Rich or Wealthy: Your Choice; Your Action!!

Many people normally think that "Being Rich" and "Being Wealthy" are the same things as both involve having a lot of money. But, there is a big difference between the two. We normally hear about ‘Get-Rich-Quick’ schemes but not about ‘Get-Wealthy-Quick’ schemes. 

Knowledge is the key differentiator between being rich and being wealthy. Rich people only have money but wealthy people know how to make money.  Rich people, may get money in an instant via hierarchy or winning a lottery. However, because of lack of proper mindset and poor money management skills, all of it can be lost in a short period of time. Many people make a lot of money, but all their money goes out of their expense column. Every time they make a little more money, they go for shopping. They often buy a bigger house or a new car, which results in long-term debt and more hard work. Nothing is left to go into the asset column. This kind of behavior that separates the rich from the wealthy.  Some of these people are more commonly known as ‘One Day Millionaires’. Now they have it, the next time they don’t.

Rich people are motivated by money but wealthy people are motivated by their dreams, purpose and passion. Most rich people make a lot of money with their paychecks but the moment they stop working, they stop making money also. The wealthy, on the other hand, don’t have these worries.

The Definition of Wealth

'The number of days you can survive without physically working (or anyone in your household physically working) and still maintain your standard of living.'

For example, if your monthly expenses are INR 20,000 and you have INR 1,00,000 in savings, your wealth is approximately five months or 150 days.

'Wealth is measured in time, not rupee.'

Wealthy and rich people both may experience downfalls and failures in their life span. However, because of knowledge the wealthy person can start all over again and build wealth over time. In contrast, rich people may find it hard to attain what they previously had. In essence, wealthy people are financially free while rich people are not. 

Ultimately, it’s not how much money you make that matters but how much money you keep—and how long that money works for you.

Therefore, Wealthy people say - ''I don’t work for my money. It works for me''.

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Types Of Mutual Funds In India

A lot of people invest in Mutual Funds, still some being unaware of it!!
How much do you know about it? Have you ever considered understanding the nuances of the same???

This blog of mine would contour around this topic only.

In India one may find many who are still not aware about Mutual Funds. I have an experience of my friends asking usually about the types of mutual funds in which they can invest. As I understand, it is a big problem with the generation who have just started their carrier or are new to the professional life.

Mutual Fund is a scheme launched by the Mutual Fund Houses which collects money from the investors and invest in various stocks, securities and bonds depending on the investment objective of the scheme. In India various mutual funds exist like ICICI Mutual Fund, HDFC Mutual Fund, Birla Sun Life Mutual Fund, IDFC Mutual Fund etc. Each scheme is managed by fund manager.

There are different kind of mutual fund schemes available in the market depending on the investment objectives, which are discussed below:

a.) Equity Mutual Funds: These types of funds normally invest in the equity and balance in the debt & bonds. They invest in the companies after researching them very well. Normally an investor should invest in such schemes by taking 3-5 years of time frame in mind. If you select a good fund then it can easily provide you a 15% plus annualized return. So, its better to put your money in these types of schemes if you are looking to save for your long term goal. Value Investor can start Systematic Investment Plan (SIP) also in these type of funds so he/she can save on regular basis.

b.) Equity Linked Saving Scheme (ELSS): If you are looking for tax saving scheme u/s 80C then you can opt for this fund. This can give you far better return than any other tax saving scheme. My recommendation for all the investors is to start SIP from the beginning of the financial year so that he can monthly invest in such schemes and reduce his or her burden for last 3 month of financial year. These schemes normally come with 3 year lock in period (refers the time period for which you can not withdraw the money invested).

c.) Liquid Funds: Everyone should keep their emergency fund in place so in case of emergency they dont have to break their investment instead they can use this fund. These fund have more liberty then the Fixed Deposit (FD). You can invest and can withdraw at any time without any charges. They normally give you returns better than the FDs.

d.) Index Funds: These funds blindly invest in the Index (Sensex, Nifty, Banking Nifty etc.) without researching the shares in which they are investing; so normally their return are in line with the Index. These types of funds are for high risk investors. As they are solely based on the index, and normally index move slowly upwards but rapidly downwards.

e.) Balance funds: These funds normally invest up to 65% in equity and rest in debt securities. Depending on the market conditions these scheme can reduce the equity exposure and invest in the debt securities.Investors of medium risk appetite can invest in them and can look forward for 10-15% annualized return.

f.) Debt Funds: These type of funds are of low risk, as they dont carry any kind of risk. These schemes invest in debt related securities like commercial papers, Govt. Securities, Bonds etc. They can give you better returns than the FDs.

To young investors my suggestion is to start SIP in the equity mutual fund so, they can increase their net worth. After getting the confidence they can sift to different kind of investment opportunities available. 

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Investing - Just Do It!!

Are you thinking about starting investing in shares???
Have you tried it but failed???

If your answer to above questions is YES, you must read this article.

A value investor always insists to start investing early in life. It sounds interesting but very tough to follow. Many people have their reasons of not starting the investment. Below are the reasons which normally people state:

a.) I don't make enough money: This is a very common reason which one states for not starting investment. Their belief is if you have to start investment, you need to have a huge amount of  money. Some say if they invest huge then only they can make impact in the market and by this way they always delay the investment.

b.) I don't want to make sacrifice: Today's young generation waste their money in non important physical things for shot term enjoyment. They live their life at fullest without caring about saving and investing or in case they are saving then they dont try to reduce their expenditure so that they can save more and then invest.

c.) I failed once: Many of us leave investing after facing the failure in investment. In spite of learning from that experience we stop our investment.

d.) I don't know enough: Many people have a notion that they 0.dont have enough knowledge about share market, mutual funds and any other investment tools. If you ask them have you tried learning it? have you tried Google-ing it? They dont have any answer for this. They want to get good returns without any hard work.

e.) I don't have enough time: People might have enough time to watch TV serials or movies but its very tough for them to get time for investment. If someone tells you that you can win a prize of millions of rupees if you set aside an hour every Saturday, you would do it but for investment you would not want to.

Instead of citing the above or any other reasons for delaying investment you should apply the below practices in your life:

i.) You get nothing for nothing: To get something in the future, you have to do something now. It is what it is.

ii.) Time is everything: If you can start investment with 1000 bucks (believe me you can), you should. You will give more time to your money to grow. Value investor always believes to start the investment without delay. In fact its better to start from small money so you can learn with time.

iii.) Patience is essential: As Warren Buffett says 'Investing is like planting a tree — nothing happens overnight'. You have to be patient if you want to earn good returns.

iv.) Perfection is not required: Nobody is perfect, even Warren Buffett did mistakes in his track record of investments. Lately, he made big mistake in his one investment named- Tesco and he accepted it on public forums as well that too quite humbly. Like him we must accept our mistakes and learn from them.There is nothing bad with making mistakes but we should learn from them and for making mistake we have to start investing.

v.) You can learn: In today's time we have lot of free stuff available at one click which you can use to learn the basics. Investment is not a rocket science, anyone can learn it. You just need to put in time for the same.

v.) Its never too late: One can start at any age. Age is no barrier in investment.The moment you feel is the right time for investment- DO IT!! There is no right time for investment.


The key to success, though, is the old Nike slogan: “Just do it.”

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