Definition of wealth varies from person to person. People in college think having cola is wealth since they have less pocket money. In India, many people think having 3 meals per day is wealth because many are poor.
In this, it is shown how one can become Wealthy in a wise way. A word of caution . Since wealth is difficult to handle do read the chapter of this book again and again. It might not be possible to understand all at the first go.
The first step is to know what wealth means to you. Than only you will know how much of wealth you want. In college, people have little pocket money But after college the definition of wealth changes.
.Most billionaires did not really want to become rich but do something great. You have to know that wealth does not come overnight.Classify your goals. Short time goals or long time goals. Don’t make your long term goals into short term goals otherwise the process of generating wealth becomes difficult.
There are two things you have to know at this stage. Growth vs inflation. If your wealth is growing inflation is cutting the wealth. Also, the difference between real and nominal returns is explained in a manner that everyone will understand.
Some people think spending less will means they will have more wealth. Others think that if you earn more you will get more wealth. But if you are earning more and spending more you will end up having less money. Pablo Picasso said “I would like to live as a poor man with lots of money”.
Few important tips are given here
Start a sinking fund
Bonuses from employment, are for saving. Don’t spend them.
Watch your bank account
There is the Li Kashing model for allocation for budgeting which is useful for planning the budget.
Create multiple sources of income.
Today it is easy to start a business other than your normal job.When my friend was in India she used to paint as hobby. Now in the USA, she is selling those paintings. What started out as a hobby turned into income generation. Since her husband was earning this was a side income If you write well become a content writer, other than your normal job
Some side jobs
Dealing in Forex
There are lot many more side jobs in the book.
Side activities can be a stepping stone to an career.
Money is a great servant but a bad master. It does not matter how much money you earn, it is how much you invest
Provident fund. After maturity, it helps to get money to live comfortably after retirement.
The post office have a saving scheme.
Shares. But remember if you make money you can also lose it when the market is down
Look on the net for schemes and then invest wisely.
Robert Kiyosaki “s Rich dad poor dad says “Rich people acquire assets and the poor and middle class acquire liabilities. An asset puts money into your pocket. A liability takes money from your pocket. So what is a asset? For Naryan Murty his employer is an asset. If you want to buy an iPhone while you have an android phone is in your phone the iphone cant be your asset but investing in apple stock can be your asset.
This talks about world of finance .
There are three things involved . Risk, return and time. This chapter is most important if you want to understand the investment.
Risk in investment should be understood. The return would imply if you invested 2rs did you get 4rs or only 2rs. After how much time did you get this investment is to be seen .0ne should try and understand risk. You can do this by looking at investopedia.com.
Also, see after how many months you will start using the return.
This is about asset allocation.
Put your money to work in the best place in a mix.
Usually, the share of equity in your asset allocation should be 100 minus your age but you need to understand the risk factor.
Different allocations will have different risks at different levels.
In this step the various assets are discussed
In liquid assets, we have mutual funds, In Illiquid assets, we have insurance, gold Venture Capital hedge funds.
I did not know so many assets existed. This is the best chapter in the book. Knowing about so many assets is important.
This talks about educating oneself to keep track of what is going on in the assets market and read the fine print of the offer document. Stay one step ahead of where to invest. Track and review your investment.
This takes about debts and how to avoid them.
How to manage tax and assets are given.
The best part of the book is the key takeaways that is give at the end of the chapter. Overall I would say this a good for anyone who knows nothing about wealth and where to invest .
The quotes are given from the same book.