Wealth creation

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Wealth creation

  1. 1. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Creating and Growing Wealth
  2. 2. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Finerva •Finerva = Finance + Minerva (Roman Goddess for Wisdom)
  3. 3. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Introduction Finerva • India’s First Company dedicated to Personal Finance Education • 3 core values: • Simplifying Personal Finance • Make Meaning • Create Value
  4. 4. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Tools to Create Wealth
  5. 5. www.finerva.com | support@finerva.com | +91-9787-11-11-66 • Basics of Cash Flow • Is there a difference between assets for Companies and Individuals? • Asset Vs Liability Chart • Mark the table in your workbook appropriately
  6. 6. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Tools to Create Wealth • Cash Flow Chart
  7. 7. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Applying Cash Flow to Our Lives •Exchange of phones
  8. 8. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Applying Cash Flow to Our Lives •Bike with high resale value
  9. 9. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Applying Cash Flow to Our Lives •Having assets and heavy loans
  10. 10. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Applying Cash Flow to Our Lives •House that we live in
  11. 11. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Applying Cash Flow to Our Lives •Vehicle loans
  12. 12. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Applying Cash Flow to Our Lives •Borrowing for tax saving investment
  13. 13. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Tools to Create Wealth… Balancing Return & Risk
  14. 14. www.finerva.com | support@finerva.com | +91-9787-11-11-66
  15. 15. www.finerva.com | support@finerva.com | +91-9787-11-11-66 • What is risk? • Any deviation from expectation is risk • Which has higher risk? • When I expected 10 % I got 9%. • I expected 35% I got 31.5% • I expected 100% I got 90%
  16. 16. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Which decision is better? • An army general has 250,000 soldiers.
  17. 17. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Which decision is better? If he fights: • The probability to lose 37,500 persons is 50% • The probability to lose 43,750 persons is 25% • The probability to lose 31,250 persons is 25%
  18. 18. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Which decision is better? • If he retreats he will lose only 15% of his army. • Which decision will reduce the loss of lives?
  19. 19. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Risk… •Is there zero risk? •No. That is why Countries are rated too. •Sometimes the sovereign rating can be lesser than some companies in the country.
  20. 20. www.finerva.com | support@finerva.com | +91-9787-11-11-66 …Tools to Create Wealth
  21. 21. www.finerva.com | support@finerva.com | +91-9787-11-11-66 …Tools to Create Wealth •Tools to meet my requirement • Comparision chart for different investments • Increase the sources of Income
  22. 22. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Sources of Income • Myth to break: Salary has to be my main source of income. – Types of People – Employed, Self Employed, Businessman, Investor – Be an Businessman / Investor – Leverage OPM, OPT – Leverage Technology
  23. 23. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Calculating My Needs
  24. 24. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Calculating My Needs Financial Planning Includes: 1. Protecting our Family 2. Planning for our Milestones 3. Planning for Emergencies 4. Planning for Retirement 5. Planning for Estate
  25. 25. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Protecting My Family
  26. 26. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Protecting My Family • Do I need Insurance? • How much Insurance do I need?
  27. 27. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Planning for My Milestones & Retirement • Have I planned for – My Children’s Education? – My House? – My Car? – My Parents? – My Business? – My Retirement?
  28. 28. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Milestone Planner Retirement Planner
  29. 29. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Where is the money? • I know I need to save. But where is the money? –This month my in-laws were in town –The TV / Washing Machine / Fridge failed this month
  30. 30. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Where is the money? –Surprise hospital expense came up –Child’s School Term Fees had to be paid
  31. 31. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Where is the money? –Soft Loan had to be repaid –Surprise Trip from Company. Claim will take one month for reimbursement. –Aadi Month / Deepavali / Ramzan / Chirstmas / Pongal / New Year / School Holiday Purchases
  32. 32. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Budget – Myths And Reality • What ever I plan does not work? So why plan?
  33. 33. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Budget – Myths And Reality • A plan does not ensure that the goal is achieved. • Plan is required to first set a goal and then to remind you to reach it • And alert you when there is a deviation • A company has become big because they have a budget…
  34. 34. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Budget is for big companies. • Any company has become big because it functioned on a budget
  35. 35. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Budget Myths & Reality • Anything on sale can be bought • A sale is profit for the sales guy • Is the thing on sale what you want? • Buy anything based on a list of needs and excess cash.
  36. 36. www.finerva.com | support@finerva.com | +91-9787-11-11-66 There is not enough money for everyone to be rich • Money is not a limited quantity commodity (at least at our level) • The more value you create for your company and others, the more money you have.
  37. 37. www.finerva.com | support@finerva.com | +91-9787-11-11-66 That guy is filthy rich! He should have done some criminal activity some time in life. • This is a statement out of guilt and jealousy / envy • Sometimes used to protect our image in front of our children. • “Money is not evil after all – in good hands” – Swami Vivekananda • “Jealousy is the root of all evil, and a most difficult thing to conquer” – Swami Vivekananda
  38. 38. www.finerva.com | support@finerva.com | +91-9787-11-11-66
  39. 39. www.finerva.com | support@finerva.com | +91-9787-11-11-66 My Present Budget • Fill in your Budget Worksheet
  40. 40. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Creating a Surplus for My Goals • Can you see where your goals are being SPENT????? • Identify expenses which can be reduced • Identify loans which need to be closed immediately • Identify investments that need to be started immediately
  41. 41. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Net Worth • The Net Worth Sheet summarises our assets and liabilities.
  42. 42. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Symbols of Social Status Vs Wealth • Wealth is generally associated with the ownership of social status symbols such as Huge Cars, Palatial Houses, Servants, Jewels, Silk Sarees, etc.
  43. 43. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Symbols of Social Status Vs Wealth • Social status symbols are more often, than thought, liabilities.
  44. 44. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Wealth Defined
  45. 45. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Wealth Defined • Wealth is defined not in quantum of cash but in TIME
  46. 46. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Wealth Defined • A person's wealth is defined by how long a period of time one can sustain one’s lifestyle if he/she stops working.
  47. 47. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Wealth Defined • The longer you can go on living your life without working another day, the wealthier you actually are.
  48. 48. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Your wealth is therefore defined by three things • Your monthly expenses • Your liquid assets and • Your passive income.
  49. 49. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Myths Summarised • Safest option in life is to get a secure job and stay there always • Only doctors make a lot of money • Sale! Sale! I buy always when there is a sale • I will never understand how investing works • They have a big house, they must be rich… • There is not enough money for everyone to be rich • People who make mistakes are stupid • Fixed deposits are safer than stocks • I will never be rich… • Investing in stocks is gambling. • Only crooks become crorepathis
  50. 50. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Mantras for Wealth
  51. 51. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Mantra 1 Time The largest of trees start from the small seeds. Allow time and nurture your investments.
  52. 52. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Mantra 2 Income – Investment = Expenses If spending money brings you enjoyment, you will never be rich. However if making money brings you enjoyment, then your wealth is guaranteed. Make list based purchases Given a choice – see what the excess amount could be
  53. 53. www.finerva.com | support@finerva.com | +91-9787-11-11-66 Invest with a Goal and Make Goal Based Investments If your goal was 10% gain sell once you get it. Don’t get Greedy. Life Goals give clarity for the quantum and term of investment. A purpose will ensure money is not used otherwise or spent.
  54. 54. www.finerva.com | support@finerva.com | +91-9787-11-11-66

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