Stock Market – While we are in good Bull rally so far in terms of Market in US, India and most of the parts of the world, we may see some rotation or correction going forward. By Rotation I mean we may see a flip or the Investments flowing more into the sectors of the market like Metals, Auto, Banks that was ignored in 2020 away from the stars IT, Pharma. Also there is nevertheless a chance of double digit correct in 2021, and this is where we need to be cautious and hold for long, not panic sell like most of us did in 2020. (If you are new to stock market you can open an account with Zerodha here)
Bitcoin/Cryptocurrency – Cryptocurrency specifically Bitcoin may see a slight correction going into 2021, but nevertheless the concept of Cryptocurrency is promising and it looks like it is here to stay for long at least unless an alternative is found. So I would like to be Vigilant here and Invest in dips. Remember always do your own due diligence before investing. To know more about Crypto click here.
Gold/Precious metal – I think Gold still holds value, and can surpass its 2020 high by 2021 end. Given the volatility in Market, and monetary policies of Govt., Bitcoin & Gold both can shine together for most part of this decade. Also this looks like the asset where Smart money will keep on flowing for most part of 2021. (Sovereign Gold Bonds is one good option if you are looking to invest in Gold in India, and best place to buy SGB is in open market using demat account like zerodha as the prices there are usually lower than current market price).
Real Estate – Now this is something I am totally unsure of, while Commercial real estate looks to be in decline, residentials and real estate in general may see some positive growth in 2021. I am expecting more growth in tier 2 & 3 cities compared to tier 1 in India.
Note – While above is my Outlook for 2021, By No Means I am here to encourage or influence you to make your Investment. Always do your own due diligence before Investing.
Hello Riters, hope you are well, hope you are doing great, & hope we together reach new financial height this year. Thank you for all the support fueling me to write yet another time.
Today, lets discuss what are somethings that 2020 taught us. So lets dive in.
You might be wondering seriously was there anything Good?, lets not disappoint ourselves yet and follow along.
Legendry Investor Warren Buffett once said ‘Be Greedy when Market is Fearful and Be Fearful when Market is Greedy’. Now what do I mean by that is, 2020 gave us all the existing long term stock market investors a chance to buy great companies share at a discounted price, and it gave a golden opportunity for new Investors to put a lump sum, off-course after doing all necessary due diligence for the firm. Also not to forget the new highs that Stock Market reached in 2020 end.
Time to slow down and reflect. Yes, 2020 gave us plenty of time to slow down and reflect back on the necessities in our life. When we (Indians) were locked in for couple of months that was an opportunity for us all to slow down and re assess our priorities. Sometimes in this mad rush for fame, money we forget what we truly want, and I suppose for many of us 2020 gave us that golden opportunity to rethink our lives.
A respect for healthcare workers. Especially in a developing country like India we often times neglect the importance of health care. 2020 taught us the importance of healthcare, and I am sure it also helped increased Govt. budget allocation towards health care for near future.
Time to rejoice with family. Sure lets admit it, it was not all roses when we had to spend time with everyone under the roof, but nevertheless for many of us it led to better understanding and importance of family.
Need for luxuries. You might be wondering what? we are talking of luxury, hold on one sec, hear me out. Now not everyone would agree on this point, But 2020 taught some of us the need to have our own little private beach house or a hill side mansion where we can retreat if another such calamity re-appears. Now, this does not mean we should not help fellow beings, in fact one thing that 2020 taught us was what is enough and what should we do for the society as a whole.
Refinance, not to forget with Interest rates at all time low, 2020 gave us an opportunity to refinance our loans, and mortgages.
The easy part, I am sure the list can go on & on for many of us here. But let me say it I want to rewind 2020 with more positivity & hence I have already given the positive angle, covering most of the Bad in the Good by flipping the lens, the perspective or whatever you call it. And if you are still with me than hang on, we are going to discuss the most important lesson that 2020 taught us, below.
