How to Make the Most of Your Savings Account

What is a Flexi Deposit? 

A flexi deposit is nothing but a bank deposit that offers you both higher rates of interest as well as total flexibility to break the deposit. The intention behind using this facility is to not compromise on your money's liquidity and at the same time benefit from higher returns. 

For example, IDBI bank offers a facility wherein you can set an exact amount to be taken from your savings account on a monthly basis eg. Rs. 2,500 per month. This is to be locked into a flexi deposit for a certain tenure, which also is decided by you. 

So for example, say you started in January 2012 and stipulated that Rs. 2,500 should be deposited from your savings account into a flexi deposit every month, for 12 months. So every month from January to December 2012, Rs. 2,500 will be deducted from your savings account, and deposited into your flexi deposit account as individual flexi deposits. 
These deposits will earn whatever the banks rate of interest is on a one year deposit, if the tenure you have specified for each deposit is 1 year. Please remember that interest is taxable. 


What is the key benefit of a flexi deposit? 

The beauty of this facility is that if at any point your bank balance is very low and you need to make a withdrawal or you have a debit on your account that is higher than your bank balance, your latest flexi deposit will be broken to the extent of extra amount required, your debit will be done as required, and the remaining flexi deposit will continue for the stipulated tenure as required. 
For example, if you have Rs. 7,000 bank balance, and you have a debit of Rs. 10,000, then your last Flexi Deposit will be broken to the extent of Rs. 3,000 and the remaining Rs. 22,000 will continue to earn interest until it matures. This is if the bank follows the last-in-first-out rule. This is beneficial as your first FD continues for the longest tenure possible, earning the highest interest available. 
Some banks offer a lowest denomination of Re. 1 i.e. you can split off even a single rupee from your FD. 
Others offer a minimum split of Rs. 1,000, so for example if you only need Rs. 800, it will necessarily break Rs. 1,000 out of your FD and transfer it to your savings account. 

Different banks have different rules, which you will need to check in detail before going in for the flexi deposit / auto sweep facility. 

This is also known as the auto sweep in facility, because when the balance in your savings account crosses a certain amount, that amount is automatically swept into an FD, on which you earn bank FD rates of interest. 

Different banks offer different types of this facility (for example, a flexi deposit is different from an auto sweep in facility) and each bank has its own rules for what it offers. 


What is an Auto Sweep In Facility? 

The sweep in account is almost like the opposite of a flexi deposit account. 
In this facility, you open a savings account, then fix a minimum amount that should remain in your savings account. Any time your balance exceeds this figure, the extra amount will be swept into an FD. 

For example, some banks stipulate a minimum savings balance of Rs. 10,000, and any amount above this is swept into the FD account, in multiples of Rs. 5,000. The amount earns interest as per the tenure that it remains with the bank, subject to a maximum of 1 year in some bank cases, or even 5 years in others. 

It is not advisable to let this kind of FD go on for more than a year, as you have better investment options that can give you returns based on your goal requirements. 

So note the main difference between the flexi deposit and the auto sweep facility is that the auto sweep is automatic transfer from your savings to the deposit account, but the flexi deposit is not, you need to fill the forms and specify amount and tenure yourself. 


What should you keep in mind with both these facilities? 

The first thing you need to check, considering that these facilities are offered by banks, are the charges. Some banks will penalize you if you break an FD early by deducting 1% of the interest earned even for the period that you remain invested. For example, if you have a deposit where you have stipulated a tenure of 6 months earning 7% p.a., and you break it in 3 months and the 3 month rate is 5% p.a., does the bank give you interest on this FD at the rate of 5% p.a. or will it impose a 1% penalty and give you interest at the rate of 4% p.a.? this is to be checked if you are using the flexi deposit facility. 
For the sweep in account facility, check if your bank will penalize you if your savings account balance falls below the stipulated amount. 

Secondly, if you conduct a high number of transactions from your savings account, you might not find it useful to have a sweep in facility. 

Thirdly and possibly most importantly, the flexi deposit is useful if your bank offers LIFO and not FIFO i.e. it breaks the youngest (and therefore lowest interest earning) FD first, and leaves the oldest FD (earning the highest interest) alone as long as possible. 

