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Friday, January 31, 2014

PERSONAL SPECIAL .....................What to do if you lose your job

What to do if you lose your job 

Take these steps to ensure you don’t have to deal with a financial crisis

    In 2004, Agra-based Shabd Mishra was working with a leading research company as its head of sales, earning a package of 7 lakh annually. As a newly wed, he was looking forward to a bright future, when he was sacked because of structural changes in the company. “I was left with almost no money as I had deployed most of my savings for my wedding just a month previously. I tried to get another job, but most companies offered a lower salary or position, which was humiliating,” says 36-year-old Mishra. Thankfully, he could depend on his wife, a coporate lawyer, to keep the home fires burning. However, everybody may not be as lucky him.
    How can you tell if you are likely to lose your job in the near future, and what can you do to safeguard yourself against such an eventuality? We spoke to a bunch of experts to help you with these dilemmas.
Read the writing on the wall
Financial experts explain that in most cases a pink slip doesn’t come out of the blue. Sometimes, job loss results from employee incompetence and negligence, and at others, it is because of inevitable, external circumstances, such as cost-cutting measures or a change in the company management. In either case, as Darryl Cabral, partner at Total Solutions, a Mumbai-based human resource consultancy firm, explains, there are sure to be certain tell-tale signs indicating an imminent job loss. “Not getting a salary increment or a promotion is a clear indication that the management is unhappy with the performance of the employee. So, chances are that he could be asked to leave within a short period of time,” says Cabral. A similar strategy deployed by a company is to look through the employee, making him feel invisible. Instances like a junior being promoted to do an employee’s job or the latter being asked to train a junior for his own role are red flags.
What to do in such a situation?
Human resource experts are of the opinion that a person should try and take control of the situation rather than lose his cool when threatened with a possible job loss in the near future. If the management has not yet told you to put in your papers, you should not do it. It is possible that only your immediate senior has problems with you, which may not matter much in terms of your overall growth prospects in the company. By quitting hastily, you would only make things easier for the disgruntled senior, not yourself.
How to cope with a pink slip
In the worst-case scenario, if a pink slip appears imminent, the best option for the employee is to search for a better job before quitting the present one. “An employee’s bargaining power increases if he has a job in hand,” says Cabral. Simultaneously, you need to get your finances in order. As a first step, you should start prioritising your expenses using financial planning tools. After this, assess your monthly expenses and create a contingency fund, which will take care of your day-today expenses for at least six months. “Though a six-month period is recommended for the contingency fund, it can be extended to around nine months if the employee falls in a high-risk job category,” says Mukund Seshadri, founder-partner, MS Ventures Financial Planners.If you have an outstanding debt, be it loans or credit card dues, you will have to rejig your expenses to make sure that you continue to meet the repayment schedule. Remember that defaulting on your debt is not an option, no matter how dire your situation. According to Pai, the worst thing to do in the face of a pink slip is to start disposing of one’s assets in real estate or equities in panic. “This is a common mistake made by unemployed people,” he explains adding that, “Selling your investment in a hurry won’t solve your problem.
How to get a new job
According to Cabral, employees who get pink slips can approach their previous company’s competitors for a job. The aspirant could also tap his network in the industry to circulate his resume. Another thing to remember while looking for a fresh job is to focus on a company that is smaller than the one you were employed with. “A company that is smaller in scale than your ex-employer would be happy to take you at a better position. This is because you will bring in a wealth of experience, particularly relevant to a larger set-up,” adds Cabral.
    At the same time, never short-sell yourself and settle for a lower salary or position in a bigger company. “You won’t be happy with the drop in pay package and will constantly think of shifting to a bigger place. This is sure to impact your productivity,” says Cabral.
Amit Shanbaug

GADGET GIZMO REVIEW ..............................Lenovo IdeaPad Y510p


PRICE 77,029/
 2.4Ghz Intel Core i7 quad core processor, 8GB RAM, 1TB HDD (5400rpm), Nvidia GT750 (2GB DDR5) GPU, 15.6-inch Full HD LED display, Windows 8, DVD-RW drive, HDMI, USB 3.0
    Great hardware, good performance, high quality screen, all the ports you need, built in DVD-RW  Glossy keyboard, plain looks not to everyone’s taste, no  Ultrabay accessories available in India

