scheme (CGAS), captal gains tax on sale of farmland, investing sale proceeds of a house in a factory, long-term capital gains, postaday, real estate investment, section 54, section 54EC, section 54EC bonds, Section54F, short term capital gains, tax exemption, types of capital gains deposit accounts

Of Flipping And Taxes

January 26, 2014 Leave a comment

wealthymatters

Those who churn real estate investments fast,without planning and preparation, are likely to pay the highest tax. This is because if the property is sold within three years of purchase, the short-term capital gain is calculated by deducting from the sale price the cost of acquisition, the money spent on improving the property and the transfer cost.This gain is included in the taxable income for the year the money is received and taxed according to the person’s tax slab and can be calculated using free tax calculators.

An investment gone wrong will result in a short-term capital loss.Short-term loss from sale of a property can be set off against capital gain from any other short- or long term asset during the financial year.

The option of setting off short-term loss against capital gain is a big advantage here.It helps reduce tax outgo.If the current year’s capital gain is inadequate, the net capital loss can be carried forward for eight financial years for adjusting against any gain.