Madabout: Money

MadAbout

Money April, 2017, Issue no. 7.

Schools create employees not entrepreneurs pg. 10

Press the right buttons: Earn in leisure pg. 12

DEVELOPING A MILLIONAIRE MINDSET

Desi Finance: See an opportunity and make it happen! pg. 26

Mad About

Money

Issue no.7

Content 06

Dissatisfaction can be the driving force to grow wealthy

10_Schools create employees not entrepreneurs

12_ Press the right The desire to be rich is as important as the business model

buttons: Earn in leisure

14_ Things to do in the new economy

18_5 reasons why rich people go broke

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20_ Developing a millionaire mindset

26_ Desi Finance: See

an opportunity and make it happen!

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28_8 Weird Ways to make money

30_Re-Skilling for the

Financial Fears Sure Fire Growth Stoppers

ones aiming to be rich

32_Get rich, stay rich 34_Diamonds are not

forever - a feature on declining prices of diamonds

24

There is a difference between ‘being rich’ and ‘being wealthy’

2

22

Feeling that the ‘world is mine’ can lead you to financial ruin

Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form of by any means electronic, mechanical, photocopying, recording or otherwise, without the permission of MadAboutMoney magazine. All information in MadAboutMoney magazine is checked and verified to the best of the publisher’s ability, however the publisher cannot be held responsible for any mistake or omission enclosed in the publication.

Mad About

Money

Editor’s Note

Welcome to this edition of Mad About Money! In our previous editions we have talked about the specific money mindsets needed to get rich as well as the individual personality traits and habits that rich people have and the tools they use in order to get there. This edition, as always, we have something new and unique for you to know and understand! The answer to the all-important question – What do you do once you get rich? Like our cover for the edition says – GET RICH. STAY RICH. Yes, that’s right…this edition talks about how to go about once you have already reached your destination. You must be thinking that once you get rich, that’s the end of your journey right? The happy ending to all your money problems, and the ‘I lived happily ever after’ conclusion to your life’s story? Well that’s far from being true. Trust me, getting rich is just 50% of the journey. The struggle to keep that money, staying rich and sustaining your lifestyle is the next crucial 50% of it! There are too many people in this world who have made it big in life, gotten rich, only to lose all or most of it later just because they did not know how to handle it. Specially for people who have not been born into wealthy families and are actually seeing so much money for the first time. Knowing how to go about it and what to do with your money is extremely crucial and cannot be avoided. So starting from providing you different weird ways to make money to stating the top reasons why rich people go broke, from showing you how to see an opportunity and encash on it, to making you understand the difference between being rich and being wealthy, all topics in this edition of Mad About Money is about sustainability. Sustaining your wealth, your money. Not just being rich but truly staying rich forever and after in your financial fairy tale. So Mad About Money is here to talk about everything to do with money that draws your attention and passion, but in a different way, with a slightly different touch… that unique magic wand of mindset change that just makes all this not only attainable in practical terms but also sustainable for you and your coming generations to enjoy!. Simply put, if taken in seriously and internalized with sincerity, it holds the power to change lives and destinies. Are you up for it? Keep reading and keep getting rich! Happy reading

Sachin Mittal

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The Mad Gang who makes it possible every month

Vijendra Singh,

Shravan Giri,

Rajiv Ranjan,

Giving a tight twist to money

Tech at his fingertips

Joining forces in troubleshooting

Swadesh Mishra,

Anubha Rathore,

Dheeraj Kumar,

The world in his pocket

Designer craft creator

Sees the glass half full

Manager Money Craft

Officer Out-standing

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Creative Technologist

Arts & Crafts Designer

Joint Creative Technologist

Chief Money Scientist

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Akanksha Mishra,

Johny Chopra,

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Hopefully optimistic

Spreading the good word

Creating the big buzz

Associate Money Scientist

Buzz Ambassador

Abhijit Banerjee,

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DISSATISFACTION CAN BE THE DRIVING FORCE TO GROW WEALTHY

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YOU MUST NOT HAVE HEARD THIS PHRASE QUITE OFTEN. IN FACT, YOU MIGHT NOT HAVE HEARD THIS PHRASE AT ALL. THE MAIN REASON FOR THIS IS BECAUSE MOST PEOPLE WILL ASK YOU TO BE “CONTENT” IN LIFE. THEY’LL TELL YOU TO BE SATISFIED WITH WHAT YOU HAVE AND BE AT PEACE. HOWEVER, TODAY I WILL TELL YOU SOMETHING WHICH IS COMPLETELY OPPOSITE. I’LL ASK YOU TO BE DISCONTENT IN LIFE IF YOUR AMBITION IS TO BE RICH AND SUCCESSFUL.

Being content is closely associated with being happy. A philosopher once studied what happiness actually is. She says that happiness is relative and everyone experiences different types of happiness. All these happiness is not necessarily related to each other and one kind of happiness may conflict with the other. So, in other words having too much of one kind of happiness might undermine other kind of happiness, making you docile and handicapped in your thinking process.

EVOLUTION: Let’s look at how we evolved into the most dominant species on the planet. We evolved from being mindless apes to super intelligent homo sapiens. From building fire to building nations, we have done it all. How did you think all this happened? By staying content? I don’t think so. If humans would have been satisfied by just building fire, they would have still stayed in the

stone age killing animals and living under rocks. The inherent nature of human beings is being dissatisfied, otherwise there would have been no evolution for us, or more precisely evolution so fast. It is that dissatisfaction that has made humans go the extra mile, lift that extra kilo, move that extra brick. Evolution is the biggest proof that humans have been dissatisfied through centuries, and that is not a bad thing. In fact, that is the best thing that has happened to our species, and that is why we have come so far.

