Money can work

Ever thought of how money can work for you, instead of you working hard for money?? Today, we are going to cover just that! In fact, we will show you a simple trick for your retirement savings! Imagine you invest 1 Lac Rupees in a mutual fund which typically grows at 15% interest per annum. Take a look at below table and be surprised how fast your money grows: Year 0: 100000.00  (+0%) Year 1: 115000.00  (+15%) Year 2: 132250.00  (+32%) Year 3: 152087.50  (+52%) Year 4: 174900.62  (+74%) Year 5: 201135.72  (+101%) Yes, you "DOUBLE"  your money in 5 years! If you are still in doubt, you can double or triple check the above math!! Imagine you stay invested for 5 more years, can you guess what will be your returns? Year 6: 231306.08  (+131%) Year 7: 266001.99  (+161%) Year 8: 305902.29  (+205%) Year 9: 351787.63  (+251%) Year 10: 404555.77  (+304%) Yes, your 1 Lac...

Basics Let's say you invested all your money by picking 10 different stocks in the automobile sector. If the government announces any policy like changes in taxes, upgraded crash norms, new engine standards etc., this can have a huge impact on the company's performance, at least in short term. Imagine, if you had diversified your investments across sectors like automobiles, IT, agriculture, construction, Retail, Oil & Gas etc. you wouldn't have got affected as much as you have in the first case. In simple words, Diversification means spreading your investments across different companies/sectors/countries. FYI, there are some mutual funds which invest in countries like United States, China, and other emerging markets. You can take advantage of these funds for diversification across countries as well. Known Benefit Common sense tells us that diversification helps us reduce the risk of our investments. Thus, the probability of you losing your capital...

Well, everyone wants to make tons of money in stock market, nobody comes to do charity! 😜 While everyone is trying to figure out different ways and techniques to make profits, there are two approaches to which you can broadly classify all of them into. They are - Trading and Investing. There are millions of traders who have made lots of money and who believe trading is better than Investing and of course vice versa. So which one is the right approach? The answer is both! In cricketing terms, it is like asking the coach if straight drive better or off drive better?? Again, the answer is both! you need to know how to play the right shot the way for the right ball! The trick is to understand the underlying mechanics and first practice before you can play for real!! Trading: In trading, typically one either buys and sells the stock within a day or maybe holds it for a few weeks max! Traders generally look at the charts to identify certain patterns, trends and ma...

Risk comes from the fact that you are speculating without knowing the fundamentals. I have heard people saying a million times, "Stock market is very risky, many people have lost all their hard earned money!". But, the fact is, Saving in a bank account is more riskier than investing in stock market! Yes, you heard it right! People think they are smart enough to save money in their savings account/fixed deposits/recurring deposits, pile up cash every month and in long-term, they would have a huge cash for a rainy day. But, as I said risk comes from the fact that you are speculating without knowing the fundamentals. Many people just forget about inflation! That's a secret wealth destroying machine! Take a look at the inflation of the last 10 years in India Averaging it comes close to 7.97% Now take a look at the savings account, fixed deposits, and recurring deposit interest rates - averages around 6% to 8%. Now add to this taxes, additional ...

Photo by freestocks.org on Unsplash Many people find it difficult to analyse their personal finances at a macro level. They just live all their life sleepwalking without knowing where they are headed in terms of building their financial wealth. But, it is really not that complex to get a birds eye view of your financial future. One can easily tell if a person is going to be rich or not just by looking at their " cash-flow statement " ! A cash-flow statement is a very simple tool anyone can use to keep track of their personal finances. It has two parts - Income Statement and a Balance Sheet. Below is an example of a simple cash-flow statement. Profit/Loss Statement "Profit/Loss Statement" helps you keep track of your income and expenses. Here you can write down your earnings like salary, savings account interest earned, etc. You can also write down your expenses like food, rent, shopping, etc. Balance Sheet "Balance Sheet" helps...

Thoughts are the most powerful assets one can have. As buddha once said "What you think, you become!" is very much true and relevant even today! The way rich and middle class people think are very different. Rich believe money is not evil Money can't buy everything in life. But remember without money the world doesn't move! To get access to good healthcare, food, shelter, one needs money ! Money gives you the freedom to live the life you want to lead.  There is nothing wrong in wanting money.  Rich focus on the needs Most of them get attracted to the new gadgets/products announced almost every week, be it phones, cars, etc. Many get addicted to shopping online, where you can shop from a catalog of millions of items with just a few clicks. But, thinking rich means focussing on essentials, buying what you need instead of what you want ! Rich acquire assets Middle class people always have their job salary as their only source of income ! While ri...