I was taking a ride with one of my colleagues a few days back in his car.

He just happened to mention about how his brother had spent a few thousand rupees that he had got as gifts, in a party.

That day I just happened to mention to him that if he was able to show his brother the power of compounding at two different rates of interest of 15% and 25% it may make a difference in his brothers attitude of investing rather than spending.

My take was that at 25% the money can grow to 10 times in 10 years (1000 to 10000) and 100 times in 20 years(1000 becomes 100000). While at 15% it can become 4 times in 10 years and become 16 times in 20 years(1000 becomes 16000).  This was just a conversation we had while travelling to a customer meeting.  I did not know how he could actually get 25% returns per annum if he had asked me.

However last week I was at Crossword in Logix Mall in Noida and I happened to glance at this new book by Saurabh Mukherjea , Rakshit Ranjan and Pranab Uniyal,  titled Coffee Can Investing.   Being a voracious reader, I generally end up buying a lot of books, the moment I get into a book shop – physically or on Amazon.  Then I end up reading them on a flight or at my leisure.  but there is always a backlog to my reading, with a lot of books lying unread.

This title however caught my attention and I got to reading it immediately and completed it in a day.  The best part of this hardbound book is that it is written in simple language, with examples of Indian companies which you can directly relate to.

He has written a wonderful thesis on how by selecting some stocks on a given set of rules, people can get returns of close to 25% per annum on a consistent basis.  Since I am always curious to know how compounding has helped people I read this book end to end in record time.

Saurabh shows with various data points how getting to 10 times your money in 10 years and hundred times in 20 years is not a theoretical exercise…. in the appendix he has done back calculations to show how over multiple years this strategy has worked.

The good thing about the book is the fact that the authors have looked at building a portfolio with combination of shares, mutual funds etc. to ensure that you get an adequate return in Indian circumstances.

Most of the investment books I have read are by international authors and with examples of international companies.  This book has a completely Indian take and therefore I would recommend reading this for sure.  If you are interested in seeing how others have been involved in getting 25% returns, I suggest have a look at this book.  I found it extremely interesting reading

Till next time then Carpe diem!!

In my last post I spoke about living your life.

One of my sisters commented that my post was so depressing that she actually decided that I write a lot of crap because before buying a Rs1400/- dress she started thinking how it could it impact her future and did not buy the dress.

Well she got out of that low feeling by going out and buying an even more expensive dress – but to come to the Rs1400/-…what it could mean if she delays the gratification.

Assume that my sister is 25 years of age.  She has a long runway.  given how medical science is progressing she will at-least live till the age of 95-105 on an average….that means she has 7-8 blocks of 10 years each…25-35, 35-45, 45-55 and so on.

I have earlier written how small differences in percentage can make a huge difference in outcome.  Now lets assume she gets 15% per annum return on this money….which means every 5 years the money doubles….so in 10 years the money becomes 4 times, in 20 years it becomes 16 times.  By the time she is 55 she will have 64 times the money that is close to Rs90000/- and at the age of 75 it will be close to Rs14,00,000/-.

The same thing if she is able to earn at 25% in 10 years Rs1400/- will become Rs14000/-, in 20 years Rs140,000/-, by the age of 55 it will be Rs 14,00,000/- and at age 75 hold your breadth Rs 140 million (14 crores).

What this means is – if you start early and every month just avoid that one dress or that one meal outside, you can actually stop working for a living  by the age of 35-40 and earn from your investments and live a more contented life, travel the world and what have you

India presently is in such a stage of growth that these things are possible in our country.  just defer your gratification by a little and you could be a millionaire multiple times over.

Carpe Diem!!

When you plan your financial journey one of the big challenges is moving targets which don’t let you LIVE your life.

You start by thinking you will save “X” and by the age of 40 or 50 or whatever you will leave your job and do something on your own which will give you happiness and help you get to your dream.  But then you get married, you have kids, their education, your parents and their ill-health and inflation and suddenly you realise you have not been able to save enough so you cant retire.

So you change the target for retiring but then your children get into higher education  and you have to pay for their fees and the dream of doing something you like only remains a dream and life just passes by.

All the above has actually happened to me and I have lived it and understand the frustration that causes.

I was watching the movie “Zindagi na milaegi doubara” by Zoya Akhtar….this a Hindi movie and a favourite of mine.  One of the leads is a character played by Hritik Roshan who has this need for money to define himself.  But when he goes scuba diving, he suddenly realises what he’s been missing in life.  All the characters one by one realise the fears that were holding them back and get liberated.

Life is passing us by everyday…let us not waste it by living only for our obligations and saving only for a rainy day.

Create a bucket where you can also save for going after your own dreams…what Tony Robbins in his book “Money …Master the game” calls the dream bucket.  Make money work for you and keep putting things in your dream bucket so that you can live a fulfilled life.

Carpe Diem….Sieze the day!!!

There was a lot of inputs on my blog from my friends asking if I have become a financial advisor or if I am teaching people a method on how to become rich.

While the concepts of compounding are the basis of becoming rich, the idea of this blog was something totally different.

As I had mentioned in my first blog, I did not know about the magic of compounding till about 4-5 years back.  Due to that I used to do a lot of things because I had to.  I was in a job because I had to, since there were so many liabilities on me – my parents, my in-laws etc and my son was getting into university.  Since we were a single income family there was always this question on how we would manage our finances if I did not have a job.

And as I had mentioned earlier also, since I come from a typical middle class family – a job was what we did all life….our whole existance was centered around being in a job.

If I had the freedom to choose things without having to worry about how my basic necessities would be taken care of then maybe I would have lived my life differently.  Maybe I would still work, but then I would do a job because I want to work and not because I had to.

The whole idea of starting the blog was that if there are people out there who struggle the way I have, they may find that my experience may allow them to live life differently.

By utilising the magic of compounding from early on in life, you don’t have to be a slave all your life.  In the initial years you struggle but invest wisely so that over a period of time you have enough invested such that the earnings from the investments take care of your basic needs and you do what you like to do and life a much more happier and fulfilled life.

In my next blog I will take a few examples of how by keeping a moving target we frustrate ourselves and how achieving financial freedom may not be such a difficult thing.

Till then….

Carpe Diem!!!