REVOLUTION: Don’t listen to your peers or elders or gurus saying that you should be satisfied with what you have. You should never be satisfied with what you have, in fact you should never be satisfied at all. Make sure that you stay hungry to make more and make plenty. That’s the revolution I want you all to have within yourself. Break free

from the comfort zone, get cracking today. If you have made a significant amount of money either by saving or by smartly commercializing your skills, it does not mean you should stop or you have come to any sort of an end. It basically shows what you are capable of and you should use it to build your confidence to make more of yourself. Building your wealth is not a journey from point A to point B. It sure starts from point A but there is not point B, that journey should never end for you. Revolutionize the way you think! It all starts there. Being content with what you have today basically means you are strangling the hopes of what you might have tomorrow. Go all in, take risks, make calculated decisions and make your money grow with you. Look at opportunities around you, know the market, invest wisely and quickly. You will be surprised how rich you can be if

IF YOU HAVE MADE A SIGNIFICANT AMOUNT OF MONEY EITHER BY SAVING OR BY SMARTLY COMMERCIALIZING YOUR SKILLS,

HOW TO GROW UP AND GET RICH STEP 1 If you want to stay rich, stop taking financial decisions abruptly. The rich are extremely careful about making investment decisions. STEP 2 You will find plenty of investors keen on investing in a new idea or startup. Be fully ready with your proposal with a long view of the turnaround. Leveraging your credentials and experience can tip the pitch in your favor.

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FINANCIAL

FEARS SURE FIRE GROWTH STOPPERS

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Money FINANCIAL FEAR 1 Financial fear refers to the fear or anxiety that we have in life regarding our finances. One of the most traumatizing financial fear that people possess is that ‘a catastrophe will happen and drain all my finances!’ Needless to say, this fear wreaks havoc in many an individual’s mind, limiting him/her in taking risks or other important financial decisions in life. For example, one hears about someone’s relative meeting with a serious accident and immediately your financial fear crops up that what if this happens to you and all your hard earned savings and investments get drained by sudden unforeseen medical expenses! You get traumatized just thinking about it!. Well, the only way to deal with this financial fear is consciously and gradually shifting from the ‘what if’ to the ‘then what’ approach! Simply put, your strategy should be to think about what you could financially do if such an event does takes place. Remember, you will always have things that are under your control and beyond your control. Focus on the former and gradually let

go of the latter. Always keep 6 months salary as an emergency fund and tell yourself that only by making little changes in the factors that you can control, can the uncontrollable factors have less impact if they happen at all. Lastly, deep breaths. Everything doesn’t happen to everybody. Stay calm and get rich!

FINANCIAL FEAR 2 Financial fears almost always keep one from taking prudent financial decisions leading to losing out on great investment opportunities most of the time. One of the most common financial fears happen to be this – ‘I will lose everything that I have in the stock market!’, and needless to say, people shy away from investing in the stock market even in the face of seemingly very good investment options. That is sad. We slog all our life in order to make it big and when such an opportunity comes, especially through the stocks avenue, one shies away from it just because of the financial fear. I am not asking you to put all your saving in stocks. No, never. But a well-planned equity strategy gives you more ROI than anything ever can and if someone cannot take the advan-

WELL, THE ONLY WAY TO DEAL WITH THIS FINANCIAL FEAR IS CONSCIOUSLY AND GRADUALLY SHIFTING FROM THE ‘WHAT IF’ TO THE ‘THEN WHAT’ APPROACH!

tage of this just because of the inner anxiety, then that’s sad. So Step 1 – Assess your risk tolerance level. Ask yourself how much you will be comfortable to lose in case of a market correction. Let’s say it’s 20%. Once you realistically think and arrive at this 20% figure, you can easily diversify your portfolio against this across asset classes and size of companies, etc. Step 2; tell yourself that until and unless you give 100% of everything in the stock market, you do not stand a chance to lose ‘everything’. Lastly, always remember that not investing in stock market also offers a certain level of risk since then you are assuming that inflation will never erode the interest on your savings. So worry less, earn more!

CHANGING YOUR MONEY MINDSET METHOD 1 Debts have destroyed many people’s dreams of becoming rich. Hence, it is essential you keep a close eye on your existing debts and reduce them to zero as soon as possible. METHOD 2 Our typical middle class outlook makes us turn our face away from money. We pretend it is not part of our life so we do not try to manage it. This must change. METHOD 3 We learn how to manage our household expenses basis our incomes. But we do not try to play the market and look for alternative routes to make money.

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SCHOOLS CREATE EMPLOYEES

NOT ENTREPRENEURS Schooling is a system that has been in vogue for many centuries now. While the methods of schooling might have differed between periods, the concept has been in existence across the globe from time immemorial. This concept has contributed a large number of people to the working class which has striven hard for the development of the society. The reality however has been that all efforts of schools culminate to create employees, not entrepreneurs.

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Money TEAM WORK MATTERS If you are aiming for financial freedom and has a family, your spouse also needs to think likewise. As a team, you need to work out on your financial gains and expenses to reach towards financial freedom.

ENTREPRENEURSHIP IS A DIFFERENT BALL GAME The gap between the education system and entrepreneurship is still huge despite the developments witnessed in the schooling systems.

CONTRIBUTION OF CONVENTIONAL SCHOOLS Conventional schools prepared students for living life in a disciplined manner. Students of such schools were expected to just absorb information in a passive manner. The teachers acted as the major source of knowledge and information. Parents had no role to play in a typical conventional school scenario.

Conventional schools treated the community around as a separate entity which was involved only for commercial purposes attached to education. Marks scored by the students in the exams conducted by the schools acted as the basic tool to assess the level of knowledge of students. Schools worked more like one of the tasks to be endured by the students than a value adding place. All the above created a subservient mentality in students right from the young age. They grew up with a mindset which was highly closed. The activity of fostering thinking did not happen at all. Children grew up like machines which worked in a perfect manner as per the given instructions.