‘Hey Rahul, Give me some cash man, I am broke, please help’, ‘Sahaab kuch kaam nhi hai, khane ko kuch nhi hora, thodi madad kariye na plz’ (Sir, we don’t have any work, nothing to eat, please help). These were some words I am sure many of us would have heard who would have tried to reach out to their cook, maid or even friends during lockdown. While we were busy living paycheck to paycheck, Pandemic happened! And we were never prepared, never learned the importance of Emergency fund and savings.If there is just one thing I want you to learn from this Pandemic it is the importance of Emergency Cash. Read more about Emergency fund here.
‘I lost my Job, I have consumed all the Stimulus check (applies to United States specifically), Can I borrow some money dad?‘. In Early 2020, when Pandemic knocked our doors, stores were shut down and it was a sight all around the global, with consumer spending at all time low and unemployment all time high, we were left with barely food on our plate. Now most of this was out of our hands, but still there was something we could have done about it, ‘Invest’, Invest, Invest! Yes, you heard correct, Invest and let the asset grows, Invest in yourself and let the most important asset your brain grows, so that when you are out of one opportunity you have something to fall back to. I know it is easier said than done, but things like side hustle and Investment can help us better cope with difficult times. Especially when the future Jobs are changing it becomes even more important to re skill ourselves by teaching ourselves a new skill in demand like video editing, data science etc.
I wish their was a skip button and I could just skip this part of 2020.
Death, Desperation and Misery. Yes, lets admit it, It send shivers in our spine when I saw coffins lined up in places like Italy, and people were not even allowed to have the rituals performed for their loved ones. While the worst is over, is behind us, nevertheless we should not forget the importance of life.Money is good but its not the end in itself, we must realize its worth. We must understand the importance of Happiness and why it matters more than the riches & luxuries in our lives. Nor should we forget the importance of donation, charity, philanthropy and the need to uplift the other half, and at times the better half of our society.
If you have made it this far or if you have skipped through most of the article, so here I urge you to stop for a minute.
Importance of Emergency Fund.2020 taught us the importance of having some cash set aside, specifically 3 to 6 months worth of your expenses in a liquid, high yield savings account.
Happiness > Money, while Money is important it is not the end in itself, realizing its place in society and realizing the need to help the poor & needy is a great lesson to take away from 2020 and well on to rest of our lives.
Importance of Personal Finance. Often neglected & hardly taught in schools, Money management, personal financing is important skill to master. Paying heed to your finances, tracking expenses and saving some extra cash will be the good place to start.
With this and without further making this blogpost any long, I wish you loads of Happiness, Health & Wealth in 2021. Happy New Year!
Hello Riters, its been a long time out there, getting ready for Winter in Northern Hemisphere?
Today lets discuss why Invest in Index ETF and why avoid Mutual fund, lets dive in.
In long Market always rise, thats not me saying, the likes of legendary investor Warren Buffet himself believe so. So, lets say if market always rise what is the best way to be on winning side?, of course buy into overall market low cost index fund like VTI
If your Mutual fund have 2% of fees (expense ratio, portfolio fees, handling charges and other hidden fees), than that can eat 61% of your portfolio growth in long run. Shocked? No?, let me explain, suppose you have invested $10,000 and kept it for 50 years in Stock market just assuming a return of 7% (ideally returns are above 9%), your portfolio will grow to a lump sum of $294,600 by end of 50 years, now if it was a Mutual Fund with charges of 2%, then you only avail benefit of 5% CAGR, leaving your portfolio to grow to $114,700 (61% lesser or 39% of $294,600 market returns) read more here.
Still not convinced? Lets say recession hits you in that case your portfolio will likely decrease in value but at the same time you will be charged the fees (the so called Active fund managers will still win this game).
Expense ratio of Index fund is very low and there is no hidden charges, for example – VTI has an expense ratio of around 0.03% and If you are in India checkout ICICINIFTY with expense ratio of just 0.05% (let me know if you find something better in comments below, the likes of VTI is missing in Indian market)
Don’t take my words for it, always do your due diligence before investing. If you want to read more grab your copy of ‘Common Sense Investing’ the book by the founder of Vanguard Group.
