The Manual Of Life - Money

This book is dedicated to all my predecessors on whose Knowledge, Observation, Experience, Thoughts and Assumptions I based my own and All my successors who would do the same.

© Parvesh Singla, all rights reserved

About the author, Born in 1982, Parvesh Singla has been living in Chandigarh, India. He is a graduate from Punjab university never really used the school education; he is also a writer of various articles on different subjects mostly on underground sites. His tryst with destiny of knowledge started with a chance encounter with a person from Netherlands who unknowingly put him on a path to self discovery, one of rare qualities that he has is that of a open mind. He has so far worked as a multimedia artist, a job consultant, a retailer, an advertisement designer, and in various service industries etc. currently he makes people rich & helps them achieve their dreams by being a financial investment advisor (mutual funds, fixed deposits, etc).

This is the first edition of the book, for any clarifications, comments, or suggestions, please contact: [email protected]

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This book is divided in three sections 1. what is money 2. how to get rich 3. An attempt to change your mindset from a poor person to a rich person. I have tried my best to make this book as practical as possible I have deliberately removed all the technical definitions, this book assumes that the person doesn’t know anything about money, or anything remotely related to financial world.

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WHAT IS MONEY? Well in spite of what people think what money is, it’s Not the music to which the world dances, it’s not the magic wand to anything., Money is a unit of “value” of the service or goods. It’s merely a certificate that “holds value”, it facilitates trade of value from one medium to another. And one product to another. Name is not important, you can call it whatever you want, dollar/rupee/yen/pound/ or anything. Trading in a way that means: I have this and I want that, let’s go to basic economy to understand it. Suppose you are a farmer and someone else is a shepherd.. You both create something that the other person want. You want his wool, he wants your grain. But how much is his wool worth your grains (food) or your grains worth his wool. You both want it, both “NEED” it. Here is where money comes, it standardizes value, showing to economy what a kg of grains is worth and what a kg of wool is worth, in relation to itself. So u can sell food to him and keep money (certificate of value) with you and buy it whenever you want/need the wool from him. Similarly he can sell the wool to you when he has it, and buy food from you throughout year. Unlike food or other things of value, currencies don’t rot Money serves three basic purposes, 1. A medium of exchange of value. 2. A medium to store value 3. A standard of everyone knows unit that tells everyone how much is a Kg of grain worth how much wool or how much is it worth a coke can. The problem incidentally with the world is that they have started confusing money with value. Both are completely different. In money terms: How much is a real estate worth: the expected future income from it. How much is a person worth: the expected future earnings of him/her. How much is business worth: future expected earnings of that business. Or for the technical minds Money is the medium through which people exchange their labour in the production of goods and services for the goods and services of others.

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WHAT IS VALUE: Value is something different from money while money just facilitates the shifting of value from one form and/or time to other, value as such remains constant. True Value is the amount of value you are willing to let go of yours in order to achiever one or more of following things 1. 2. 3. 4. 5.

avoidance of pain more pleasure anything which facilitates continuance of your genes Anything that would make you feel better than others. Anything that facilitates your perceived progress in life.

Value is different for each person for the same thing/service. A person may not value services of a beautician as much as a woman would do. To understand it deeply let’s do a hypothetical situation. You are in a desert, with none in sight, you haven’t eaten of drunk for many days, and you think if you don’t get something to eat and drink you will die. You see a small house with a person sitting outside. And you ask for food/water. And he says yes, I’ll provide you with both, but for that I want all your life’s belongings, your money, your property and everything. Would you give it to him? I guess yes why, coz in that situation that plate of food and that glass of water was worth more than anything you ever owned. It had more “value” than your property because it was going to save your life. People ask well he could have asked for anything and got it in that situation, not true, let’s see the same situation, only now he is not asking for money, he Is asking for your son’s heart coz his child’s heart has a hole and your son’s heart is a match for him. Now would you let go of your son to save yours, I guess not. I have tried my best to let you understand the difference between the two. Money and value. Think. Value is never destroyed as such. It merely changes form from one product or service to another. However value does get created and destroyed which are more or less equal. All value starts from land and ends in consumption. A farmer who is growing from the field is creating money. A person who is creating chair out of wood is creating value. A person who actually invents something in service is creating value.

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A person who eats foods is destroying that value A person who has bought that chair to use has destroyed that value coz he gave some of his value in order to enjoy the pleasure of that chair, which he will destroy is some years. A person, who took that service of person, destroyed that value by giving his own personal value. However, since the rate of creation of value is virtually same as the rate of its destruction. A.k.a. consumption. Value in world normally remains the same

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CURRENCY To understand currency, We much first understand economy of a nation. Similar to a person A nation earns by trade, trading with other nations. Something of value that the citizens of that nation create. In order to get something of value that the citizen of that other create. The difference between the value of the two products or services is the profit.. Citing an example. Oil rich nations of Middle East sell something that their nation produce (oil) to USA that needs it in return for dollars. Since oil is of much higher value to US than the dollar is to Middle East, so USA has to pay more and more and more dollars to make up for the loss in value for them ( not due to loss of value of dollar, but the fact that they can sell oil to anyone for value, world is heavily oil dependent economy. So we (world) has to pay more and more dollars to make it a attractive enough proposition for them we need oil not them.) Onto second point. Imagine a cake of value, which has been cut in some pieces. And imagine a second cake of value that is also cut in some pieces. You both trade. To make a profit you want to make sure you give less value and get more value in return. The difference between the two trades is profit or loss. USA left the gold standard in 1970’s ; most of the countries had left that standard in 1930’s that means that each dollar bill used to be a certificate of gold. Meaning you could get a specific amount of gold in weight with every dollar. But insufficient gold in the world forced them to abandon it, and then they took the oil standard which also proved to be insufficient, after that they have been supporting the dollar with products and services.

It’s hard to think but currency is really a scarce commodity. Coz just about enough of it is created / printed. The price of the currency depends on the supply, a currency is essentially the part of a nation’s value, so more profitable a nation = more valuable a currency because a nation is basically getting more value than he is giving. So foreign market exchange (forex) is basically evaluating a nation’s economy in relation to the world and the particular two countries in question. Simplifying it. Suppose everyone wants to buy German cars, then the price of mark would go up, because importers in Australia to Africa to Asia have to use their currencies to buy German marks to pay for German cars. A German car costs 2000$ to create and it sells for 5000$. That difference of 3000$ is the profit. And unbelievably, if you want to know real state of economy of a nation if it’s profitable or loss making, just see it in relation to gold and other currencies. Coz whether or not we admit it gold is still the world standard of value. You can calculate anything in relation to gold, almost all the world’s products and services are connected to gold in subtle yet firm ways. Suppose a gram of gold bought 10 kg’s of copper a hundred years ago, it still buys 10 kg’s of copper today no matter in which country you live or which currency you use.

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It is not an investment; it merely, practically ensures that whatever you have today in economic value, if it’s held in gold you’ll have it in a hundred years regardless of inflation or currency or political problem GOLD is the unofficial unit of economic value of the world.

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GDP & GNP GDP is the gross national product. In layman terms it means all the total economic values of the products and values created in an year within the borders if a nation while GNP is GDP + investments and return on investments in foreign economies. When we hear on the news that the economy grew at 5% that means the economy which produced products and services worth 100 billion last year, has produced goods and services worth 105 billion this year.

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INFLATION Inflation is the increase in cost of goods or services. There was a time when people used to enjoy a fast growing economy, but everyone has realized that it has it’s own set of problems, with decrease in unemployment companies are forced to pay more for valuable employees and cost of goods and services are increased to accommodate increased costs. Inflation basically happens when for a limited supply of goods and services people are willing to pay more, a bidding war starts and prices of most of the products and services increase. Then workers & commodity suppliers demand more money to buy the same services which they bought for less last time, this fuels a unsustainable cost and price increase which continues until the bubble burst of the cycle. Resulting in recession in some cases or slowing of growth. This hurts the ones with fixed income because they cannot increase their supply of value to sustain the same standard of living which they were enjoying before inflation. When central banks see inflation beyond tolerable levels, they, as a first line of defense against inflation slow down the economy by increasing interest rates. It does two things, first by increasing interest rates they make it more expensive for people to buy products or services, thereby practically decreasing demand for it. Resulting in lower sustainable prices for everyone. Secondly by increasing interest rates they force banks to increase their deposit rates for money thereby making it more attractive for people to deposit their money in banks instead of buying good or services.

