Few Months back i have published the Article - Buy a Second hand Car.

I have received so many comments on this article. Most of that comments were from highly un satisfied readers. I can understand the feelings of my readers.

Few days back, i have received a comment from a reader. Here is the Comment.

" I guess there is a thin line between frugality and savings. Would you die as a billionaire without experiencing the small joys of life OR you would die with sufficient savings and all the enjoyable memories of life with you? I think the decision to buy a car of more than 1% of your asset should NOT only be thought from financial point of view, but rather an emotional point of view also. It is a balance that needs to be achieved. If you are satisfying your emotional needs then I think buying a car more than 1% of assets might not be a bad idea. Imagine a person wants to buy a car of his choice, but is stuck with your logic of 1%."

Well, the purpose of this article was just to educate the people regarding they should not spend more than they earn. See. Basically these car companies are marketing their products so aggressively that, it affects your mind. So Not having a Luxurious Car will feel you poor.

Because this aggressive marketing by Car Companies, people starts thinking that if they want to look cool and rich than they must buy a car. So they don't buy 2nd hand car only because they want to look cool and rich.

They started thinking emotionally that they are not happy because they don't have a new luxurious car. Well, to those people i would like to advise that,Car is one of the Ultra-fast depreciating item. Means once you buy the new car, it will loose more than 60% of its value within first 4 years.

So instead why not buy just a 2-3 year old car having a good condition?
Because somebody else has already taken that loss on their head. Yes, I know that it will feel you poor and the reason for that is because Car companies have so aggressively marketed their products that not having a car will make you unhappy or feel poor.

second thing i have mentioned in the article that, True rich people never buy a car more than 1% of their Total Net Worth. Well, see.. No matter how you feel emotionally or psychologically but the true fact is thatoogl,"If you want to live Financially free and without having any financial burden, than you have to spend less than you earn"

No matter how you attracted by some car or something else but the basic fact of happy living is that, you must have to spend less than what you earn. If you love a car worth of Rs. 10 lacs and you don't have a net worth of Rs. 20 lacs only than buying a car with borrowed money is a Fool's plan. Because by borrowing money you give the rights over your future Income to anybody else (Bank or Financial Institution) and this is not at all a good financial plan, No matter without having a car what you feel..........

Please try to understand that, not having a luxurious car feels you poor and un comfortable only because those car companies have spend literally spend hundreds of crores of rupees behind marketing their various car products. It is only the state of your mind that makes you feel poor..........

So i again advise readers that, please buy a 2nd hand car only. Never buy a car of more than 1% of your Total Net Worth............ I know, first you won't look cool and rich but when you see your Wealth growing, you won't care how you look.....!!!!!!!!!!

About “My Journey To Billionaire Club” -

“My Journey To Billionaire Club” (MJ2BC) is India’s First of its Kind of Personal Finance Blog. I have Launched this Blog on March 2008. The Spiritual Mission of this Blog is to provide Financial Education to people of India as well as this World. And Of course Business Mission of any Business is to make profit. This is my Internet Business & the Business Mission of this Internet Business is to SELL Ad Spaces to potential advertisers directly and mainly via Google AdSense Program to Generate Revenue for this Business.

So Why I have chosen Blog Platform to Educate people?

Well, According to me the Education should be like that, so that it can change at the same faster rate as the world is changing. Current Education system is no longer effective to ensure success in your life because our current education system is unable to change with the faster changing world.

Click Here to Read The Article, Why I have chosen Blog Education instead of Traditional Education?

About “MJ2BC Unmasks The Mystery of Money” -

I am reading Personal Finance, What is Money, History of Money, How it works, Investments, Business, The Power of Corporate Structure and many more things related to money since I was only 16. Today I am 26 (Year 2009) and after 10 years of reading I have totally unmask the Mystery of Money. Along with Lots of reading, I have done lots of observations of Middle Class, Rich & Ultra-Rich  people. I personally met so many Middle Class & Rich people and few Ultra-Rich people in my life also.

So Finally I have developed this Guide for Educating people about Money. I have developed this Guide for Mass Financial Education. So that people of India and other parts of world can easily Understand What is Money, How it works, How to make Money work for you and How to create New Money and circulate it in the Economy.

So From Next Chapter, without discussing more about this Financial Awareness Program, I will directly start educating you. I have written this Financial Awareness Guide in very easy to understand language.

I have also avoided undue lengthy explanations and writing. Everything is in short, Sweet & Simple Language. Each Article of this Guide is easy to Understand and Information Rich. So Read Everything very carefully and you will Understand the Mystery of Money in detail……..!!!!!

Any Way……. Best Luck 4 your Journey To Unmasking The Mystery of Money.

Click Here to Read the Full Index of “MJ2BC Unmasks the Mystery of Money” Guide

“MJ2BC Unmasks The Mystery of Money” is a Mass Financial Awareness Program. Where MJ2BC is a short form of this Blog, “My Journey To Billionaire Club”.

It is a Quick Guide of Financial Awareness. In this Guide, I have avoided the undue lengthy writing. But instead I have focused more on Information. This Information Rich Guide will open your eyes and change your middle class mindset of money.

Year 2009 is a Mass Awareness Year of India. And so many Giant Companies  have started spreading mass awareness in this year.Here are the few Examples of such Mass awareness Programs.

01) Jaago Re, 1 Billion Votes, A Mass awareness program and Online Voting Platform from TATA Tea

02) SBI & SEBI “Investor Awareness Program”

03) “Teach India” Program by Times of India

04) Customer First Series – A Mass Financial Awareness Program by DISHA (ICICI Bank) Financial Counseling Services

So “My Journey To Billionaire Club” has also decided to launch a Mass Financial Awareness Program this year to help people of India to understand What is Money, How it works, How to manage Money, How to make Money out of Money, How to create new Money in the Economy & The Power of Corporate Structure………!!!!!!!!

So Here is a fifth Mass Awareness Program for Indians and that is,

05) “MJ2BC Unmasks the Mystery of Money” sponsored by India’s No.1 Personal Finance Blog “My Journey To Billionaire Club”

Salient Features of this Program -

- Very easy to understand language.

- Very interesting Language. Whole the guide is written in such a manner that it will hold you up to the last page.

- Easy to Distribute as you can not only read this Guide on this Blog but you can also download a PDF File of this Guide and send it to your Friends to educate them. Download is 100% FREE…!!!!!

- Give your Friends, Children, Parents, Spouse, Batch Mates & Colleagues this Financial Awareness 

Guide as a Birthday Gift or any other Gift. It is available in PDF File and 100% Free for Download.

- The Guide is in interesting language that doesn’t mean that you will read some kind of making easy money or making quick money tips inside it. You will find Totally real time And practical ways of managing and creating money. Rich are Making their money work for them (Making Money out of Money) in this way only since centauries & Billionaires are creating new money in the Economy in this way only since decades…….!!!!!!

- So after reading this Mass Financial Awareness Guide, the picture and vision about money will become totally clear in your Mind.

So Hope that You will Like this Guide…..!!!!

Click Here to Read the Full Index of “MJ2BC Unmasks the Mystery of Money” Guide

Remember “The 3 Golden Rules of Money”,

Rule: 1 Middle Class Earn Money (Middle Class Work for Money),

Rule: 2 Rich Earn Manage Money (Rich make Money work for them) &

Rule: 3 Ultra-Rich Earn Manage create Money……………..!!!!!!!!!!!!

Unmasking “The Mystery of Money” is all about the above 3 Golden Rules of Money.

We will discuss here the above 3 Golden Rules of Money. I mean i will write in the “Unmasking The Mystery of Money” about How Middle Class earn Money, Rich Manage Money & Ultra Rich create Money?

What is “MJ2BC Unmasks the Mystery of Money?”