You won’t normally find the words ‘gaming laptop’ and ‘affordable’ in the same sentence. Lenovo’s Y510P however, manages to give you a fair amount of bang for your buck if you’re into serious performance. It comes equipped with a fourth gen Core i7 processor, 8GB RAM, a powerful graphics card (with 2GB DDR5 RAM), 1TB HDD, Windows 8 and a 15.6-inch, full HD LED screen. With this kind of hardware, you won’t have a problem running any of the modern games. You could also pair it with a controller and output it to a TV for 1080p gaming. Needless to say, any of the more mundane tasks will also not be an issue. The problem is, for all that the machine has by way of hardware, it looks rather plain. Unattractive, even, in the eyes of several people who saw it. When closed it has a brushed metallic finish that attracts a lot of smudges. It has all the features and ports you would expect: HDMI, multiple USB (two are USB 3.0), multi card reader, webcam and a backlit keyboard (red backlighting, with two intensity levels). The Ultrabay design is supposed to add versatility — you can theoretically swap out the DVD drive for another battery, a weight saver or add-on graphics card. I say theoretically because none of these accessories are available in India (a glaring afterthought). It’s also an oversight to put a plain, 5400 rpm HDD into a gaming laptop. The JBL speakers deserve special mention — paired with the built in Dolby software (equaliser, pre-sets), they beat the sound from most laptops for loudness and clarity. Ultimately, Y510p sorts of sits in middle ground. It’s not an out-an-out gaming laptop like an Alienware and thanks to the plain design, it’s not very desirable either. Casual users meanwhile, will have numerous options in the sub 50,000 range. If you want more features, Dell will sell you the new Inspiron 15 (7000 series) with the same specs but a way better design and 1080p touchscreen for 82,990.

FOOD SPECIAL....................... Indian ingredients yet to be explored

 Indian ingredients yet to be explored

The lesser known desi ingredients that can add an exotic thrill to everyday cooking

    Bored of the same old flavour you add to your meals time and again? Jazz up your dishes by incorporating these unexplored Indian ingredients you may know of but never used skillfully in your cooking.
 Or lamb’s quarter is quite popular in North India, where it is cultivated, and is available during the winter months. A wild relative of the spinach plant, it is cooked in the
same way as spinach. However, it should be eaten in moderation due to high levels of oxalic acid.
 Culinary uses: The young leaves and smaller stems can be eaten raw in salads, added to stirfried veggies or used to make raita. Moreover, it can be used as a stuffing in breads and pakodas. It can be mixed with other greens and lentils to make dals. For experimentation, add it to dough to give a distinctive taste to rotis and parathas.

Is dark, tart vinegar which is made out of the fruit of a plant native to Kerala and other coastal states. It is an indispensable ingredient in the Kodava cuisine of Coorg. Every Coorg kitchen has a bottle of kachampuli, often homemade.
Culinary uses: Kachampuli is usually used in the final stages of cooking, mainly in meat and fish dishes, most famously in pork curry to lend it a special flavour. It is a souring and thickening agent that can be used as a marinade. If you’re using the dried form, either soak it in water for 20 minutes or add directly to curries. Its reasonable substitute is dark brown malt vinegar, although it will never give you the rich, dark colour of kachampuli.

Melon seeds:
Also known as charmagaz, melon seeds are a mixture of pumpkin, cucumber, watermelon and muskmelon seeds. Apart from having cooling properties, they are full of vital nutrients. They lack any distinct fragrance, are nutty and have a sweet taste. Store melon seeds in an airtight container in a dry and dark place.
Culinary uses : Soak them and grind into a smooth paste when adding to Indian gravies. The paste acts as a thickening agent. They are also added to traditional halwas and fruit fudges for enhancing the flavour. These seeds can be dried and roasted and treated as mouth fresheners when mixed with nuts and spices. You can also add them to salads or use them as a topping on bread.

 Golden apple:
These apples, with yellowcoloured skin, are a cheap substitute for mangoes. The pulp can be eaten but has a watery base. They are the sweetest of all varieties and are eaten raw as well as used in cooking. To store them well, wash them and keep in perforated net bags, or zip lock bags in the refrigerator. If you want to store a cut apple, mix lime or orange juice to avoid browning due to oxidation.
Culinary uses : They are best used in salads to add colour and fruity taste. You can also use it to prepare apple sauce that is added to various desserts. Or cut them into thin slices and spread over apple pudding or apple cake as garnish. You can also core and stuff them with various fillings. Or simply chop and add them to a fruit cocktail.

Indian vanilla bean:
 It is the second most expensive spice after saffron. The fruit contains tiny, flavourless seeds. In dishes prepared with whole natural vanilla, you can recognise these seeds as black specks. Though there are many compounds present in the extracts of vanilla, the one called vanillin is primarily responsible for the characteristic flavour and smell of vanilla. Store vanilla beans in an airtight container and keep them away from sunlight.
Culinary uses: For a vanilla flavour in food, add vanilla extract or cook vanilla pods in the liquid preparation. For a stronger aroma, split the pods into two, exposing more of the pod’s surface area to the liquid. In this case, the pods’ seeds are mixed into the preparation. Apart from flavouring ice creams, it is also used to enhance the flavour of other substances, to which its own flavour is often complementary, such as chocolate, custard, caramel and coffee.

