Tag Archives: ritefinance

Investment Lessons from poker

Instead of gambling away all money in Poker, we can learn Investment from it. Don’t trust me, hop on..

1 – ALL IN

Poker tells you to bet as much as you can if the odds are extremely in your favor (remember never to bet your life savings, and to keep some buffer for emergency).

If you come across an Investment which totally completely makes sense to be the next big thing, based on the information you have and the potential it holds (or what you perceive it holds), and you are convinced; then you should probably Invest as much as you can to see that small cap, Crypto or whatever it is, turn Multi-bagger! (remember only Invest the amount you won’t regret if you lose)

2 – Preserving Wealth is difficult than Accumulating it!

Seriously, I have found it very difficult to preserve my balance in Poker, and very easy to lose it all. Well, I know these games are designed this way, nevertheless it teaches us how difficult it can be to stop your urge to spend that extra buck in real life, or to throw that shit loads of money on your next luxury (not saying you should not do it, but be watchful) .

3 – Greater the risk higher the reward >

In Poker the more chips you stake in, the bigger the pot you can win! Well this may not be true everywhere in Life, but it sure is true for some Investments of your life.

Look at the Cryptocurrency in its early years, it sure was risk (well it still is risky but not as much as it used to be), market adoption was low, real use cases or utility was hard to be found, but nevertheless it gave huge returns to those who took the risk or say understood its power. Same applies to some small cap stock which later goes onto become multi-bagger and star of your portfolio.

4 – It feels good when you have a little extra

I don’t know about you, but it feels good to me every time I see my poker chips soaring in value. I hate depleting capital! even if its just a video game.

5 – Money makes money

The more you have, the more you can stake, the higher you can win. Same thing applies to every Investment, the higher you can stake in, the more the ROI (Return on Investment). But be careful remember #2, it is easier to lose wealth than to accumulate.

6 – Kindness

You maybe thinking what does kindness has to do with Poker, or Investment. Well, remember the last time you won a big pot of say some million dollars, have you not given it as tip to the dealer, and as weird as it may sound, have you not felt good giving it away? Answer is you probably did! And it applies more to real Life than Poker, the more you give the happier you get!

So, if you want to just take one thing out of it than let it be ‘Kindness’, why not? Happiness > Money.

Thank you for reading. ‘Leaves with a Poker Face’…

The Initial step to Freedom

Everybody wants to be financially free, but a few knows the way and a very few actually puts in the effort.

Welcome to riteFinance – the pathway to Financial Freedom! Today we will discuss how to create wealth.

The very first step to wealth creation is to know your spending aka track your expenses. To track your expenses you can use a simple excel sheet or a more suitable tool like mint. Whatever you choose the process is very simple, you need to list down all your expenses from day 1 of every month to the last day. And you need to do this for at least 3 months to get an average. If this Average is more than 100% of your Income, then you need to either A. Cut down your expenses, or B. Increase your Income, though an Increase is always advisable but cutting down the expenses is the first thing you should do. Remember ‘Live below your means’, buy only what you can afford not what your credit card can afford.

Once we know how much we spend, the next step is to create an Emergency Fund, i.e. set aside 3 to 6 months (6 recommended) of cash reserved, only to be used for Emergency. If you need to know more about the same, we already have blogged regarding the same here.

Now, if you have the above two steps taken. The next question is ‘How to create Wealth?‘. Yes, we haven’t yet discussed that. The above steps won’t help you create wealth, but it will give enough peace to progress towards Financial Freedom.

To begin your journey, you must know how much of the Income is your expenditure (again if your expenditure is more than or equal 100% we urge you to increase income or cut the expenses). Calculate %Expense of Income, for example if your Income is 100 INR
(or for that matter any currency), and your expense is 75 INR than it becomes 75%.

One thumb rule to manage your Finances especially if you are beginner is to follow 75-15-10 rule i.e. Spend 75% of your Income, Invest 15% and Save 10%. Later on as you get better grasp of your finances and is able to cut more on expenses / increase your income then one should progress to 50-30-20 Rule, 50-30-20 rule can also be called as the Ultimate lifetime Money Plan. It simply means one should Spend 50% of the Income, Invest 30% and save the remaining 20%. And in case your expenses are less than 50%, great you can invest the remaining. You can read more on Investing here.

Remember the you need to Invest like crazy to be Wealthy, while if you Spend like crazy you just end up looking Rich. Choice is Yours.

Tip – Donate a small amount from your earnings to a Charity, and you will start feeling Abundance & Positivity surrounds you, fueling in more wealth and adding a sense of purpose to your life. The more you give the more you will be in a position to receive. Give it a try!

Thank you for reading. For more such Financial Tips, do follow us @ritefinance. Together let’s build Wealth. Happy Learning…

Covid happened, what does it mean for Personal Finance?

Spend less, Save more and hope for the best. Well, yes but not exactly. Covid has left many Businesses and firms bankrupt, leaving millions of employees jobless.  News of Recession and Economic downturn is all around. And no one knows, how long the Economy is going to take to recover or will it even further go down! While we agree its a tough time, nevertheless every tough situation has some thing important to teach us.

One thing Covid teaches us is the Importance of Emergency Fund. It echoes clearly that Emergency Fund is a must. So What is Emergency Fund?, Why everyone should have it?, and How?.

What is Emergency Fund?

As the name suggest it’s a fund set aside only to be used in an Emergency. So can you use it to buy the next new iPhone?, or that fancy Car down the road? The answer is obviously not! It’s the amount only to be used when you have no other source of Income coming in. When you can’t manage your expenses, and is being laid off or became victim of a crisis like Covid.

Why everyone should have it?

Yes, you heard it correct. Not just Individuals, even a Business needs to have some sort of Emergency fund to safeguard its employees and help the Business survive the Crisis by being able to pay off all the basic minimum expenditure. That is not to say, Business shouldn’t look for alternative or cut costs. A healthy Business is the one who is capable of doing it all. Surviving a Crisis is not easy especially if you are operating in a sector that is being hit hard (for example – ‘Theatres’, ‘Cinema Halls’, ‘Gyms’ and ‘Restaurants’ in current Covid19), but having the reserve cash set aside to meet the basic minimum of your operational cost and other expenditures for a period of 3 to 6 months gives you enough time to think with clarity and plan for better handling of Crisis or even turn it into an Opportunity.

For Individuals ‘especially’ keeping aside the Cash can keep their Stress at check, and help them be better prepared to cope with Crisis. Emergency fund won’t  give you a lavish lifestyle or won’t guarantee you funding for the period till the Crisis resolve, you will still have to think of alternative, but it will give you enough Mental Peace to be able to focus on the next steps.

How to have it?

Now that we have established the importance of Emergency fund/Reserved cash for Crisis, you may be wondering how can one have it? Well the answer is pretty obvious Save 3 to 6 months of personal expenditure in a separate account that you can’t touch unless until its an Emergency! Yes, there is no secret sauce to it. You need to, you must Save, Save before you Spend, Save before you Invest, In fact don’t start Investing unless you have the Emergency Fund setup. After all Money is a tool and if it can’t get you peace, it is useless.

All the fancy items can be bought back later, first you need to live below your means and get the Fund setup. It is an essential first step towards your Financial Freedom. And if you already spend more than you earn than by all means either Earn more or Spend less!

Thanks you for Reading. For more such Financial Tips, follow riteFinance. Happy Saving