Bonus Content – what to do in current stock market scenario? (for retail investors)
Stay Invested, don’t sell value stocks so as to be able to avail the benefit of further highs
Sell the stocks that lacks value & strong fundamentals and are up just in the Bull due to investor sentiment.
Don’t invest a lump sum new investment amount, as the market is still prone to volatility due to Covid.
Lets look at a list of Investment available to you globally.
Direct Equity (Stocks / Shares) – High risk Investment with greater return in long run and volatility in short, Equity today is one of the easiest to invest in terms of accessibility with just a few clicks you can own a piece of Tech giants like Amazon, Apple etc. (not suggesting/recommending). A good thing for a beginner to Invest when starting with Equity is to invest in broader market indices like Nifty, Sensex (in India) and VTI, S&P 500 in US. By Investing in S&P 500 you can own a piece of 500 of the significant publicly traded companies in US. (Link to Open a Demat account with Zerodha to start Investing today)
Mutual Funds – A mutual fund is made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund’s assets and attempt to produce capital gains or income for the fund’s investors. But be aware of the Expense ratio and hidden fees, they can eat a big chunk of your portfolio in long run.
Real Estate – Own a house and rent it, while you wait for the upside. Real Estate is the physical asset that you can own and feel unlike the Stocks. But you need to research before investing, and you may need to learn something called house hacking to start with, where in you own a Duplex and rent one portion while you continue to live in other. And if you like Stock Market and hate the extra work to put in for the physical asset you may be better of owning the REIT (real estate investment trust), a company that owns, operates, or finances income-generating real estate. Modeled like mutual funds, REITs pool the capital of numerous investors.
Commodities – A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. For investors, commodities can be an important way to diversify their portfolio beyond traditional securities. Because the prices of commodities tend to move opposite to stocks, some investors rely on commodities during periods of market volatility. Commodities that are traded are typically sorted into four broad categories: metal, energy, livestock, and agricultural. When it comes to Commodity it is good to own a small portion of your portfolio in precious Yellow Metal – Gold to hedge against the paper money.
Bonds – Bond is a debt security, borrower issue bonds to raise money from investors willing to lend for a particular period of time. Bond is a fixed Income Investments. There are wide variety of Bonds such as Agencies, Treasuries, Corporate, Municipal etc. A T-Bond, Treasury Bonds issue by U.S. Federal Government is considered to be safest of all, regarded as risk-free since they are backed by the U.S. government’s ability to tax its citizens. One good Investment in India is SGB (Souvenir Gold Bonds) issued by GOI (Govt. of India), and it can be bought via Zerodha (Link to Open a Demat account with Zerodha to start Investing today)
Whatever you Invest in remember to diversify well, and also remember no matter what there will be a time where your investments may lose 50-70% of its value. The key to avoid huge downside especially with volatile investment like Stocks is Asset Allocation. Diversify not just across different investments but also within one investment.
Further to the list above, below are some great articles published by us to refer before Investment-
Hello Riters, Hope you are doing great. We are back to help you do the personal finance. Today lets take you through some don’ts of a Investor. Lets discuss 7 ways to lose money in stock market and how to avoid them.
Buy at Bull and Sell at Bear – Yes, you got it. Now get a Beer & chill. Hold on, its not weekend, never mind. Buying at Bull Market (all time high) and selling at Bear (all time low) can cause you to lose money, a lot at times. But how do you avoid that, don’t be emotional and be patient. Hold on to your investment when market is low, and sell when its high. As Warren Buffet once said, “Be fearful when others are greedy, and greedy when others are fearful.”
Prediction – Can you predict the next Market Crash? Actually, No one can! No one can time the Market. Instead if calculated in a right way, investing early and consistently without worrying about crash, a bear or a bull can give far more returns than trying to time the market and missing out on those occasion or holding on to your cash for that perfect time.
