Wealth Creation

[amitrandive]

Financial Risks people take.

http://www.subramoney.com/2016/04/the-risks-that-people-take-and-destroy-their-lives/

You will not even believe if I tell you that these are real life MISTAKES that I have seen people make. I then realized that many of us make these mistakes, but were just damned lucky! Here is a partial list:

• Giving bank guarantees for friend’s business loans and home loans
• Marrying without checking the background of the potential spouse (Guilty! got lucky, so looking smart)
• Women staying on in an abusive marriage for far too long
• Parents urging girls to stay on in a bad marriage
• Parents giving house ownership papers to children for their ‘short term borrowing needs’ and finding house being takenover
• Parents selling flat to combine resources with son / daughter to buy a ‘joint’ ownership house
• People refusing to even calculate how their funds are performing
• Doing investment themselves, doing equity investing themselves and not keeping records
• Justifying lower returns saying ‘but my needs are few’ – then why not a simple debt fund growth plan?
• Taking too much risk
• Taking too much risk by thinking that they are not taking any risk – bank FD ONLY kinda portfolio
• Thinking PPF, NPS, etc. are ZERO risk products
• Being extremely trusting, and not even verifying.
• Being too dependent on spouse, sibling, parent, children, agent or RM.
• Buying unnecessary and complicated products to please the salesman
• Thinking complicated products = better returns
• Thinking Fund manager = financial planner
• Thinking financial planner = fund manager
• Incomplete documentation especially in life insurance and real estate
• Getting into areas like film industry without understanding the downside -financially, physically, and emotionally
• Using media as the financial planner

 

[amitrandive]

Media based investing and losses…
http://www.subramoney.com/2016/04/media-based-investing-and-losses/

Some of the media based advice is so dangerous or simply useless, let us see them…

• Indexing works in the USA, but in India there are many funds that outperform the indices by a long margin: how useful unless you can say “Xyz is a good fund which will outperform the index over the next 20 years your investing life” – impossible to say this, so it does not work.
• You can never go wrong buying a good company: Well if 5 years ago people had bought Tata Steel, LnT, Reliance industries. He would still be nursing a big loss.
• Your IFA is good only if he can get outsized returns like the guy who got 3000% return in a game.
• You should rebalance your portfolio once in a year. You must not time the market.
• Experts beat the market regularly. Every measuring period that is.
• Good fund managers remain on top all the time. If they do not, it is time to sell.

Questions that they cannot find answers in the media (including blogs and fellow readers):

• How many funds to invest in to get a diversified portfolio?
• If mid cap will always outperform large cap in the LONG RUN, WHY should I invest in large cap at all?
• I can handle volatility so should be in a 80% equity portfolio?
• Will I really make money buying LnT at 1020 and selling at 1085?
• Why do ticker channels not play their 4 month old tapes to tell us what really happened?

 

[amitrandive]

18 questions to predict wealth
http://www.businessinsider.in/A-wom...ns-to-predict-wealth/articleshow/51232970.cms

Ever since she was little, Jaime Masters wanted to be a millionaire.

It wasn't until she was 24 years old, over $70,000 in debt, and in a job she hated that she made the effort

In her quest for $1 million, Masters began to study and interview people who had already reached that goal. (You can read some of her case studies on her website.) Soon enough, she started to come across commonalities that she realized influenced their success.

No one can predict the future, but Masters found answering "yes" to more than half of the following questions may indicate you have a mindset similar to those who have earned $1 million already - which says good things for your chances of doing it yourself.

Masters suggests you ask:

1. Do you consistently think of ideas to earn more money?
2. Do you usually care about value and spend less than you earn?
3. Do you already feel successful in many things, but aren't sure you can do something on your own?
4. Do you know you are destined for great things, but feel like things aren't moving fast enough?
5. Have you always wanted to be in control of your own time and experiences, but right now feel like you are just trying to get by?
6. Have you tried business ideas that didn't work out before, but still have the passion to try new ones?
7. Does the idea of working for someone else the rest of your life scare you?
8. Does having a boss feel constricting, and you don't want someone telling you what to do?
9. Do you have the idea of waiting until retirement to enjoy your life and the world?
10. Do you believe that success and wealth are in your power, but you don't want to rely on others?
11. Do you want to travel more but don't have enough vacation days?
12. Are you able to daydream about what you want to be when you grow up, no matter how old you are?
13. Do you only sleep four to five hours per night because you are too excited about your new ideas or business?
14. Do you read success stories and think, "What made them so successful? How come I haven't made it yet?"
15. Do you want to do work that matters, not just something that pays well?
16. Do you want to become a better person through personal growth?
17. Do you want to leave a legacy?
18. Do you want to give more, but feel unable right now?