Turn Over A New Leaf

Have a makeover; become a better person. The only thing stopping you is you, says Swami Kriyananda

How many of us think of our personalities as obnoxious relatives, hard to get rid of! I knew a man who, although fine in most ways, allowed his weaknesses to grow like weeds, until his good points began to choke for lack of nourishment. Whenever I tried to help him by pointing out how he was hurting himself, he would sigh, “I know — but I’m helpless! This is how I was brought up; all these tendencies were there in my parents as well.” He would proceed to list all the conditions that had made him the way he was.What could I say? For I saw that he enjoyed being helpless.

Heredity and environment do influence our personalities, but people are much too eager to accept their personality as their fate. If you ask them to change, they let out wails of pain and run away like rabbits. They are interested in what you have to say, until they find out that it means that they need to change themselves.

We can change ourselves if we want to. The timid can become brave, the restless can become meditative. Even the talkative can grow to love silence. The impatient can learn to love patience and the over-critical can become a fountain of appreciation.

Once we bring God into our lives, we rise above limitations. We have only to realise that we are deeper than our personalities. We need to step aside and watch our personalities, until we can see that the whole thing is merely a coat, covering our divinity.

We have been in awe of the lesser self for far too long. Even if we have erred a thousand times, setting tongues wagging, we are not that small self. Don’t look upon yourself as a weakling who has tried to reform himself and ended up becoming weaker than ever. Instead, see yourself as a prince among princes, a queen among queens, indulging only for a little while in an unpleasant nightmare.

We don’t know how great we are. We don’t know what a glorious future lies before us. Many think, “Well, God wouldn’t look at me, so I’d better not look for God.” We think we are unworthy, so we hide from Him. Yet God has been looking at us all the time. He doesn’t hold it against us if we have failed His test. All He wants is to see us conquer our shortcomings. God says, “I am not interested in your faults — I am interested only in your continual improvement!”

Remove Mental Fences
By exercising, you gain muscle and begin to do the exercises better. More than that, you come to understand how strong you already are. Because you have never tested your strength, your will is hypnotised into making you feel inadequate.

Even the most restless person can gradually develop the “strength” to meditate, or to pick up any good habit he wishes to inculcate. Why not test yourself? Don’t be afraid.

Karma, heredity, and environment — these are only temporary stumbling blocks in the path of the strong person. That fact that some people have conquered them shows that they can be conquered. Instead of crying “I give up!” when you stumble, laugh and get up again. You will discover that the only thing preventing you from changing is the belief that you can’t change.

Here are six things you can practise that will greatly help your efforts to change.

1. Be active, never passive, in response to life’s challenges. Willing activity will awaken within you the thought that something can be done about every problem.

2. Exercise regularly with deep attention. Physical exercise will not only keep the body fit, but will enliven the mind.

3. Practise breathing deeply several times a day. An increased supply of oxygen to the lungs invigorates also the brain.

4. Make a habit of holding your body erect, whether standing or sitting. An erect spine induces positive mental attitudes. A bent spine is the natural companion of negativity.

5. Develop a preference for foods that are high in energy and nutrients, as opposed to junk food. Remember, diet plays an important role in your mental, as well as your physical, well-being.

6. Say YES to life! Two voices compete within us — one is life-affirming; the other, life-negating. Be open to the yes influence. When faced with a new opportunity, ask yourself, “How can I make it a reality?” Stop being a naysayer.

Difference between Private Banking and Wealth Management

There is no generally accepted standard definition of wealth management – both in terms of the products and services provided and the constitution of the client base served – but a basic definition would be financial services provided towealthy clients, mainly individuals and their families.

Private banking forms an important, more exclusive, subset of wealth management. At least until recently, it largely consisted of banking services (deposit taking and payments), discretionary asset management, brokerage, limited tax advisory services and some basic concierge-type services, offered by a single designated relationship manager. On the whole, many clients trusted their private banking relationship manager to ‘get on with it’, and took a largely passive approach to financial decision making.

Private banking has a very long pedigree, stretching back at least as far as the seventeenth century in the case of some British private banks. It is, however, only really over the last 15 years or so that the term ‘wealth management’ has found its way into common industry Parlance. More sophisticated client needs throughout the wealth spectrum; a desire among some clients to be more actively involved in the management of their money; a willingness on the part of some types of financial services players, such as retail banks and brokerages, to extend their offerings to meet the new demand; and, more generally, a recognition among providers that, for many clients, conventional mass-market retail financial services are inadequate.