Listen to Random guy – I mean avoid listening to a random guy on Youtube or a close friend. Do your own due diligence, don’t just buy that hot stock just because Minky told you to do so! Avoid looking for confirmation on Youtube.
Hope for a Miracle – Hoping for a miracle, chasing that next multibagger ain’t gonna do the trick. There is no guarantee you are ever gonna find a multibagger more so if you are after a penny stock. Instead invest in companies that are fundamentally strong!
Greed – Getting greedy, fearing that you will be left behind, speculating, always looking for the next big thing, or impatiently dumping all your money on Get Rich Quick Scheme.
Fees – Overlooking those hefty fees that are hidden under the blanket of complex finance terminology, and blindly investing in that mutual fund can gradually be a big hole in your pocket. For example – If you own a mutual fund with an expense ratio of 1%, you will be losing $1000 per year on $100,000 invested in the mutual fund, by just holding on to that investment.
Others – Poor monetary & fiscal policy, Geo political instability, currency devaluation are some other factors that can affect the Stock Market valuation.
As Benjamin Graham, once said, “In the short run, the market is like a voting machine. But in the long run, the market is like a weighing machine.”
Hello Riters, hope you are having a good time, enjoying yourself and making loads of Money. No? Yes? well regardless, these tips will help you grow your wealth. So lets dive in! (Opinion Alert – most of these below are my personal opinion)
5 Tips to Save your Money
Automate your Savings – yes! you need to Automate this. As they say out of sight is out of mind, every first of month or whenever your Income gets credited Automate a recurring deposit to another account that you can’t / won’t access for your expenses. Even if its just 10% of your Income, over time it can grow to a substantial amount which you can later Invest. Remember Save first spend later.
Don’t Shop when you are hungry – Please avoid running to a mart or your favorite restaurant at the very moment you are hungry. Plan it well before or else your mind will be fogged by that juicy extra Guacamole or that Cheese round the corner.
Get your Caffeine fix at home – You may need to avoid daily Chai Point Tea or that Starbucks Coffee as a recurring soul not so satiating. Instead buy a Coffee Maker (Indians out there just get that pan) and have some mouth watering Dark Roast Ethiopian Coffee, and you can get the cost down from few dollars to few cents (150 Rupees to just 20 rupees).
30 Day Rule – This one is controversial, good to have, not exactly saver but a thumb rule to save on expensive expenditures. Whenever you want to make a big purchase like that Gucci Scarf , sleep on it not one day but full month, yes, unless its peanuts money for you, wait till that luxury is yours, so when you buy it you know you really need it!
Cut those Credit Cards – Stop those Credit bills from drowning you in debt. Only own the card if you can repay it! Yes, if you can’t pay on time, ditch it! This one really depends if you sure can repay within a month go ahead and avail those extra points and benefits, but if you can’t destroy, burn it to grounds or just put it away from your sight.
Live below your means unless you expand your means. ‘Save before you spend’, if wealth building is your aim. And once you have enough Invest! Invest! Invest!
Thank you for reading, if you are already following Two or more of these tips do let us know how is it going. Keep Learning.
Spoiler Alert – 99.99% of Get Rich Quick schemes sold in Market are Financial Fraud!
Welcome Riters, today will discuss what are ‘Get Rich Quick’ Schemes, the truth behind them and why/how to avoid them. Lets dive in.
Pyramid Scheme is a business model where you recruit people in return of a future promise of wealth creation via promise of payments if you enroll others into the scheme.
In layman terms, it is a sketchy fraudulent business model that works on commissions received by new recruits you recruit or your recruits recruit.
You pay a upfront cost often misguided by the person selling you this scheme in the name of get rich quick! That said mostly pyramid schemes rely on recruitment fees, but sometime they will even sell you tangible goods and services (which of course are not worth the money) to hide the underlying pyramid structure. Often they have a binary structure where in one person has to recruit two others which in turn recruit two others and the list goes on. As long as the Pyramid base is wide the stability remains
Another terms which we often hear is MLM (Multi-Level Marketing).