- Well it is all about How Middle class earn Money, What is the middle class mentality to think and handle Money. How Middle class spend Money? How Middle class handle Money…. and everything about Middle class Money Mentality

- It is all about How Rich Manage Money, What is the Rich mentality to think about Money? How Rich Handle Money? How Rich Manage Money? In Which things Rich spend money? How much is the Financial IQ of Rich?, What Rich know about Money that Poor & Middle class don’t and ALL the other aspects about Rich Money Mentality

- It is all about How Ultra-Rich create New Money in the Economy? How Ultra-Rich think about the Money? What is the mindset of Ultra Rich people? What Ultra-Rich people know about Money that Poor, Middle Class and even Rich don’t know? How Ultra-Rich people literally create Money? How you can also create New Money in the Economy? How you can also be Ultra-Rich, What is the Financial IQ of Ultra-Rich? At Which level Ultra-rich think about Money? And ALL the other aspects about Ultra-Rich…………..

What is NOT “MJ2BC Unmasks the Mystery of Money?”

- It is not about ways to make Money. But it is about how to make money out of money, how to manage money & how to create money?

- It is not about make money fast

- It is not about make money easy

- It is not about Fast Money or Quick Money

- It is not about to earn money, making money by hard work or easy money. But its about managing money, making money work for you, making money out of money and creating money

- It is now a How to make Money guide but its how to manage & How to create Money Guide.

Conclusion -

In this Guide, I will totally unmask the Mystery of Money.After reading this Guide, you will understand in detail that What is Money, How it works, How you can Manage Money, How you can make your Money Work for You (Rich) & not only this but you will know after reading this guide that “How can you Create New Money in the Economy?” (Ultra-Rich)…..

Hope You will Like it…….!!!!!!!!!

Click Here to Read the Full Index of “MJ2BC Unmasks the Mystery of Money” Guide

How to Become Rich Someday

from wikiHow - The How to Manual That You Can Edit

There are many ways to become rich, but many more to become poor. Of course it's usually not easy and many quick methods involve a lot of risk. so take your time and follow these steps to build your wealth.
Note that people have different perceptions of what it means to be rich. In this article we will define rich as having a fortune higher than $1 million.

Steps

Start by investing in your most important asset: Your mind

1. Doing well in school and getting an education in a high-paying profession such as doctor, lawyer, economist, etc. will give you a head-start and a safe economic position.
   
2. Learn about basic economics such as Compound interest and investment strategies.
   
3. Develop yourself all your life. Increase your professional skills, leadership skills, financial skills, social skills and general life skills. Making yourself valuable will increase your chances regardless of your path to riches.
   
4. Develop a vision; why should you become wealthy? Based on this, set your goals. You wont rise up unless you are able to build and focus your ambition.
   
5. Stay healthy; It is very important to stay healthy in your endeavour to become rich. This will enable you to work hard and also increase your life span increasing your earning period. On the other hand, you will be able to reduce the cost on health care.
   

Invest

1. Start investing as early as possible. Do not wait until you have "enough" money to invest. You will end up with a larger account in the end if you start investing a small amount early and keep adding more regularly.
   
2. Make smart investments
   

If you don't understand what you are investing in, don't. Start with something easy like index funds. They have fewer ups and downs than individual stocks, and you will not have all your eggs in one basket.

1. For safety: Stay as debt free as possible. A paid-for education and a paid-off house will enable you to invest more money in the stock market or your own business. Only gear up low-risk investments with loans.
   
2. Starting now is better than never starting. The power of compound interest can make anyone wealthy. Example: Investing only $10 every year at 15 % annual profit will give you over $1.3 million after 70 years.
   

Start Your Own Business

1. It is always better to be an employer than an employee, if you are disciplined and able to devote time and money. Learn all you can about running a business. Take a class. Ask an experienced business owner for advice. Be careful, though. Many businesses fail, especially in their first year. You could end up with considerable debt, no savings, and no benefits. Get help!
   
2. Entrepeneurs make up the majority of millionaires, it is high risk, but it is also the most likely way to become truly wealthy. Few people amass great wealth through other means. Less than 1 % become a millionaire through "other" means such as being a rockstar, winning the lottery, etc. So unless you inherit wealth your best shot is doing this.
   
3. Note that you can start your own business part-time. For example by going into real estate, purchasing, renovating and selling homes is a common way for building wealth for people without money to invest.
   

Be Smart

1. Learn about budgeting, credit, and debt. Learn how credit cards work! If you get into debt early it can sabotage your progress.
   
2. Put an amount of money in the bank monthly. 10, 20, 30 dollars is good - $100 is better. By the time you get old, retirement would be easy. (See segment about compound interest).
   
3. If you are in college and can't afford an apartment and don't like those nasty dorms, then gather with 3 or 4 people, and buy a good sized house while splitting the payment. It'd probably cost less than a apartment. Better yet, buy yourself a home using a mortgage and pay yourself instead someone!
   

On the other hand, there haven't been covered any specific ways in this article. Please update.

Related wikiHows

• How to Start Your Own Business
  
• How to Finance Your Business
  
• How to Get Rich Easily
  
• How to Start Building Wealth when You Are Very Young
  
• How to Start an Investment Club
  

Article provided by wikiHow, a wiki how-to manual. Please edit this article and find author credits at the original wikiHow article on How to Become Rich Someday. All content on wikiHow can be shared under a Creative Commons license.

Many readers of this blog have a same query, And that query is “Index Funds Versus Direct Shares” – Which is Better?

So let us discuss today that which is better? Index funds or direct shares?

Well, The straight forward answer is – If you are a professional Investor who can read and analyze financial statements and the fundamentals of the Company than you should go for direct stock investing. Because direct stock investing has a slightly higher edge than buying index mutual funds.

But if you are not a master of professional stock investing than buying a broad index funds is a better option.

So What it means by Index Funds?

Well, Index funds means the mutual funds that have a portfolio of exactly the “Mirror Image” of that of underlying index. Suppose if you buy some index fund which has underlying Index Sensex than its portfolio composition will be exactly the mirror image of that of Sensex. Means it will have the same 30 stocks in same proportions as Sensex have.

In developed countries like USA and European countries, Index mutual funds are better than actively managed mutual funds or direct stock investing. Because developed countries are so much developed that the growth in any business sector is average and it is sometimes very difficult to beat the underlying index and even if sometimes you or your fund manager beat the index, you or your fund manager will hardly beat the index by 1-2 % and this 1-2% will go towards fund management charge or brokerage charge in case of direct stock investing.

But if we are talking about developing countries such as India, China and other Asian economies than there is a large space for businesses to expand and grow. So if you are in a developing country like India than the actively managed mutual funds and direct stock investing (if you are an intelligent investor) has much higher edge over index funds.

Actively managed Indian mutual funds have beaten the Sensex by over 10% since last 10 years even in the bear market. So it is advisable that you invest in actively managed mutual funds or direct stock investing (if you are an intelligent investors) rather than investing in Index mutual funds.

So weather to invest in Index funds or direct shares is really depends on your personal investment skills and your Financial IQ.

Ask your self honestly that, Do I have a Complete knowledge of stock market? Will i be able to watch the market on regular basis? Will i be able to analyze the financial statements and fundamentals of the Indian companies every quarterly? Be Honest with your self. If your answer  is “YES” than go for direct stock investing & if your answer is “No” than simply go for Actively Managed mutual funds or Index Funds…….

Let us discuss about Indian Wedding Industry and Business Opportunities in Indian Wedding Industry.

You believe it or not but "Indian Wedding Industry" is Rs.1.5 Lac Crores of Industry and Growing at the rate of 20 % annually.

