Wealth creation

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Tools and methods to create wealth and sustain it.

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Wealth creation

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

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