Personal Finance: 2025

How a Simple Question Changed a Client’s View of CAs

Why Your CA is Your Business Partner Too

Role of a Chartered Accountant Beyond Filing Returns

It was just before 10 AM when Mr. Sharma walked into the office of S&Co. He had been referred by Sundaram, an old client of the firm, and had booked the earliest appointment available. The office was still settling into the day’s rhythm - computers being opened, the aroma of freshly brewed coffee lingering, and the new receptionist learning her way around the front desk.

Mr. Sharma approached the counter and asked, “Can your firm prepare a project report for my upcoming venture?” The young receptionist, new to the role, hesitated. She had heard of income tax returns and audits, but “project reports” sounded unfamiliar. Before she could fumble an answer, the glass door opened and in walked CA Srini, the owner of S&Co.

With his characteristic warmth, he greeted Mr. Sharma and invited him into his cabin. The discussion that followed stretched for an hour. They spoke about Sharma’s new business idea, how banks evaluate loan proposals, the importance of structured financial projections, and the professional touch a project report adds in securing finance. By the end of it, Sharma looked visibly reassured. “I didn’t know a CA could help beyond tax filings,” he remarked, shaking hands with Srini before leaving.

Later, the receptionist, curious and a little embarrassed, asked Srini, “Sir, apart from tax returns, what exactly does our firm do?”

Srini smiled. “That’s a very good question. You see, most people think Chartered Accountants only prepare accounts and file returns. But our role is much wider. At S&Co, for example, we handle taxation, audits, and accounting - that’s the base. Beyond that, we advise on estate planning, help families structure wealth transfers smoothly, guide investments, and prepare project reports for banks and financial institutions. In fact, we often support clients in making business decisions, setting up systems, and even managing compliance in new ventures.”

She listened intently as Srini continued, “And it’s not just us. Larger firms with multiple partners may specialise in niche areas - international taxation, mergers & acquisitions, forensic audits, business valuations, even risk advisory. Chartered Accountancy has evolved far beyond the traditional perception. We are problem solvers, advisors, and trusted partners in growth.”

The receptionist nodded, now seeing her workplace in a new light. The conversation left her with a deeper appreciation of her role as the first touchpoint for clients who often walk in with diverse needs.

For S&Co, that morning was a reminder that every new client meeting is an opportunity to break myths and showcase the true value a CA can bring. After all, a Chartered Accountant is not just about filing returns - it’s about enabling businesses and individuals to grow, protect, and manage their wealth with confidence.

The content made available in this article is for general informational purposes only. While every effort has been made to ensure the accuracy and completeness of the content, it should not be considered as a substitute for professional consultation.

About the Author

A Homeowner’s Nightmare Lessons from a Rental Dispute

When “Safe as Houses” Turns Risky

Lessons from Real Estate Rentals

Real estate is often seen as one of the safest investments. The logic sounds simple - buy a property, hold it, and either earn regular rental income or benefit from long-term appreciation. But sometimes, reality can turn out quite different.

A recent newspaper headline caught my attention: “Elderly man reclaims flat from defaulting tenants after 4 years.” The story was about a senior citizen who had to fight a long legal battle just to get back possession of his own flat.

That news item instantly brought back memories of a case I had witnessed nearly three decades ago. One of my clients, an employee with the Department of Atomic Energy, had a similar ordeal. While he was still in service, he purchased a modest apartment through a loan from his employer. His plan was straightforward - continue living in government-provided quarters until retirement and then move into his own home.

Unfortunately, life had other plans. He rented out the apartment in the interim to a couple who happened to be legal professionals. They were also closely related to a local political corporator. Within six months of moving in, the tenants stopped paying rent. What followed was a long, painful struggle.

Instead of enjoying the comfort of his own house after retirement, my client was forced to live in a rental accommodation. He had to shell out money each month for rent, while his own apartment remained locked up in a legal tussle. For nearly two years, he went from one office to another, filing complaints, attending hearings, and pleading with authorities. It was only after a prolonged and emotionally draining battle that he could finally reclaim his property.