Of course, the "Eventual Millionaire" mindset is only a piece of the puzzle.

Ultimately, earning a million is up to you.

 

[toingpoing]

Wonderful thread and very valid points. Refreshing after banging against silly threads,people planning to make millions from few thousands within a few months time! Carry on bro,with your nice posts....

 

[amitrandive]

Wonderful thread and very valid points. Refreshing after banging against silly threads,people planning to make millions from few thousands within a few months time! Carry on bro,with your nice posts....

Thanks for your kind words and appreciation !!!
:clapping::clapping::clapping:

 

[amitrandive]

Wealthy Mindset

http://www.subramoney.com/2016/04/wealthy-mindset-or-otherwise/

A wealthy mindset is what Kiyosaki calls Rich Dad behavior..how is it different from from a Poor dad mindset? I met rich people, very rich people and others..here is my observation:

• The rich earn far, far more than what they need and use
• As a corollary to that, their expenses are a small fraction of what they earn
• They know the difference between earned income, unearned income, realized income and unrealized income
• Their net worth is a few times more than their residential property
• They do not go into debt for consumption
• They know how much debt to go into for investing
• Even salary negotiations are done with lots of data maintained in a day to day diary
• They hold assets far, far in excess of debt
• Almost all their money is working for them, and working hard. They got rich that way, dammit.
• They are not slaves to any brand, lifestyle, nor do they worry about ‘what others will think’
• They are constantly looking to increase their REAL NET WORTH.
• Their children are brought up with a lot of wealth value systems
• If they do take debt it is for tax benefit, or to teach the kids the value of money – educational loans being a case in point
• They understand the difference between risk, volatility and inflation
• They learn money management skills from their parents / friend circle
• They virtuous cycle of being rich, compounding, and knowing how money works makes them richer

there should be much more…but these are just off hand…see where do you fall…this group or the debt group?

 

[amitrandive]

Teach your children all this

http://www.subramoney.com/2014/03/teach-your-children-all-this/

A few things that you should teach your kids:

1. Be responsible for your actions: When a kid runs and gets hurt, do not blame the bed, table or chair. Teach the kid that the table was stationary, it did not do anything, and the blame cannot be on the table.

2. Patience: the whole world will want the kid to do many things. Even the kid feels the power of ‘NOW’. Teach patience – make the kid wait for a bus, train, queues, – it actually helps relax when you know to internalize these things. You cannot ALWAYS find a ‘Ramu kaka’ who will buy your tickets. At least your children should NOT.

3. Everything has a Price, but Value is what YOU know to create out of it: Whether it is a Rs. 2000 doll with which she did not play or a Gym that you joined but did not go. The price was paid, but the value not drawn. And she could have a doll bought for her in class 2 which is STILL a favorite in class 12. That is super value. Exactly what happens later on in life while investing too.

4. Money has to be earned, it has to be respected, saved, invested, loved, and cared for. You may spend a lot or spend frugally, but ALL these steps are absolutely necessary. I know one businessman who keeps saying “I do not need money, my lifestyle is very simple’ – God hears him loud and clear – I have never known him to be COMFORTABLE with money. Immaterial of how much he has or needs. Funny.

5. Life is fair, we get what we deserve, and normally we are biased in our thinking.

6. Being rich and simple in this materialistic world is possible. It gives peace, and richness is a state of mind, not bank balance. Tell her that her heart should decide whether she is successful, not her excel sheet.

 

[amitrandive]

4 Distinctive Habits of Wealthy People

http://time.com/money/4158832/4-habits-wealthy-people/?xid=frommoney_soc_socialflow_facebook_money

From studying millionaires and non-millionaires, wealth expert Tom Corley says he’s isolated four daily habits that distinguish well-off people from the not-so-well-off.

1. Wake up early. Corley found that wealthy people wake up three hours before work, using that time to complete various tasks.
   
2. Have a to-do list and stick to it. Even if there are only a few items on that list, complete each task before the end of the day.
   
3. Take care of your health. Wealthy people exercise, watch what they eat, and don’t indulge in alcohol very often.
   
4. Manage your time. Wealthy people don’t waste a minute of their day. They’re always doing something to better themselves or to learn something.

 

[amitrandive]

Negotiate your salary!

http://www.subramoney.com/2016/04/negotiate-your-salary/

This actually started off as a talk to retiring military / defense people, but I realized that there are many people who do not negotiate their salary!

