How a 15 year old can aspire to be a billionaire

Last weekend I was at one of my relatives place. She has two young kids. One of them is around 19 years and the younger one might be around 14-15 years of age

I was very glad to notice that they had an interest in making investments at such a young age. I also loved the idea that their father was actually instilling in them a habit of trying to evaluate different avenues in investing. This means that in India the efforts of channels like ETNow and CNBC TV18 & the efforts of the mutual fund industry and stock exchanges like NSE are starting to bear fruit. If kids and parents start discussing financial products then the future is definitely bright for the Indian middle class.

When they came to know that I write a blog on achieving financial freedom, they thought of asking me for some recommendations on stocks and other investments, which I denied. I prefer not to give advice on any specific type of instruments or stocks, because a) I am not qualified and b) because everyone has a different risk appetite.

Since I like to look at just the basics and compounding and the rule of 72 are simple things that anyone can do at the back of an napkin, I just spent time with them on that.

Using the above I just explained to them without any use of even a calculator how wealthy he could grow.

If the younger son invests today Rs10000/- at the age of 15. India’s long term growth rate has been about 15% average. Even the indices therefore will grow at a long term average of 15%.

Therefore if he was to put this 10000/- in a Nifty ETF, it would also grow at an average of 15%. By the rule of 72 if he divides the number 72 by 15% then he will double the money in about 4.5 years. For simplicity let’s assume 5 years. which means every ten years it will grow 4 times. So his investment table, if he keeps invested with this 10000/- would look like below. Just staying invested without doing any hard work (incidentally staying invested could be the hardest thing) he can convert his Rs10000/- into Rs10million or (Rs 1 crore)

Age	Amount@15%	Amount@25%
25	40000	100000
35	160000	1000000
45	640000	10000000
55	2560000	100000000
65	10200000	1000000000

The second column is if he looks out for investments which can lead him to compound at close to 25%. then you see the magic. The amount converts to Rs1 billion (100 crores). Look at what happens between the ages of 45 and 65. At 45 he would have Rs 10 million and at 65 Rs 1 Billion. Even Warren Buffet’s wealth if you Google at age 65 and now at age 85, he is one of the richest men on earth just because of this phenomenon.

Obviously getting 25% on a consistent basis is not going to be easy, over a long period of time. But the key is going to be about staying invested. I hope the young guy can.

If you have any young guy you know, just show him this table of what his 10000 today can do for him over 30-40 years.

Till next time….

Carpe Diem!!!

How women in India are already changing the consumption landscape of India

Financial Independence, Uncategorized

Couple of posts back I had written on how the impact of ladies coming into the workforce will change the whole economy in India.

Over the last 2-3 weeks after writing the posts I noticed a few trends which I wanted to share.

I happened to go to eat at Pizza Hut in Connaught Place, New Delhi last weekend. My wife loves the pizzas there. There were at least four sets of girls only groups who had come to eat there. It’s quite common to see boys and girls in some restaurants, it’s quite common to see families in restaurants but on that one afternoon I saw at least four different sets of girls come and have food there. And its not they were there just to have a quick meal. They were out there having a good time and had ordered quite an elaborate lay-out.

The week before that in the PVR at Logix Mall in Noida I had gone to see a movie and in the IMAX screen there were nothing less than at least 7-8 girl only groups who had come to see the movie. The reason for pointing the IMAX is that it has I think the most expensive seating out of all the PVR screens.

And the last was the visit to showroom of Maruti cars – this was there Nexa showroom. Out there were women, who had come with their husbands or families to select the cars, what was astonishing was that it was the women who were signing the documentation for car leases or giving the cheques

Now on the face of it none of this has any significance. People in general and women have been going out to have lunch or to meet friends or going to movies. What is significant however is that all these things that I mentioned above were happening at above average locations or at places which are probably considered premium and in “ladies paying” situations.

When I started doing some fishing around to see if these trends are observed at other places I also came to know that there are high end bars who offer “women only” nights, on somedays of the week. Premium lingerie ads are all over the cyber city corridor on metro pillars in Gurgaon.