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CENTRAL BANK. Central bank Is an institution that is entrusted with the job of a driver. A person or institution that makes sure that the economy is heading in the right direction like the Reserve bank of India or Federal Reserve of USA And unlike most of the people think it actually works differently than governments, governments can come and go, Central banks stay. They take money for the govt. from the market. It’s usually called govt bond or Treasury bond

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BUDGET LOSS AND TRADE LOSS Budget loss is when governments spend more then they earn (through taxes) They have two choices, either to make people pay more taxes or sell bonds : a bond is a promise to pay the amount at a future point of time, with interest. Most government find it convenient to pay by bonds instead of limiting expenses or raising tax rates, one of the problems of economy, govt just can’t give a bitter pill to the nation. A trade loss is when a nation is importing more than it is exporting. Basically It means that it is losing it’s value to other nations.

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DEBT Debt instruments such as bonds and debentures etc are just a way of accessing the world’s capital. It’s like the capital markets provide an easy access to creditworthy institution to access money . capital market’s simply transfer money from the one’s who have it to the ones who want it and are willing to pay a price(interest) for it. Interestingly like I have already said, money is never created nor destroyed it merely changes shape from one place to other, it automatically finds the best place where it can grow, securely, with the preference being to security than risk. So if interest rates are low enough making it unattractive avenue of investment, money will take risks to make itself grow.

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BOND Bond is a piece of paper that says I, the borrower agree to pay you the owner, a certain amount of money in the future. There are many types of bond but they can be broadly gauged in two categories. Deep discount bond : these bonds pay no interest but are sold at a discount to face value to make up for the interest payment. For example a bond which says that it will pay 1000$ at 2030 might be sold for 250$ today. So interest and principal will be paid at that point of time in the future. Second type is the one that pays interest periodically that is called coupons in bond world.

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WHAT IS INSURANCE. Business of insurance is related to the protection of economic value of asset. Every asset has a value, the asset would have been created through the efforts of the owner, it is valuable to the owner because he expects to get some benefits out of it, and benefit may be in income or some other form. Like In case of a factory, or an earning member of a family expecting to generate an income to sustain family. Both are expected to last for a certain period of time, by which the person expects to arrange for an alternative. An accident or any unfortunate event might make it incapable of giving the benefits. Insurance is a mechanism which makes sure that economic value of the asset remains intact. Insurance is of two parts, endowment and insurance, endowment makes sure that a person has future money in case he is not able to make money, and insurance makes sure that his family would get money in case he is not there. An insurance is a promise between two parties, person makes a promise that I the person makes a promise that I would continue to give you a specific amount of money (premium) so that you would either do one or both of these things in case the event insure against happens. An insurance company on the other hand says that they would keep that promise if you pay premiums. (There might be different procedures or names for the same things, but essentially all the insurance is the same.)

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THIRD WORLD. There are basically 4 groups of nations in the world. First and second world are old industrialized nations of the world, first world usually includes Italy, Britain ,and as such which are like the old bunch of the block, then second world are the countries like USA, Japan, western Europe, however because of similarity between industrialization and development of the nations of first and second world, they are interchangeable and just called first world collectively, third world are actually two groups of nations one who are growing super fast like Hong Kong, Thailand, Malaysia and others second group is of china and India which are growing moderately. and fourth world is of nations which are not growing at all like in Africa . They have no resources to base their development on.

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MONEY LAUNDERING. Money laundering is the process by which illegal money is converted into legal money. To understand it, suppose a criminal makes a lot of money. But what’s the use of the cash if he can’t spend it, I mean there is a limit to all that you can buy without a bill and a receipt, if you want a huge bungalow to live, you at least have to show legal money otherwise you’ll arouse the suspicion of local law enforcement and tax authorities. It somehow needs to be deposited in a bank or converted into something that can be justified to authorities. ( local thuds rarely go beyond the 100,000 mark which they can easily spend in cash, but the real bosses of the crime need not commit a crime, for that they hire a local thud. They want to be as clean as possible for the authorities.) therefore a money laundering is essentially converting that money into legal income or in other words justifying the income to income tax people. Some ways of doing that are, making too many small deposits in many banks, which accumulate into a single account at some point of time. They buy lottery tickets from winners, pay amount in cash to them, and collect the cash from authorities, indirectly justifying the income; another way is to deposit some illegal money with a lot of legal money thereby making a spillage, trading amongst them. Anything with a bill or receipt, like a stock or anything that is legal. Thereby moving money from one hand to other IN PAPERS.

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SWISS BANK ACCOUNT. Contrary to popular belief Swiss bank account is nothing more than a normal bank account except for a very few procedural differences. They do not disclose identities of their clients to anyone without a court order, which is granted ONLY in case of criminal cases which does NOT include tax evasion because tax evasion is considered as a civil case not a criminal case in Switzerland. It is used almost exclusively for storing LEGAL money which people earned to save themselves from unfavorable economic or political circumstances at home or high tax rates. Banking system worked great even during world wars Money launderers however use it because once it passes from Swiss banking system , there is no past of the money. Opening a bank account is almost as simple as opening one in your local bank, go there, open account, and make a deposit. That’s it.

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WHAT IS A BLACK MARKET. Black market is a simply speaking a normal market that exists outside the preview of govt authorities, they usually exist when the thing that you want is either illegal or unavailable in legal quantities to you, you are willing to pay a higher than market price for it. For example drugs are Illegal in most countries, but some people want it, and are WILLING to pay for it. that creates a black market for it. A Kg of heroine, costing 1000$ in streets of Pakistan, costs about a 250,000 in streets of New York.

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WHAT IS BANKRUPTCY It happens when an individual or institution can no longer pay his liabilities with the assets it has.

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WHAT IS ASSETS Assets is anything that pays you money for holding it. Example - bonds, mutual fund units, stocks, insurance units that pay you (annuities). Real estate that pays you rent. Anything basically that does NOT take your time in order to give you money. If it takes time then it’s you JOB, and if it’s your job then you are selling your time to earn money, and if you are selling your time to earn, then baby you only got 24 hour’s a day.

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WHAT IS LIABILITY. Liability is anything that takes money from you for holding it. Example: your home( you PAY tax to hold it together with maintenance amongst other things, don’t say it’s increasing in value because you will earn that value ONLY when you sell , until then it’s just in your mind)

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WHAT IS EXPENSE. Expense is anything you spend. Example: food you eat, loan installments, bills like electricity, health, education for children, Taxes, maintenance, petrol for car. To anything like that.

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WHAT IS INCOME Income is anything you earn. Your salary, dividends from stocks, and mutual fund units, rent that you get from your real estate, any business income.

How to be rich, make sure you INCREASE assets, and reduce liabilities.

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BEARER BOND. It’s a special type of debt paper that says pay to whoever has this bond. Holder of the bond has right to redeem it and receive any interest payment receivable on it. It is mostly used when the person does not want to identify himself to avoid problems at home, usually high net worth individuals and criminals.

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BROKER: like a real estate agent who bring together buyer and seller for a fee, a broker acts as an intermediary between financial transactions. He usually has the responsibility to ensure the goods (financial instruments like stocks/bond) are delivered to the opposing party. Main difference between a dealer and a broker is that the dealer has the stock of goods with himself, while broker only brings seller and buyer together.

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CAPITAL MARKET OR STOCK MARKET. It is a exchange where goods or services are sold and bought. Technically and ironically first exchange was the slave market of Rome, first stock market where shares or bonds etc are traded is the NYSE, or New York stock exchange.

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A BANK An establishment where you can keep your money for safe custody, free from the fear of theft of thieves or economic hardships, a bank earns by lending the same money to borrowers at higher interest than it pays to it’s depositors. The difference between the two is the profit of the bank that is used to pay for the expenses and perhaps a small profit.

Incidentally it’s this corporate greed of the banks that forced them to lend to people who can’t pay it back for a higher interest in turn jeopardizing the safety of the funds they had taken from depositors

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COMMODITY. Commodity is basically the raw material or basic products that is used to create products Such as wool, milk, food, basic metals etc,

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DEBENTURE. A debenture is a bond issued by a corporation that pays an interest. There are a few types of debenture such as equity linked debenture and convertible debenture etc

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DEPRESSION Depression is usually a prolonged period of recession, production, supply and demand decreases and people and companies go bankrupt. Last great depression was in 1930. Governments have been more or less successful in avoiding a depression by increasing spending or increasing money supply.

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DIVIDEND The payment to the shareholders of a company or mutual fund is called dividend. It usually is in form of cash or sometimes as bonus share or unit or

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DUMPING. It’s a type of business practice in which commodity or product is usually dumped in the market to drive competition out of the market and then sell the commodity or product at super profits. This is usually done on small scale (individual) now because countries erect trade barriers to discourage large scale dumping

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EQUITY OR SHARE. It basically means holding a part of something. Similar to a birthday cake a company can also be divided into large number of small pieces which are called shares or equity that are tradable in a stock market. Holder of the share entitle them to receive dividend or profit by increase in price of the share when a profit is made.