The incident left a deep impression on me. On paper, owning property looks like an asset that offers both financial security and emotional comfort. But once rented out, especially without proper due diligence, the same property can become a liability. Eviction laws in India are notoriously tenant-friendly, and unscrupulous occupants know how to exploit the loopholes.

The lesson here is not to dismiss real estate as an investment altogether - it undoubtedly has its place in a balanced portfolio. But investors, particularly those who intend to rent out their property, must be careful. Strong legal agreements, thorough background checks on tenants, and a realistic assessment of risks are essential safeguards.

After all, an investment meant to give you peace of mind should not become the very cause of sleepless nights.

About the Author

A Bharadhwaj Investsmart Story - The Real Cost of Too Much Real Estate

Don’t Put All Your Eggs in One Basket

A Lesson from Sanjeev’s Story

The mid-morning hum of Bharadhwaj Investsmart was in full swing when the reception phone buzzed for the fourth time that day. “Sir, Mr. Sanjeev has called again,” the receptionist whispered to Vaidy, the firm’s founder and seasoned wealth advisor.

For two days, Sanjeev had been relentlessly seeking an appointment. That afternoon, he finally arrived - tall, well-dressed, but with tired eyes. The moment he sat down, his story tumbled out.

A Real Estate Fortress

From the outside, Sanjeev’s life was enviable. A senior executive in a multinational, a hefty salary, and a line-up of properties:

A spacious Mumbai apartment for his family
An ancestral-style house in Kerala
An “upcoming luxury project” touted as the next big thing
A weekend farmhouse in Karjat

On paper, his net worth sparkled. But almost all of it was locked in real estate.

The Sudden Jolt

Two weeks earlier, Sanjeev’s mother was hospitalised unexpectedly. Surgery, medicines, and aftercare expenses mounted quickly.

When he opened his banking app to transfer funds, he froze - his account balance was alarmingly low.

EMIs for his properties and steep maintenance charges swallowed most of his monthly income. The “upcoming project” was still years away. Selling the farmhouse would take months, and the market wasn’t favourable.

Sanjeev was asset-rich, but cash-poor.

A Hard Truth

Vaidy listened patiently before saying, “Sanjeev, you’ve built a fortress - but one with no gates. Your wealth is trapped inside.”

He explained the old principle: Don’t put all your eggs in one basket. Real estate can be valuable, but overloading on any one asset class leaves you exposed.

Liquidity - the ability to access cash without significant loss - is as vital as returns. Life’s emergencies, job changes, or sudden opportunities all demand funds you can tap into instantly.

A Balanced Plan

Vaidy suggested:

Keep one primary residence, reduce exposure to multiple illiquid properties
Allocate part of his portfolio to diversified equity mutual funds
Maintain an emergency fund covering 6–9 months’ expenses in liquid or ultra-short-term debt funds
Get adequate health and critical illness insurance

“I thought I was being smart investing in what I could see and touch,” Sanjeev admitted. “But I never realised I’d feel this helpless when I needed cash.”

The Takeaway

Real estate offers stability and tangible value - but it’s not the whole picture. Over-concentration can turn wealth into a cage.

True financial strength lies not just in assets, but in the freedom to use them when it matters.

Diversify. Keep some assets liquid. And remember - even the grandest fortress is useless if you can’t open the gates when you need to.

About the Author

A S&Co Story - Independence day & Financial Independence

Freedom Beyond 15th August – A Chat on Financial Independence at S&Co.

It was a rainy Thursday morning at the office of S&Co., a reputed audit and tax advisory firm. A small tricolour adorned the reception desk, and the atmosphere was quietly festive with Independence Day just around the corner.

As the team wrapped up their morning coffee, Manoj, the senior most staff, casually said, “Sir, every year on 15th August, we talk so much about national freedom. But what about personal freedom - like financial independence? That seems equally important today.”

