I think the mistakes highlighted in your cover story (10 Financial Mistakes) should always be avoided irrespective of the market condition and the level of inflation. Calculating lifetime cost of a commodity, staying away from the multiple card trap, upgrading career skills, etc, are critical for successful financial management.
— Bal Govind, Bareilly
You are right that such mistakes must be avoided at all times. But, volatility in the markets and unfavourable economic conditions, such as high inflation and rising interest rates, makes the sting of these mistakes more potent. Hence, investors need to be extra cautious and not compound losses by making costly mistakes.
In the story on salary structures you have shown how people at different income levels and ages should restructure their pay packages to increase effective take-home salary (How to redesign your pay structures). I think you underestimated the income levels of senior-level employees. On an average, they earn close to Rs 5 lakh a month (gross salary). Please advise on the optimum salary structures for such employees.
— R. Ramnath, e-mail
The salaries of senior employees vary across industries and companies. Our example of Rs 1 lakh a month is an average salary package. As one moves up the corporate ladder, the percentage of variable pay in the total salary shoots up. On an average, it is over 25%. The quantum of variable pay is taxable and is directly linked to the performance of the employee and that of the company. The fringe benefit tax on perquisites like accommodation and car provided by the company, club membership, etc, is likely to be passed on to the employee. So, it is better to ask for allowances. But note that some of these, such as servant allowance and family allowance, are also taxable.
Please explain how to compute “emoluments payable” from CTC (Choose your Salary Structure).
— Ravi Bajaj, e-mail
The “emoluments payable” includes only the basic pay and the allowances (special allowances, HRA, conveyance and telephone) which are paid every month. Some others such as LTA and medical allowance are usually not paid every month and so have not been included in the calculation. From this amount taxes and contribution to provident fund are deducted to arrive at the take-home salary.
In your cover story on Ulips (Ulip: Fact and Fiction), the first year load of Bajaj Allianz’s Unit Gain Plus policy was wrongly mentioned as 76%. This is the allocation rate for the plan. The load charge is 24%.
— J. Balaji, Madurai
Thank you for pointing out the mistake. The figure you have given is the correct and changed on our website.