If Indian women are empowered and are going to be spending at such premium locations whether it is to buy cars or to have pizzas or have wine then it suddenly throws up so many opportunities for someone who would like to just sit back and passively watch their income grow

If there are funds or there are companies who are going to benefit from this consumption boom which is taking place in metros because of Indian women, then those investments well grow dramatically fast

So from a pure selfish interest I think we males need to figure out ways to empower women to grow so that when 400-500 million women in India come into the workforce people who are invested in this consumption theory for women will get dramatically rich.

Carpe Diem!!!

Quarter Century

Financial Independence, Uncategorized

This is my 25th post….. its been quite a journey over the last few months…..never thought would ever reach this figure.

First of all getting me started to take my own domain name and then take the WordPress subscription and then figuring out what to write was a major effort. For the last 2-3 years that I have been wanting to take this activity but some issue or another kept cropping up.

I read blog posts and heard podcasts from Tim Ferriss, I took a course with Ramit Sethi and I read others across the board but did not get the “ignition”

Even after taking the domain name and the WordPress subscription I wrote about four or five posts but after that I did not know on the topics that I could write.

Then I read Gary Vaynerchuk and one thing which struck me was he wrote and I paraphrase “why not first make a list of topics that you could possibly write on and then go on writing against each of them. If you come across something in-between you could add to the list”

I took Gary”s advice to heart and over the last few months I have consistently written whether it was a topic which was from the list I had made or there was a topic which I read in the magazine or a video I saw on the internet.

Even then sometimes I had a writer’s block and as I had written in one of my blogs couple of weeks back, it was the podcast from Tim Ferriss with Daniel Pink that got me started on just writing and things falling in place….now I am consistently started doing that.

I started the blog post with the idea that at some point of time if I will be able to monetize it. I will use part of the earnings to ensure that we are able to feed impoverished kids and enhance the life of women in India…..lets see when I am able to reach that stage.

The content of the blog was meant to be for young Indians who are at the age of around the age of my son, but what I found is that I have had more followers joining from countries as far as the US and Canada than from India itself.

Thanks to all of you for taking time to read my posts and liking them.

Till next time then….

How women in India can change the destiny of the country – part 2

Financial Independence, Uncategorized

Continuing where I left last, when more women come into the workforce there is money in more hands.
First this money goes to ensuring that the basic necessities of life are taken care of.

The good thing about basic necessities however is that once they are taken care off, there is not too much more that needs to be done , so once you have had three meals you can’t have one more meal during the day.

Once people have more money than they need to take care of their basic necessities they do 2 things – one they try to save and two they like to move up in life by doing discretionary spending.
When discretionary spending starts to happen the GDP growth starts to multiply. In India from the time the per capita rose from $1000 to $1700 one major trend that is seen – last year the growth of Air Traffic has been faster than the growth in rail traffic. The per capita is expected to in the next 7-8 years hit $3000/-. That is considered the poverty line in countries like the US& Canada for a family of 5. But adding $1300 per capita into more than 1 billion people can mean such a huge uplift for India.
Just with the addition of $700 per capita (from $1000) even though the Indian economy does not seem to be doing very well, still you have most Metro airports and all the Planes and flights which I have taken recently completely full. Whether it is low cost Airlines like Indigo and Go air or full service Airlines like Air Vistara or Air India you don’t see empty seats. There is a waiting list for cars and 2 wheelers. People are wanting to move up in life. They have aspirations to be better than what their parents were.

So what does this have to do with financial freedom….

If more women come into the workforce they will add to the per capita income. Once they take care of the part of the burden of the basic necessities of the house, then they will end up spending on better education and health of their children and better quality products for themselves.

If you see trends like these and you invest in countries like India, which have a such a young demographic, you can be picking gems which can make you rich many times over. Invest through SIPs in mutual funds or invest in Emerging Market funds, but systematically go about investing in growth stories and the growth momentum can propel your finances into a different orbit…

Till next time

Keep identifying trends