The Ultimate guide to Investing in your 20’s : Knowledge about money should be given so that one can always be financially stable. In 2011, when K Colin’s daughter came back from college, the author asked his daughter, “Do you know how to manage your money because money is important in life?”
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The daughter said, yes Dada, I know money is important but there are more important things to do in my life, now I might be thinking of leaving only money alone.
On this the author released that he has returned all this financial knowledge to his daughter. She would write in a format so that even if he is no more in this world tomorrow, his daughter can follow this process and is financially independent and the author has written all this knowledge in the form of a book and the name of this book is The Simple Path.
The Ultimate guide to Investing in your 20’s
Finally, this book is very famous and in today’s Article we will talk about this book, how we can achieve financial freedom according to the author, two benefits of achieving financial freedom, The Well Accumulation i.e. first collect so much money. Make sure that you never worry about daily expenses. When you have accumulated so much money, after that comes the next wealth preservation i.e. invest the same amount of money every year so that you will be financially ok throughout your life.
Okay, first of all you will see the wealth technician fees i.e. how to collect money. And for this the first point is called The Most Powerful Tool for Navigating the World. Many people must have heard themselves saying that money does not give happiness. Let us see this point not by words but by answers. Nobel Prize winner Cain’s mother was four and a half years old. A survey of lakhs of people was conducted to find out how more money can improve their emotional life.
In this, people were asked about their annual income and also they were asked how much money they earn in a year and how happy they are with life. They observed that That 75000 is a cut off point i.e. as people are earning money to reach 75000, they are becoming more and more happy with their life but after achieving 75000 annual income, money is not giving much happiness in their life.
In short this research One thing is clear, of course, more money does not bring happiness but less money definitely brings sadness, hence respect money and the people who tell you that money is nothing, brother.
The Ultimate guide to Investing in your 20’s
In the next point, the author tells us that the most dangerous obstacle to build wealth is this dead author. It is said that whenever a businessman earns more money, like Mukesh Ambani took a loan of lakh crores to set up Jio and then repays the loan and quickly sets up a new business, but when a common man takes a loan, that business Not for buying but for buying useless gadgets, the bank company also wants us to take a loan from them for example.
The author says that once he had taken a credit card and did a shopping of Rs. 15000 and he was told that he would not be able to avail the loan from the credit card. The person will not charge any interest if he deposits his money within 30 days.
When the credit card bill came, it was written in it that he had to pay only 150 rupees as the minimum payment. The author was very happy that he would not give me ₹ 15000 in one go.
Rather, that too in installments, but then show the author the part below the system bill in which it was written that the author has to pay 18% interest on the remaining money. The author says that if we can get 18% return from our investment. So in a few years we will be among the richest people in the world but if someone is taking 18% from us then we will be completely ruined, so the point is to eliminate the non essentials first.
That is, stop any useless expenditure, whether it is a dinner of ₹ 400 outside, a copy of ₹ 30 or any useless gadget. Step to make a list of all the debts. Write all the debts on a paper along with their interest rates. Write the interest in loan in 3rd rank in descending order according to the interest rate. Step 4: Those with highest interest for i.e. highest installment. We have to give the loan to the one whose infrastructure is highest. Minimum payment of the remaining loan once our loan is over.
Then comes the next which says How to Think About Money Author says that money can buy a lot for you and the most important thing it can buy for you is your freedom. When you become financially free, you will have to think about your daily routine. Not worrying about expenses, not having to do that stupid job that you hate, if our parents get sick, we may have to stay away from them just because we are not financially free and we have to work far away, so whenever we have money, When we come here, we have three
options: Option 1: We can spend the money, due to which we will never get financial freedom and useless gadgets keep accumulating in the house.
Option 2: Invest the money and by spending the returns we get from it, we will add money to it, but I am not going to go very quickly.
Option 3: Invest the money and also invest the returns you get from it If we choose this option then we can become financially free very soon.
Now you must be obviously thinking where to invest the money then the author says Stock Market Now the next question that would be coming in our mind is that what will happen if I lose money in the stock market and that is why the author’s next point is that most people lose money in the market. It is said that maximum people lose money in the stock market.
The mistake that is made in the market is that even an average person starts thinking that he can be like Warren Buffett. He can bring returns and saying that we can bring returns as much as Warren Buffet is like saying that we can win a boxing match with Mike Tyson and it is very difficult because of Mike Tyson’s capability. To become a Warren Buffet, there is a lot of dedication and we should start investing at a very early age. Next point comes Investing. As the author says, we are the majority.
We should invest the money in index funds till the time we collect 25 times of our annual income i.e. if we want a minimum of Rs 6 lakh per year then we will have to collect 25 * 6 lakh which is equal to Rs 1.5 crore to become financially independent. For this, the author says that the best method is to buy index funds and not mutual funds.
Now most of the investors think that if they buy mutual funds which have the best fund managers, they can get very good returns and they can also beat the index funds. The author says that this is a wrong thinking. A study has also been done in which it has been seen that in 30 years i.e. from 1976 to 2006, 2076 mutual funds were launched, out of which only 0.6% mutual funds beat C index funds.
Now if you want to go into details about index funds and how to invest in index funds, then we have created a free course for this in our second channel, the link of which we will give in the description now next. The most important point comes wealth preservation fee in which the first point is do not call speculation and then once we achieve investment then it becomes our responsibility to preserve our wealth.
Now because we are such maximum middle class people then if we invest in any expensive If we buy something or do not have an expensive vacation, our body will create an alarm and we will come to know that we should waste the money but the problem comes when we invest the money somewhere and we call it investment or it is speculation and this In this case, we do not get any alert signals from our body and this is the thing that we have to protect ourselves from when we achieve financial freedom.
The next point is called The 4% Magic Root. Authors say that if we have achieved financial freedom then it After this, we can divide our income into three parts – 75% of which we will keep in index funds so that our portfolio keeps going and 20% of the money we will keep in bonds so that the volatility of the stock i.e. the price which goes up and down.
All that remains is that we are able to smoothen our portfolio a bit and we will keep the remaining 5% in cash because we need money to handle short term expenses and emergency funds which we can keep in high interest savings accounts like FDS etc. According to the author, even if we keep increasing our portfolio by 4% every year, our money will never run out even in the most probable way. For example, if we have now achieved financial freedom i.e. investing Rs 6 lakh per year.
According to us, we have collected 25 times of this i.e. Rs 1.5 crore, so we will keep 75% of the money i.e. Rs 1.1 25 crore in index funds, 20% of the amount i.e Rs 30 lakh will be kept in closed and 5% in cash i.e Rs 7.30 lakh HD Now even if we keep investing 4% of our portfolio every year, it is almost impossible that the amount of our portfolio will decrease but it will most probably increase.
Now we do not have to trust this data blindly because this data keeps getting updated. But we have got an idea as to how we can manage our money. So that the concepts of this important Article get installed well in our brain, once we revise it, then give two main steps to manage money.
First phase is money accumulation phase i.e. collect money and second hand money preservation phase i.e. save the money. In money accumulation phase we have to collect at least 25 times of our annual expenditure. For this we can go to index our money. Funds: According to the author, if we invest 50% of our income every month in index funds, we can achieve financial freedom in about 11:30 years. Once we achieve financial freedom, that is, we have collected 25 times the annual expense.
After that we can divide our money in three parts. First is that 75% we will keep in index fund, 20% we will keep in bonds and 5% if we keep in our bank account and now even if we keep investing 4% of the money then also Most probably our money will never run out because the index fund will give us more money than we are raising. Friends, if you want to read or listen to investment and business related book summary in Hindi for free, then you can download the legal application.
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