10 years before when Meher Sarid, Leading Delhi-based Wedding planner in 1997-98 had started her business as a wedding planner there was hardly any competition in this market. But today, there so many Wedding planners in Delhi for all budget marriages. Today in metro cities like Delhi, Mumbai and Chennai it is impossible to think about marriage without having a Wedding Planner.

At present average Wedding Budget for Indian Wedding is,
Rs. 20 lacs to Rs. 1 Crore.
And Celebrity Weddings range from anywhere between,
Rs. 1 Crore to 10 Crores of Budget.

Take the Example of famous celebrity wedding, Abhishek Bachhan & Aishwarya Rai.

There are so many Businesses that are associated with Indian Wedding Industry.

1) Jewellery
2) Clothes
3) Wedding Planning
4) Decorating
5) Flowers
6) Caterings
7) Travel Business (for Honeymoon Purpose).........etc


All of the above Businesses are associated with the Wedding Industry of India. There is a huge market space to create your Business in the Wedding Industry. Shopping of any wedding starts from 6 months prior to the wedding. Which included jewellery, clothes...etc...

Wedding Planners order flowers from so many outer countries.

There is also an another Business that is associated with this Industry and that is Celebrity Weddings outside the India. The most favourite destinations are Malaysia, Singapore, Mauritius and Thailand. Celebrities prefer their marriages in these Destinations also.

So you can develop your new Business Venture in this Industry. The only thing is that, you should completely know what you are doing and you should be persistent with providing your Services.

Today, all types of Wedding Planners are available for all budget Wedding Ceremonies.

So according to my Research and Analysis, this Industry has so much of Market Space. What i suggest to anyone is, if they have proper skills and expertise than this is the right time to start a New Business Venture in this Industry. Because there is a lot of market space spared in this industry. And another important thing is that, this Industry is growing at the rate of 20% annually and very few Industries in the Indian Economy sectors are growing at this much of Rate.

So Start your Business in "Indian Wedding Industry" and watch it grow exponentially....!!!

Have you ever think that what is the difference between Rich (Rich & Ultra-rich) and Poor (poor and middle class)?

Well, the main difference between Rich and everyone else is the "Leverage".
So what it means by "Leverage"?

Well, in very simple terminology and if talk about school level physics than in physics leverage means its the action (as shown in figure) by which you can move earth also.

But in Finance, Leverage means,

1) The use of a small amount of assets to control a greater amount of assets.
2) The use of borrowed capital to increase the return of an investment.
3) The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment
4) The ability to control large dollar amounts of a commodity with a comparatively small amount of capital
5) Company debt expressed as a percentage of equity capital. High leverage means that debts are high in relation to assets. The equivalent UK term is gearing
6) The use of borrowed funds to finance a portion of the cost of an investment
7) And many more...........

So in the finance, Leverage means the above things. There are so many definitions of Leverage in Finance.
But in Simple and Layman's Language, "Leverage means applying Other people's Money (OPM) and Time to get Rich, richer or richest very Quick".

So how we can use OPM (Other People's Money) to get rich?

Say for example, take the Example of Real Estate. Suppose there is a Commercial space in Prime location of Ahmedabad City worth Rupees 1 Crore (1,00,00,000) and you want to buy this commercial space for investment purpose and generating regular rental income. Now a person without having the knowledge of Leverage will go to the market, give rupees 1 crore and buys the commercial space.

Because this person (Middle class) thinks that, "Thank god.. i have 1 crores rupees in spare so i don't have to take the loan."
But at the other hand the person who has the full knowledge of Leverage (Rich person) will think that, "I want to invest this Rs.1 Crore in Real Estate than why don't use the Leverage Income?"
So what he will do is he will go with some Bank and ask for a Loan (Mortgage) and by putting rupees 20 lacs (20% of the Total property cost) as a Down Payment, He will borrow rupees 80 lacs from the bank (This borrowed 80 lacs is leverage from rupees 20 lacs or in sophisticated words, controlling large mount of assets (money) with small amount of asset (money))

Now this person will put this commercial property on rent. Obviously, he won't take home more money than 1st person at home because the most of the rental income will go towards paying the mortgage of rupees 80 lacs that he had borrowed from the bank for buying a property.

So at 1st look person A will look cool. But wait.... this second person (rich) has invested rupees 20 lacs out of his 1 crore to acquire the commercial property worth rupees 1 crore. Now what this person will do with rest of the 80 lacs?
Well, he will again leverage this 80 lacs means this person will buy 4 more commercial properties (Total 5) by putting 20-20 lacs as Down Payments.

So now take a calculator and count.
This person B (Rich) has uses his 1 crore rupees to buy the Assets (Commercial Properties) worth rupees 5 Crores (4 crores of Leverage or Borrowed money in simple terms).
And the rental income from all of these 5 properties are going towards paying the mortgage.

So after 10-15 years, what will happen? The person A will have only 1 Commercial property, thinking that he is earning much more than person B because person B's major rental income goes towards paying mortgages of those leveraged properties. But after 15 years when all of the mortgage will be paid, Suddenly all the 5 commercial properties will start throwing heavy Rental Income in comparison to Person A who will have only 1 commercial property Rental Income.

This is known as Leverage or OPM (Other people's/Bank's Money) to get rich quick.
Of course if you are middle class than you will think by reading this article that, "But its too risky. Well, Leverage is not risky but being uneducated is risky. You have to learn first that how to use leverage in your favour."

So how we can use "Other People's Time" to get Rich Quick?

Take the example of this Blog. Currently if you consider this blog as a Business than this Business has only one Employee (Writer) and that's me. So i have to work hard to grow the Asset (Portfolio of the Articles) of this blog.
Now suppose think that, after sometime, if this blog starts generating some amount of Cash flow by Google AdSense Add. displaying than i may re-invest this income of this blog and i may outsource the articles or i may higher some other writer and pay him a salary and he will write the articles on Personal Finance for this blog.

So now, the blog has 2 writers right? So previously 24 hours (by me) of mind labour(writing the articles is a mind labour) was spending per day but now 48 hours of Mind labour per day starts behind growing this Blog right?
Can you believe that, 48 hours of Labour work out of 24 hours Only....!!!!!!
So now i can get rich at twice the rate than before because previously i was the only person who was spending time behind this blog but now there are total 2 persons who are focusing on growing the Asset (Portfolio of Articles) of this Blog.

This is also Leverage, Leverage of time or in simple terms using other people's Time to get rich quick.

So Learn in your life that, how to use Leverage, Learn to use OPM & T.........!!!!!!!!!!

                           

I am an active member of “Get Rich Slowly” Forum. Recently one forum member Tester 2001, has post the following comment on the forum.

“Hello,
I'm new - and hoping to get financial related questions answer here!
Here's something I don't understand about compound interest. The longer a person invest, the more they should have in return, correct?
Can someone explain this example in detail.
Mary is 25 and for 10 years (until 35 yr) invests $150 a month. Thus, $1,800 x 10 = $18,000.
Tom is 35 and invest until he's 65 - same amount as Mary ($150 per month). $54,000 for 30 years.
Both has a 8% rate of return for their compound interest.
However, Mary ended up with $283, 385 while Tom ends up with $220, 233.
How can Mary have more?”

The question is really nice. So I have decided here to reveal the Mystery of Compound Interest in details in this Article.

Well, See. First let me tell you that according to Albert Einstein, The Compound Interest is the greatest force in the Universe. He had also once called the Compound Interest – The 8th Wonder of the world.

Here is the Compound Interest Formula – See the above Picture. The picture shows compound interest formula.

The 3 important elements of Compound interest are, 1) Principal (Amount invested), 2) rate of interest & 3) Time

Most of the time we focus on Principal. We try to earn a lot of money in our life. But if we understand the rest of the 2 elements of the compound interest than we don’t have to work hard in the economy and these 2 elements are rate of interest and time.