CA Srini, the firm's founder, smiled. Though known for his tax and audit acumen, Srini had a deep personal interest in financial literacy and wealth management. “That’s a brilliant thought, Manoj. Just like our country fought for freedom, each of us has to work towards financial freedom in our own lives.”

Dhawal, from the society accounts team, added, “But sir, what does financial independence really mean? Is it just about being rich?”

Before Srini could answer, Jagruti, the ops in charge, said, “I think it means not worrying about money every month - like having enough to cover your needs and still save.”

Srini nodded. “Exactly, Jagruti. It’s not about how much you earn, but how well you manage it. Financial independence means control, peace of mind, and choices - not compulsion.”

Just then, Sunil, from Bharadhwaj Investsmart (the wealth management firm run by Srini’s brother, Vaidy), walked in for a joint client meeting. He overheard the discussion. “Srini Sir is right. We see this all the time - people with high incomes stuck in debt, while modest earners who invest smartly live stress-free.”

Pooja, who handled GST, leaned forward. “So how do we get there? Many of our clients earn well but don’t seem financially independent.”

Prajakta, who helps the other seniors in almost all the aspects, joked, “Maybe we should do an ‘audit’ of their personal finances too!” Everyone laughed, but Tabassum, the practical one, said, “Actually, that’s not a bad idea. Most people have no clue where their money goes each month.”

Srini picked up a marker and wrote on the whiteboard:

Spend less than you earn. Control lifestyle inflation.

Build an emergency fund. Keep 3-6 months of essential expenses ready.

Invest early and consistently. SIPs, PPF, ELSS - let compounding work.

Avoid bad debt. Credit cards and luxury loans kill freedom.

Define your goals. Retirement, education, home - clarity is power.

Insure wisely. Get proper health and term insurance.

Review regularly. Audit your financial life annually.

“It’s simple,” Dhawal said, “but needs discipline.”

“Just like our nation’s independence came with planning and sacrifice,” Srini added, “personal financial freedom also takes time, patience, and consistency.”

Sunil smiled, “And the earlier you start, the better. Time is your greatest ally.”

As the team returned to work, Srini concluded, “Let’s not stop with flag hoisting this 15th August. Let’s also pledge to work towards our own financial freedom.”

The national anthem began playing softly from someone’s phone. The office fell silent - for those few moments, everyone stood not just as citizens of a free country, but as individuals determined to be financially free as well.

About the Author

Coffee, Conversations & Blue Chip Companies

How a Casual Chat Turned Into an Investment Lesson

Understanding Blue Chip Companies and How to Identify Them

It was a quiet Friday afternoon at the S&Co office. CA Srini, the seasoned owner, was enjoying a cup of coffee with his brother, CFP Vaidy, the brain behind Bharadhwaj Investsmart. Their conversation drifted into a nostalgic lane.

“Do you remember, Vaidy,” Srini smiled, “those shares we picked up years ago in truck finance company? The dividends alone could fund a Goa trip every year.”

Vaidy chuckled. “And the stock price now? Easily over ten times. That’s the magic of a true blue chip company.”

By now, a couple of curious ears had picked up the conversation. Jagruti wandered over, followed by Prajakta, Dhawal, Manoj, Pooja, Tabassum, and Sunil. Soon, the entire team was huddled around, notebooks in hand.

Srini leaned back. “Alright, since you’re all here, let’s make this a quick master class.”

What exactly is a Blue Chip Company?
Vaidy took over. “Think of them as the Sachin Tendulkars of the corporate world - consistent performers over decades, respected, and resilient. These companies are leaders in their sectors, have strong financials, and a track record of weathering economic storms.”

Traits of Blue Chips
Srini began counting on his fingers:

Market Leadership - They dominate their industry, like a telecom giant or a top private bank.

Strong Balance Sheet - Low debt, high reserves, and robust cash flows.

Steady Dividend Payouts - They share profits generously with shareholders.