Multi-Level Marketing, also called Pyramid Selling or Network Marketing
MLM is often a legal business practice, that unlike traditional pyramid scheme involves actual sale of goods & services. Nevertheless their main motto remains hiring new recruits and getting their money. They will at times sell you educational courses and no-value products at high cost, and in turn make you / motivate you to sell them to the new recruits! These schemes work primarily on commission system.
Now other similar financial fraud is referred to as Ponzi Scheme.
Ponzi Scheme, coined after Charles Ponzi in 1919, refers to as ‘Robbing Peter to pay Paul’, Ponzi Schemes rely on new investors to pay old investors. A certain of people buy into the idea, and Invest, when they sold this to others (new investors) they get to keep the return paying a certain fee to the intermediator a third party.
In a sense, they are similar to Pyramid structure, here instead of recruits you are calling them the Investors and the ideology behind this financial fraud is that of Robbing one to pay other!
Remember the underlying Motto of all these schemes is to steal your money to satiate the greed up the ladder!
Bernie Madoff’s (American Financer) Ponzi scheme ran for decades defrauding thousands of investors tens of billions of dollars. Finally in 2009 Madoff was sentenced to 150 years in prison and forced to forfeit $170 billion.Read more about it here
Why say No to Get Rich Quick Fraud Schemes?
They won’t even get you Rich forget about fast.
They are unethical, and at times operate in a legal loophole.
They rip many of their life savings.
Based on True Story – Imagine a 25 year old Kiran from an Indian village get convinced by a few friends to invest (as they say it) few lakhs which he arranged selling a piece of land that he inherited, and unable to further recruit others, in turn he convince his family members who end up selling more of their livelihood, their land, finally losing all they had in pursuit of a secure glaring bright future which was never ever possible by the Scheme!
They waste you time! Yes, as you know Time is more precious than Money, lost money can be made again but lost time never comes back.
They can rip you off your livelihood, even if you don’t sell anything like our imaginary friend Kiran these schemes nevertheless instill a hatred in your heart for your job! Now you may never ever gain the promotion you would have easily got at first place, and you may never ever be happy with your Job and that means your future can be bleak.
Now these schemes do have some benefits but the potential risk and damage outweighs these benefits by large (for the sake of discussion lets discuss them).
Benefit – 1. You learn to sell, often network marketing if not anything else teaches you how to sell yourself! Which is a very good skill to learn (You don’t need to be involved in fraud to learn this and should rather pursuit it by other means). 2. They teach you about Investment, yes if you are into a Ponzi scheme and you have lost your money, you now know how to not invest, nevertheless often the cost of learning is too high and you may never learn unless you decide to quit!
How to avoid buying into such Frauds?
Never Invest in things you don’t understand. Often times these schemes are sold by using complicated terms and indirect ways, and psychology against you.
Always do your due diligence, and don’t just listen to a random friend.
Don’t blindly trust people with your money (or anything for that matter).
Lastly if someone says they will make you rich quick, run away from there.
With heavy heart and tears in my eyes, I feel very bad to tell you NO GET RICH QUICK SCHEME EXISTS. Yes, But I am in fact happy about this fact. The fact is you need to use knowledge, create value, sell value or your time in return of the Money! Once you have, as Tony Robbins called it critical mass of Money, the money will work to get you more money throughout your life. And that is how my friends, Financial Freedom is made! Don’t ever buy into anything that is being sold to you in the name of ‘Get Rich Quick’, more than 90% of the times they will end up draining your wealth and even if you end up getting more return than you invested or wasted in this case, you will not be wealthy. Wealth comes those who knows how to manage their money i.e. why the odds of you going bankrupt a year after winning the lottery (whose odds are itself very low) is pretty high.
Thank you for reading, follow us for more, and if you gain anything from this do share with your friends! Keep Hustling, Keep Learning & Keep Investing!