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GOLDEN PARACHUTE. Fearing a huge loss to company or management takeover or firing by new owners, managers often give themselves huge guaranteed pays or bonuses or huge severance packages should they ever be forced out of the company. It guarantees them a lot of money but at the cost of the shareholders.

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HEDGE As the name says, a hedge is a protection from uncertainty. A hedge consists of buying and at the same time buying the right to sell it at a later date at a higher price if the price drops. Many intelligent investors buy gold or rent paying real estate to protect themselves against inflation as well as uncertainty of income.

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HNI OR HIGH NET WORTH CLIENT. It’s a person who has a lot of investable income, as compare to his peers. It is usually defined as an individual who has more than 1 million dollars of investable money excluding real estate.

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HOT MONEY Hot money is the money that is invested for very short duration looking for the highest return on investment. It can come and leave at a moments notice. (Incidentally the reason why there are so many quick crashes is because of this quick money. This type of money is not investable, it looks like an investment money but it merely comes to make a quick buck and usually both the investor and the invested are the losers.) This is unfortunately the root cause of the problems in world economy right now, from 3 super crashes in the world in last 10 years, this problem will only grow. To bigger and bigger crashes. The problem lies in various funds which are not investing but speculating in stocks and various other options, unfortunately they are sold as investments which they are not, at least not by my definition, how is buying stocks of a company going to make it create value?

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INFLATION It is the percent increase in prices of commodities and products measured by an index usually called a price index. See Google on index computation.

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INSTITUTIONAL INVESTORS Sometimes called foreign institutional investors, are nothing but huge organizations such as pension funds or mutual funds. They have trillions of dollars at their disposal. ( if that makes you think at the writing of this book , Nokia the famous Finnish telecom giant is owned by California teachers pension fund.)

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INVESTMENT Invest basically means purchase of productive assets such as factories, equipment, commercial rental property and things like that, which produce value and give a return on investment .

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LIQUIDITY. It basically means ready supply of funds. As in financial sector it refers to how fast the security (share/bond/debenture) can be sold in large quantities with little effect on price.

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MUTUAL FUND. A mutual fund is a collection of bonds or securities that are sold to investors as single investment. This allows the investors risk of losing in a single company should the company go bankrupt or make a loss.

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NET ASSETS It’s basically a sum of what company really owns in real physical terms and cash. Minus it’s obligations and liabilities.

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PRIMARY MARKET. Also called initial public offering or IPO. It exists when new bonds are stocks are issued to the investors, it exists only till the payment time it is OUTSIDE the normal stock exchanges.

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SAVING. Saving is a part of income that is not spent. When a person spends only a part of income which is usually put aside for purpose of bad times or , invested to earn some more money.

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SECURITIES. It is a paper (financial instrument) that represents something of value It usually consists of stocks, bonds, fixed deposits, and similar things. It basically states that the holder of security is entitled to something of value. Banks can also securitize their assets, meaning for e.g. they converted the loans they gave into a securities that entitled the holder of the converted security (bond) to receive principal along with interest payment.

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SHARE / STOCKS This represents ownership in a company, as a owner of the share a shareholder has right to the earning and assets of a company. Company’s management is employed by shareholders to run the company and they are expected to provide them with profits. In practice shareholders of the company appoint directors in annual general meetings or AGM’s who in turn appoint all the employees from MD to CEO and others.

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SUBSIDY. Government’s payment to a business to successfully run or compete with foreign companies is called subsidy, Subsidies are usually provided for many reasons, When the price of commodity has to be kept low like subsidy to farmers to produce food but prices of food has to be kept low so poor people can survive. When a business as a whole starts to fail due to economic circumstances, like in case of airlines immedg after 9/11 or at the time of oil shock of mid 2008. When a business is providing large scale employments but running into losses

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UNEMPLOYMENT. It is defined as the percent of workforce of a nation that is looking for a job; it is a good indicator of the state of the economy of a nation. Contrary to popular belief, unemployment to some extent is always good because it make sure there is a ready supply of good workforce, that the workforce is essentially improving itself (growth) it makes sure wages do not increase fast thereby not fueling inflation.

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VOLATILITY. The movement of a price of a security over a given period of time is called volatility, stock (or any financial instrument) whose price moves wildly fast is usually not preferred by serious investors because it denotes that the stock higher risk. Just on a personal note, I never understood stock market, I mean its just like selling a promise of future earnings. Just like supply and demand there are only enough number of stocks meaning only a limited number of promises that are bought and sold. Only rarely do the investors or buyers of these promises get rewarded by way of dividends. All they can see it the notional increase in value of the stocks, which they rarely get if they decide to sell.

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PART TWO

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Now I hope you understand that what is that you want, meaning you know what money is, let’s explore a few time tested formulas of getting rich.

SAVINGS. For every 1000 that you earn, save a hundred for bad times. I can’t seem to stress it more how important it is. Especially in modern age of cheap money that is NOT yours ( credit cards) and 27x7 screaming of the corporations and government that is asking you to spend more and more and more. Because more you spend = more profits for the corporations and more you spend more tax revenue to the government. It doesn’t matter how much do u make, but how much you keep that matters in .

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CONTROL EXPENSES. Limit your expenses to what you NEED and not what you WANT, both are really different things.

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INVEST. Consider your money to be your slaves, make each slave i.e. buck work for you, 24x7 to reproduce more money.

There are five sub laws of investing. Money comes like magnet to the people who put at least 10% of their earning in income producing assets. Money does a really hard work to reproduces itself in kind to a person who finds a suitable and profitable place for it to work (it gives a good return on investment to the ones who find good places to invest) Money never goes out of the hand of the person who invests it under the advice of the persons who are trained in its upkeep. Money goes away from the hands of a person who doesn’t understand the place where he is investing. Or where people trained in it’s upkeep have disapproved it. Money runs like hell from the hands of the people who put it to impossible earnings (get greedy) a guaranteed 10% a year is a more than good return on investment than a speculative 20%. But wanting 200% return, sir, you should give your money to me coz you going to lose it to someone else anyways.

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PREVENT LOSS. Make sure you don’t lose the money, ask help of the one’s who are good in it’s upkeep ( I would stay away from self claimed financial advisors who don’t know anything about money, yet on basis of some degree they got in a university by writing in exam what they read in a textbook written by someone who himself was broke advising people on how to be rich, claim to be better than you in investing your money.)

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MAKE YOUR HOME A PROFITABLE INVESTMENT. Buy a home ONLY when it is a asset. Paying a rental is a constant drain on your income buy if owning a home is worse than not having one, that is all the property taxes and mortgage and as such, try to find an asset which can pay for the rental.

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INSURE A FUTURE INCOME. Make sure that if you stop earning today you family would have a steady income from investments, when poverty enters the home all the love and affection even from the closest of family members runs out of the window.

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IMPROVE YOURSELF. You are your own biggest asset, improve some skill, learn something new, weather or not you are going to need it , for all the things I have learnt no skill or person is useless in this world they are like formulas in mathematics, values may change, formula remain, wherever you are, wherever they are, someday somewhere you’ll find a use for them.

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AVERAGE Don’t be average, average people don’t reach anywhere. Learn to look beyond the word average, I mean let’s take an example, suppose a person’s one leg is in boiling water, and other leg is frozen in ice, then according to the law of average, that person is averagely ok, but is he ok, I guess not. On a second example, suppose out of a hundred people 25 earn 20 a month, 40 earn 30 a month and 25 earn 35 a month and 10 earn 100 a month, then according to the law of averages. On an average people are earning 35.75 each. Yet is this average telling you the real story, is it telling you that 90% are earning less than 29.11 a month? And yet most of the wealth is concentrated in hands of 10% of the sample size?

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MONEY MAGNET. There is an ancient thinking that rich people keep on getting richer, and poor people keep on getting poor. This thinking is true. Its because rich people by their very actions attract the circumstances that makes them rich in the first place, so if you want to become rich, break the cycle of poverty. When next time a problem of poverty comes to you don’t say I can’t afford that, use your supercomputer brain to simply ask how can I afford that, your brain will give you an answer, you’ll be surprised with yourself.