Brand Value & Trust - Decades of reputation that customers rely on.

Resilience - Even in recessions, they bend but don’t break.

Why do they deliver over time?
“These companies grow slowly but steadily,” Vaidy explained. “They reinvest wisely, innovate without taking reckless risks, and expand their reach. Their growth compounds - and so does your wealth.”

Sunil raised a question. “But aren’t they expensive to buy?”

“Yes,” Srini admitted. “Often, blue chip stocks trade at higher valuations. But remember - you’re paying for quality, stability, and long-term performance. Just like you’d pay more for a gold coin than for brass.”

How to Identify Them?
Vaidy outlined a simple checklist:

Market Capitalization - Usually among the largest in their sector.

Consistent Earnings Growth - Profits rising year after year.

Dividend History - Uninterrupted payouts for at least a decade.

Low Debt-to-Equity Ratio - Sign of financial strength.

Strong Corporate Governance - Transparent and ethical management.

The conversation ended with Dhawal summarizing: “So, it’s about finding the companies that can keep delivering, year after year, like seasoned marathon runners.”

Srini smiled. “Exactly. And if you hold them long enough, they won’t just make you money - they’ll give you peace of mind.”

As the team dispersed, the clink of coffee cups was replaced with the quiet tapping of keyboards. Somewhere in the hum of the office, new investment journeys had already begun.

About the Author

Three Finance Minds and a Curious Doctor

From Varalakshmi Pooja to Pvt Ltd Punditry

It was a special Friday on the calendar - Varalakshmi Pooja, a day of devotion and prosperity. This year, it also happened to be Raksha Bandhan. Aditya, a Chartered Accountant, and his wife, Dr. Rashmi, decided it was the perfect day to visit Kannan mama’s home.

Kannan mama, a CA, lived with his wife, Geetha mami, who was known for her meticulous pooja arrangements and irresistible snacks. Their children, Priya and Rohan - Aditya’s cousins - were also home for the occasion.

The front door opened to the aroma of sandalwood and fresh flowers. Geetha mami, draped in a rich silk saree, greeted them warmly. “Come in, come in! You’re just in time. The aarti is about to begin.”

The living room was a burst of colour - rangoli at the entrance, brass lamps lit, garlands strung across the altar. Varalakshmi’s idol shone, adorned with jasmine and marigold. Rashmi, still shaking off the stress of her hospital shifts, felt instantly at ease.

Geetha mami offered prayers with quiet focus, while Malli mama, Kannan’s younger brother and a lively Certified Financial Planner, chimed in with the responses. The air was filled with devotion, but also a warm undercurrent of family celebration.

Once the prayers ended, it was time for Raksha Bandhan. Priya approached Aditya with a tray. She tied the rakhi and fed him a sweet.

Geetha mami brought out the snack spread – medu vadas, modaks, and steaming cups of filter coffee. That’s when the festive chatter began morphing into the inevitable - finance talk.

Kannan mama leaned back. “Adi, I’ve got a client running a successful proprietorship. He’s thinking about converting into a private limited company.”

Malli mama grinned. “Ah, the moment every growing entrepreneur faces. To Pvt Ltd or not to Pvt Ltd - that’s the question.”

Rashmi, amused, joined in. “Why would anyone bother? Isn’t it more complicated?”

Three finance professionals turned toward her, as if a buzzer had gone off. Aditya chuckled. “You’ve set off the masterclass alarm.”

Kannan began. “A proprietorship is tied to one person. Simple to run, fewer compliances - but no separation between you and the business. If the business sinks, your personal assets can be dragged in.”

Malli added, “A private limited company is a separate legal entity. It has its own life - limited liability protects personal wealth, and credibility shoots up in the eyes of banks and clients.”

Aditya looked at Rashmi. “Think of it like moving from a small rented clinic to building your own hospital. More paperwork, sure - but far greater scope for growth.”

Rashmi nodded, munching on a modak. “So it’s not just about tax saving?”