Progressive schooling is the requirement of the day. Instead of preparing students to live life, schools must become a part and parcel of life. Schooling must not alienate students but involve them in activities as problems solvers and planners. Teachers must take the role of guides and facilitators fostering creative thinking skills rather than remaining entities of authority. Parents must be involved in the learning experience, making children learn goal setting and many more attributes that will lead them to success. Children must be allowed to take decisions so that their risk taking abilities get fostered right from a young age. Learning must be approached more from a pragmatic angle and must not get limited to the content in the

text books. Knowledge assessment of students must be based on their interactions rather than just their grades in the exams. Such assessments must lead to progression rather than being the end point to define the potential of students.

CHANGE IN THE APPROACH OF SCHOOLS When the approach of schools changes and the community gets involved in the complete process, every child will learn entrepreneurial skills right from their childhood. No school or college can foster entrepreneurial skills in an exclusive manner. They can only teach a bunch of life skills which can value add to the students as future human beings. Creating entrepreneurs is the collective responsibility of many entities around students. Let us stop creating employees in huge numbers. Employees create middle income class of people in the society. When we focus in creating more and more entrepreneurs, we create a world of successful business which will improve the quality of life we live in a holistic manner.

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PRESS THE RIGHT BUTTONS:

EARN IN LEISURE Wealth is a passion of the highest order- immortalized by every nobleman, Patrician, Prince that ever existed. Once the world had industrialized in the eighteenth century, people had leisure time. New forms of entertainment sprang up. The smarter people leisurely invested in leisure goods. As the Fourth Industrial revolution dawns upon with complex neural networks, quantum computers, robots, 5-D printers, self-driving cars; it is time to get smarter! What happens when the Fourth Industrial revolution disrupts the job market? What shall be your sources of income and the sources of multiplication of your wealth? Take a moment to fathom the massive amount of changes that lie before you.

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SAY THE MAGIC WORDS AND ENCORE! The four magic words for the fourth disruption: Press the Right Buttons. Technology has transformed the way financial markets are organized. FinTech is the elusive golden hen. There are no limits to the growth of FinTech. With the right software, the right approach and portfolio, and the right risk appetite, you can earn as much as you want. Money is evolving with time. Trading went digital in the nineties. Now, currency has gone digital, transformed by the revolutionary blockchain technology. Bitcoin is one such market disruption. It would be smart to use this commonplace knowledge to advance your monetary interests in the currency market. And this is just the first stroke of the multiple opportunities that lay before you in the leisure time that the fourth

industrial revolution brings with it!

KEEP DREAMING LIKE LALAJI BECAUSE THIS PARTICULAR LALAJI IS HAVING THE TIME OF HIS LIFE!

THE SEDUCTIVE APPEAL OF FINANCIAL MARKETS Researchers at IBM and Google have proclaimed that the entry of quantum computers in commercial applications is not far. The appeal of quantum mechanics laid in its weirdness. Simplistically speaking, a change in one particle could cause a change in another particle across space. This is exactly how financial markets work. Federal Reserve is due to announce a possible hike in interest rates this month. This means a capital flight from India to United States because the dollar is a safer currency for investment purposes. Prime Minister Narendra Modi’s party wins the UP elections and the stock market jumps in joy (pun intended). Or on a grimmer note, Lehman Brothers

goes bankrupt and stock markets across the world collapse (a financial tragedy). Financial markets are where sociological, political, regulatory, and economic agendas intersect. And hence, a popular photograph that circulates around when a tragic incident occurs is of people staring at the building of the Bombay Stock Exchange in Mumbai. So when your regulatory authority decides to decrease the amount of cash a Non-banking financial corporation can dispense for gold, it is time to sell your stocks! With all its complexities, a passion for wealth cannot exist without a passion for financial markets.

AS LAZY AS YOU CAN GET, LALAJI There is an old man of forty. He lives with his parents in a rented threeroom apartment in a wellconnected part of New Delhi. He is unmarried, by choice. He is a freelance software developer who invests in Bitcoins (1 Bitcoin = 82089.92 Indian Rupee), sold his shares in a famous NBFC today, has a general store and a shoe shop where he intends to install the software the popular ‘Amazon-go’ supermarket uses, has bought a three-storey building in the north campus that he rents out to students and has invested in Exchange traded funds of the recently floated public sector insurance companies.

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Millennial

Finance

THINGS TO DO IN THE NEW ECONOMY Rachel Green, the legendary character from the show F.R.I.E.N.D.S left the groom at the altar and ran away from her wedding because she thought her husband’s head looked like a potato. She found a gravy boat more attractive than her fiancé. Hilarious, was it not? The show was the lifestyle Bible and still provides solace to everyone who has ever watched it. As the show progressed, the viewers realized, Rachel did not leave her fiancé because she thought he looked like Mr Potato head. She left him because of her drive to be financially independent.

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Money BEING RACHEL The Indian youth has a significant disadvantage in terms of being financially independent. They live-off their parents as the latter’s cultural duty. There is a set trajectory that life takes, albeit at a different time for everyone. After school, college, job, marriage, childrenrepeat. There is little space for financial independence. The space for financial independence that should, in theory, be free from all interferences of culture is actually saturated with it. The first thing a millennial in India needs to do is: Leave such a trajectory at the altar because it is antediluvian.

AS INDIA ASPIRES TO BE ‘BRAND INDIA’ The cultural influence on the idea of financial independence is enormous. Terms such as, ‘middleclass’, ‘simple life’, ‘simple needs’ are not only glorified but are considered legitimate goals to aspire towards. Even as India aspires to be ‘Brand India’, banking upon her absolutely gorgeous demographic dividend; being a depositor, simple, average, middle-class person with a stable job (a clear misnomer in the twenty-first century) and small short-term desires are considered noble. Here is the second thing a millennial needs to do: break away. The term ‘noble’ is as antediluvian as the trajectory mentioned earlier. The contradictions of traditional simplicity as a goal to aspire towards is not a choice anymore. The intoxication with the simple, sub-continental life ended in 1991 and more so in 1993, when the Securities and Exchange Board of India was established (more on this in the next issue of Mad About Money).

