Wise Wealth Advisors

D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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The World Headquarters

Posted by Muthu on March 17, 2011

On the day of Tsunami, I was concerned about the safety of one of our client based in Japan. I tried his Japan number and the call did not go through. With hesitation, I called his parents and was immensely relieved to know my client and his family was doing fine.

I heard from his colleague (who is also our client) yesterday that they are likely to come back to India shortly.

Japan, the only country in the world which has faced the brunt of atomic weapons is now facing the risk of nuclear radiation. I hope and wish Japan is spared of further turmoil.

When a country like Japan, which plans its infrastructure and installations keeping such natural calamities in mind, can be subject to such a threat, I wonder about India.

Remember 2004 Tsunami. Kalpakkam nuclear power station is near the shore and is very close to Chennai. Due to Tsunami, sea water even came inside the power station. I do not think we plan our installations keeping such calamities in mind. If Tsunami happens again in Chennai?

I get over a dozen mails every week from people (who get my mail id through our portal) highlighting their financial issues and seeking a solution for the same. Most of them are related to debts.

A lady who is living in a city in Tamilnadu called me last week and started crying. Her husband is a government employee. She got my number from a TV channel and narrated her woes regarding debt. Her situation was pathetic. With negative networth, high interest (5% per month) debts and limited income, everyday living is a hell for them.

All I can request you is not to borrow for enhancing your life style. If your needs keep growing with your income, you need to take a fresh look at needs. Remember, your cost of living is not equal to your standard of living.

In the consumerist society we live in, contentment has become a bad word.

For those of you who do not know, Buffett’s annual salary is only $100,000. 99% of his wealth is tied to Berkshire (his company) and there is no dividend declared by his company. This means that salary is the only cash flow he gets from Berkshire. It works out to $8333 every month. Assuming 33% tax, Buffett gets in hand only $5584 per month to take care of his lifestyle.

I think all our friends and relatives who are in U.S. may even be earning better.

I’ve told many of you about Buffett’s head office or corporate office or what he calls as ‘World Headquarters’.

I always get surprise as response from people when they come to know one of the world’s richest person operating from such a small office.

In the Fortune 500 list which ranks the largest corporations of America, Berkshire Hathaway is ranked 11th.

Buffett’s business empire employs more than 250,000 people.

How many staff Buffett has at corporate office to help him manage this?

Let us listen to him

“For good reason, I regularly extol the accomplishments of our operating managers. Equally important, however are the 20 men and women who work with me at our corporate office (all one floor, which is the way we intend to keep it!).

This group efficiently deals with a multitude of SEC and other regulatory requirements, files a 14,097 page Federal income tax return along with state and foreign returns, corresponds to countless shareholders and media inquiries, gets out the annual report, prepares for the country’s largest annual meeting, coordinates the Board’s activities – and the list goes on and on.

They handle all of these business tasks cheerfully and with unbelievable efficiency, making my life easy and joyful. Their efforts go beyond activities strictly related to Berkshire: They deal with 48 universities (selected from 200 applicants) who will send students to Omaha this school year for a day with me and also handle all kinds of requests I receive, arrange my travel, and even get me hamburgers for lunch. No CEO has it better.

The annual rent of Buffett’s head office is $270,212. The total money spent on furnishing, all equipments and other interior works for his head office is only $301,363.

Efficiency need not be measured only by numbers or size.

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