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MONEY IS EVERYWHERE. A friend taught me that money is everywhere, in ever grain of sand and in every second of time, if you can’t see the money, you probably are not looking it in the right way. He simply gave me an example after which I did not question him. He said do you have a toilet at home, I said yes, he said do you want to earn from your toilet, and I was like huh, he said he was earning from his toilet, and I asked how, he told me that he has converted his toilet outlet pipe in a small biogas plant, and now he was getting, biogas as fuel, leftover of the biogas plant as a organic manure, he also used leftover food as input in the plant, so now, I was amazed, I mean just by shitting, he was running his car, and getting free manure for his field. ;) now try to think something like that! Well what I am trying to say is, money Is everywhere, so stop telling everyone If you can’t earn that” there is a recession, and people are not earning the money to spend the money in the business you are in. Remember I told you value is never created or destroyed in a economy, it mere changes from one hand to another and one shape to another.

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EXPENSES WILL RISE TO MEET INCOME. No matter how much you earn, your expenses will always match up to it, how because of an old habit of the humans to see pleasure today. To explain it let’s see the financial standing of two different individuals one earning 15000 a year and second one earning 300000 a year Let’s call them a mechanic and a doctor. Mechanic: Gross income: Taxes : Net :

30000 10000 20000

Expense: A Car loan of a normal cheap car. Housing loan insurance Education of children in public schools Vacations clothes Food and restaurants Credit card, phone, electricity bills savings charity investment Other expenses leftover

2500 8000 500 1000 1000 1500 1000 2000 500 500 500 1000 nothing

That of a newly rich man suppose a doctor. Gross income: Taxes : Net :

300000 100000 200000

Expense: A Car loan of luxury cars Housing loan for a bungalow insurance Education of children in private schools Vacations clothes Food and restaurants Credit card, phone, electricity bills savings charity

25000 80000 5000 20000 10000 4000 5000 2000 500 500

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Various new taxes like property tax etc New purchase of stuff you don’t need buy want to show off Charity to showoff investment Other expenses, you’ll usually find something to spend it on. leftover

8000 10000 5000 10000 15000 nothing

So you’ll see whenever both will be out of job or work, both lose everything, there is not much difference between the two of you. Doesn’t matter what you earn in or the type of work, you earn less you’ll send them to public schools you earn more you’ll send them to private school, you earn less you’ll drive a normal car, you earn more you start driving a Mercedes but does that matter? Some would say that ok, how can a doctor lose a job, well don’t be so sure, god didn’t made a guarantee that the time would remain the same for you or him, that you would not accidentally make a mistake in a patients healthcare which is not provable in court, or you would not love your hand in an a accident, or you would not go mad or you would not get sick. List is countless, depends on who you ask. You become rich by Saving what you earn, Insuring what you save, Investing what you insured. Always understand what are you investing in. if you don’t explain it to yourself in two lines you don’t understand and if you don’t understand don’t invest, you’ll lose. When investing in something, ask yourself three questions what will he do of this money, how will he earn, is he investing in speculative things, if he dies how would you recover your principal, if he defaults, what physical thing does he has that you can take to compensate for the loss of capital, is he earning from illegal or unethical things, investigate him as you would do for your daughters husband, if you can’t answer even one question don’t invest.

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COMPOUND INTEREST. Often called the eight wonder of the world. Compound interest is basically reinvesting the return on investment that basically means that, you are getting interest on something and you are again lending that interest to produce even more interest. Simplifying it: Simple interest or linear growth 100 invested interest of 10 earned = 110 10 spent, 100 again the invested, interest of 10 earned =110 again 10 spent, 100 again the invested, interest of 10 earned =110 again 10 spent, 100 again the invested, interest of 10 earned =110 again

Compound interest or exponential growth 100 invested, interest of 10 earned =110 10 NOT spent, 110 again the invested, interest of 11 earned =121 again 10 NOT spent, 121 again the invested, interest of 12.1 earned =133.1 again 10 NOT spent, 133.1 again the invested, interest of 13.31 earned =146.41

In first table first one has spend 30, and he has 100 in capital left to be invested. In second table he did not spend 30 and he has now 146.41 that is a smart gain of 16.41. Money which he earned by REINVESTING the capital along with return on investment. Again explaining it in simple terms, interest money usually doubles in let’s say 7 years So you have 200 at end of 7th year, 400@ end of 14th year, 800 at end of 21st year, 1600 at the end of 28th year, 3200 at the end of 35th year, 6400 at the end of 42nd year, 12800 at the end of 49 year and so on, if you see it differently, that is 200% return on investment guaranteed! Year on year, It doesn’t look much in initial years, but it becomes explosive in later years. It’s said that the purchase of Manhattan island is the world’s most profitable investment, it was bough for 24 dollars paid in beads and stuff, however if that 24 dollars was invested at 8% compounded annually, it would have been about 24 trillion dollars plus, which would have been enough to buy entire world many times over.

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Fast To Faster the faster you move towards your goals, the faster they move towards you.

Worlds best investment is the people. To explain it let me give you an example, I worked at an internet café a few years ago, there a customer came and he we talked and became friends, I did not charge him for anything wand when he offered to pay, I merely said it’s ok, and he went home, a few month later he came to me for some work it was not much and I was free at that time so I did it, I again did not charge him, this went on 4-5 times, then I felt actually a bit used, but since he was a friend, and his work usually wasn’t much trouble, so I didn’t paid much attention to it, recently he came to me and told me that he was now working of front desk of an insurance company, and he wanted something from me, I asked what and he said that he wanted to make me an agent, on being asked he said that he felt bad that I did not charged him anything for the work that I did for him and he wanted to somehow repay me, and since he was at the front desk of the insurance company which paid huge commissions to his sales insurance advisors he wanted to make me an insurance advisor so that he would sell the insurance policy to the clients in my code, commission of which otherwise had been in companies profit accounts, so practically without working I would be earning huge commissions without even going to the office or working, just because I chose not to be a “ kill me but pay me” person, by letting go of 5-10 bucks I earned a person , who earned me a Lot, now tell me is this the best investment of them all or not.

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GROWTH. Contrary to the popular belief, it doesn’t matter how much one earns, what matters is how much they can earn on their investments, simply explaining it, let’s take the example of America, America has about 5 trillion dollars of investment money, that means that 5 Trillion dollar has to be invested somewhere, in order to generate return, meaning about 500 billion dollars a year. is the world capable of generating that much value in a single year? And taking compounding growth into consideration, 550 billion dollars second year? So in order to generate that type of return the so called intelligent fund managers and the likes have to take unnecessary risks in order to generate that money. Have you ever wondered come there are no recessions, ever till 1821? There was a commodity shock in the that year that lasted 30 years, after that duration of recession and depressions have been getting smaller and frequency has started increasing. Can you recall major problems of over capital in the current economy, 1997, no matter what the govt or the intelligent TV commentators tell you, it was a case of growth vs., risk, corporations and funds invested huge amount of money in south Asian economies like Thailand, Malaysia and likes, and when the returns generated was not good enough, they pulled that money, resulting in super shocks to their economy, that was one of the first warning sign to the world which no one paid any attention to. Then it was the dotcom bubble to 2000,. Too much money being thrown by venture capitalists and likes in unsustainable business ideas, then 9/11 happened, and us govt in order to boost the economy, did something that should not have been done, it lowered the interest rates to dirt cheap, which resulted in unleashing to tremendous liquidity in world markets as well as huge amount of capital available to the American public. Which had to be invested somewhere, which they found in local property market, because it was shown to the public that historically, real estate prices rarely come down, what was not shown to the public that historically people did not had 5 trillion dollars to invest which they don’t know where to invest. So greedy financial institutions in order to show growth did something very similar to what they have been doing, boost prices of something that is in limited supply by buying at whatever price they can get, only in this case the buyers were the sub prime people who couldn’t afford huge villas and apartments, but bought it anyway, and why shouldn’t they are not the ones who is buying because to buy you need to put in your money which they never did, it was the money of the financial institutions which was buying the properties for them and they never really cared about credit worthiness or credit scores or anything like that because all they wanted was a promise of the bearer that they would pay interest, and when they couldn’t even pay the interest they took it back, sure they can “foreclose” and what do the sub prime people have to lose, nothing, they simply enjoyed their stay in huge villas and bungalows just by paying the interest. It was never their money to begin with. It was your money, the people’s money that crashed the market. Who lost the money eventually; remember likes of Lehman brothers or JP Morgan or Wachovia or freddiemae or xyz.

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Understanding money.

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I was somehow always being taught that I should study to get good grades so that I could get good job and have a secure future and it made me wonder how my grade would made me a rich person. I mean everywhere I saw there were highly educated people but all I saw on their homes were recovery agents of banks, meaning they could not repay their debts, well I wondered if these people, in spite of being so intelligent and smart cannot avoid being thrown out of their own homes and being poor, how would I do the same. I did saw a couple of people though who did not appear to be doing anything yet they were enjoying life to the fullest, in my opinion they were supposed to be poor not the hard working convent educated intelligent guy. Well I got the answers, and they were surprisingly simple yet surprisingly efficient.