Here is a Compound interest Table, which will explain the above phenomena in detail.

Marry Invests US $ 150 per month for 10 years means from the age of 25 to 35. And that is US $ 1800 per year right? ($ 150 per month * 12 months = $ 1800 per year). Marry invests for 10 years and stops investing till the age of 65. So Marry has totally invested US $ 18000 over 10 years of span right? (From the age of 25 to 35)

Tom is cool. So he doesn’t invest at all up to the age of 35 years and after that he starts investing $ 150 per month until the age of 65 years and that will be $ 150 per month * 12 Months * 30 years = $ 54,000 invested over span of 30 years right?

Now see. How the difference of only 10 years make a difference in the wealth…..

Age (Years)	Marry (Amount Invested)	Balance at the rate of 8%	Tom (Amount Invested)	Balance at the rate of 8%
25	$ 1800	$ 1800	0	0
26	$ 1800	$ 3744	0	0
27	$ 1800	$ 5843.52	0	0
28	$ 1800	$ 8111	0	0
29	$ 1800	$ 10599.88	0	0
30	$ 1800	$ 13204.67	0	0
31	$ 1800	$ 16061.04	0	0
32	$ 1800	$ 19145.92	0	0
33	$ 1800	$ 22477.60	0	0
34	$ 1800	$ 26075.81	0	0
35	0	$ 28161.877	$ 1800	$ 1800
36	0	$ 30414.82	$ 1800	$ 3744
37	0	$ 32848.01	$ 1800	$ 5843.52
38	0	$ 35475.85	$ 1800	$ 8111
39	0	$ 38313.92	$ 1800	$ 10599.88
40	0	$ 41379.03	$ 1800	$ 13204.67
41	0	$ 44689.36	$ 1800	$ 16061.04
42	0	$ 48264.50	$ 1800	$ 19145.92
43	0	$ 52125.67	$ 1800	$ 22477.61
44	0	$ 56295.72	$ 1800	$ 26075.81
45	0	$ 60799.38	$ 1800	$ 29961.87
46	0	$ 65663.33	$ 1800	$ 34158.82
47	0	$ 70916.39	$ 1800	$ 38691.53
48	0	$ 76589.71	$ 1800	$ 43586.85
49	0	$ 82716.88	$ 1800	$ 43586.85
50	0	$ 89334.24	$ 1800	$ 48873.80
51	0	$ 96480.97	$ 1800	$ 54583.70
52	0	$ 104199.455	$ 1800	$ 60750.40
53	0	$ 112535.41	$ 1800	$ 67410.43
54	0	$ 121538.24	$ 1800	$ 74603.27
55	0	$ 131261.30	$ 1800	$ 82371.53
56	0	$ 141762.20	$ 1800	$ 90761.25
57	0	$ 153103.18	$ 1800	$ 99822.15
58	0	$ 165351.43	$ 1800	$ 109607.93
59	0	$ 178579.55	$ 1800	$ 120176.56
60	0	$ 192865.91	$ 1800	$ 131590.69
61	0	$ 208295.19	$ 1800	$ 143917.94
62	0	$ 224958.80	$ 1800	$ 157231.38
63	0	$ 242955.51	$ 1800	$ 171609.89
64	0	$ 262391.95	$ 1800	$ 187138.68
65	0	$ 283383.31	0	$ 220230.74
	Total Amount Invested = $ 18,000	Value of Investment = $ 2,83,383.31	Total Amount Invested = $ 54,000	Value of investment = $ 2,20,230.74

Carefully observe the above table. Here are few observations.

01) The reason why Tom never catch to marry in wealth is because Marry has started Investing early. At the age of 35 years when Marry has stopped investing, she has a Corpus of $ 28,161. And at that time Tim does not have any investment balance. So after 35 years, every year that $ 28,161 keep rolling like an ice ball. The more it rolls, the more ice it takes in to it every time and gets bigger in size.

02) Tom has started 10 years late. But in the 10 years the Compound interest Formula’s Time element has multiplied the wealth of marry in a breath taking manner. You observe the table. Tom has never ever catch Marry in the Wealth in any year, even if he has constantly invested US $ 54,000 over 30 years. The reason for this is Time……. Remember, Lost Money can be recover but Lost Time can never be recovered……

This is why Financial advisors advise you that, “Best Time of Investment was 20 years before & Second Best Time is Now………..!!!!!!!”

So Invest as early as possible in your life…….. Means NOW…….!!!!!!!!!!!!!

Related Articles -

01) Value of Rs.1 Crore after 40 years – The Power of Compound interest

02) 1 Rupee Invested for 30 years

03) 1 Rupee saved every day for 30 Years

04) The Power of Compounding

One of my friend is running a Food Business. He is running a Food Restaurant in Baroda city, Gujarat. He is running his small business since last 2 years.

His small business is also generating a fairly good amount of Revenue every year. But now he want to increase his Revenue from his Business year by rear like other mid and large sized businesses.

So one day he called me and asked me, Hey Asav…. Kindly suggest me some good Business Consulting services or some good Business planning consultancies. I asked him the reason for the same.

He replied me that, Well i have started this small business of Food restaurant 2 years back. And within 2 years my this business is settled very well and started generating good revenue for me. Now I own business but i want a Business growth now……

I want to grow the revenue of my this small business year by year. I want to increase my Business sales. So i am searching for good business strategies.

Right now i am a small business owner but i want to be a big business owner now and i want to grow the revenue of my business like anything. And that’s why I want to do a strategic planning for my business.

Well, There are so many people around this world who owns a small business and now they want to increase the revenue of their business. Mt fiend’s Restaurant is in a 1000 square feet of commercial space and he is generating around Rs.10 lakhs of Revenue per year from his Business.

But now he want to grow the revenue of his business. So The question here is “How can you grow the revenue of your small business year by year?”

Does it require another modified Business Plan?

Does it require Business Consulting?

Does it require a new Business Strategy?

Does it require a new Business marketing strategy?

Does it require any different Strategic Planning?

The answer is – None of the above. If you are already running a Business than i think you already have done the above jobs. So you don’t require now any different marketing strategy or some new business strategy or anything else to grow the revenue of your Business.

You Require to focus only on One thing if you want to grow the Revenue of your Business and that is “Size of the Business”.

Let me explain you how?

Well see. Business marketing, Business strategies, advertising help to increase the revenue of your business up to certain level. After that one saturation level comes for that Business unit to generate revenue. In our example, my friend’s restaurant is 1000 square feet. So this much amount of real estate can accommodate limited number of people every day and thus there is an upper limit of revenue generation.

But now suppose think that, If my friend re-invests his profit into the same business and acquire some other commercial space of 10,000 square feet in some other area of Baroda than the revenue of his Business will be doubled. Why? Because now the size of the Business increased and so that it can accommodate more people and thus the more Revenue.

Take the examples of McDonald’s and Subway food chain. These 2 food chains are generating billions of dollars of revenue every year and it is still growing. Why? Because they are increasing the Asset size of their Business year by year. Every year they re-invest their profit into their own businesses and acquire new commercial spaces and increase the size of their Businesses and more Asset size means more customers it can accommodate and thus more revenue.

Now think that, if there was only 1 McDonald’s or Subway restaurant there in this whole the world than can it be able to generate billions of dollars of revenue every year by changing their business strategies or their marketing strategies?…….. Not at all……….

Business planning, Business strategies & Marketing strategies work to increase the revenue up to certain level but after that, You just have to increase the Asset size of your Business. The more Assets your Business have, the more Revenue it will generate….. It is as Simple….!!!!

Take the Example of this Blog…….

