but ……. ….. What is personal Finance ?
It is Time to get out of La La Land and take a real look at what you are , what your money is , what your relationships are , and secure yourself. The point is that you don’t have to spend the best years of life slaving it out just for your kids or your wife and for a hospital visit ridden old age.
Nothing is Permanent anymore ! People jump from being entrepreneurs to being self employed to becoming corporate slave labor. Some decide not to work at all. You have to look at personal finance from a completely new perspective.
There are few Power Laws of personal finance which we have forgotten. It’s High time to Remember the Laws :
A. Your children don’t have to be a part of your Business
Your business is not some hereditary kingdom. There is no reason for them to takeover. Sell out when you don’t want to be in business any longer.
Just like you , your children may want to pursue what they want. They may have a temperament for some other kind of work.
You need to maximise the Value of your brand and your business. They can only be done by hiring the Best. So Hire the Best , Hire the one who is really Deserving.
Let the Children Find their own way .. !
B. Don’t ask others about your Ideas
The fact that no one understands your idea is the reason it is Unique !
If you are planning to set up your own business , Go for it. Setting up your own business does not mean more free time. It means full time involvement and new outfits have the same chance of survival as fish eggs.
So either you believe in what you are doing or don’t do it. But finding someone to confirm this for you is a waste of time.
C. Don’t be stuck with Illiquid Real estate
Real estate is usually sold by creating an illusion that it is the only asset that is limited and land cannot grow. Even if this were true, how does it have to do anything with your investing?
The History of real estate is such that while it appreciates only a handful of families manage to keep holding real estate for generations. Most lose their real estate to new roads , government changes , wars , family disputes , etc.
What are you collecting real estate for ? For passing it on to your children ? How does it help them except that they become good for nothing and fight among themselves to divide up the business.
D. Invest at the Source
Why do you need these intermediaries ? Why are you financing so many layers of fees . First you pay the mutual fund’s fees. Then you pay the financial planners fee , if you have one.
You can immediately bump up your returns by Investing directly in Stocks , Mutual funds and Real estate . It will require you to master investing and trading skillsbut anyone who puts in 2 to 3 years of investing and trading can master that . Investing directly in stocks means all the returns are Yours.
Start with Listed Stocks . There are many companies listed in Stock exchange. Learn and do the fundamentals and Technical analysis and save a huge sum of fees for yourself. Find sources to get you stocks before an IPO or stocks that may get listed or investing with someone in a business.
You will start to see higher and higher Returns if your Timing is Good.
E. Take a Salary even if it is your own Business
Business Owners must treat their businesses as separate from themselves and both pay for its products and take a salary.
For example , if you are using your own garage space , warehouse or shop for the business , pay yourself a rent .
Does the business make sense after paying a market rent to yourself ? Does the business make sense after paying a salary to yourself ? Try this and you will be able to make go or not go decisions very quickly.
F. Brand Yourself
What you wear , how you talk , the restaurants you visit are all part of a Brand. Think of the exponential value you add to yourself when you brand yourself.
Those of us that are in our business are so busy with its day to day chores that we don’t pay attention to the importance of Branding. Spend as much time in your brand as you do in your business. Sell muffins but with great service and a great storefront. Run a doctor’s office but invest in a quality receptionist and a beautiful clinic.
These are the things that deliver significant Value and customers over the long run.
G. What does well today might not do well in the future
Trees don’t rise to the skies.
Humans don’t go beyond a certain height.
What goes up come down.
High tide is followed by low tide.
Things are no different with your investments. What is doing well today sows the seeds of what will not do well in the future. And yet we make our investments based on the most rosy data and exactly at points where the low tide is beginning.
The seeds of every decline are sown at the peak of every advance , and vice-versa. It pays to be a Contrarian at peaks. It is not a good idea to do what everyone else is doing. It is even worse to get into any kind of investing fad.
H. Never be in anything that requires ” Regular Investing “
There is nothing called “regular” or :systematic” investing. You cannot put your investments on some kind of fixed allocation no matter what the markets are doing.
You have to increase investments when markets are cheap and change investments when the market moves.
Regular investing is like being told to drive a car at the same speed and be on the same lane no matter what the traffic looks like or what speed it is moving at.
I. Avoid any installments and Debts
Whatever you do , do not take on debt for anything. Finance everything with your own money. If you don’t have the money then don’t buy. PERIOD !
You were not born for eternal indentured labor or servitude. Debt will send you into bonded labor for the bank or financier , a trap from which you might never recover.
Why you should have a home if you don’t have the money ?
Why you should have a car if you don’t have the money ?
Is the bank in the business of charity ? Why is it giving you loans ? Why should your credit rating matter to anyone ?
Think about it !
J. Who you are decides what your Personal Finances will look like
Are you impulsive, short-tempered , calm , calculated ? Defines who you are .. ….. Because that will decide what you should do for your finances.
Your Personal Style and Personality goes a long way in defining how you will accumulate your wealth and what you are capable of achieving in terms of money.
After all , We Bring about what we Think about !
Thank You & Take Action !