Simplest plans are often the most brilliant.

Before I tell you about the answers , let me give you an example, suppose you take a home loan from a bank, and they give you 20,00,000 in loan money for which they charge 12% interest, I t will turn out to be 2,40,000 a year as interest, meaning 20,000 a month, now suppose bank charges you 20,000 a month as installment and you have choices of 2 banks, one adds interest to the principal at the end of the month, AFTER you have used the money for the month and another who charges you interest before the month for which you have availed the loan amount, on paper both look the same because according to the salespeople of the bank it doesn’t’ matter when you are paying the installment , at the end of the month you still are liable to pay 20,000 as interest. Well look again. Let’s calculate both, first bank levies interest on 1st of every month, Before you have a chance to pay interest and before you have used the money for that month. So first month, your liability is 2020000 and you repay 20,000 on first of month your liability is still 20,00,000 next month again the same so 1 year later you have repaid, 2,40,000 with the full principal still standing. Now take the case of bank which puts interest at the END of the month after you have used the month for that month, so you have liability of 20, 00,000 at the start of the month, you repay 20,000 and your liability Is now = 19, 80,000 now add interest to that: 1% of 19, 80,000 is 19800 and NOT 20,000 add the compounding effect we have already seen and you have a total benefit of over you can imagine. Of course there are minor differences in real life to this for example; your installment in both the cases is going to be a bit more than the 20,000 in order to cover the capital repayment too. But think, Nature has give you a portable supercomputer in your head called the brain USE it.

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The problem with the world is that the education being provided is still the education that was required when INDUSTRIAL age started, and when I say education is old I don’t mean the content of subjects that are being taught, but the subjects themselves. There have been four main education ages that existed in the world; first one was pre 3000 year old education that was taught by parents to their children which was how to make a fire, how to kill an animal. How to make a home. At the start of the millennia (about 2000 years ago, 3500 years ago in India and Egypt) due to rapid development of society, requirement of an individual to learn the mentioned skills like hunting/growing the food, making the house etc ceased because there were people who did that for you. So now to grow, new demands and supplies were starting, which require special skills. Those skills can be put into four broad categories, like first category was – education, research, priests, doctors and all those things related to that. Second category was that of power like that of soldier, politicians, ruling class and likes, third class of people were like the economic class of people like traders, farmers, prehistoric banks and likes, fourth class of people were like the slaves , servants, laborers of the times. All were being taught skills related to their jobs and more importantly skills and most importantly the CHARACTER. In the industrial revolution of 1600’s and after that, a new type of education emerged which was required at that time, and which tried to convert the people into generic workers who could be molded into any role. And now we are again at the cross roads of the worlds, we are again changing the age of the world from an industrial economy to essentially an paper economy, (well tell about this later)

One of the worst thing that modern education did was making everyone stop asking questions. they started teaching the syllabus which said this is right, and that is wrong. Not the character of the thing but merely because it has been said so in the books, learned men have written it so you should not Question it. There is a huge difference in the two statements Aliens don’ t exist And So far we don’t have any evidence of aliens. First statement tells the person in subtle ways that we have evidence that aliens don’t exist, while it’s the other way , we don’t have evidence of them existing. First statement switches off the thinking part of brain while second statement forces one to think how can I find the aliens or whatif or a million other possibilities.

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Can you recall last time something new was invented?

There are 3 universally recognized formulas of making money. ( notice I have written making money and NOT getting rich.) Job income Rental income Paper asset income Job= anything that requires your time in order to generate income. Doesn’t matter if it is a multi million dollar business or a small 9-5 clerical job or a farming work. Rental income: this is the income that is acquired through giving something of value to someone who is willing to pay a price to use it. Most of the people limit it to houses and commercial establishments. I have used the word value in it, not land or property. Let’s see some other things of value that might be converted into rented value, a car if put up as a taxi, a person whose services can be rented out to other person or company temporarily and a thousand other things, which you should think of yourself. Paper asset: these are the things which are just papers which entitle the holder of the paper to something of value, like various financial tools, bonds, mutual fund units, insurance units,

Job: the most positive thing about a job is that it gives money right now, which most people cannot avoid because delayed result is not existing in our culture anymore., second is that it gives maximum share in value, that is if the job creates 100$ , you get to keep 60% of it, which is almost too irresistible to avoid, since it gives the feeling that they are getting richer. But why then do I find that most people are not rich, or wealthy. Because of simple reasons. First you cannot grow by being in a job, there are just one in a million who get where they want to be, and one to a million is not an odd I am willing to take, it’s worse than a lottery. Second, no matter how good you are at your job, you are still getting a part of the earning that your job makes, nothing else, the key to getting rich is taking a share of everyone’s earnings, no matter how small, do you know about a few who take the smallest out of your earnings, yet become the richest, let’s count, shareholders of the company, your supervisors, they supervisors, their managers , their regional managers, their country heads, and then ceo. Rental income: this is the income, which one gets by buying or having some sort of value in a product or something and leasing it to someone who otherwise might not have been able to get that value either due to its’ unavailability or it’s high cost. Example, someone needs a car, you lend it to him for a fare, you get rental for the period. Can you recall any more rental incomes, parking space for the cars (right to use that space for some time), or road tax or toll tax, right to use the road for that time, or a building whether commercial or residential, that gives you a

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rent, ( incidentally the money is also put on rent, rental of which is called an interest, just a food for thought ) Paper assets. These are the financial things which basically mean you own a part of something of value, and you shall get the part of that value generated, this could be anything, from a mutual fund unit to a interest bond, to a thousand different types of financial tools which you’ll know of when you enter this maze of financial world. These are actually the worst of the three because they actually rarely generate any value merely show it as such however it is preferred by people owing to it’s high liquidity.

When I meet my clients to discuss their financial needs, very often they ask me, how can they be rich without much capital to invest, and I tell them it’s actually very easy, just change your mindset and you’ll not only be rich in no time, but Stay rich as well. Their second question is, well how do we change our thinking? I simply give them an example, suppose you have two cars in front of you one costing 20,00,000 and other one costing 2,00,000 and you have 20,00,000 with you, which one will you buy, and usually the answer is the one with 20,00,000 Well I say suppose you are in a financial trouble, which usually comes when you are feeling the best then what would you do, and sometimes they say my car is worth 20,00,000 I can sell it. I tell them it was worth 20,00,000 when “you wanted “ it, the moment it came out of the showroom and “you need “to sell it, it’s not worth more than 12,00,000 so essentially a super loss of 8,00,000 ? Wouldn’t it be good if you buy a car worth 200,000 and invest the rest in monthly interest bearing bonds, which provide you with enough money to cover the cost of running the car as well as complete maintenance, no matter you have a job or not, and which can provide you with something should you go in some financial trouble? Isn’t that better than a 20,00,000 white elephant which is a constant drain on your salary or earnings like insurance, maintenance, petrol? At least I make them think. People say study, so that you will get good grades, and with good grades you will get a good stable job, and I prefer to say study so that you will get good grades, so that you can own the best businesses. It never took money to get rich, it always took brain to be one, in Hinduism it is said that money is a naughty girl it moves from fools to smarts. fate replenishes the fools again and again yet it moves from fools to smarts again and again. There is a difference between smarts and intelligent, In real world, If you ask a intelligent person what is 1+1 his answer is going to be 2 If you ask a smart person the same question, he would ask back, how much do you want it to be?

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Suppose you say it want it to be 1.5 he would say well 1+1 is 2 but government took his share hence 1.5 if you say 3, he might say 1+1 is 2, and govt gave you incentive to provide locals with jobs. Apply mind. One of the most profound quotes in my life has been: deal with life as it works not as you hoped or wanted it to work. The key to being rich is in understanding the difference between liability, asset, income and expense. You have already read about it. Let’s go through it again, what you earn on a monthly or weekly basis is income, what you spend on monthly or weekly basis is expense, what increases your income is asset and what increases your expense is liability. Read last three lines a hundred times until you understand the meaning behind it.