Here is my take:

1. You cannot afford to wait for your boss to find out that you are a great worker and increase your salary. Mathematically, in a company with 20,000 people the chance of this happening are close to zilch.
2. Your boss may not be able to convince HR to increase your salary, unless you sit in appraisal meetings with a lot of data about your contribution. I have advised people on this, and it works.
3. Most people come to appraisal meetings with a prayer on their lips. A diary maintained on a weekly basis about your contribution to the company and a nice 2 page summary is far, far more useful.
4. Defense personnel spend about 20 years in an organisation where negotiation of salary is not possible, so they assume that they should not bargain or negotiate. Wrong assumption, make changes, NOW.
5. Even if it is a new job as long as you negotiate politely there is no risk of the job offer being withdrawn!
6. Ask if you justify and deserve the salary that you are asking for
7. Go and do your homework on the company, and find out what other companies pay.
8. Bigger companies may try to drive a harder bargain, be careful. Be polite but firm.
9. How well you can negotiate depends also on your strength. If you have a good job already, your position is strong.
10. Negotiation is not a great win situation – your next appraisal could be muted if you negotiated too well!!
11. Negotiation is useful because once you start on a high note, the chances of remaining there are higher
12. People who start off on a lower salary find it almost impossible to get a big jump, so the choice of first job is very important.
13. Be careful about breaking the deal by being unrealistic.
14. Do not lie about your current package. I have seen companies refusing to talk to the candidate post lie detection!!

 

[amitrandive]

Being Rich
http://www.subramoney.com/2016/04/unconventional-steps-towards-being-rich/

Assuming for a minute that you come from a rich family, these steps might sound odd, but these are nice steps to take…see if you can do them…

Visualize that you are rich: you are rich by the thoughts that you have, damn the excel sheet. So go and Visualize that you are rich. You have a nice bank balance, assets to fund you for the rest of your life, and you have a nice big huge surplus. You are sitting with two agencies and wondering how to end world hunger, and how you plan to buy a rain forest and start greening it even better.

Remember when you have a lot of money, you have a choice of what to do with the money for world good. Imagine you are there sitting in a nice comfortable office and making such decisions.

Congrats, you are on your way to a great journey.

Go, skip a meal: Pick up Ekadesi as a day to skip a meal. Only water, maybe 2 bananas – one in the morning and one in the evening. Nothing else. It is a way of telling your body that ‘hunger’ does not scare me anymore. We are a pampered generation of urban rich who has a choice of a lot of foods – at home and as soon as we step out of the house. Apart from cooked food, we have fruits, etc. such a rich choice completely spoils us BUT MAKES US DEPENDENT and perennial sugar cravers. Stop craving – it is a sign of conquering your body’s requirement.

Go, take the public transport: Most of us start life using the public transport. A few years into the car and we start making statements like ‘OMG how do people travel by train’. A slight nudge…you did it not long ago. Our body has completely lost the ability to take some pain, tolerance, patience, …so we believe ‘we cannot’. Actually go and take a train. Conquer the fear of ‘will I be able to live without a car’. One more exercise at conquering fear.

Imagine you just lost your job: Many people have fantastic plans of what they will do if they lose their jobs. However, they are actually petrified that they will lose their jobs. Now. They have no action plan. If you think you have an action plan, do a test run. Now what would you do? Who would you call and go and see? Make a list and then call them now whilst you still have your job.

Make your CV. Update your LinkedIn status. Enter all your skills. Call your previous bosses, call your ex colleagues. Find out how is the market for your skills. If your current salary is Rs. 15 lakhs and you find jobs worth Rs. 12 lakhs, relax. Talk to your boss and ask him what you can do to increase your salary. What skills do you need to learn? what attitude to change? talk to people who are parallel to your boss. Look at better jobs geographically. If you are in Pune, look at Mumbai. If you are in Mumbai, look at Dubai.

Go, read a book: It is inspiring to read books on leadership, courage (Shackelton?), thinking (Vivekananda)…there is nothing more inspiring than to read a book. You get the distilled leadership and experience of a successful man summarized in 2/ 3 days reading effort. It is a very very unfair equation, but hey it favors you.

Go get rich by reading such books.

Pay yourself first: read here:http://www.subramoney.com/2013/12/pay-yourself-first-means-what/

Shift to a more sensibly priced, lesser fuel guzzling car. If possible sell off the car and shift to public transport + Uber or Ola.

Give up white sugar: If you are the Museli, Corn flakes, bread jam break fast types, give up ‘branded’ breakfast. Most of them are laden with 60% sugar. Dramatically give up on addicting white sugar and shift to jaggery, honey, dates, raisins for your ‘sweet’ fix. An amazing array of choices are available. Sugar is addicting…see how quickly you can give it up.

BE willing to be unconventional…so rent a house, travel around in a cycle, eat vegan….see what all you are willing to do different from what you have been ‘taught’.

Go have fun.

You just got richer. The money will follow…