“Not at all,” Malli said. “Yes, taxes can be planned better - salary, dividends, retained profits. But the bigger wins are scalability, attracting investors, and smooth succession planning. You can transfer ownership without the business collapsing.”

Kannan sipped his coffee. “Of course, you have to be ready for the extra work - ROC filings, board meetings, statutory registers. It’s a trade-off. But for many, it’s the bridge to the next level.”

By the time the last vada & modak was gone, Rashmi felt she’d attended a TED Talk in traditional attire. Between the pooja, the rakhi, and the finance banter, it had been an unexpectedly enlightening evening.

As they got ready to leave, Rashmi laughed. “I came for blessings and snacks, but got a crash course in corporate law. Next year, I’m bringing a notebook.”

Malli winked. “And maybe we’ll start charging entry fees.”

Kannan added, “Fine - but Geetha will still make the snacks free of cost. Some traditions are too good to change.”

And so, under the glow of the pooja lamps, the festival had woven together family, tradition, and just the right dose of financial wisdom.

About the Author

A Bharadhwaj Investsmart Story – The Cost of Free Advice

The DIY Investor’s Wake-Up Call

It was a cloudy Tuesday morning when a new client walked into the office of Bharadhwaj Investsmart, the boutique wealth management firm run by Vaidy, a seasoned financial advisor known for his calm demeanour and practical wisdom.

The new visitor, Raunak, had been referred by an old client and appeared visibly uneasy.

"Vaidy sir, I really thought I could manage things on my own," he confessed as they settled down. “But I think I’ve made some serious mistakes.”

Vaidy smiled gently and gestured for him to continue.

“I had a clear requirement. I needed funds about 10-12 months later for my sister’s wedding. But I ended up putting the money into an equity mutual fund, thinking I could ride the market for better returns. Now, after six months, the value is down by nearly 9%,” Raunak sighed.

Vaidy listened without interrupting, then nodded. “Equity is great for the long term, Raunak , but for any short-term needs, especially within a year, it carries risk. A simple debt fund or even an ultra-short-term fund could have been more appropriate.”

Raunak nodded in agreement. “And that’s not all. I’ve been investing in traditional insurance plans for long-term goals like retirement and my kids’ education. The returns are barely matching inflation, but I thought I was being safe.”

Vaidy leaned forward. “Insurance is important—but it's a risk-management tool, not an investment product. Mixing the two often leads to suboptimal outcomes. For long-term wealth creation, you need products tailored to your goals—based on your risk profile, time horizon, and liquidity needs.”

Raunak looked embarrassed but relieved. “I’ve been trying to do it all on my own—watching YouTube videos, reading blogs, listening to friends. But clearly, I’m missing the big picture.”

“DIY investing is fine,” Vaidy said kindly, “but just like you'd go to a doctor for health or a CA for taxes, financial planning too deserves professional help. A good advisor brings not just knowledge, but structure, discipline, and objectivity.”

Raunak folded his hands in gratitude. “Sir, I’ve learnt my lesson. Please accept me as your client. I need someone to watch over my financial health, the way I watch over my family.”

Vaidy smiled, “That’s what we’re here for.”

About the Author

Why the Boss is Back to Studying?

A Lesson in Staying Updated

It was a regular Tuesday morning at Bharadhwaj Investsmart, the air buzzing with client calls and portfolio updates. But something was different. The usually composed Vaidy Sir, the founder and brain behind the firm, was unusually glued to his laptop, flipping through PDFs, scribbling notes, and muttering financial jargon under his breath.

Curious, Sunil, the senior relationship manager, leaned over to Tabassum, his colleague at the desk next to him.

“Do you know what's going on with Vaidy Sir? He’s behaving like a student during finals week!” Sunil whispered.

Tabassum nodded, amused. “I overheard him telling someone that he’s registered for an exam next week. Apparently, it’s a new certification SEBI has mandated for anyone who wants to distribute the new SIF (Specialised Investment Fund) product.”