Is preserved rose jam made out of a specific type of rose (damask) and sugar. Sometimes, other ingredients like cardamom, coral and pearl powder are added to it to increase its medicinal and cooling properties. Store gulkand in an airtight container and keep it in the refrigerator.
Culinary uses : It is eaten as a constituent of paan (betel leaf) with lime and sweet trimmings, primarily as a digestive and stress reliever. It can also be stuffed into Indian sweets or added to kulfi or ice cream. You can also use it to make roseflavoured teas and drinks.

Also known as water chestnut, they have been cultivated in India and China since ancient times. They are consumed in two forms: raw, roasted or steamed. When steamed, the outside covering becomes blackened and it tastes starchy, like a potato. Unpeeled, fresh water chestnuts will stay well for up to two weeks in a plastic bag in the refrigerator. Prior to cooking, cut off the top and peel the skin. If you’re peeling the skin ahead of time, make sure to store them in cold water in the refrigerator, with the water changed daily.
Culinary uses : Singhara can be powdered to be made into flour. This flour can be used to make breads and is often used during fasting. They can also be added to stir-fries or used as fillings in dumpling for extra texture and a sweet flavour.

Shikha Shah Inputs by: Chefs Rahul Dhavale and Bhuvanesh Kalburgi. TL140109

FINANCE SPECIAL ..................The best ways to save tax

 The best ways to save tax 

Before you decide to invest in a tax-saving instrument, go through this guide and rating of the most widely used options under Section 80C

    Multiple options. Contradictory advice. And a deadline that’s approaching fast. Many taxpayers find themselves in this situation at the beginning of the year when they have to make tax-saving investments. Are you also confused? Before you make a choice, go through our cover story to know which is the best option for you. We have rated the most common investments under Section 80C on five basic parameters: returns, safety, flexibility, liquidity and taxability. The rating separates the chaff from the grain. Whether you are a novice or a seasoned investor, it will help you cut through the clutter and choose the investment option that best suits your financial situation.

The PPF is our top choice as a tax saver in 2014. It scores well on almost all parameters. This small saving scheme has always been a favourite tax-saving tool, but the linking of its interest rate to the bond yield in the secondary market has made it even better. This ensures that the PPF returns are in line with the prevailing market rates.
    This year, the PPF will earn 8.7%, 25 basis points above the average benchmark yield in the previous fiscal year. The benchmark yield had shot up in July and has mostly remained above 8.5% in the past six months. Although the yield is unlikely to sustain at the current levels, analysts don’t expect it to fall below 8.25% within the next 2-3 months. So it is reasonable to expect that the PPF rate would be hiked marginally in 2014-15.
    The PPF offers investors a lot of flexibility. You can open an account in a post office branch or a bank. However, the commission payable to an agent for opening this account has been discontinued, so you will have to manage the paperwork yourself. The good news is that some private banks, such as ICICI Bank, allow online investments in the PPF accounts with them.
    There’s flexibility even in the quantum and periodicity of investment. The maximum investment of 1 lakh in a year can be done as a lump sum or as instalments on any working day of the year. Just make sure you invest the minimum 500 in your PPF account in a year, otherwise you will be slapped with a nominal, but irksome, penalty of 50.
    The PPF also offers liquidity to the investor. If you need money, you can withdraw after the fifth year, but withdrawals cannot exceed 50% of the balance at the end of the fourth year, or the immediate preceding year, whichever is lower. Also, only one withdrawal is allowed in a financial year. You can also take a loan against the PPF, but it cannot exceed 25% of the balance in the preceding year. The loan is charged at 2% till 36 months, and 6% for longer tenures. Till a loan is repaid, you can’t take more.
Invest before the 5th of the month if you want your contribution to earn interest for that month as well.