YOU ARE SO LUCKY! The world is standing at the cusp of a new beginning. More than the exciting politics of our times, it is technology that shall change the manner in which life operates. Did you know that by 2030, privacy is going to be a thing of the past with the rental economy in its full bloom while your morning coffee shall be served with toast by a robot? (Check out the World Economic Forum’s website for more details). What this means is, you shall have enough money (hopefully with a basic income if the governments decide in the affirmative) to invest. The cardinal choice that you shall make 10 years later is not which course to study, but which skill to invest in!

THE THIRD THING A MILLENNIAL NEEDS TO DO Lucky to be born in such exciting times, are we not? So, the third thing a millennial needs to do: Skill up, and then diversify. The term ‘interest area’ or specialization as we know it today will undergo huge changes in the new economy. For instance, Political Science, Research methodology, Python (or its grandchild) in Data Sciences and Economics or Eugenics, Nanotechnology, Quantum Mechanics and Financial Market shall be ONE skill. The change is evident in the new MOOCs one can find online. Mass production of skills is history! Robots have it covered. And that gives the Millennials of today an unprecedented opportunity to be the risk-takers, history-makers!

UNO, ZWEI, TROIS! A successful investment banker who works in the city of London leaves his job to start a juice bar that also sells quinoa in central Delhi. Be ready to hear more stories of the kind because profit, money, quality, passion and drive to succeed is going to converge in emerging economies like India. Our advice? Invest, invest in this new form of sustainability! Uno (success), Zwei (knowledge) and Teroi (happiness): nothing is more real in the new economy than these three virtues. In our subsequent issues, we introduce you to the options that are for the risk takers, the ones with the appetite for more-than simple. So the fourth thing a millennial needs to do is: subscribe to Mad About Money!

SKILL FOR THE TWENTY FIRST CENTURY Let us leave you with a problem that requires emotional intelligence and critical thinking (an indispensable skill for the twenty first century): You start earning via freelancing as a writer/developer. You earn your first income, i.e., twenty five thousand. It is not much. But it is your first. You have your eye on a new range of hair products by the ever-fantastic Body Shop. You have been longing for it. The money is in your account. You have three options: set up a professional website to showcase your work, invest in a SIP (systematic investment plan) or purchase the gingercastor-argon hair care range that you have longed for a year. Ponder away!

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THE DESIRE TO

BE RICH IS AS IMPORTANT AS THE

BUSINESS MODEL Napoleon Hill, a Great Depression-era author and former advisor to President Franklin D. Roosevelt in his famous book “Think and Grow Rich” stated that thinking about being rich is as important as the act of making the money for being rich. You must have come across thousands of personal finance books on the shelves these days you will find hundreds of titles on how to spend less, how to save more, how to invest better, how to retire early, how to get out of debt faster so on and so forth. But the most important thing all these books fails to mention is taking the first step – get the “desire” to be rich first.

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Money YOU MUST BE THINKING HOW IS DESIRING TO BE RICH CAN BRING YOU RICHES. SIMPLY WISHING SOMETHING DOES NOT MAKE IT MAGICALLY COME TO LIFE. IT’S TRUE, YES. WISHING TO BE RICH WON’T BRING YOU RICHES. BUT DESIRING WITH A SOLID STATE OF MIND WILL MAKE IT INTO AN OBSESSION, AND THEN YOUR MIND WILL PLAN DEFINITE WAYS AND MEANS TO FULFILL THAT OBSESSION, MAKING YOU RICH AND SUCCESSFUL. TODAY I’LL EXPLAIN TO YOU FIVE VERY SIMPLE STEPS THAT WILL TURN YOUR DESIRE OF BEING RICH TO ACTUALLY BEING RICH AND SUCCESSFUL. AND THESE STEPS MUST BE INTEGRAL TO YOUR BUSINESS PLAN BECAUSE THESE STEPS WILL ENSURE A SMOOTH JOURNEY FROM THE DESIRE TO REALITY.

Step 1:

Spend some time alone and fix the exact amount of money you desire. Create a benchmark for yourself. It is not enough for you to say something intangible like “I want a lot of money” or “I want plenty of money”. You have to have a tangible amount in mind and be definite to the imagined amount.

Step 2:

Now comes the very important next step. Determine exactly how much you intend to give in return of getting the imagined amount of money in future. You have to realize that there is no such fact as “something for nothing”. You must be ready to sacrifice and toil for reaching your monetary goal. How much will you sacrifice and toil is entirely upto you, but remember, your effort is directly proportional to the results.

Step 3:

Now establish a definite date when you want to possess the money you desire. Like the desired amount can’t be an intangible number, same with the date. You need to have a target date fixed in your mind so that you have a clear path laid in front of you, a clear path with a deadline. Without a deadline, there is no way for you to reach your goal, on time.

Step 4:

Now what you need to do is create a definitive plan for carrying out what you desire, and begin immediately. Once you have the plan, start without further delay. Once the plan is set, it’s set. Whether you are ready or not, get on with it immediately.

Step 5:

The final step of the plan is basically a culmination of the last four steps. Write down a clear concise statement of the amount of money you desire to acquire, the time limit for the acquisition, your intention to what you want to give for the money, and the entire roadmap of your desired acquisition. Now what you need to do is read out the written statement aloud, twice daily. Once right before bed at night and once in the break of the morning.

IT MIGHT SEEM LIKE A PRETTY BASIC PLAN IF YOU COMPARE IT TO ALL THOSE HEAVY PERSONAL FINANCE GUIDES YOU READ, BUT BELIEVE ME THIS IS WHAT ALL OF THEM COME DOWN TO. THEY JUST COME WITH A LOT OF BELLS AND WHISTLES BUT THEIR ENTIRE MATTER SPEAKS OF THE STEPS I MENTIONED ABOVE. SO START DESIRING TO GET RICH TODAY, BECAUSE THAT IS THE FIRST STEP TO A PLAN THAT WILL ACTUALLY MAKE YOU RICH AND SUCCESSFUL IN YOUR LIFE.