Wealth management is therefore a broader area of financial services than private banking in two main ways:

Product Range: As in private banking, asset management services are at the heart of the wealth management industry. But wealth management is more than asset management. It focuses on both sides of the client’s balance sheet. Wealth management has a greater emphasis on financial advice and is concerned with gathering, maintaining, preserving, enhancing and transferring wealth. It includes the following types of products and services:

(a) Brokerage.

(b) Core banking-type products, such as current accounts, time deposits and liquidity management.

(c) Lending products, such as margin lending, credit cards, mortgages and private jet finance.

(d) Insurance and protection products, such as property and health insurance, life assurance and pensions.

(e) Asset management in its broadest sense: discretionary and advisory, financial andnonfinancial assets (such as real estate, commodities, wine and art), conventional, structured and alternative investments.

(f) Advice in all shapes and forms: asset allocation, wealth structuring, tax and trusts, various types of planning (financial, inheritance, pensions, philanthropic), family-dispute arbitration – even psychotherapy to children suffering from ‘affluenza’.

(g) A wide range of concierge-type services, including yacht broking, art storage, real estate location, and hotel, restaurant and theatre booking.

Client Segments: Private banking targets only the very wealthiest clients or high net worth individuals (HNWIs): broadly speaking, those with more than around $1 million in investable assets. Wealth management, by contrast, targets clients with assets as low as $100 000, i.e. affluent as well as high net worth (HNW) clients.

Robert J. McCann, President of the Private Client Group at Merrill Lynch, provided a succinct definition of wealth management at a recent industry conference:

“Wealth management addresses every aspect of a client’s financial life in a consultative and a highly individualised way. It uses a complete range of products, services and strategies. A wealth manager has to gather information both financial and personal to create an individualised series of recommendations, and be able to make those recommendations completely tailored to each client. Off the shelf – it won’t do. What [wealth management] requires is connecting with clients on a personal level that is way beyond the [retail financial services] industry norm”.

5 Advantages Of Investing In Your 20s

Young adults often face financial challenges due to burdensome student loans, relatively low-paying junior-level positions and a lack of budgeting experience. While twenty-somethings know they are supposed to be saving for retirement, the golden years seem unimportant and a long way off compared to the consumer purchases that could be made now. For many young adults, it seems easier to put off any investing decisions until their financial situation becomes, at least theoretically, more stable. Twenty-somethings, however, are actually in a prime position to enter the investing world, even with college debt and low salaries.

Time  While money may be tight, young adults have a time advantage. There is a reason that compounding - the ability to grow an investment by reinvesting the earnings - was referred to by Albert Einstein as "the eighth wonder of the world." The magic of compounding allows investors to generate wealth over time, and requires only two things: the reinvestment of earnings and time. A single $10,000 investment at age 20 would grow to over $70,000 by the time the investor was 60 years old (based on a 5% interest rate). That same $10,000 investment made at age 30 would yield about $43,000 by age 60, and made at age 40 would yield only $26,000. The longer money is put to work, the more wealth it can generate in the future.

Take on More Risk  An investor's age influences the amount of risk he or she can withstand. Young people, with years of earning ahead of them, can afford to take on more risk in their investment activities. While individuals reaching retirement years may gravitate towards low-risk or risk-free investments, such as bonds and certificates of deposit (CDs), young adults can build more aggressive portfolios that are subject to more volatility, and that stand to produce larger gains. 

Learn by Doing  Young investors have the flexibility and time to study investing and to learn from both successes and failures. Since investing has a fairly lengthy learning curve, young adults are at an advantage because they have years to study the markets, and to refine their investing strategies. As with the increased risk that can be absorbed by younger investors, so too can they overcome investing mistakes, because they have the time needed to recover.

Tech Savvy  The younger generation is a tech savvy one, able to study, research and apply online investing tools and techniques. Online trading platforms provide countless opportunities for both fundamental and technical analysis, as do chat rooms and financial and educational web sites. Technology, including online opportunities, social media and apps, can all contribute to a young investor's knowledge base, experience, confidence and, ultimately, expertise.