Hello Riters, welcome back, how is your holiday going? Are you learning that new skill or upgrading yourself to be better prepared for the days ahead or just sipping that Mojito alongside that private beach? Whatever you are doing, below are the principles that if used correctly will teach you how to close the deals, negotiate better terms, grow business, be successful as a salesman & as a leader, giving you exponential return, and all it take is 5 minutes to read.
The Principles are from ‘Dale Carnegie’ book titled ‘How to Win Friends and Influence People’. Some of these principles have helped me in my personal journey and I want to share the same with you. I have distilled most of them, divided into three categories (self-made), and tried to explain the principles in my own words (not necessarily the same order), nevertheless the book contains in-depth explanation of all the principles, and I would highly recommend you to have a copy of the book to refer to (link to book).
Don’t criticise, condemn or complain about people. It is seriously just a waste of time.
Give Honest and Sincere Appreciation back to people wherever possible.
The world is full of people who want to grab your attention, Be the one who tries unselfishly to serve others. Arouse in other person an eager want by showcasing how you can help them be it via service, a product or just a talk.
Become genuinely interested in other person, encourage them to talk and be an active listener. Make other person feel important and do it genuinely.
While negotiating or making a sales pitch talk in terms of other person’s interest.
Always wear a smile in your face, and try remember the other person name (make sure not to misspell the name).
Avoid unnecessary Arguments. (Especially if it is with your Partner 😉)
Show respect for other person’s opinion. Never directly say ‘you’re wrong’ (especially in a professional setting).
Try genuinely to see something from other person’s view. Be Sympathetic with their idea.
When you are right try to win people gently and tactfully to your thinking, but when you are wrong admit it quickly with all enthusiasm.
Be the Businessman-
Get the other person to say ‘Yes, Yes’. A person is more likely to agree to your suggestion if you get them saying yes & yes. If you want to get the deal close, don’t start with a ‘No’. It is difficult to convert a No to Yes, so get them to your liking and then suggest something.
Let the person feel that the idea is his or hers. Often times we see the salesman next door pushing a product to us, enlisting all the features of it, but we ignore. We won’t buy it unless we feel we are in control of the decision! The same applies on the other side, if you are selling something make the other person feel that the idea is his or hers to buy, and you are just helping them make the choice.
Dramatize your ideas. Yes!, As Seth Godin Says “All Marketers Tell Stories”. Make a Story around your product or service try to sell the story rather than the product, a hope, a value, a vision. The truth has to be made Vivid and Interesting; you have to put the emotions at work.
Like a Leader –
To Motivate someone to do task, if no appreciation works, try throw down a challenge. Challenge your Employees to sell that next big thing, or your kids to wake up early (this one is difficult :-p). Nevertheless, Challenge motivates people to achieve bigger things.
Always begin with a praise and honest appreciation, even if you are to tell someone their shortcomings. Most People will listen to the full feedback once you make genuine effort to see the good side of their work or effort.
Call attention to people mistakes ‘indirectly’. Never directly say you are Wrong, instead tell them scenario where things would have been better handled.
If you and your team had made a mistake, first point out your mistake and then criticize others.
Don’t Order, Nobody likes to take Orders. Instead Suggest your Employees by Asking Questions. Asking questions can also fuel their Creativity and you may not know about better solutions that can come up along the way. For example – if a Customer is not satisfied with your service, maybe call your team and ask ‘How do you think we can provide better service to xyz?, team’
Praise the slightest improvement and be lavish in your praise.
Make other person happy about doing the thing you suggest. Maybe Incentivise your Employee, give them a portion of the benefit.
Remember no one grows alone. Take care of People around you, and they will in turn reciprocate. Be it your Partner, or Employee, they deserved to be praised and feel valued! The principles listed above will not only help you in your Professional, but also in your Personal Journey.
Let us know in comments below, what principles you think will help you in your personal Journey!
Thank you for Reading! Follow us for more. #MakethatChange