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REASONS WHY RICH PEOPLE GO BROKE

BEING RICH DOES NOT NECESSARILY MEAN YOU HAVE FINANCIAL EDUCATION. SO WHEN PEOPLE SAY THAT ‘WHEN I GET RICH ALL MY MONEY PROBLEMS WILL GO AWAY’, THEY HAPPEN TO BE FAR AWAY FROM THE TRUTH! THE FACT IS, WITH MORE MONEY COMES NEWER PROBLEMS AND WITHOUT PROPER FINANCIAL EDUCATION, YOU CANNOT KEEP THE MONEY WITH YOU. LOTTERY WINNERS GOING BROKE, MILLION DOLLAR WORTH ATHLETES GOING INTO DEBT, EXAMPLES ARE NUMEROUS ALL AROUND. THE REASON BEING THAT ONCE PEOPLE HAVE MONEY, THEY DO NOT KNOW WHAT TO DO WITH IT! HERE ARE THE TOP 5 REASONS WHY RICH PEOPLE GO BROKE:

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Money NOT GROWING UP WITH MONEY

LENDING AND DONATING TO LOVED ONES

Individuals who have not grown up seeing money, and have become rich later on in life, do not have a clue as to how to handle it. Either they stash the money away in bank accounts or lose it in unwise gambling, etc. Him/her neither having a past of handling huge sums of money, nor having the right financial education ends up not doing anything constructive with it. Hence, the proverb – Money does not make you rich, financial education does.”

When you have a lot of money, it becomes very difficult to say ‘no’ to loved ones, friends or family who are a little sort of cash right then. Infact people can’t even say ‘no’ to themselves and spend money on excessively expensive things so saying ‘no’ to loved ones also becomes very difficult and you can’t stop yourself from going further into debt with more money!

THE EMOTIONAL EUPHORIA OF IT ALL Let’s face it, money gives a different sort of a high to people. Individuals start thinking they are very clever and everything that they are thinking is right while in reality they act more stupid then they think! Feeling that the ‘world is mine’ often leads to people spending all their money on luxury that they have always dreamt of, losing it all in the process.

INVESTING WITHOUT FINANCIAL EDUCATION When people become rich, by default they think themselves to be extremely financially savvy! This is of course the worst possible mistake to do! It might well be the case that they

suddenly got lucky and got rich! So when you get rich, you start investing in whatever comes your way, whatever you feel would work without the right education and analysis. But remember, just because you can afford to make big investments doesn’t mean you should make them and lose all your fortune in the process. Again, getting financially educated is the right way to go!

NOT KNOWING THE DIFFERENCE BETWEEN GOOD AND BAD EXPENSES

assets in the future. Bad expenses on the other hand are expenses that you use to buy liabilities that eat up your money without producing any asset. Houses, cars, etc are all actually bad expenses since realistically speaking, all they do is gobble up your money without really producing other assets for you. So now that you know how rich people go bankrupt, time to hit those brakes! Step back, take a look at what you have and then get yourself financially educated so that you can use your money to make more money, instead of blowing it all up! Best of luck! Stay rich. Stay happy!

Individuals usually make more bad expenses than good ones, especially when they are rich. The difference between the two is simply that good expenses are used to buy assets that create more

OUR TYPICAL MIDDLE CLASS OUTLOOK MAKES US TURN OUR FACE AWAY FROM MONEY. WE PRETEND IT IS NOT PART OF OUR LIFE SO WE DO NOT TRY TO MANAGE IT. THIS MUST CHANGE. 19

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DEVELOPING A MILLIONAIRE MINDSET MILLIONAIRES ARE MILLIONAIRES TODAY OWING TO THEIR HABIT OF TAKING GOOD CARE OF THEIR MONEY. THEY PREFER TO GET RICH IN A SLOW AND STEADY MANNER, RATHER THAN IN A FAST MANNER. THE KEY DIFFERENCE IS IN THE MINDSET.

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Wealthy people think about their financial position for an average of three to four hours per month. On the contrary, self made millionaires who have put in their flesh and blood in making money, think for approximately thirty hours and more about their finance every month. This mindset fosters the habit of prudent decision making pertaining to money every time the same needs to be spent or invested. This mind set yields profitable results giving financial freedom in a slow but steady manner.

Don’t ever lose money. Millionaires have financial habits that help them multiply their money. They never take time to think about investing the money. They usually take a long time to investigate about the investment options where their money is going to be parked. Financial decisions taken under the pressure of self or someone else usually tends to misfire. Financial decisions taken in urgency can result in loss of money. Consider investment opportunities as buses that keep coming one after the other. For all you know, many a times, money not invested in the wrong option is money saved from loss.

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Learn to negotiate hard. Millionaires value every penny of theirs. Negotiate hard and pay as little as possible when you buy something. Negotiate hard to increase the value when you sell something. Develop the habit of consciously monitoring every penny that goes out of your pocket. Remember, every negotiation saves or fetches you that extra penny which matters if you want to become a millionaire.

Insure your earnings. Don’t get blocked by the usual mindset which considers Insurance as a waste where money lies idle. Insuring safeguards you during situations when you are caught unguarded.

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Wealthy people think about their financial position for an average of three to four hours per month. On the contrary, self made millionaires who have put in their flesh and blood in making money, think for approximately thirty hours and more about their finance every month. This mindset fosters the habit of prudent decision making pertaining to money every time the same needs to be spent or invested. This mind set yields profitable results giving financial freedom in a slow but steady manner.

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Never wait depending on luck. Your financial position is like a bird in your hand. Do not look at the two birds on the branch to come in to your hands by luck. You may lose the one in hand too. Remember, luck favors the ones who try hard.

