Money Complicates Relationships

"It is when money gets involved," Raymond continued, "that matters get a bit complicated. Just the other day, a reader posed an interesting dilemma to the NZ Herald columnist Mary Holm."

Beatrice handed him his drink, and the boys quietened down a bit, their curiosity piqued. They gathered around him once more.

"This lady wrote to Mary," Raymond continued, "that she had two lovely daughters, both middle aged now. Her husband was now retired with $500,000 invested in the bank."

"The elder daughter and her husband were borrowing $600,000 from the bank to buy a block of flats as an investment."

"So the father suggested that instead of borrowing the whole lot from the bank, they borrow $500,000 from him, and the rest from the bank."

"That way they could split the interest saved - being the difference between what he got from his bank and the commercial interest the couple had to pay to their bank. A Win for both."

"I don't get it," Josh interrupted.

"A bank charges more interest from its borrowers," Dane explained, "and pays less to its savers, whose money it borrows to lend to others in the first place. That is how it makes its profit."

"So if one member of the family has spare money, and another needs to borrow it, they can loan it directly to each other, without getting a Bank involved. Banks take their cut from both parties."

"Let's say Pa gets 4% interest per year on his savings," he asked his little brother. "Do you know what that means?"

"Yea," said Josh. "I'm not stupid!"

"What does it mean then?" asked Dane.

"That if Pa gives the bank $100, he'll get $104 back after one year," said Josh, looking at his elder brother with supreme confidence and daring him to challenge it.

Dane patted his head affectionately and nodded.

"That's right," he agreed. "And let's say the bank will charge me 8% per annul, annul meaning year, if I take a loan from them. What does that mean?"

"That if you had borrowed $100, you'll have to pay $108 back to the bank after a year," said Josh.

"Correct," said Dane. "Can you see now, what happens if Pa offers to loan me the same money directly at 6% p.a., pa being shorthand for per annul?"

"Then we will both gain $2, and the bank will lose its $4 profit. I'll have to pay less interest and Pa will get a bit more interest, than if we were dealing with a bank. So, borrowing directly from Pa and splitting the difference we both save, will be good for both of us."

"Very good," Raymond beamed proudly, "but this reader wrote that her younger daughter felt a bit left out because of this arrangement."

"If she were in the same situation, the parents would have gladly given them both, half of the $500,000. But she was not currently planning to borrow any money. So the younger sibling suggested that whatever gain the elder made, also had to be given to her, to be fair."

"But that wouldn't be profitable for the parents," Beatrice joined in, "because she would gain at the parents' expense. The parents would be taking the risk of loaning to the family for nothing."

"Yea," replied Raymond. "And that was the point I was trying to make. Despite the best of intentions, money can complicate relationships."

"There is so much friction in the world," said Isha. "I wouldn't want to create more. I'd drop the whole idea of lending to family."

"It's still worth doing," said Dane, "if the parents trust their elder daughter and her husband. Even though the parents would be back to square one themselves, both the daughters would be better off due to this arrangement."

"But the parents won't be back to square one," Raymond clarified. "Because they will get 6% instead of 4% interest per annul, they'll become liable to pay more tax."

"The gift of 2% to the younger daughter is not a tax deductible expense. So, they'll have taken extra risk, paid more tax, and made their daughters richer, by becoming slightly worse off themselves."

"Bad idea!" Beatrice reiterated. "I think they should drop it."

"There is still a way they could all gain," replied Raymond. "They'd just have to cut up the pie slightly differently. Assuming, 4% and 8% were the interest rates in this case, Mary suggests that the parents charge the older daughter 7% p.a."

"That way she still saves 1% on $500,000 yearly. That's $5,000 worth of savings."

"She'll probably look at this solution in a different light," argued Isha. "She could have been $10,000 better off had her sister not intervened. Saved 2% under the original plan."

"Maybe," Raymond agreed. "But it's still better than saving nothing, if the parents opt for Status Quo, as you recommend. The Bank would charge her 8%, so she's still better off."

"Gift the younger daughter 1%. That way she gets the same benefit as her elder sibling. Parents also still get more than the 4% the bank would have paid them, being 7% less extra tax paid less 1% gifted, so still somewhere between 1-2% depending on their tax rate. Now, they have all gained."

"What if the actual interest rates are different?" Beatrice objected. "It's not going to be so straightforward a calculation then, is it?"

"That shouldn't be a problem," Dane responded. "Just charge her 75% of the difference between bank savings and lending rates, over and above the Bank savings rate."

"So if the rates are 9% and 12%, charge her 9% + 75% x (12-9)% = 9% + 2.25% = 11.25%. She still saves 0.75% of $500,000 which works out to $3,750 yearly. The thing to remember is that whatever she saves yearly, is what the younger daughter gets gifted too. All fair now."

"It is not going to be smooth sailing between these two sisters," warned Isha.

"Probably not," Raymond agreed. "But that is their business. Equanimity, like beauty, is in the eye of the beholder. Which is why I want to make it clear to both of you right now, that whatever I choose to give one of you, I don't have to give to the other."

"I'll treat you individually, not equally, as only that acknowledges the uniqueness of both of you. Whether I give out of love or based on merit, it is unlikely that the numbers will ever be the same anyway, because you will have different circumstances."