Money is not evil, absence of justified money is the root of all evil (just a random quote)

One of the best advice that I can give to you is, don’t work for money, if you do that you will continue to work for it for the rest of your life, and still never be rich. “You are greedy, you suck the blood out of poor people, you exploit them, you use them to be rich, you don’t take care of them. You do this, and you don’t do that.” Is it you saying these things to your boss? Well the problem with the people is that you think your boss is the problem, while this is not the case so stop blaming him for the mess in your life, if you think the reason for your problem is the boss, well then you have to change him, instead if you think you yourself is the problem, then you have to change yourself only, you can change, and be better, and more intelligent as well as smart, most of the people in the world want the world to change but they don’t want to change themselves. It’s way easier to change one’s own self than to try to change the world. let’s say you think your boss is the problem then what is the option that you have? Quit the job and look for another job right? Most of the people make the assumption that a new job with better pay is going to solve their problems. It never does. Poor people work for money, money works for the rich people. The world is divided in two types of people poor people who tell their kids, work hard so that you can have a good job and make sure you have good job benefits in it, while rich people , top 2% of the world tell their kids, learn how the money works, so you can make it work for you.

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Most of the poor people think they should be paid more. But the rich bosses know that they don’t have to pay more, because regardless of what they’ll pay, poor people will continue to work for them because of their fear, fear of losing the job, fear of not being able to pay for their bolls, fear of a fresh start, fear of being poor, fear of a million other things, and they become the slave to money, and when they can’t do anything about that fear, they start to release their anger at the boss which hardly matters to anyone. Like I said there is a lot to be learned, most of the people study in college, and then try to take a safe stable job, then start earning, then start spending, and this cycle of earning spending continues for their life, their pay increases but also their expenses. Until the day comes when they no longer can work, and they are dependent on either their children for money, or dependent on social security, and they ask themselves well what wrong did I do? Well and my answer to them will be, nothing, except for one thing, you never learned the subject of money, you learned to balance bank accounts but never understood money.

=================================================================== Beware of the biggest trap of life.

Don’t read this topic if you want to work a lot and earn little, if you want to be forever in the love of a job security, a two week a year vacation ,of a meager pension after working for life. If not, then read on. First of all stop lying to yourself. Most people have a price. And they have a price because of human emotions named fear and greed. The fear of being without money motivates us to work hard, and then once we get that pay , greed or desire takes over the mind and starts to show us the pictures of what the money can buy. The pattern is then set. The pattern of getting up, going to work, paying bills, getting up, going to work, paying bills... Their lives are then run forever by two emotions, fear and greed. Offer them more money, and they continue the cycle by also increasing their spending. This is the cycle of life, for most poor people." Instead of telling the truth about how they feel, they react to their feeling, fail to think. They feel the fear, they go to work, hoping that money will remove the fear, but it never does. That fear haunts them, and they go back to work, hoping again that money will calm their fears, and again it doesn't. Fear has them in this trap of working, earning money, working, earning money, hoping the fear will go away. But every day they get up, that old fear wakes up with them. For millions of people, that old fear keeps them awake all night, causing a night of sleeplessness and worry. So they get up and go to work, hoping that a pay will kill that fear stalking their soul. Money is running their lives, and they refuse to tell the truth about that. I never want you to be rich, because by being rich is not going to solve the problem, It never did.

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Let me explain the second feeling, that is desire, desire to have something better, they want money for the assumption that that can buy them happiness, but that is very short lived, so they need more money to buy bigger happiness. So they keep on working thinking that money is going to give them happiness. Most of the rich people who are rich don’t become rich because they want to be rich, but because they fear poorness, so they work day and night and become rich, and in the end start having a new fear, fear of losing money, so they keep on working, for this fear. In fact as may would tell you, most rich are worse than a poor person because at least a poor person can sleep at night, a rich person can’t even do that. Love of money or hating the money is the root of all evil. (Use money as a means to buy something that you need, don’t love money as if money “is” your life.) You will find many people who keep on saying I am not interested in money, well then why the hell do they go on their job every morning for? This is nothing but denying the fact that they cannot have money, it’s almost like the old story of a cat that can’t reach for grapes at a height and then tries to pacify her mind by thinking that maybe grapes are sour. This is sheer craziness. A JOB is an acronym for “just over broke”. If you have just graduated, or got free from your studies, then don’t run after job money as if it is going to solve all your problems, it never does. Instead try to think if that job is a long term solution (paycheck) for your long term problem (no money) usually it’s no. a job is at best a short term solution for a long term problem. People will tell you to study and get a good job, and it is a good idea for most people, and I would like to remind you, most people are not rich. I want you to understand and control the power of money and the fear of poverty. I want you to understand and save yourself from this trap made of two things, fear and greed. Use the two things in your support, and not against yourself. Don’t try to collect a huge amount of cash for yourself, you cannot control greed or fear with that. If you cannot do that, it doesn’t matter how much you earn you’ll still be a highly paid employee of money. Don’t lose your mind in front of the emotions of greed or fear, instead learn to evaluate. Don’t let the emotions pollute your thinking. It merely starts a cycle of fear greed and paycheck. Its because of these feelings that people tend to spend their entire lives over an illusion of Paycheck, increment, and job security, which never exists. They never think where these feelings are taking him, their situation is just like a donkey whose owner (fear and greed) is dangling a carrot in front of him, the owner goes where it wants to go, but the donkey is chasing an illusion. The second you started thinking about the new goodies money can buy like ring for your GF, or a fancy car or a new bigger home, you started dreaming about that dream which is supposedly going to make you feel good. These are just toys for life, and as you get richer, your toys get more expensive, gold ring for GF converts into a diamond ring, a car converts in a jaguar, a flat converts in a mansion. I don’t want to say or mean in anyway that school is not important, it is important, it teaches you skills which are required to grow a society. And the problem with this is two things, first

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they don’t teach you about money and second for most people school is the end of learning, and not the beginning. Learning must continue for life. Don’t live a cruel life, to live life by the size of the pay or to believe that money can buy you things that will make you happy or living with the illusion of job security. Don’t let the two emotions run your life. Today’s business schools unfortunately make people sophisticated calculators only, all they can think of is cutting cost and increasing income, but they don’t know a dime of how to run a business. They just kill a business in less time you can blink your eyes. We can control this cycle by controlling the fear and greed and choosing one’s thought. Choose thoughts instead of reacting to emotions. Most of the people get up in morning to go to work and hoping to get a paycheck. Instead stop for a second and ask a question from yourself, is going to a job a solution for your problem? Don’t say stuff life, Well, everyone has to work.’ `The rich are crooks.’ `I'll get another job. I deserve this raise. You can't push me around.' Or `I like this job because it's secure.' Instead of, this why don’t you ask well what I am missing in this job which I should be getting?' which breaks the emotional thought, and gives you time to think clearly. Money is an illusion, almost like a carrot for a donkey; it’s only out of fear and greed that this illusion of money is held together by the people of the world. Money is really made up. In many ways the donkey's carrot was more valuable than money." KEEP WORKING, BUT THE SOONER YOU FORGET ABOUT NEEDING A PAYCHECK, THE EASIER YOUR FULL LIFE WILL BE. KEEP USING YOUR BRAIN, WORK FOR FREE, AND SOON YOUR MIND WILL SHOW YOU WAYS OF MAKING MONEY FAR BEYOND WHAT ANYONE IN LIFE CAN TELL YOU. YOU WILL SEE THINGS THAT OTHER PEOPLE NEVER SEE. OPPORTUNITIES RIGHT IN FRONT OF THEIR NOSES. MOST PEOPLE NEVER SEE THESE OPPORTUNITIES BECAUSE THEY'RE LOOKING FOR MONEY AND SECURITY, SO THAT'S ALL THEY GET. THE MOMENT YOU SEE ONE OPPORTUNITY, YOU WILL SEE THEM FOR THE REST OF YOUR LIFE. THE MOMENT YOU DO THAT, LIFE IS GOING TO TEACH YOU SOMETHING ELSE. LEARN THIS, AND YOU'LL AVOID ONE OF LIFE'S BIGGEST TRAPS. YOU'LL NEVER, EVER, BE POOR AGAIN.

Learn financial literacy. What is retirement, it only means that one’s wealth increases regardless of weather or not they work. People are too much concerned on money and not on their greatest asset which is themselves, their earning potential, their education. Only if you have this asset can you tide through all the

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world has to offer. Only then can you tide over all the changes that the world has to offer, ( it’s adaptability)If a person is willing to keep an open mind and learn he can tide over anything and grow richer with every change. People fail to realize in life that it doesn’t matter how much money does one make, what matters is how much money one Keeps. Everyone knows stories of people who by an act of chance became suddenly rich, and are soon poor again. And my advice to the people always is, always have financial literacy if you want to stay rich There is nothing worse than having money and then losing it.

Be financially literate. In their zeal of getting rich fast people are ignoring the base of money, financial education which is going to ensure they would KEEP that money.