This Blog is my Internet Business. And the Asset of this Blog is its “Blog Archive”. The primary Business mission of this Blog is to generate revenue by selling ad spaces to potential advertisers. Right now I am using Google AdSense Program to sell the ad spaces of this Blog. Each Article (Web page) of this Blog is like a small piece of real estate. The Blog Archive of this Blog is like a real estate. Right now when i am writing this article, The Blog Archive size of this blog is around 300 Articles. And it is generating around US $ 5-6 per Month Revenue for me. And that is around US $ 60-70 per year.

Now if i want to grow this revenue than i have to drive more traffic to this blog. Because more traffic means chances of clicking more adds and thus more Revenue. I can drive more traffic to this blog by various Internet Marketing techniques or search engine optimization techniques. But all of them will grow the Revenue upto a certain limit. Because the Asset size (Blog Archive) of this Internet Business (Blog) is only 300 articles. After that if i have to increase the revenue of this Business than i have to grow the Blog Archive of this Blog.

Because Large Blog Archive means Large Asset and Large Asset means large web space and large web space means more advertises I can display at a time and large Blog archive means more pages are indexed in Google and various search engine and thus more web traffic and more web traffic means More Revenue……….

So if I want to grow the Revenue of this Blog (Internet Business) than i have to grow the Blog Archive. I have to develop a deep Blog Archive. I have to build a large size Blog Archive.

So now you Understand?….. Size matters for any Business. The more the Asset size of Any Business, The more Revenue it will generate……..!!!!!!!!!!

So Focus on growing the Asset size of your Business rather than only focusing on Marketing and other aspects of your Business. Asset Size of your Business is in directly proportional to the Revenue of your Business……….!!!!!!!!!!

Are you using Google AdSense on your Blog/Website to generate Income? than you MUST know that how many adds you should put on one Web page?

Well, See. Of course if you put more adds on your web page than chances are that you will get more clicks and page impressions and thus more Revenue. And everybody likes to see more revenue in their Google AdSense account.


But Remember the Golden Rule of Putting Adds on your Blog/Site - Readers are not visiting your Blog/Site to click your Adds. But they are visiting your site to read the content. Readers are coming on your site because they like the content of your Blog/Site and they want to know or learn something new.

If you put 2 or 3 adds on your web pages than it will look decent. But putting so many adds around the content is not a good idea. Because it will create a bad impression to your regular readers that your sole purpose to start your Blog/Site is just to earn money.

Readers will follow you if they think that you are doing your Internet Business for passion.
The best add placement is above the fold. Link adds are also better. You see this Blog. Observe that how i have put the Google Adds on my Blog. I have put 1 Add above the Article and 1 below the article and 1 Skyscraper on the right side bar. And 2 link units on the top of the page. It looks descent and it is not crowded.

Your adds never be crowded than your content. Otherwise it will leave the bad impression on your readers. You can see that i am displaying adds on this blog but these adds are never over crowded than the original content of this Blog. After all readers come to read the content of this Blog and not to click the adds.

If you have put only 2 or 3 adds on one every web page than it will not only look descent but you will earn little more amount in the long run. Because your site visitors will continue returning to your site.

How Can one learn to do Business?

Everybody wants to be a successful Entrepreneur but every one has a same question in their mind and that is “How Can I Learn to Do a Successful Business?”

One of my friend wants to start a Food Business so he asks me every time when we meet that How Can I learn to do a successful Business?

He asked me one day that Should I join the Business School? or Should I join some Business Management team to learn the Business?

Well, this is the question of everyone who wants to be Entrepreneur in their life and want to start their own Business.

Starting a Business is a different thing and making it a successful Business is a different thing. If you want to start your own Business and make it profitable than it is not necessary that you must have join any Business School.

So How can you learn to do a Successful Business?

Do you require excellent Business Consulting?

Do you require a professional Business Planning?

Do you have to take experience from any Business Management Team?

Do you have to go to any Business School?

Well, None of the Above. If you want to be a Successful Entrepreneur than you require none of the above. You require only one thing to develop a Successful Business & that is “Business Acumen”.

So What is Business Acumen?

Here is a definition of Business Acumen. This is the definition that I have copy and pasted from Wikipedia. For more information on Business Acumen, Click this Link to Wikipedia.

“Business acumen is a concept pertaining to a person's knowledge and ability to make profitable business decisions. Originating within corporate learning and development circles, the term has seen a sharp rise in usage since the beginning of 2007. Despite a lack of consensus on an exact definition, business acumen is often closely linked with the fields of behavioral finance and financial literacy.

Additionally, business acumen has emerged as a vehicle for improving financial performance and leadership development. Consequently, several different types of strategies have developed around improving business acumen.”

So you have to learn Business Acumen if you want to develop a Successful Business.

So the next question is How can anyone learn the Business Acumen?

Is there any place in this world where we can learn this Business Acumen? or Is there any Business school which teach us what Business Acumen?

Well, the answer of first question is “Yes”. Yes there is one place in this world where you can learn the Business Acumen but it is not any Business School or any Business Management Team.

Some Basics of Business Acumen are present in Large part of Population of India. The largest number of Business men and Business women are street vendors. And they understand “CASH”. It is a four letter word, These Vendors understand that and their mind works on how to get ‘CASH’ at the end of the day.

Yes, this is true. If you want to learn how Successful Food Business works than you don’t need to go to any Business School, You have to go to “Law Garden”, Ahmedabad, Gujarat, A Local Food street in Ahmedabad city where all the small food vendors have their own small food restaurant.

Yes, The streets of India is the best place to learn this Business Acumen. Small Vendors on the streets of India will teach you how to develop a profitable business anyhow. To develop a profitable business you don’t need to join any Business school or any business management school. This is something which you can best learn from the vendors of the street.

If you want to develop a profitable and successful retail business than also go to streets of India and see how small vendors run their small business. See how they manage CASH. and how they manage to get cash at the end of the day.

Also see that how they effectively cut the costs and run their small business with minimal expenses.

Right now I am in a Kolhapur, a city in Maharashtra state of India that is 200 Kms away from Goa.  Me and my friend every time go to the near local bus stand and on the bus stand there is a huge raw of local food vendors. and they run their small stalls of food. When ever i go to the local bus stand i always observe their behavior and how they run their very small empire. I always observe that how quick they are in providing service? I also observe that how they run their small stalls in a very cost effective ways…….

All of these street vendors somehow manage to earn cash from their small business at the end of the day and this is the prefect business acumen. You don’t require any high class skills or business knowledge to develop a profitable business. But you require a street knowledge to develop a profitable business. You require a Simple & Practical thinking to make any business profitable.

So next time go to your local Business School Street if you want to learn Business Acumen and how to develop a profitable Business?

This Article is all about, "Act Differently - if you don't like where your parents are today".

Everybody love their parents. In anyone's life parents' influence is much more than anyone elese. Parents are the mentors for the children and our mentors (in some stages of life) are our parents.

There is so much influence of parents on our mind that, We blindly follow them. We don't think much before walking on their paths.

But Wait.... Albert Einstein once said, "Insanity means repeating same things again and again and expecting different results."

So how this statement of Albert Einstein applies here?... Well, see. Suppose your parents are Employees, Self-employees, Business owners or Investors right? Now they had started their career before 30-35 years. Now suppose today they are not that much successful what you may want to be after 30-35 years than simply don't follow your parents and Act differently. This is the moral of this Article.

Say for example, suppose your parents are Business owners and they had started business before 30 years and today you don't like what they are, at which level fincnaially, socially and mentally they are......than simply don't follow them and act differently. Means you everything else except the Business. Because if you follow their path than after 30 years you will be in same position. And this is whay Einstein says, Insanity means repeating same things again and again and expecting different results.

And suppose if you love what your parents are today than, Blindly follow them. You will be the same by sure at their age what they are today.