Human Capital  Human capital, from an individual's perspective, can be thought of as the present value of all future wages. Since the ability to earn wages is fundamental to investing and saving for retirement, investing in oneself - by earning a degree, receiving on-the-job training or learning advanced skills - is a valuable investment that can have strong returns. Young adults often have many opportunities to increase their ability to earn higher future wages, and taking advantage of these opportunities can be considered one of the many forms of investing.

The Bottom Line  Saving for retirement is not the only reason to make well-planned investments. Many investments, such as those made in dividend stocks, can provide an income stream throughout the life of the investment. Twenty-somethings have certain advantages over those who wait to begin investing, including time, the ability to weather increased risk and opportunities to increase future wages.

5 Ways to Kick Your Fear of Failure

Losses come in a variety of forms, but the worst thing we can lose is faith in ourselves: in our ideas, in our skills and talents, and in our willingness and ability to overcome challenges and achieve our dreams.

When you constantly try to achieve big things, some amount of failure is inevitable. So is the resulting loss of confidence and self assurance. The key is how you respond and how quickly you regain belief in yourself.

If you’re struggling to find motivation and determination:

Think critically about the worst that can happen. Most fears and almost all worries are groundless. Whenever risk is involved—and trying something new definitely involves risk—it’s easy to back away when you’re stewing in a pot of vague, indefinite concerns. But nothing I’ve ever tried has ever turned out as badly as I imagined it could. (And I’ve done some really stupid stuff.)

Say you quit a full-time job and open a retail store. What is the worst possible outcome? Oh, your business could fail, your savings could evaporate, and your family could be out on the streets, homeless, and destitute. Possible? Sure, but not at all likely. If your store struggles you will work harder and adapt your business model, and if that doesn’t work you’ll shut it down and get a job. Failing would hardly be ideal but failure is something you and your family can overcome. Back away from the edge, determine the more likely “worst” things that can happen, and then create plans to deal with those possibilities.

Worries are just possibilities you haven’t decided to face. When you don’t face them, you can’t control them.

Recognize you aren’t different—in a good way. Spend time with a person who is very successful in some field or pursuit; it doesn’t matter what. After a few minutes you’ll probably think, “Wait, this guy isn’t any smarter than me.”  After a few more minutes you’ll probably think, “Hey, I’m actually smarter than he is.” Success doesn’t require a high IQ or some special intangible quality that you don’t have. Successful people only become “special” after they succeed; before they put in all that time and effort they were just like everyone else. Spend time with a few successful people and you will realize you are just as capable of achieving great things.

Get a buddy. The average business owner lives in the land of “If it is to be, it’s up to me.” Entrepreneurs actively seek authority and responsibility, but going it alone doesn’t work well when the only person you can turn to when times are tough is yourself. You don’t need a business partner, but you do need someone you can occasionally lean on for emotional support. Finding a buddy is easy: Just ask a friend how she’s doing and listen, empathize, and offer a little support. When you’re the first to reach out, creating an informal support network is easy... and while you may never need your buddies, it inspires confidence to know they’re there.

Think about a time you succeeded. How did you feel about yourself? How did others feel about you? Bask in the glow. Remember the praise you received. Remember when you took a deep breath, nodded your head, and thought, “Wow, that was awesome.” You probably felt like you were almost floating. Hold on to that feeling. Then...

Think about a time you failed miserably. Think about how horrible you felt. Then promise yourself you’ll do whatever it takes to make sure you never have to feel that way again.

And go get started.

Mutual Funds are tax efficient investments

Everybody knows that bank deposits are attractive investments now with returns in the range of 9-10%. But are you aware of the tax implication on the interest income? The interest earned on a bank deposit is added to your income and are taxable. Mutual fundsare very good for long term wealth creation. Another advantage of investing through mutual funds is the attractive tax treatment. If you are investing 1 lakh in equity mutual fund and getting 1, 21,000 after 2 years, you need not pay any tax on the 21000 gains. But if it was invested in a bank deposit, the interest of 21,000 is taxable as per your tax slab.

Let us discuss the mutual fund taxation.

Equity Mutual Funds:

From taxation angle, Equity mutual funds are those funds where equity holding is more than 65% of the total portfolio. Even most of the balanced funds will fall under Equity Funds, because they maintain more than 65% in equity.