Sunil raised his eyebrows. “But he’s got over 25 years of experience! Why would he need to take an exam?”

Just then, Vaidy walked by, holding a printout of practice questions and a highlighter in hand. He chuckled overhearing their conversation. “Ah, yes! The old man’s back in study mode!” he smiled.

Sunil and Tabassum grinned, but Vaidy continued more seriously, “You know, it doesn’t matter how long we’ve been in the business. SEBI wants only certified professionals to promote SIFs. And honestly, that’s a good thing. Our industry is evolving, and if we don't upgrade ourselves, we become outdated—fast.”

Tabassum nodded thoughtfully. “It’s inspiring to see you take it so seriously.”

“I have to,” Vaidy replied. “Clients today are smarter, and regulations are tighter. What worked 10 years ago isn’t enough anymore. Knowledge is like milk—it goes stale if not refreshed.”

That afternoon, the team gathered for their regular weekly huddle. But instead of the usual market update, Vaidy took a few minutes to speak from the heart.

“If any of you are thinking that learning stops once you get your degree or job, think again. This field is dynamic. Whether it’s tax laws, mutual fund norms, or risk profiling standards—there’s always something new to understand. I want Bharadhwaj Investsmart to be known not just for experience, but for being ahead of the curve.”

That evening, Sunil signed up for an online refresher course on mutual fund taxation, and Tabassum began reading up on investor grievance redressal mechanisms.

Because when the leader leads by learning, the team follows by example.

About the Author

Why My CA Says a Good Night’s Sleep Is Better Than a Risky Refund

Email to an old client

Subject: Why Honesty Still Pays - My Thoughts on Your Refund Query

Dear Nikhil bhai,

Warm greetings.

Thank you for your email and the trust you’ve continued to place in our office for the last 25 years. It’s always been a pleasure to be of service to you, and it’s nice to hear that your son is now starting his professional journey. May he do well and prosper.

I understand from our discussion / your email that your son, based on some peer advice, has suggested that we create additional / dummy expenses in your ITR to get a higher refund. I’m writing to explain, as clearly and respectfully as possible, why this is not just unadvisable - but potentially dangerous.

Let me begin by saying this: our office does not believe in or engage in filing returns with false or fabricated claims. Not only is it ethically wrong, but it’s also legally risky. And the consequences, especially today, are far-reaching.

The Income Tax Department has moved far beyond random checking. It now relies on sophisticated data analytics, AI-driven algorithms, and annual information statements (AIS) to match your claims with data from banks, insurers, mutual funds, and other reporting entities. If your return shows inflated expenses without matching bank trail, vendor invoices, or business patterns, it will likely trigger red flags. Once that happens, scrutiny notices, inquiries and even penalty proceedings or prosecution under can follow.

In your case, since you are a long-standing insurance agent with regular commissions, the department already has access to all TDS deductions and turnover via Form 26AS and AIS. Any mismatch or suspicious claims can open the door for assessment. And as you know, these assessments often stretch for months, requiring explanations, documentation, and unnecessary mental stress - even if one has nothing to hide.

Nikhil bhai, you’ve always been a straight-forward professional and a respected client of our firm. Please don’t let momentary temptation, peer pressure, or hearsay dilute that. It’s always better to pay the right tax and sleep peacefully than to gain a few extra rupees only to lose your peace of mind. And as someone who has built a clean track record over decades, your reputation with the department is an asset - let's not compromise that for short-term gains.

We’ll be happy to file your return accurately and in line with actual expenses you’ve incurred. If there are genuine deductions available, we’ll certainly claim them - as we’ve always done. But let’s not take the slippery slope of creating fiction in the return. That’s not the legacy I want for your son to inherit either.

Looking forward to your confirmation so we can proceed with finalising the returns for both of you.