Equity-linked saving schemes (ELSS) are at second place in our ranking. These funds can generate good returns for investors over the long term. In the past five years, this category has given average returns of 17.5%.
    However, this potential to earn high returns comes with a higher risk. There is no guarantee that your investment will generate positive returns after the 3-year lock-in period. Even the best performing funds have churned out disappointing returns in the past three years. The returns will naturally mirror the performance of the stock markets. Therefore, only investors who have the stomach for a roller-coaster ride should consider this option.
    Though the ELSS funds invest in equities, they are different from other open-ended diversified equity funds. Due to the lock-in period, the ELSS fund manager does not have to worry about redemption pressure from investors. This gives him the freedom to invest in shares as per his conviction and hold them for longer periods.
    ELSS funds offer tremendous flexibility to investors. The 3-year lock-in period is the shortest. Since there is no tax on gains from equity funds after a year, an investor can safely recycle his investments every three years and claim tax benefits on the reinvested amount.
    The minimum investment is also very low. You can put in as little as 500 in an ELSS scheme. Unlike a Ulip, pension plan or an insurance policy, there is no compulsion to continue investments in subsequent years.
    Since ELSS funds are a high-risk investment and their NAVs are volatile, you need to stagger your investment over a period of time instead of going for a lump-sum investment at the end of the financial year. 
For many policyholders, Ulips denote the costly mistake they made a few years ago. But the 2010 guidelines have reformed the Ulip, turning it into a more customer-friendly investment. Though a Ulip should not be your first insurance policy, you can consider buying one as an investment that also helps you save tax.
    We checked Morningstar's data on Ulips and found that the returns have not been very good in the past 5 years. But a Ulip is not necessarily an equity-linked investment. You can also invest your Ulip corpus in debt funds. Instead of investing in the equity option, put your corpus in the debt fund. You can start shifting the money to the equity fund when the prospects look rosier. Only a Ulip allows you to switch from debt to equity, or vice versa, without incurring any capital gains tax.
    Like the Ulips, the 3-year returns from the NPS funds are also a mixed bag. While the 4.15% average returns from the E class (equity) funds are in line with the market returns, the 6.62% from the G class (gilt) funds are quite a disappointment. The redeeming feature is the 10.24% returns churned out by the C class (corporate bond) funds.
    Its low-cost structure, flexibility and other investor-friendly features make the NPS an ideal investment vehicle for retirement planning. However, even though the fund management charges have been raised from the ridiculously unviable 0.0009% to a more reasonable 0.25%, the pension fund managers are not hardselling the scheme. If you want to save tax through the NPS this year, be ready to do a lot of legwork and paperwork before you can get to invest in this unique pension plan.
    One of the most outstanding features of the NPS is the ‘lifecycle fund’. Under this option, the investor’s age decides the equity exposure. The 50% allocation to equity is reduced every year by 2% after the investor turns 35, till it comes down to 10%.
    Opt for the liquid or debt fund and then shift to the equity option as per your reading of the market. 
Many taxpayers think that up to 10,000 interest from bank deposits is tax-free, as announced in the budget two years ago. But the newly introduced Section 80TTA gives a deduction of up to 10,000 on interest earned in the savings bank account, not on FDs and recurring deposits. Also, the nomenclature ‘tax-saving deposits’ means you save tax under Section 80C. It does not mean that these deposits are tax-free. The interest earned on deposits is fully taxable at the normal tax rate applicable to you. You have to mention this interest under the head ‘Income from other sources’ in your income tax return.
    So don’t get misled by the high interest rates offered on the 5-year bank fixed deposits. The post-tax yield may not be as high as you think. In the 20% and 30% income tax brackets, it is not as attractive as the yield of the tax-free PPF.
    The second misconception is that there is no need to pay tax if TDS has been deducted by the bank. You may have to pay tax even if TDS has been deducted. TDS is only 10% (20% if you haven’t submitted your PAN details), and if you are in the 20-30% bracket, you need to pay additional tax.
    The interest on NSCs is also taxable but very few taxpayers include it in their returns. However, with the integration of tax records, a taxpayer may not be able to escape the tax net easily. For instance, if you have claimed tax deduction under Section 80C for investments in NSCs or FDs in one year, the tax department may want to know why the interest earned is not reflecting in your tax returns for subsequent years.
Don’t try to avoid the TDS by investing in FDs of different banks. You will have to pay the tax later anyway. 
Though the Irda guidelines for traditional plans have made insurance policies more customerfriendly by ensuring a higher surrender value and larger life covers, they are still the worst way to save tax. The tax saving is only meant to reduce the cost of insurance. It is not the core objective of the policy.
    Money-back and endowment plans score low on the flexibility scale. Once you buy a policy, you are supposed to keep paying the premium for the rest of the term. This can be a problem if you took the policy only to save tax.
    However, these policies are not as illiquid as they appear. You can easily get a loan against your endowment policy from the LIC. The terms are quite lenient and repayment can be done at your convenience.
    Insurance companies claim their products offer the triple advantage of life cover, long-term savings and tax benefits. That’s not true. Traditional plans give a low life cover of 10 times the premium. For a cover of 25 lakh, you will have to spend 2.5 lakh a year. They also give niggardly returns. The internal rate of return (IRR) for a 10-year policy comes to around 5.75%. For longer terms of 15-20 years, the IRR is better at 6.5-7.5%. As for the tax benefit, there are simpler and more cost-effective ways to save tax, such as 5-year bank FDs and NSCs. If the taxability of the income worries you, go for the PPF.
    However, traditional insurance policies still make a lot of sense for the HNI investor who is more concerned about the tax--free corpus under Section 10(10d) than the deduction under Section 80C. Even for such investors, a Ulip will make more sense as they will have control over the investment mix. The opacity of the traditional plan is best avoided, but your agent might not be very keen to sell you a Ulip this year because his commission has been cut to 6-7% of the premium.