What happens basically with middle class people is, they go to school, get good gredes, graduate from colleges, spend lacs of rupees behind their speciality or higher education than the graduation degree, after they find safe and secure job, live paycheck to paycheck, goes into deep debt, retire and depends on governement pension plans and dies one day leaving behind lacs of rupees of unpaid loans, credit card bills and a bad debt.

Now the problem is that, when the children of these middle class people sees this, they think that we don't want to live like our parents. We don't want to die with hubdreds of thousands of lacs of rupees in debt and we don't wan to live paycheck to paycheck.
So they decide not to live like their parents. But they do one mistake.

And that mistake is, they don't act differently.

Means ideally they should have been acted differently than their parents. Means if they are unsatisfied with their parents position and life today and their parents are employees than they should atleast NEVER EVER think about being an Employee. They can be either Self-employee, Business owners or Investors (Yeah of course, it is not guaranteed that in other sectors their lives will be great and smooth). But they should not at least NEVER think about being an employee.

Because if they also become an employee at some place and start expecting different results than its simply impossible.

Unfortunately, Financial IQ of the people of India is so much low that, they don't think these things very deeply. They blindly follow the path of their parents even though they don't like what their parents are today and start expecting different results.

So Act Differently if you don't like where your parents are today. And blindly follow them if you love what your parents are today. But never make the mistake of repeating same things again and again and expecting different Results.........!!!!!!!!!

So many readers ask me every month via e-mail that, I want to start a new Business. Kindly suggest me which business should I start? I want to start an run a small business and I am a Doctor/MBA/School teacher/Doing job…etc..etc… Which Business best suits me? Kindly suggest me some good business ideas.

After reading my articles about “Start your own Business”, so many people ask me the above question every month. Some want to start a Home based Business while some want to start small business.

One reader asked me last week that, I want to start a Business but i don’t know which Business should I start? I don’t have any Business idea also. Should I join some Business School?

While another reader asked me that, I want to start e business. Which Online Business should I start? I don’t have any Business plan also.

My Answer -

So I receive these types of queries from various readers every other day. My Common, Simple & Most effective answer to all of the above queries is that, First ask your self that why do you want to start some particular Business? If answer is “To earn money and get rich” than simply leave that idea. Don’t start a Business because you want to get rich… you will fail 100%.

But ask yourself that On which thing I am really PASSIONATE About?

What ever the answer comes in your mind, Develop a Complex Business structure around that idea. Starting a Business on an idea on which you are passionate about is the key to successful business and definitely getting rich. Here are some example.

Example – 1 “My Journey To Billionaire Club” -

Well there are basically two good reasons for why you should start a business on which you are passionate about…….. First is if you make your hobby or passion as your business than your passion will drive you through the initial tough period of any Business. And Second is if you have developed a Business around your PASSION/Hobby than all of your expenses will be considered as a Business Expense & considered for Tax Deductions every year. Let me explain you how this works?

Take the Example of this Blog. “My Journey To Billionaire Cub” is my Internet Business. It’s an Online Personal Finance, Business & Investing Magazine. It means that I am in an Online Publishing Industry. Well I have started this Business not because the Online Publishing Industry has a huge space for expansion and higher growth opportunities. But I have started this blog/Internet business for two good reasons.

One is I am PASSIONATE about educating people about Money, How it works, Businesses, Investments and Personal Finance. It excites me when I teach people about money and people give me a feedback. Plus Reading Books/magazines/news papers about Economy, Business, Personal Finance, Stock market and Investments is my hobby. So by starting this Business, i will be benefited in 2 ways.

First is I am PASSIONATE About this Business and this Internet Business is in its starting stage and in starting phase, obviously when nobody is knowing you, it takes a time to develop a web traffic on your Blog. And less web traffic means less Revenue for this Blog/Internet Business. This Business earns mainly by selling Add Spaces to potential advertisers via Google AdSense Program. But as i am passionate about educating people, even if i don’t receive a web traffic on this blog, i will continue writing on this Blog. Because my PASSION is driving me through this Initial phase of Business.

Second, Last 2 months this Blog has generated US $ 3.64 & US $ 3.24 Revenue per month for me and this month this month the revenue goes up by almost 75% to US $ 5.70 and this will goes up year by year. So Once this blog will develop a sufficient Income, I will afford my hobby of my reading at free of cost from the Income from this Blog and that will be Tax Free….How?

Well let me explain you how?…

Well see. My Business is Online Publishing business and the business object is to teach people financial literacy. Now suppose if I earn Rs.50,000 from this blog per year and I purchase Rs.30,000 Books/magazines/New papers from this Income than this Expense is called as my Business Expense because I have purchased these things to run and grow my business. And thus it is Tax Deductable.

So I don’t have to pay any tax on these expenses as well as My Hobby of reading is fulfilled at free of cost because this Blog/Internet Business is affording my hobby of reading.

This is the advantage of developing a business around your hobby. Neither your have to pay any tax on your expenses behind your hobby nor you have to do expenses to fulfill your hobby from your own pocket because your Business afford all of your hobbies at free of cost.

Example – 2 E-play -

E-play is a game center in Ahmedabad city. The person has started a game center because he loves to play games like counter strike, world of war crafts…etc.

So he has developed a business around his hobby and passion. And so today his hobby is being afforded by his Business. His business affords his hobby of playing games free of costs.

So Develop a Complex business around your Passion or hobby. If you love to travel than start a travel business. If you love to drive new cars than start a business around that hobby. and so on…….

Recently, so many readers have asked me that, "What should be the Asset allocation of an ideal Rs. 1 Crore Portfolio?"

Well, The answer is your Age. Asset allocation of an ideal Rs. 1 Crore portfolio is depending on your Age. Not only Age but also on your Marital Status, Number of dependents on you, your risk appetite....etc.....

If we talk about HNIs -High Net Worth Individuals who have investable Financial Assets of more than US $ 1 Million (Roughly more than Rs. 5 Crores) than in India there are around 1.25 Lacs HNI Families.

And Average HNI of India's portfolio Composition is as follow,

1) Equity - 30%
2) Debt - 30%
3) Real Estate - 30%
4) Fixed Deposits & Jewellery - 10%

Well, the above is the average composition of HNI. It doesn't mean that your Rs. 1 Crore Portfolio should also have this much amount of proportion. In fact there is no such rule.
If we talk about Equity:Debt Ratio than Remember the Rule of Thumb - "Means 120 - your Age should be the Asset allocation of Equity in your portfolio and rest should be Debt."

Say for Example, If your Age is 20 years than 120 - 20 = 100% should be the Equity Exposure in your Portfolio and 0% should be Debt Allocation.

However, Rule of Thumb is the rough estimate of calculating Asset allocation.
Another theory of Asset allocation says that, an Investor should invest anywhere between 25 to 75 percent in Equity and Rest in the Debt according to market conditions.

Another thing to remember in mind when you are making Rs. 1 Crore Portfolio is that, You should never allocate more than 10% allocation of your Total Portfolio worth to Gold. No matter how excellent the Gold generates Returns but your Portfolio Exposure to Goals should not exceed in anyway more than 10% of the Total Portfolio Value.

So these are the few basic things to keep in mind while you are making an ideal Rs. 1 crore portfolio. Remember, the ideal portfolio can't be defined. According to me any portfolio is ideal if it can fulfill your Short, Medium & Long term Financial Goals.

Inflation means rising prices year by year and reducing the purchasing power of your money year by year.

Inflation rate is 6.84% in India right now and just few months back the rate of inflation was 12%. Rising inflation rate causes higher cost of living, slowdown of economic growth, riding unemployment rate and reducing the purchasing power of your money.

Suppose if today you earn Rs.100 than after 1 year you won’t be able to purchase the same amount of Goods and Services from the Economy that you can purchase from the same 100 rupees today. This is because of Inflation.