"At least you know now," Beatrice smiled benignly at them, "that you will both be getting something."

"I will give who I wish, what I wish, when I wish," Raymond stopped her in her tracks. "Without having to be fair to the other. I may also choose not to give anything at all to anyone. Remember that."

"Mother Nature does that too. It does not always distribute everything fairly among all its offspring."

From The Water's Womb

I was a witness. A witness to nature's magic. I felt like a tree. Awake yet still. I felt like the sky watching the earth.

I felt. But I did not move. Like the passive earth that witnesses the twinkle of each star. Or the uncurling of each blade of grass at the safe prodding of light.

I was a witness. And so was my family. Along with so many others who had gathered on that beach. Before the dawn of New Year's Day. Some were sitting along a rock boundary, some lying on the sand in front and many standing behind us.

I looked at Ma and Pa who sat fingers interlocked, in the midst of the crowd of humanity milling all around us. They were staring ahead at the dark sea, alone in their togetherness.

This was Cape of Comorin - the Cape Reinga of India – almost at the southernmost tip of the peninsula. We were in a town called Kanyakumari in the Indian State of Tamil Nadu. Contrary to the popular (and sensational) belief that Kanyakumari lies at the meeting point of three bodies of water, the Bay of Bengal, the Arabian Sea and the Indian Ocean, it is surrounded by only one: the Laccadive Sea.

But I didn't know this. I had come to see the confluence of the three waters. Neither did I know that Kumari Amman or the Kanyakumari Temple, located on the shore and a famous pilgrimage for Hindu girls, is dedicated to a manifestation of Parvati, the virgin goddess who did penance to obtain Lord Shiva's hand in marriage. But I did know that Kanya meant girl and Kumari meant virgin in Sanskrit.

On a rocky islet just off the shore, southeast of the Kumari Amman temple, was the Vivekananda Rock Memorial, built in 1970 by Eknath Ranade. On another islet just behind the Memorial rock was the 133 feet (41 m) tall statue of Tamil poet Thiruvalluvar, one of the biggest statues in Asia, completed in 2000 by sculptor V. Ganapati Sthapati.

A rock boundary circled the border of the mainland, where we sat. It rested on top of a small bluff, five meters from the low tide mark. The ash grey rocks were neither sharp nor smooth. I sat on the boundary comfortably, and allowed my legs to dangle freely in front of me as I gazed out towards the horizon.

It was dark, but not pitch black. Josh was looking at me, watching me. I smiled at him and looked out again. I could make out some boats on the water. A few people sat in each boat. All were waiting. Waiting for the ball of fire to rise from deep inside the sea. From the water's womb.

Just an ordinary event, some would say – Sunrise. But how many times do we stop? To watch it? And reflect? Beauty unfolds in a sunrise. Or a sunset. But we have no time, so we remain oblivious. Of the happiness in small joys. Of the extraordinaire in the ordinary. Of the uniqueness in events common and regular in life.

We do not discover, because we do not seek. And so, even when the magic is unfolding all around us, we do not witness it.

The sea was calm. Waves crawled in towards the beach. Then crept back out to the horizon. They were like a hand reaching out towards me. A mother's hand - reaching out to caress me lovingly. Forwards. Then still. Backwards. Then still. I felt their touch. The heartbeat of the sea was in sync with mine.

A light breeze rose from the shadows of the sea. It came in with the waves and left with the waves. Its fleeting coolness tickled me between my naked toes. Then spread through me like dye in a cloth. It was soothing. Relieving. A reassurance that life renews itself in every moment.

Each breath I took in its wake, filled my lungs with its live energy. It traveled deep inside me, rejuvenating my acquaintance with parts of my body that had long since been forgotten. Then it left me slowly, only to return and refresh me again without being asked. And again, And yet again.

What had I done to deserve such abundance? What promise had I given? What purpose would I serve? For nature, to want to bless me so opulently with life and health? Would I be willing to repay its generosity when the time came? I wanted to. Would I be a good investment for nature? I wanted to be. I felt blessed and grateful.

With each heartbeat, I sensed a warmth rise up in me. In sync with the world inside my head, light in the world outside crept higher. Slowly, steadily. Rising from a deep dark abyss beyond the horizon. Black sky merged with the sea, its darkness dissolving in the saline waters.

Turning from black to pink, then to purple, and then to blue. Dark evaporated. There was light. What is darkness, I pondered? Truly, just an absence of light. Gone in a flash, like it had never ever existed.

The horizon lit up. It was an unforgettable sight. A giant majestic halo rising towards the sky, reaching for the stars that beckoned from above. The sun peaked shyly out of its watery blanket. Water reflected its light, magnifying its size. It climbed slowly, like it knew no care in the world, nor had chores to worry about.

It was an amazing extravaganza. A great spectacle. The orb grew more confident as it rose. Glowing promisingly with every lazy step out of the sea. I closed my eyes and felt it reaching out to me. Touching me, encapsulating me. In its mellow radiant warmth. I felt safe, secure. Time stopped. To witness this camaraderie. To live this moment. Like me, it was a witness. To the nature's magic.