Warm regards,
CA S Srinivasan
S&Co, Chartered Accountants

About the Author

Why Is My CA Asking So Many Questions

Subject: Your Query on Information Requirements for Tax Filing – Clarification

Dear Anirudh,

Thank you for your email. It’s great to have you and your family onboard with S&Co for this year’s income tax return filings. I understand your concern - the list of details we’ve requested may seem longer than what you’ve been used to in the past. Allow me to explain why.

Each taxpayer is different - not just in terms of the source of income but also in the nature of transactions, deductions, exemptions claimed, and financial behaviour. In your case, we are looking at four unique profiles:

You, a self-employed musician and music arranger with possible freelance gigs, royalty income, studio expenses, and TDS from different sources.
Your wife, a salaried employee in the tech sector who may have stock options, bonuses, or even crypto holdings.
Your mother, a pensioner - for whom senior citizen benefits and 80C/80D deductions may apply.
Your father, a retired businessman now drawing income from investments, perhaps with capital gains, dividends, and interest components.

Now, the reason we’re being thorough is because the Income Tax Department is being thorough too. Over the past few years, the tax system has become more data-driven and interconnected. Annual Information Statements (AIS), TIS, 26AS, and other data points are now automatically matched with your return. Even small mismatches can trigger notices or refunds getting held up.

We’re not trying to overwhelm you. We’re trying to represent your family’s finances as accurately as possible - while ensuring you don’t miss out on any deduction or benefit legally available. For instance, many self-employed professionals overlook claiming legitimate business expenses like travel, instrument maintenance, or software subscriptions. Similarly, salaried employees often miss HRA, Section 80 deductions, or even foreign income disclosures.

Our goal is not just to file a return, but to file an informed, clean, compliant return that:

1. Minimises your tax liability legally.

2. Avoids future scrutiny or unnecessary notices.

3. Keeps your financial records tidy in case of any loan applications or investments down the line.

Your father-in-law, who kindly referred you to us, will attest - this extra effort upfront saves a lot of time and trouble later.

We see this as a long-term relationship, not just a transaction for this year. As we get to know your family’s financial patterns better, future years will become much smoother and faster.

Let’s take this first step carefully and confidently. Thank you again for your trust in us. Feel free to call or drop in if you’d like to go over any specific questions.

Warm regards,
S Srini
S & Co, Chartered Accountants

About the Author

When cousins & their spouses meet - Simple becomes compound...

Simple Interest Vs Compound Interest

A Family Chat That Turned Into a Masterclass

It was a relaxed Sunday evening when Aditya, a Chartered Accountant, and his wife Rashmi, a doctor, dropped by Priya - his cousin’s house for a coffee. Priya, a Certified Financial Planner, lived nearby with her husband Sanjiv, an MBA and a banker. All of them were around 30 and catching up after a long time. What started as a casual chat quickly turned into a lively and insightful discussion on the power of interest - more specifically, Simple Interest vs Compound Interest.

Rashmi, who’s usually immersed in medical journals and patient care, mentioned her fixed deposit investment and asked, “What’s this compound interest everyone keeps talking about? I thought interest is just... interest.”

Priya smiled. “Great question! Let’s start with the basics.”

She explained, “Simple Interest (SI) is calculated only on the principal amount you invest. So if you invest ₹1 lakh at 10% annual interest for 3 years, you’ll earn ₹30,000 - ₹10,000 per year. No surprises there.”

Rashmi nodded.

“Now,” Priya continued, “Compound Interest (CI) is where the magic happens. Here, interest is calculated not just on the principal but also on the interest already earned. That means your money earns interest on interest.”

Aditya jumped in. “Let me illustrate that. Suppose you invest ₹1 lakh at 10% compound interest per annum. At the end of the first year, you get ₹10,000 - same as simple interest. But in the second year, your interest is calculated on ₹1,10,000, not ₹1,00,000. So you earn ₹11,000. In the third year, it becomes ₹12,100. Over three years, you earn ₹33,100 instead of ₹30,000.”