As Inflation rises, Consumer Price Index also rises and thus the cost of living. Inflation rate usually becomes high during the time of recession. During the Recession, the price index also rises. GDP of the country also gets affected and Economic growth slows down.

So once you earn and save some money than the second problem arises is that, how to beat Inflation? Beating Inflation is itself is a different job once you earn and save some money.

So This Article is all about how to beat that Inflation and staying in the Economy?

According to Economics, if you want to beat the inflation than you have to park your money in some Assets which can beat the inflation. Asset means something which puts money into your pocket and/or likely to appreciate in the future.

Examples of Assets are Stocks, Bonds, Gold, Real Estate, Businesses, Art, Intellectual Properties….etc

So here are some amazing ways to beat the inflation.

01) Park your Money in Businesses -

This is the best way to beat the inflation. Invest your Money in your own Business if you want to beat the inflation. The reason behind investing in your own Business is that because Business is an Asset. Business can provide you steady cash flow monthly and in increasing amount year by year. Plus Business can appreciate in its Value year by year.

Take the Example of this Blog. “My Journey To Billionaire Club” is my Business, An Internet Business. I am right now investing my money behind this Business, my own Business. You will ask than well you are running this blog on Blogspot platform and it is free than how you invest in this Blog?

Well i am investing in this blog by various ways. See first of all i can’t write all these articles without a proper information of business, investments and personal finance. So i need to subscribe certain Economy news papers and magazines such as The Economic Times, Wealth Insight, Mutual Funds Insight…etc… I also need to buy Business, Investing and personal finance books. And these books costs me. Another thing is that, Right now I am not at my home. I am studying my post graduate course at Kolhapur, Maharashtra, India.

So last month i have bought a new Compaq Laptop worth Rs.40,000. And this Rs.40,000 was my Investment in my own Internet Business. Because after Investing in my Laptop, now my laptop is my Business Equipment and i cab stay in touch with this blog more time than i used to be touch previously. And thus this Asset (Blog/Internet Business) is growing.

So you will ask that how can this Asset/Blog/Internet Business beat the inflation? There are so many people around the world who invest in the same things as you have invested than why they can’t beat the inflation and you are saying that you are beating the inflation by this blog?

Well, See the reason is simple. After spending this much amount of Money, at the end, Asset (This Blog cum Internet Business) develops which is providing me steady cash flow by displaying Google AdSense adds on it plus the intrinsic value of this blog is increasing day by day because i am adding more and more information in the Blog Archive daily.

Last Month I have earned US $ 3.24 from this Blog. But this month i have earned around US $ 5.70 from this Blog. And that is 75% increase in the Revenue in one month……….

Within few years this blog will start earning 6 figures money every year. Plus the Valuation of this web property is increasing day by day. So This is how by investing around Rs.50,000 behind this Business will beat the inflation for me. (Rs.40,000 for Lap top + Rs.10,000 for Books and Magazines)

02) Common Stock -

The above was the best way to beat the inflation – Investing in you own Business….It always pays off in the long run….. The second way to beat the inflation is just buy the stocks of fundamentally strong companies and hold it for long term. Or just invest in Equity Mutual funds for Long term. Traditionally stocks are also a best Asset class which can beat the Inflation.

03) Real Estate -

Real Estate is the another option by which you can beat the inflation. Investing in Rental Properties is a good idea. You can earn steady rental income every month plus the price of that property goes up in its value year by year so that whenever you sell that property in future, you will have a capital gain.

The Web properties such as Blogs/websites/forums/online Businesses are exactly like the Real estates. As long as you hold it you are benefited by steady cash flow and when you sell it, you are benefited by capital gains.

04) Gold -

You can also park a portion of your money in gold. Gold has beaten the inflation very well. But it is advisable that you don’t invest more than 10% of your Total portfolio net worth into Gold

05) TIPS -

TIPS means Treasury Inflation Protected Schemes. These are not available in India but for US people only. TIPS launched in 1997 and the rate of interest from TIPS Bonds change according to inflation rate. These Inflation protected bonds can better beat the inflation and proetect your Money.

So these are some ways to beat the inflation. 1st way to beat the inflation is my favorite way….. Invest in your own Business……..What is yours?………  If you have another ways to beat the inflation than please let me know by commenting on this post.

What is the effect of recession on world Billionaires?

Well the question is very broad. So here we will discuss it in detail. The question is very broad in the sense that which type of effect of recession on World’s Billionaires? Of course the effect will be financial effect. But at which level? At Business level or at personal level?

All the Billionaires of this world own Business. They own their own Business. And these are not a small business. These are Businesses which are publically listed and the securities of which are traded on the various stock exchanges.

Every Billionaire is a Business Owner. Now let us discuss the effect of discussion on world billionaires on the above 2 levels.

Business Level -

If we talk about the effect of recession on Financials at the Business level than there will be a huge effect. The profit of Business will be shrunk. Balance sheets will be shrunken. A Business sometimes may make a huge loss also such as GM Motors. The Business may sometimes have to file a Bankruptcy also. So these are the effects of recession on world billionaires at Business level.

Personal Level -

Now let us discuss the effect of recession on Personal Level. Everybody wants to know that what happens to the Personal Wealth of these Billionaires?

Because all of these Billionaires are shareholders in their own publically listed Company, And in the recession the stock market is down and their share prices are hammered so what will happen to their finances at personal level?

Well, The answer is Nothing happens at personal level. The Billionaire’s Net worth is an “On Paper” Valuation only. Most of the part of their life (Sometimes whole the life), this Wealth is the On Paper only. So it doesn’t make any difference if the Valuation of their Wealth goes up or down. Because the shares they own in their own Publically listed Businesses are the Controlling stakes. Means by these shares they have the Hold on the Management of their Companies. So they never think about selling these shares.

Take the Example of Mulesh Ambani, Chairman & MD of Reliance Industries.

Mukesh Ambani is world’s Top 10 Billionaire. His Net Worth is around US $ 35 Billions (I don’t have the recent Net worth Data). Now 99% of this $ 35 Billions Wealth is because of the “On Paper” Valuation of his own stake in Reliance Industries. So if the price of the shares of Reliance Industries goes down than the On Paper Valuation of his Business and his Net Worth will go down. But who cares about this? He can never imagine to sell his shares in Reliance Industries to anyone else because if he sells these shares than he will loose the ownership and management control over Reliance.

The second thing is that, Billionaires know that their Businesses are functioning well and this is just the “On Paper” Valuation of their Businesses and their Net Worth that is going up and down. And this On Paper valuation they are not going to liquidate most of their lives.

Plus in the personal life of Billionaires there is no effect of recession at all. Because they have the controlling stakes in their own publically listed companies so they can take out as much money as possible from their own businesses anytime so their lifestyles don’t change.

So The effect of Recession on World’s Billionaire is just the change in the “On Paper” Valuation of their Net Worth and in reality their personal life styles don’t affect a 1 %………..!!!!!!!!!!!!

In recent down Stock market i received so many mails from people who are in their pre-retirement ages means in their 50s. These people will retire anywhere between year 2014 to 2018.

All of them have a common query.
"I am 52 years right now and i will retire at the age of 60 years. I have my money in the various pension plans (Equity-Linked), PPFs and mutual funds but in the recent Stock Market Crash around 40% of my portfolio value is wiped out. Now retirement is 5 years ahead so what should i do now? Because I will have to work 5-10 more years if the market will keep going like this."

This is the Query of so many people. You have to understand that Equity is the Risky Investment vehicle. The fault with these people is "Bad Asset Allocation".
This is because of Bad Asset Allocation. You have to strictly follow the "Rule of Thumb for Asset Allocation." What these working people think in the young age that Equity is a Risky investment vehicle so why should i risk my hard earned money?
And when their retirement comes near, they become panic and think that i will invest my money in Equity for 3-5 years and build the proper retirement fund so that i can retire happily.