Becoming a millionaire is a combination of traits like thoughtfulness, courage, persistence and character. As the saying goes, slow and steady wins the race.

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FEELING THAT THE ‘WORLD IS MINE’ CAN LEAD YOU TO FINANCIAL RUIN

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FINANCIAL RUIN NECESSARILY FOLLOWS FROM BEING FINANCIALLY WELL-OFF IN THE FIRST PLACE. THIS MEANS THAT IF YOU THINK GETTING A LOT OF MONEY WILL REDUCE ALL YOUR MONEY PROBLEMS THAN UNFORTUNATELY YOU ARE HIGHLY MISTAKEN. RICH PEOPLE GO BROKE TOO AND STARTING FROM MULTIMILLION DOLLAR WORTH ATHLETES TO LOTTERY WINNERS, THERE ARE NUMEROUS EXAMPLES ALL AROUND US WHERE PEOPLE WHO HAVE A LOT OF MONEY WERE EVENTUALLY NOT ABLE TO HOLD ON TO IT, RESULTING IN FINANCIAL RUIN IN THE PROCESS. SO WHY DOES THIS HAPPEN? WHY DO RICH PEOPLE GO BROKE? AND WHY CAN’T PEOPLE HANDLE MONEY WHEN ONE HAS IT? THE ANSWER IS SIMPLE – THE ALL TOO TYPICAL AND USUAL ‘NOW THE WORLD IS MINE’; SYNDROME.

‘WORLD IS MINE’ SYNDROME – WHAT IS IT? When you suddenly get your hands on a lot of money, be it an inheritance or a lottery win or even a business deal that went the right way, you feel that the world is yours! It can be of course, but you need to strategically plan for it! The ‘feeling’ per se can do more damage than good and more than often leads to complete ruin! Let’s see why and how.

YOU TEND TO OVERSPEND ON YOUR ‘DREAMS’: Let’s face it, when you suddenly win a lottery and feel that the ‘world is yours’, what do you do? You go around splurging it on things which you have always dreamt of but could never afford. That luxury bungalow, the sports car, perhaps a world trip? So basically you just splurge it all off and get back to where you started from! Nothing can be sadder. If and when you have a chance of changing your life forever and maybe the

generations to follow, you should sit back, plan and judiciously and intelligently categorize your spending so that some goes towards such things but mostly the money is used to make more money…so that the entire corpus doesn’t dry up and you can sustain your new standard of living!

YOU TEND TO BECOME GENEROUS TOWARDS THE WORLD: After your inner need to show the world that you are rich, comes the next dangerous need – the need to be generous towards your near and dear ones. Many of your dear friends or family might be short of cash and in some kinds of a problem which would get sorted if only there was a little money. A little

push in the new start-up business, a sudden medical emergency, a marriage, the list is endless. You might suddenly feel bad if you do not help them out in their times of need when you possess so much money. Well, sadly – this is yet another sure shot way towards financial ruin. Such benevolent acts unknowingly spiral out of our control and honestly, most of these you will perhaps never get back. Even if you do, it would be without interest or any other kind of ROI. So the ‘world is mine’ feeling can eventually make you a popper again if you don’t step on the brakes now. Remember, the world can be yours only and only if you can sustain this money. Get yourself a financial planner, categorise your money, divide it into chunks of savings, investments, debt payments and spending and then sit back and sip on that drink… finally you have done your best to make the world yours.

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THERE IS A DIFFERENCE BETWEEN

‘BEING RICH’ AND ‘BEING WEALTHY’ THE OTHER DAY I RAN INTO AN OLD FRIEND, WHO COMES FROM INDIA’S ONE OF THE BIGGEST RETAIL CHAINS- BIG BAZAAR. WITH A LOT OF DISMAY, HE TOLD ME THAT THEIR PRIME LOCATION IN SOUTH MUMBAI WAS BEING SHIFTED TO A SUBURBAN AREA, WHILE THE FORMER LOCATION WAS GIVEN AWAY TO THE GLOBAL LIFESTYLE BRAND, H&M. THE IDEA WAS THAT H&M WILL CATER TO UPMARKET CONSUMERS LOCATED IN SOUTH MUMBAI. IT WAS A PREMIUM LUXURY BRAND, DISPLACING A MASS BIG BOX RETAILER, BIG BAZAAR. IT LEFT ME WONDERING ABOUT THE STATUS OF LUXURY GOODS MARKET IN INDIA. ARE THERE ENOUGH LUXURY GOODS CONSUMERS? CONSUMERS BUY FROM H&M BECAUSE OF ITS ‘VALUE’ PROPOSITION OR IS IT BECAUSE THEY WANT TO ‘LOOK RICH’ WITH THE PREMIUM BADGE ASSOCIATED WITH H&M?

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Ostentatious display of wealth The truth is, Indians love to flaunt their money. They do not shy away from ostentatious display of wealth. Marriages are one such platform where one can witness India’s ramp walk on ‘who is the richest’ show. Well, it’s not such a bad thing. If you got it, you will flaunt it. Who doesn’t want luxury and other shiny things in life? India’s consumption story of luxury goods has changed drastically.

There is an increase in appetite for luxury goods amongst consumers. Number of High Net worth Individuals (millionaires) in India have increased and data suggest that luxury market in India has been growing at unprecedented levels (currently valued @$18.5 billion).

Strong interest in luxury goods There is a strong interest in luxury goods. The tags have become important for people. H&M stores

Mad About

Money are opening and other global luxury brands are setting their foot in Indian market. Highend perfumes, jewelry and handbags remain consumers’ favorites. However, there are many reasons to feel downright glum about this market ebullience. As the consumption of luxury goods is increasing, consumer behavior is also undergoing a drastic change. Consumers are continually relinquishing their conservative Indian avatars, and having a hard time controlling their spending spree. India’s average household debt (amount of money all adults in a household owe to financial institutions) has been continually rising without fail for 5 years. In their attempts to flaunt their money and ‘look rich’, these riches are in actual losing their true wealth.