Income from a mutual fund can be divided into 2 parts

1. Increase in the value of investment (capital Gain)
2. Dividends

Let us see how tax is calculated on the above 2 income from Equity Mutual funds.

Capital Gain is the increase in the value of your investment. It is divided into short term and long term for taxation purpose.

Short term capital Gain arises if investment is hold for less than 1 year or in simple words sold before completion of 1 year (365 days).

Short Term Capital gain on Equity Mutual Funds – if you sell equity mutual fund before completion of 1 year you need to pay tax of 15% on capital gains. (15.45% with 3% cess)

Long Term Capital Gain arises if investment is sold after 1 year. Long term capital gain on equity mutual funds are tax free. You need not pay any tax on the gain. This is the biggest advantage for long term investors.

The dividend income from Equity mutual funds are also tax free. There is no dividend distribution tax also in case of equity mutual funds.

So, you need to pay tax of 15% on the gains, only if you sell the units within 365 days from purchase. Otherwise all income received is tax free in the case of equity mutual funds.

Debt Mutual Funds:

All other funds which will not qualify as equity fund, including Fund of Fund and international Fund will be treated as debt funds for taxation. Definition of Short Term and Long Term is same as mentioned in equity funds.

Short Term Capital gain on Debt Mutual Funds – any short term capital gain that arises due to selling of debt fund before 1 year will be added to investor’s income and taxed according to tax slab of the individual.

Long Term Capital gain on Debt Mutual Funds – The tax will be calculated as follows.

• Without Indexation – 10% tax on capital gains
• With Indexation – 20% tax on capital gains

Indexation provides for adjusting the returns to offset the effect of inflation to some extent. In order to determine the capital gains after accounting for inflation, the indexed cost of acquisition is subtracted from the sale consideration. You need to pay tax only on this difference. This will really reduce your tax burden. We can understand the effect of indexation with an example.

Suppose you had invested Rs 10,000 in a debt fund in financial year 2009-10 and sold in financial year 2010-11 for Rs.11, 000. The ratio of the inflation index at the time of sale (2010-11) to its value at the time of purchase (2009-10) works out to 1.125 (711/632). The indexed cost of acquisition will work out to Rs 11,250. So, there is a capital loss of Rs.250/- in this case and there is no need to pay any tax on the maturity amount of Rs.11000/-.Only if there is a gain above the indexed cost of Rs.11250, you have to pay tax at 20% on such gains. This makes debt mutual funds attractive over other debt instruments.

Dividend income from Debt Mutual Funds are tax free in your hand. But there is dividend distribution tax paid by mutual funds to income tax department. The rate of tax depended on the type of debt funds.

Dividend Distribution Tax on Liquid/Money Market Schemes

Liquid/Money Market Schemes are Debt funds which invest in money market instruments or in securities that have maturity of less than 90 days.

27.038% tax (25% Tax + 5% Surcharge + 3% Cess) will be deducted from the dividends in this case.

Dividend Distribution Tax on Debt Funds other than Liquid/Money Market Schemes

13.519% tax (12.5% Tax + 5% Surcharge + 3% Cess) will be deducted from the dividends in this case.

So from tax point of view, it makes sense to plan your investments through mutual funds. You can decide a combination of equity funds and debt funds, as per your risk profile and investment duration. This will reduce your tax burden, compared to other investments.

Differences Among CV, Resume and Biodata

People use the words RESUME, C.V., and BIO-DATA interchangeably for the document highlighting skills, education, and experience that a candidate
submits, when applying for a job. On the surface level, all the three mean the same. However, there are intricate differences.

Resume

Resume is a French word meaning "summary", and true to the word meaning, signifies a summary of one's employment, education, and other skills, used in applying for a new position. A resume seldom exceeds one side of an A4 sheet, and at the most two sides. They do not list out all the education and qualifications, but only highlight specific skills customized to target the job profile in question. A resume is usually broken into bullets and written in the third person to appear objective and formal. A good resume starts with a brief Summary of Qualifications, followed by Areas of Strength or Industry Expertise in keywords, followed by Professional Experience in reverse chronological order. Focus is on the most recent experiences, and prior experiences summarized. The content aims at providing the reader a balance of responsibilities and accomplishments for each position. After Work experience come Professional Affiliations, Computer Skills, and Education

C.V.(CURRICULUMVITAE)

Curriculum Vitae is a Latin word meaning "course of life". Curriculum Vitae (C.V.) is therefore a regular or particular course of study pertaining to education and life. A C.V. is more detailed than a resume,usually 2 to 3 pages, but can run even longer as per the requirement. A C.V. generally lists out every skills, jobs, degrees, and professional affiliations the applicant has acquired, usually in chronological order.A C.V. displays general talent rather than specific skills for any specific positions.