To be rich You must know the difference between an asset and a liability, and buy assets. If you want to be rich, this is all you need to know. This may sound unbelievably simple, but most people have no idea how powerful this rule is. Most people struggle financially because they do not know the difference between an asset and a liability. If road to richness is that easy then how most of the people are not rich? The answer lies in the basic education, schools teach how to hear but they don’t teach how to listen, they teach us how to read but don’t tell us how to read between the lines, they teach us literacy but don’t teach us financial literacy which is essentially just understanding the difference between asset, liability, income and expense. In financial literacy its not the numbers but what the numbers are telling you that matter. People read but they don’t understand, there is a difference between the two.

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This is a cash flow of an asset, basically this means that anything that puts money in your pocket. Usually it includes, but is not limited to mutual funds, insurance units, annuities, rental incomes, your job, business, stocks, dividends. Royalties from various sources. And as such.

This is a cash flow statement of a liability. Liability is basically everything that takes money from your pocket, it includes but is not limited to, taxes on things that you have, cars that add to expenses such as insurance and petrol, hundreds of bills that start when you buy something.( includes a postpaid mobile phone that you might not need to a satellite TV connection that takes some amount of money from your pocket every month. And now onto the main thing, a house is a liability IF to hold that house you are paying taxes/insurance/mortgage/maintenance that exceed the amount of money you would have got it on rent. But if the cost to hold that

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house is less than that then it is an asset because indirectly it is saving you from a permanent monthly bill of rent. Expense is taxes, foods, rents, clothes, entertainment, and travels. Etc

This is a cash flow of a person who does not buy anything. This is a person who basically lives with hand to mouth, he spends what he earns. Suppose this person earns 100 a month typically his expenses are 50 a month for rent, 25 for clothes and rest in various bills like electricity/cell phone and stuff.

This is a cash flow statement of a normal family person whose income first goes in servicing liabilities then these liabilities add to the expenses. This is the category in which most persons belong to, the key to getting rich for this person is to reduce his liabilities and increase the assets.

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This is the cash flow of a person who is by definition rich, this person is not depending of money to survive, this person has enough income generated from his assets which can by and large service his expenses, so even if he is not earning anything out of his job, he still can live with the same standard of living that he was living before he stopped working or his job stopped paying. This is not as difficult as you can imagine, just control your life for some time and you’ll be rich in no time.

This is the ideal rich person, someone who is not dependent on one’s own physical work and this person would continue to get more and more rich , whose assets are big enough to grow over themselves, as well as provide for expenses, suppose someone’s expenses is 1000 a month, and one can get about 10% a year as a secure return then this amount is at least 1,30,000 so that the return on investment can provide 1000 a month as well as add to the capital principal amount, so that the return keeps on growing on a monthly basis ( read compound interest for that)

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To understand the effects on a normal family, let me give an example of a newly wedded couple. They work day and night and increase their direct job income, and they decide that they would buy a new home, instead of living on rent. When they get in new home they get new expenses such as mortgage, property tax, maintenance, and as such. Then they buy new things such as new furniture, new car and new products so that their home looks that of a rich person. And suddenly they realise that they have increased their expenses from new mortgage loans, to credit card loans, and consumer loans.

SO TO GET RICH, CHOSE THE CASH FLOW PATTERN YOU WANT TO HAVE AND YOU ARE GUARANTEED TO BE RICH. IF YOU WANT TO BE RICH, BUY ASSETS POOR SPEND WHAT THEY EARN OTHERS BUY LIABILITIES THINKING THEY ARE ASSETS LEARN ACCOUNTING

What is being rich means? Who is rich? Being rich for me means that enough cash is being generated from my assets that I am no longer dependent on my job income to be able to meet my expenses. It’s said that for people speaking in front of people is perhaps the worst fear of them all, worse than the fear of dying. They fear ridicule from friends and family, people would blacklist them, and no one would then talk to them, the fear of being social outcast is what keeps them following the crowd . instead of asking questions, they keep on listening to the crowd. There was a line I read somewhere which said if you wand to be a good cook , don’t ask someone who has never cooked, ask someone who cooks good food daily, people are full of advice, they always have an opinion on something weather or not they know anything about it. People just don’t’ work for themselves, first they work for the owners of the company they work for, then they work for the government they pay taxes to, and then they work for the banks who have given them loans.

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KEEP WORKING FOR YOURSELF

This basically means that a person should concentrate of his work only, and what is that work, to collect his assets. Someone asked ray (owner of MacDonald’s) what was his business? And he answered his business is being a real estate agent ( remember I wrote value of real estate is the future expected cash flow for that particular piece of property ) so what he meant was that he buys worlds best real estate by the money of franchisee owners , and in return he takes a part profit to the franchise owner. So in effect he is buying the worlds best real estate for free, and taking a percentage of profits from the franchise owner (remember profit, he as such has NO liabilities, just a lot of franchises worldwide that pay him a lot of money daily, with NO problem) so doesn’t’ matter where in the world you buy a hamburger from, you always are going to pay Mr. ray a tiny bit something And that is what is making him hugely rich.

Rich buy luxurious stuff in the end while poor and middle people buy it first. Financial intelligence is made of basically three things, Financial literacy, understanding figures (accounting) Investing literacy, understanding money, how money is made from money. Market (supply and demand) understanding what the world wants and whether you can supply it. Law

There are two types of investors One are the ones who go and buy investments like mutual funds/ bonds/or real estate fund

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Second are the ones who make investments, their investments don’t get advertised in yellow pages or infomercials, instead most don’t even know about them, yet richest ones get it.

First ones don’t get rich, they simply live in an illusion that they are rich. If you wan tto be rich, you want to be the second type of investor, and to become that you need to have three qualities, 1. Look for chances which no one else can see, there is a difference between seeing and watching. Seeing is done by mind, your brain and watching is done by eyes only. 2. Understanding how to arrange capital. Most of the people think that going to bank is the only way to arrange for capital, but it is not, rather it is not the most efficient one. There have been instances when some of the greatest investors have bought huge places without a penny in their account, there was an instance, someone wanted to desperately sell an apartment for 100,000. but the investor did not had anything to pay him with, so he bought it regardless of it, gave him a non refundable deposit for 10,000 and he got a period of 60 days to arrange for the entire 100,000. he knew the place was worth 180,000 so he sold his position to another investor for 50,000 , he made 50,000 in a day without much risk. 3. understand how to keep intelligent people with yourself. smart people are the ones who know how to keep intelligent people working for themselves or work with them

WHAT YOU KNOW IS YOUR BIGGEST ASSET, WHAT YOU DON’T KNOW IS YOUR BIGGEST RISK.

BE INTELLIGENT AS WELL AS SMART. There is a difference between being intelligent and smart, we find so many intelligent people in this world who should be rich, yet they are not or super rich people who probably don’t deserve the money they are having. I’ll say that they are just one step away from being rich, and that’s financial literacy. Yet when we talk about getting rich, most people only know how to work hard and pay taxes and work some more. Instead of being good in something it’s better to be knowledgeable about everything, there is difference between the two. Suppose you are best in your field, because it forms the basis of adaptability. Remember being good in something is for employees, but you are an investor, and investor don’t have to learn how to cook the best food in the world, they have to know where to buy the restaurant, and then hire the best cook in the world.

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The hardest part in the world is not to work, but how to get work out of the employees, leading the employees is perhaps the hardest of them all. Learn marketing. Life is marketing; you are marketing yourself 24x7 from the love of your life to the kid as a dad, to everyone in between. Basically this means that you are polishing yourself to a level that people actually take a look at your value, being not looked at is very painful. Being bankrupt before 30 has it’s advantages, you know how it feels, and you rarely are bankrupt again, and you know the value of money thereby not losing it anymore. There is an old saying that says that employees work just enough so that they don’t get fired, and employers pay just enough so that employees don’t quit. Most people work for the short term incentive to work, such as pay and bonuses and some vacations and stuff. And in the long run they are the losers. To be rich for these people I recommend to them that they should join a network marketing company they have some of the best sales training programs in the world, one of the best things they will put in your personality is to make sure you get immune from the fear of failure, success often comes after failure.

ALWAYS LEARN NEW SKILLS You’ll be amazed to know that most of the skills you know are interchangeable that is no matter what you learn where, there is always something you can do with that skill in your current work. The most painful of this process is the fact that you decide that you want to change, the process as such is not that difficult, it’s the decision and action that matters. If someone asks how you if u can make better pizzas than dominos, most would raise their hands, then why is that dominos makes billions a year. it is not that dominos makes better pizzas, it’s because it has perfected the business system better. Most professionals are poor or not rich because they have not perfected the business system, they are merely trying to make their product better. There are three main parts of management success Cash flow management Time management People management

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One of the most important parts of success in this world is the ability to deal with fellow humans. Nothing affects your earning ability more than communications skills.