Person who wishes to be wealthy When you spend on a Louis Vuitton bag or an Armani Suit or MercedesBenz, you are not being wealthy, you are being rich. Why? See, it from the point of view of a smart investor. Sure, you will ‘look rich’ with these, but in reality, you have bought these ‘depreciating assets’ by trading your money for it. So, you have just become

A WEALTHY PERSON LOOKS FOR OPPORTUNITIES TO GROW HIS ASSETS SO THAT HE COULD PAY FOR HIS LUXURIOUS WISHES. ‘little less rich’ now. To the rich it may not matter if these are poor investments, but to a person who wishes to be wealthy, it should. Wealth doesn’t impress anyone. It seeks freedom. Freedom to buy anything one wants without losing on prior money. If you take into account one’s balance sheet, you may find both rich and wealthy the same. With all the hard assets in store of rich, the rich may look even richer than the wealthy one. But, is he?

Put more money ‘in his coffer’ The difference between rich and wealthy is a simple one. A wealthy person looks always for alternative ways to put more money ‘in his coffer’ (even when it comes to buying), while a rich person may just put his money on a liability by taking money ‘out of his coffer’.

I am not suggesting that you keep your money intact or don’t spend it on things that you have longed for. Purchase them. Invest in luxury goods all you want. But purchase them by keeping an attitude of a wealthy person, not a rich person. How? Let’s see.

How to flaunt your wealth without spending on it? Warren Buffet invests in permanent assets such as roads, electricity and railways. He chooses them because new technologies and inventions may get replaced by newer ones and old stocks may go down, but roads, electricity, railways, etc. are some permanent assets which won’t go down so abruptly. A wealthy person looks for opportunities to grow his assets so that he could pay for his luxurious wishes.

Take for example- You want to buy MercedesBenz. There are two ways you could go for it. You can directly buy this car or you can carefully invest in a short term stock, from which you can get good returns and from those returns you can buy a Mercedes-Benz for yourself. A wealthy person will choose the latter. Being rich is lucky, staying rich is strategy.

Choice between creating wealth and spending it Ever heard, Money creates money? It’s true. Money works round the clock. It doesn’t do any good by lying in cash chests and nor does it grow by spending on depreciating luxury assets. It needs to keep moving. One needs to keep investing it for it to multiply. Money needs your nurturing and acknowledgement. A wealthy person well understands this. Don’t be a pretender spender. Flaunt away your money in limited edition watches, cars and handbags, but take a little longer route and create more wealth for fulfilling your whims and fancies. Be a smart spender!

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Desi Finance

SEE AN OPPORTUNITY AND MAKE IT HAPPEN!

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Money WANT TO HEAR THE THREE MAGIC WORDS THAT SHALL MAKE YOU POP OUT OF YOUR CHAIR: YOU ARE BROKE. THAT IS OUR VANTAGE POINT FOR THE REST OF THIS ARTICLE. YOU ARE BROKE IN NEW DELHI/MUMBAI (PICK YOUR CITY) IN 2017. WHAT DO YOU DO? WALKING AROUND IN DELHI YOU SHALL FIND MANY MARKETS, SCENARIOS, AND OPPORTUNITIES. DESI FINANCE IS ABOUT THE THIRD: OPPORTUNITIES.

S

tanding in the land of unexplored opportunities in an ecosystem of people who want to spend but do not know where to spend it is an entrepreneur’s dream. My NRI friend Aryan just got back to India from London mesmerized by the quinoa revolution. Quinoa is the staple diet for the Latin Americans. Rice is to India what Quinoa is to Latin Americans. It is hailed as the hallmark of success for globalization. Over a cup of coffee in the market complex opposite IIT Delhi, he asked me: “You have no idea how unexploited Indian markets are. I just wish I could start a

quinoa revolution in India. Do you think it is possible?” Being the patriotic Indian, I replied, “No Aryan, you should not do it. We live in India. We should promote domestic grains like barley, maize and Bajra. Why should you import a grain from South America and sell it in India?” “No” is the favourite word for novelty “No” is the favourite word for novelty. If you hear “No” to something in India, you are doing something novel. And not everything novel is not worth pursuing. My friend Aryan started importing quinoa from a dealer in London, started selling it on Amazon and approached me to file a collective bid for a franchise restaurant based in New York. He saw an opportunity and he made it happen! The Baap of all protein foods is now catching on in India. Let us go back to our vantage point now: Imagine you are broke. You have no money. You are living with your friend in the suburban area of Rohini in Delhi. You have no money. You pick up a job as a restaurant manager near your place and now, you have to make money. You cannot borrow and in this particular scenario, your parents are not an option. The cultural baggage of financial dependence is shed. What are you going to do? Scenarios like this provide perspective on the importance of financial independence. We are lucky to be born in a culture where it is an obligation for familial systems to coexist financially but this is a matter of luck

and not a privilege. And that is as much as luck as we should lead ourselves to believe we have. Money is not only for the rich It is empowering to be financially independent. Money is not a sin item. Money is money. It is an enabler. Money, contrary to what populist narrative would have you believe, is not ‘only for the rich’ or stratospheric entity you cannot achieve. Looking out for the correct opportunity at the right time is the basic characteristic of an entrepreneur’s mind. Not only should you be able to gauge the dynamic of the market, but win the hearts of your consumer. You should be able to crunch data into comprehensible, implementable ideas that are not only self-sustaining but increasingly profitable. But prefixing all that with an “I can do it” attitude is extremely important. Whatever you do, your cause, your product or your service has to be able to transform into a tangible entity that can promote itself. The comparative advantage is against you when you are starting a business or investing your money in one. The first hurdle that you have to cross is a “no”. It is hard. But it is surmountable. How do you deal with an audience whose first response to a product is “no”? My broke friend decided to open a café. He took a personal loan and I loaned him the rest of the money. He got the design ready, the menu ready; he had all the right ideas. We were looking for a space. “Indians are prudish”, he said brooding. We were standing