Bio-data

Bio Data, the short form for Biographical Data, is the old-fashioned terminology for Resume or C.V. The emphasis in a bio data is on personal particulars like date of birth, religion, sex, race, nationality,residence, martial status, and the like. Next comes a chronological listing of education and experience. The things normally found in a resume, that is specific skills for the job in question comes last, and are seldom included. Bio-data also includes applications made in specified formats as required by the company.

A resume is ideally suited when applying for middle and senior level positions, where experience and specific skills rather than education is important. A C.V., on the other hand is the preferred option for fresh graduates, people looking for a career change, and those applying for academic positions. The term bio-data is mostly used in India while applying to government jobs, or when applying for research grants and other situations where one has to submit descriptive essays.Resumes present a summary of highlights and allow the prospective employer to scan through the document visually or electronically, to see if your skills match their available positions. A good resume can do that very effectively, while a C.V. cannot. A bio-data could still perform this role, especially if the format happens to be the one recommended by the employer.

Personal information such as age, sex, religion and others, and hobbies are never mentioned in a resume. Many people include such particulars in 
the C.V. However, this is neither required nor considered in the US market. A Bio-data, on the other hand always include such personal particulars.

‘Management Lessons from Gustave Eiffel’

After facing a rejection on his idea and lots of criticism during the second effort also, this project manager still completed his project so successfully that today it is the single most visited paid monument in the world. No guess work needed – the project - ‘Eiffel Tower’ and the name of the project manager - ‘Gustave Eiffel’ (Eiffel).

The Beginning

Designers - Emile Nouguier and Maurice Koechlin, the two chief engineers in Eiffel's company developed an unprecedented design of a very tall tower in 1984. This was a bold idea for Eiffel’s company, which had been a master, engineering the bridge supports and even for 53 years old Eiffel who by now was France's master builder in metal. Even though Eiffel had been building railway bridges and a host of other metal structures in France and abroad for 30 years, building a 300 meter tower presented a different aspect since the bridge supports were short and intended to bear a horizontal load rather than a vertical one.

Eiffel & Company, his engineering firm, undertook research on the proposed tower's structure. The tallest structures at that time were half the height of the proposed tower and they were built taking a really long time. Also, these structures were made with stones. Eiffel, however, was determinant to build his iron tower and decided to work ahead on the idea. On September 18, 1884 Eiffel registered a patent ‘for a new configuration allowing the construction of metal supports and pylons capable of exceeding a height of 300 metres’.

Eiffel planned to build the tower in Barcelona and presented the idea to the city of Barcelona to build the tower for the Universal Exposition (World Fair) of 1888. His idea for the bid was a 300 meter tower made of iron which would be the tallest structure in the world. However, his idea was rejected as too off-beat, strange and expensive construction. Later Eiffel submitted the proposal to the city of Paris for the Universal Exposition of 1889 and this time approval was given for building his design as the entrance arch for the exposition. The intended purpose of the tower was to build it as a tourist attraction for the exhibition and restaurants were also planned for the first and second levels.

In January 1887, Eiffel signed a contract with the French government and the City of Paris. However, the real challenge for Eiffel had just begun.

The Roadblocks

The estimated cost of the project was about $1.6 million, less than one-fifth of which was covered by the French government's subsidy.

Apart from financial issues, Eiffel had to face fierce resistance from the artistic and architectural community in Paris. The community of artists protested through open letters in the newspapers, calling Eiffel’s project as ‘useless and monstrous’, ‘tragic street lamp’, ‘incomplete, confused and deformed’, ‘high and skinny pyramid of iron ladders’ accusing him of spoiling the beauty of the city of Paris.  The architects accused him of paying attention to aesthetics without regard to engineering.