NOW ONTO MOTIVATION.

SELF

CONFIDENCE

AND

There are five reasons that prevent you from getting rich. 1. 2. 3. 4. 5.

fear cynicism laziness Bad habits Arrogance

Fear Fear in this context means fear of losing money. No one wants to lost money and so they play it safe, we always meet a lot of rich people who have lost a lot of money and we also meet a lot of poor people who have never lost a penny. Read the line again, rich loses a lot yet poor loses nothing. Read it again “Rich” people lose a lot of money, “poor” person lost nothing. I was just looking at bill gates, he gave an interview to someone, and when asked what is he going to do after retirement, he said research. Poor tend to play it so safe that they end up gaining nothing. There is an old saying that winning means being unafraid to lose. Failure inspires winners, it defeats the losers. So take risks, take risks that are justified. Not the mindless ones people tend to see.

Cynicism

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Cynic is just the doomsayer he constantly predicts the negative, as if the world is going to end. We all have doubts in our minds hat we are not good enough or we are not smart enough or we are not something or we don’t have something. I merely ask everyone, why they listen to people about investing who have never invested themselves. I always say start work first, and then think about making it successful. Once you start, your brain will start to give you ideas which you never thought possible or profitable enough. Most of poor stay poor because when the time or chance comes to invest, they start to listen to all the cynical doomsayers who are constantly telling them about all the risks. All the cynical people listen to is that stock market is falling, and falling and falling. I ask them if stocks always fall. If that was the case then the stocks would have been zero long time ago. Yet people still become rich from stocks. (Just a food for thought) when you ask them from where did they got their “knowledge” they usually say from a friend or neighbor or someone else. On being asked if his friend or neighbor is an investor they usually have no answer.

Increasing asset is not rocket science, financial intelligence merely ensures that it increases faster.

Laziness Busy people are often the most lazy ones, they tend to stay busy because they want to avoid taking care of their assets or their family or something else. So how do you remove this type of greediness, by being a bit greedy, greed for more, greed for more money, for more fun in life, for more. Unfortunately people tend to think of greed as bad, usually due to family and society upbringing that shows greed in bad light, I don’t mean to say full greed is good, they type of greed that makes you a slave for money, I mean the greed to be better. Our parents usually always are telling us that they are not rich, and something similar like that, this line unfortunately forces people to NOT improve themselves and try to be rich, it makes a subconscious belief in their mind that they are not rich, and they cannot be rich, and that’s the way it is. The ones who break this pattern are the ones who are rich. Followers never are rich, leaders always are. Instead of saying that you are poor, start saying you are rich, there is a difference between being poor and being out of money. Being out of money is temporary, being poor is permanent. Instead of saying I cannot buy that, just say “ how can I buy that” this single sentence is going to change your life and break the pattern of losing that you are so accustomed to.

Habits. Pay yourself first.

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Pay yourself first, because if you pay yourself last you won’t have any pressure to work more, improvise and use your supercomputer called brain. But if you pay yourself first, you’ll use all these things so that you may pay your creditors like banks, govt and others.

Arrogance I make money with what I know; I lose money with what I don’t know. Every time I showed arrogance I lost money because I believed what I did not knew was not important.

START Getting rich is just like driving a car, it looks difficult the first time, but after a while, it becomes super easy, almost effortless. The reason our financial genius is sleeping in our minds is because our society and culture has put a belief in our mind that money is the root of all evil. This belief has made us professionals who work for money but never teaches us on how to make money work for us. They make us believe that govt will take care of our all needs, never telling us that its’ our children who would be doing all the hard work for that and paying for that( remember taxes) they put thoughts in mind that say earn, and spend and if you are tired of that, you can always take a loan. Unfortunately most of the westerners work on this model because working for someone and doing a job is far easier than actually using your brain to make your money for you, and when they do earn something, they tend to invest in mutual funds thinking Harvard educated students will make them rich. They become wealthy by taking a share from YOUR earning promising good returns. There are ten basic rules of starting, control of which are in your hands and mind only, use it to your best advantage. I need a bigger reason than reality. Whenever you’ll ask a person if they want to be rich, they all would say yes, but then reality bites, all they can see are obstacles, there is an old saying that says “obstacles are those frightful things you see when you take your eyes off your goal.” If you want to be rich, learn to use your mind, why do you want to be rich because: I don’t want to work all my life, I don’t want o listen to my boss all the time, I don’t want to live a life with fear of being fired all the time, I don’t want to ………..

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Add I want to live life to the fullest, I want to go to the space, I want to take a world trip, and I want to be someone for a change. And who is going to do that for you? Only you, Basically what this mean is that if you don’t have a goal, you won’t be able to reach where you want to go. Choose an option everyday. Financially whenever we get a buck, it’s we who choose that whether we want to be rich or poor in our life. Our habits tell us who we are, whether we are rich or we are poor. Rich people have habits which put money in pocket, while poor people have habits which take money out of pocket. Most of the people find lame excuses because they cannot become rich owing to ignorance or lack of will or maybe they don’t know. They invent excuses like, I am not interested in money, or I am still young, or rich are crooks or a million other, while if you ask the same question to a rich man, he’ll say well because I wanted to be rich. First invest in education. Perhaps the best and the biggest asset that you can have is your brain, it can generate value for you where none existed, feed it good information or bad information, and it’s your choice. You can see TV all day or go in a seminar on doing something, choice is yours. Go to various seminars and buy educational tapes. The education you got in your school merely taught you how to learn from the world, sadly most think it “is” the education of the world, thereby losing a lot which the world has to offer. Whenever you ask most of the people on something, they always tend to start arguing as if they are the center of this universe. Whenever I find something, instead of arguing on it, I try to understand his point of view, and on more than one occasion it has show me a different way of looking things, no essentially right, but different, which sometimes resulted in huge profits. Something interesting. It’s like you both want to go to point b from point a. there are many means of doing that, from walking to a car to a train to a horse cart, all are in themselves not right or wrong, it merely depends on the situation. Choose your friends very carefully. Nothing beats good friends. There is a psychological theory that says you become more like your friends. I don’t choose my friends on basis of weather or not they are rich or poor, rather weather or not I can learn form them. In my experience I learned from everyone from Bill gates to the Tatas, from a spider on the web to the beggar of the road. In the world of being investing, the worst thing probably you can do is walk with the mob. Mob enters the last and it’s the mob which gets slaughtered. They usually know when the profit has already been made. Let me explain. You make a profit when you choose to buy and you make a loss when you have to sell. Suppose a stock is at 1000 now , but no news, rich ones enter at this point, and take the stocks to 10000 then they cash out, at this point the mob

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starts to enter. Saying this stock has given profit of 1000% and they want that part of the profit too. They don’t realise that for a stock bought at 1000, price of 10000 is a profit of 1000% but for purchase of 10000, it has to go to 20000, just to give you 100% return. If the price moves to 15000 the first person makes a profit of 1500% while the person who entered at 10,000 made a profit of 50% only. It will take some time for you to understand, for now read it twice thrice, until you understand it. SO WHAT’S FREE? Learn to see something for free, in financial world you capital is perhaps the second thing that matters. See what is coming for free in that particular investment, If you buy stocks for say 100,000 and the value becomes 120,000 and you want to sell it, don’t’ go in and sell all your stocks, sell only 100,000 let 20,000 stay in the stocks because your capital is back, you have 20,000 worth of shares, which should ideally result in a positive cash flow permanently. There should something be free in every investment. Like a piece of land with a home, or something else, just remember that you should always use your brain, and try to extract maximum mileage out of everything. Assets buy liabilities. If you want to buy a car, find an asset which can give you enough cash flow by which you can take care of all the expenses of the car like petrol, insurance and maintenance.

In short: Stop doing what you are doing and get on the sidelines with life, see what you are doing, what is working in your life, and what is not working in your life. Stop doing what is not working and start doing what is working.

Start to learn new thoughts & formulas, start doing whatever is being said, most of the people wait for someone to come and tell them that whatever they have learned is wrong and it is going to lose them money. I never listen to the ones who have never done what I am doing because there are a million doomsday naysayers in this world, who cannot do anything in their life and can’t see someone else do that, either. Activity always beats inactivity.

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In the end all I can say is: Money isn’t everything, if you start running after money, in the end you will realise you are just chasing a dream. Race is long and in the end you are just running with yourself.

Please send me your comments and suggesting and anything in general. I would love to hear that.

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