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

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Nuggets for 12th September

Posted by Muthu on September 12, 2017

I’m receiving positive feedback from you for regularly sharing my recent tweets. I would continue to do so. Also I’ve not stopped writing regular blogs. I’ll keep doing it from time to time.

1)The first step to come out of debt is to change the lifestyle which got you into it.

2) Like many aspects of life, in personal finance and investing too, avoiding problems is much better than solving them later.

3) It is your savings and not income which determines your wealth.

4) Envy gets us into debt to lead others lifestyle and chase fads to match someone’s investment performance. Envy is all pain and no fun.

5) Sacrificing certain things today for a better tomorrow is not stupidity. It is delayed gratification which is the key for secure future.

6) A stock may not move for many years and suddenly rise very steeply. As long as underlying business is doing fine, patience is the key.

7) If you borrow and buy a house, you work for the asset. If you save and invest in equity, the asset works for you.

8) Those who achieve early financial independence share two common traits; they are high savers and live well below their means.

9) Planning is not about Excel projections but getting your approach right about managing money.

10) In a 10 year holding period, 30 or 40 best days would contribute to all gains. You need to stay invested to get the benefit of those days.

11) There is no point in being asset rich and cash poor. Need to invest in assets which generate cash flows.

12) Some of us want to get rich fast. Time is the critical factor in compounding. There is no way to compress it. Be ready to get rich slowly.

13) Stock market does not guarantee riches. If we behave well, it helps us to compound wealth at a better rate than other asset class.

14) Over emphasising skill and under emphasising luck is the way to get into ego trap. Luck plays a significant role in our investment success.

15) Quoting Buffett or Lynch does not make us one. It is to draw inspiration so that we can try to be better than what we are.

16) The difficulty in investment strategy is not in formulating it but diligently sticking to it especially during the periods it doesn’t work.

17) Worst would be saving 5% of salary and investing it at 7%. Best would be saving 30% of salary and investing it at 15%.

18) An ounce of gold was $19 in the year 1800. It is around $1350 now. Annualised return of 1.98% over last two centuries.

19) Higher savings help if future turns out differently than we planned. Who can be sure about future?

20) If expenses keep matching income, we would never be out of financial slavery.

21) If you really want to understand what an hour of your time is worth, the easiest approach is to simply divide your annual income by 2000.

22) If your annual income is Rs.10 lakhs and you buy a car for Rs.6 lakhs, it means you’re paying 1200 hours of your time for it.

23) Your net worth should be your age times your annual income, divided by ten. Twice the number, you’re really wealthy.

24) Age:50 Annual income:Rs.24 lakhs Net worth needs to be Rs.1.2 crores. Twice the amount, Rs.2.4 crores, is considered wealthy.

25) This is the wealth equation provided by Thomas Stanley. This is not applicable to those who are in the initial phase of their career.

6 Responses to “Nuggets for 12th September”

  1. Kkr said

    Love your nuggets, Muthu!

  2. Shyam said

    Excellent words….to practice it requires lot of mental balance and maturity

  3. Sir, I want to understand will 7 years of experience be counted as initial years. And net worth also depends on your initial salary. It could be possible that someone initial salary is quite low, however, current salary is decent. Do the net worth equation mentioned above still hold true?

  4. Venkatesw Reddy Konda said

    Awesome quotes.. Very Matured and needs good amount of maturity to understand and implement

  5. dhaya said

    I am not sure how you are saying that having 2.4 crores at age of 50 with the current income of 24 lakhs is wealthy. We may live for 40 more years which equals to 480 months and we may end up in having just 50,000 per month. That too our investment should give us inflation matching return.

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