Eiffel had serious technical challenges to overcome to implement his design. Due to the height of the tower, high winds could cause structural damage or even collapse the structure. The tower being really high and an open structure, the risk of accidents on the site was also high for the construction workers. Getting the tourists up the curved columns of the tower through elevators represented another challenge.

Having received the final approval at the end of 1886, Eiffel began to work on the project only in January, 1887 but he had to follow the tight schedule since the entire project had to be completed in time for the opening of the exhibition on May 6, 1889.

Following the criticism, the engineering challenges of the design, and short span of time, completing the proposed project was clearly a huge challenge for Eiffel.

Eiffel’s Response

Entrepreneur Eiffel agreed to contribute $1.3 million in return of receiving all revenues generated by the tower during the exposition and for 20 years afterward, recovering his investment and a profit-if the tower was a success. As per the contract, after 20 years’ time, full ownership would revert to the City of Paris and they could also demolish the structure.  
Answering to the criticism by artists and architects in an interview to a leading newspaper, Eiffel assured that the tower would give a great impression of strength and beauty. He asserted that engineering practicality and aesthetics were not mutually exclusive and that the tower would be a handsome attraction that would enhance the beauty of Paris, rather than detract from it.

To overcome the technical challenges, Eiffel in the descriptive book ‘The 300 Meter Tower’ gave, precise indications concerning relational use of the materials at the different levels in keeping with the simplified calculations. The shape of the tower was also determined by mathematical calculation involving wind resistance.

As shown in the picture, the tower basically composes of two elements: 

(i) a sturdy bar stool,  standing on 4 main pillars, bonded and extended with a much lighter batter at the smaller level constituting the second floor, 
(ii) a tower firmly attached atop.

Eiffel’s detailed note served as a base to build the tower. To complete the project in time within the given budget, Eiffel divided the project into phases.

To avoid accidents on the site, Eiffel took safety precautions. He used movable stagings, guard-rails and safety screens. Due to his safety measures, the construction site was safe for the hundreds of people to work. To make the elevators work through the odd angles of the tower, Eiffel divided the task vertically - separate elevators to the first, second, and third levels, and horizontally - between the four columns: North, South, East, and West. The problem of carrying tourists to the top of the tower was solved with two counterbalancing cabins and a vertical piston to provide lift. The final phase of the project - the painting of the tower did not present any technical problems other than the huge areas and the many surfaces and angles that had to be painted.

With Eiffel's hands-on management techniques, the entire tower was completed by March 31, 1889 (exactly in 2 years, 2 months and 5 days) five weeks ahead of the May 6 deadline. With fifty engineers, 5300 blueprints, 100 ironworkers and 121 workers on the construction site, the project was completed with an overall cost of $1.51 million - under the determined budget.

First of its kind, built entirely of iron and completed in an amazingly short period of time, once the tower was complete, the presence of masterpiece itself dissolved the criticism. The project brought Eiffel the nickname ‘magician of iron.’ The tower became the focal point during the 1889 World Fair.

The tower was constructed as a temporary structure with a 20-year permit and was to be dismantled by 1909. However, people were more than used to seeing it standing tall. As a result, we still see it intact in the City of Paris. 
 
From 2 million visitors the first year, to more than 200 million visitors by 2008 (since its construction), the tower quickly became a tourist attraction, now welcoming about 7 million visitors every year.

Eiffel’s actions during the construction of the tower provide useful inferences for today’s managers.

Lessons from Eiffel

- Entrepreneurial lesson – Capitalizing on the idea; Overcoming criticism; building flagship product or service that people get talking about
- Planning – With 5300 blueprints and his detailed note, Eiffel’s planning laid a base for the project
- Risk management – With no precedent structures to refer, he executed the idea of the world’s tallest monument overcoming all the risk factors
- Problem-solving – Overcoming technical challenges 
-Managing stakeholders – Published response to the community of artists and architects 
- Quality management – A successful design, still intact
- Team work – Bringing along the designers, engineers and workers to get the work done 
- Cost-effectiveness – Completion of the project within the determined budget
- Time management – Completion of the project within the given tight schedule by dividing it into the phases

End Note

For any given organization or project, managers are an integral part. Having different responsibilities, they fulfill many different roles. They are decision-makers, problem solvers, goal setters, planners, and strategists.