“Now imagine this happening over 15 or 20 years,” said Sanjiv, warming up to the discussion. “Compounding starts slowly, but over time, it’s exponential. It rewards consistency and patience.”

Priya added, “This is why starting early is so important. Even a small SIP in a mutual fund that compounds over time can outperform a large lump sum invested later with simple interest.”

Rashmi asked, “But aren’t fixed deposits compound too?”

“Yes and no,” Aditya replied. “Most bank FDs compound quarterly, but if you withdraw the interest regularly, it works like simple interest. Also, equity mutual funds, PPF, and EPF - these are examples of instruments where compounding works really well if left undisturbed.”

Sanjiv chimed in, “In fact, the entire principle of wealth building relies on compounding. Warren Buffett says compounding is the eighth wonder of the world - those who understand it, earn it; those who don’t, pay it.”

Rashmi laughed, “Okay, okay, you’ve sold me on compounding. Time to revisit my investments.”

As the sun dipped lower, the group moved on to other topics, but for Rashmi, this was a revelation. A casual coffee chat had turned into a crash course in wealth creation.

Simple interest is straightforward and predictable. Compound interest, though slower at first, can deliver far superior returns over time. The earlier you start and the longer you stay invested, the more compounding works in your favor.

About the Author

A S&Co Story - OPC Explained

Solo but Structured

Understanding OPC in Simple Terms

It was a breezy weekday morning at S&Co. CA Srini had just wrapped up a video meeting when Mr. Agarwal, a recently retired professional, walked in for his scheduled appointment. After taking Voluntary Retirement from a 30-year corporate career, he had plans to start a small consulting firm and wanted to explore the best way to formalize it.

"Should I register a partnership? Maybe an LLP?" Mr. Agarwal began, settling into the chair opposite Srini.

Srini smiled. “You’ve got several options - but let's see what fits your needs best. Since you plan to start alone, have you heard of a One Person Company - an OPC?”

Mr. Agarwal shook his head. That caught the attention of three staff members seated nearby - Jagruti, Pooja, and Prajakta - who paused their work to listen in. OPC was a term they'd often seen on MCA forms, but never truly understood.

Srini continued, “An OPC is a relatively new structure designed for solo entrepreneurs. It allows a single individual to form a company with limited liability and corporate status, much like a private limited company.”

“So I can be the only owner?” asked Mr. Agarwal.

“Yes,” Srini nodded. “You’ll be the sole shareholder and director. But there’s one mandatory requirement - you’ll need to nominate someone who’ll take over the company’s affairs in case something happens to you.”

“Oh!” exclaimed Pooja, “like a legal heir?”

“Not exactly,” Srini clarified. “The nominee is more of a legal fallback. They won’t hold shares unless the original member becomes incapacitated or passes away.”

Jagruti jumped in, “What about compliance and taxes? Is it treated like a normal company?”

“Good question,” said Srini. “Yes, an OPC is taxed like any other private limited company, currently at 22% plus surcharge and cess, under the concessional regime. You’ll need to maintain books, get audited if turnover crosses ₹1 crore, and file annual returns.”

“And are there any limitations?” Mr. Agarwal asked.

Srini leaned forward, “Yes, two major ones. First, you cannot incorporate more than one OPC at a time or be a nominee in more than one. Second, if your turnover crosses ₹2 crore or paid-up capital exceeds ₹50 lakhs, the OPC must convert into a private limited company.”

Prajakta looked thoughtful. “So it’s perfect for small consultants or solo startups?”

“Exactly,” said Srini. “It gives you the brand credibility of a company without the complexities of partners or investors initially. And if your business grows, the structure can evolve.”

Mr. Agarwal smiled, visibly more confident. “Then OPC it is. Let’s get started.”

As the meeting concluded, even the young staffers had a clearer picture of how a one-person business could be formalized smartly. For someone just stepping into entrepreneurship, OPC could be the perfect blend of independence, structure, and simplicity.

About the Author