This is a big mistake that people make. I advise people that, you start planning your retirement as early as possible in your life means NOW....!!!!!!
In Early years of your earning life, you should have more equity exposure and Zero Debt Exposure but in later stages of your life you should have less Equity Exposure and more Debt Exposure. But people of India have very low Financial IQ. They don't spend much money or Time behind increasing their Financial Literacy. They Exactly do the Reverse of what actually they should have done. And this is the reason they suffers.

So What is the "Rule of Thumb" for Asset Allocation? -

Well, Rule of Thumb is that, you should invest in Equities "120 - your age" and rest in the Debt. Say for example if your age is 20 years today and you are earning than you should invest 100% of your Money in Equity and 30% in Debt. And if your is 50 years today than you should invest 70% in Equities and 30% in Debt.
And you should also re balance your portfolio every year. Means every year you have to balance Equity:Debt Allocation. Means suppose the stock market is up some year than at the end of year without being greedy you should book profits and transfer this profit to your Debt.

Advise for Youngsters -

If you are below 30 years of age and recently completed your college than, i would strongly recommend you one thing. And that is, "Start focusing on Developing your own Business or Developing your own Cash flow producing Asset as early as possible in your Life"

This is very important financial advise for future generations. Because old financial advises like Save money, Invest it for long-term, Diversify and retire with large sum are no longer effective.

After 1990, The world has started changing so much fast that these old financial advises are no longer effective to ensure successful retirement. All you want is your own Business or your own Cash flow producing Asset that can provide you steady Cash flow after your retirement. Once you have your own Business, you will no longer have to dependent on a little earning (4-8%) from Fixed deposits and pension plans.

If you want to secure the future of your next generations than also you MUST have to develop a Business. So start focusing on developing your own Business since young age that can last forever (Means generations to generations). Say for Example, Reliance, Birtla, TATA, Big Bazaar are some people of India who have developed a Business that will last forever.
TATA Group is running since year 1850. Last 5 generations of TATA Group were Financially secure and next all generations also will be. Why?........... Is it because Jamshetjee Tata had invested in 1850 in some Pension or Retirement plan or in some Mutual Funds?

No.... It's not so. Because Jamshetjee TATA had developed a Business, TATA Group.
So this is the key of Successful Financial Future. To have no Financial worries forever (For next generations), you MUST have to develop a Business, your own Cash flow Producing Asset.......!!!!!!!

So Start as early as possible focusing on developing our own Business cum Cash machine means NOW.........!!!!!!!!!

                                                      

The term Vanilla Mutual Funds have been popular now a days in mutual fund industry. So What it means by “Vanilla Mutual Funds” ?

Does is mean “Top Mutual Funds?”

Does it mean “Best Mutual Funds?”

Does it mean “Best Performing Mutual Funds?”

Well, none of the above. Vanilla Mutual fund is neither a top mutual fund, nor a best mutual fund nor a best performing mutual fund. In the Mutual Fund Investing Vanilla Funds means “Simple (Plain/Vanilla), Equity Diversified Mutual Funds.”

The term Vanilla Mutual Fund is for simple, equity diversified stock mutual funds.

The CEO of India’s Best Mutual Fund Rating Agency Valueresearchonline.com, Mr.Dhirendra Kumar (In Photo) has first time introduced the term Vanilla Mutual Funds as a synonym of Equity Diversified Mutual Funds and after that the term became a most popular term in the Mutual Fund Investments world.

So why he has introduced this term? And what is the importance of investing in Equity Diversified (vanilla) Mutual Funds?

Well, Because Mr.Dhirendra Kumar says that, “Diversified Stocks Portfolio pays the highest return in the long run. Sector and Thematic mutual funds are on two extremes of the mutual fund performance. Means either they are at top performing mutual funds list or they are at the bottom of the mutual funds performance list. While in the Long run say more than 5 years, Vanilla (Equity Diversified) Mutual Funds are at Top performing mutual funds list.”

According to Mr.Dhirendra Kumar, it is next to impossible to go anything wrong with the Vanilla funds because the fund manager of vanilla mutual fund can invest investors’ money in all the economy sectors while the fund manager of sector or thematic funds is bound by his own definition of that sector. So suppose if that sector of economy underperform than the fund manager of your sector fund can’t move your money to other sector because the sector fund is bound to invest in that sector only.

But the fund manager of the vanilla (Diversified) fund can move your money to another sector because the definition of diversified funds is very broad so the fund manager of vanilla fund is not bound by his own definition.

So it is advisable that any mutual fund portfolio should have a Vanilla fund as a core fund. It is always advisable to be as simple as possible in the Investments……….

So Invest in Vanilla Funds for Long term and retire with Handsome corpus……….!!!!!!!!!

As i have already told you that According to Albert Einstein, “The Most Powerful Force in the Universe is Compound interest.” Albert Einstein also told once that “Compound Interest is the 8th Wonder of the World”.

Compound interest is so powerful over the time that it multiplies your Wealth in a Breath taking Way…….. Here let us discuss one Example of “The Power of Compound Interest.”

What will be the Value of Rs.1 Crore after 40 years?

Well the question is very broad. Basically it really depends on in which Asset (Stocks, Bonds, Gold, Real Estate, Businesses, Art, Mutual Funds). Second thing is that it really depends on the Compound interest rate.

I have run my Compound interest calculator on spread sheet and enter various Compound interest rates and i found amazing data.

In the Compound interest formula there are basically two main elements and those are Time & the Compound interest rate. If you increase any one or both of these elements than the final outcome will be breath taking………..!!!!!!!!!

Suppose if you invest in Government of India Bonds than the Interest rate will be 8.5% Per Annam compounded Annually. If you Invest in Indian Equity directly or via mutual funds than the rate of return will be 15-20% in the Long run.

So here we will discuss two scenarios. In first scenario, we will consider the rate of return of 8.5% per Annam for 40 years. And in second scenario we will divide it in 2 parts. In part 1 we will consider that You have invested those Rs.1 Crore in Indian Equity which has given you 15% per Annam compounded annual return in the long run while in part 2 the Indian Equity has given you 20% per Annam compounded annual return in the long run.

For simplicity purpose we will assume that you have invested your Rs.1 Crores in Government of India Bonds in Scenario 1 and in Equity Mutual Funds (Top Mutual Funds) in scenario 2.

Here is a Compound interest Calculation table of all the 3 scenarios.

Year	8.5% per Annam	15% Per Annam	20% Per Annam
0	1,00,00,000	1,00,00,000	1,00,00,000
5	1.5 Crores	2.01 Crores	2.48 Crores
10	2.26 Crores	4.05 Crores	6.19 Crores
15	3.40 Crores	8.14 Crores	15.40 Crores
20	5.11 Crores	16.37 Crores	38.33 Crores
25	7.68 Crores	32.91 Crores	95.40 Crores
30	11.55 Crores	66.21 Crores	237 Crores
35	17.38 Crores	133 Crores	590 Crores
40	26.13 Crores	267 Crores	1470 Crores
Total	26.13 Crores	267 Crores	1470 Crores

So in all the 3 scenarios your 1 Crore invested today will be Rs.26.13 Crores, Rs.267 Crores & Rs.1470 Crores at the rate of 8.5%, 15% and 20% respectively.

I know that you won’t believe these figures but these figures are absolutely true and correct. Your 1 crore rupees invested today can be Rs.26 Crores, Rs.267 Crores & Rs.1470 Crores after 40 years. It really depends on the rate of return and time horizon………..

This is the power of Compound interest and That’s why I am saying that Start Investing as early as possible in your Life………. Because Compound interest will take a time to work on your wealth…..!!!!!