near a chole-kulche stall opposite PVR Prashant Vihar. The patriot in me revolted. “How dare you say such a thing? It is blasphemy. Indians are honest and humble. People with simple needs.” Internet is a human right now “Well, simple needs is a flimsy concept. Needs change with time. Internet is a human right now. I think it should be a fundamental right, like equality. A hundred years later, it will be a need simple need to own a Tesla electric flying car. I am trying to sell them gold at the price of Channa and no one wants to buy it. I am selling them smoothies, coffee, juices, a detox diet and all organic! In a foreign country, it would sell in a jiffy! But here, choosing the right spot is a nightmare. And whenever I tell one of the people here the menu, they freak out and taunt me by showing me fresh fruits. How is one supposed to start a business here?” The patriotic fervour toned down a bit. “My broke friend”, I said lovingly, “You are looking in the wrong direction there. PVR Prashant Vihar sees a daily footfall of students, couples. It is a movie hall. The idea of relaxation for people here is a movie and a pizza.” I took my friend to a hospital. Well, outside a hospital and we rented the ground floor. That is where we run our successful café called, Swastha Bharat. (The patriot in me could not resist that name) Now, dear reader, would you be interested in working on a project of a grand seven star apartment on TRAPPIST 1?

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8

WEIRD WAYS

TO MAKE

MONEY

HOW MANY TIMES HAVE YOU STORMED INTO YOUR ROOM, LOOKED FOR A LITTLE CASH HERE AND THERE, TURNED YOUR POCKETS INSIDE OUT AND EXCLAIMED ‘WHY ON EARTH DO I NEVER HAVE ENOUGH MONEY?!’ IF YOU ARE READING THIS ARTICLE, CHANCES ARE, THAT A LOT OF TIMES! WELL, FOR ALL YOU FOLKS…HERE ARE THE TOP 8 WEIRDEST MONEY MAKING WAYS FOR YOU TO GET A HIGH ON!

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ty, become a professional hangover helper in the locality!

So get hold of your dart set and go earn some cash!

5.

Give Product Demos

7.

Sell a secret language:

Next time you get a haircut, try and earn some money for it! Hair is always needed for making wigs and other theatre disguises, etc. So you can sell your hair to earn some money!

Starting from malls to big fairs, from corporates to individuals, brands are always on the lookout for people to give their product demo to win the mindshare of their potential target group. So be it the latest smartphone with some cool features or a household item like a roti maker, giving product demos are easy cash right there!

In today’s day of whatsapp, messenger and all the social networking apps and features, having a code language the code to which only you know and the person you share it with, is a novel and romantic way to make communication interesting! Rack your brains a little, invent a secret language and go sell it and its code key!

4.

Become a hangover helper

6.

Organize Games in Sales Meets

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As weird as it may sound, life is all about identifying opportunities around you and encashing them! All of us have had those mornings with severe hangovers where you cursed being alone and thought ‘only if there was someone’ to do this, give that, help me get over the hangover, etc. Yes, so if you happen to live around a student communi-

Marketing, sales meetings, be it a product launch or a distributor meet, are always about inviting a group of people and then making them happy. Usually organized in five star properties, there is always a need for fun and games arrangement outside the banquet during the waiting hours etc when distributors can have fun and win prizes!

to many, being a life model for painters, sculptures, etc are not only a good thing for artistic reasons but it also pays! Such life modeling needs all types of body shapes and sizes, hence however you are you can definitely life model for art!

3. 1.

Sell your photographs Almost all of us have a DSLR now and what we all do with it is go click happy, taking snapshots of whatever we fancy and of course our vacation snaps! Well, organizations pay huge sums of money to buy well composed photographs from online sites for their webpages, blogs, etc. So go put your photographs on sale!

2.

Become a life model Being a ramp or a commercial model might need a lot of hard work and effort..including having the right height and body type, but unknown

Sell your hair

Become a face painter in front of a kid’s school If you have drawing talent, want to earn cash by having fun, nothing like carrying a set of brushes and paint to a children’s school during the evening holiday hours. One kid gets his/her face painted and you are done! Get ready for atleast an hour of painting, laughter, happiness and of course fast cash!

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RE-SKILLING for the ones

AIMING TO BE RICH 30

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I TODAY ALL BUSINESSES FACE MULTIPLE CHALLENGES ON ALL FRONTS MAINLY BECAUSE OF EVER DYNAMIC MARKET ENVIRONMENT. WHAT’S HAPPENING NOW IS BUSINESSES DEMANDING ADVANCED SKILL SETS BECAUSE THE NATURE OF THE WORK IS CONSTANTLY CHANGING AND GROWING. THE CONCEPT OF RESKILLING HAS HOWEVER HAVE BECOME THE CENTRAL FACTOR FOR MAINTAINING THE BUSINESS MOMENTUM.

f you are an ambitious business owner or an individual who aims to be rich, you must realize the importance of re-skilling yourself or your business or your work force. Re-skilling not only enables you to stay at par with the industry but also gives you the power to provide quick innovative solutions to the constant problems arising from day-to-day business affairs.

You snooze, you lose Understand this, the demand and expectations from your customers are in a constant rise and it will keep on increasing. Only way to keep up with their increasing expectations is getting re-skilled time to time. You snooze, you lose. Re-skilling means acquiring new skills, which when combined with your understanding of your domain gives you the power to surge ahead in this fluctuating market. Re-skilling gives you the power to adapt fast, as fast as the market is moving and that is going to give you the edge your competitor will lack. Re-skilling is a smart move, a move you must make if you ever want to be rich and successful. We have extensively talked about the “why” part, now let’s talk about the “how” part. Here’s a simple 7 step program that will

help you or your business re-skill effectively:

EVALUATE: Your primary first step is to evaluate the pain points in your business. Evaluate carefully to find out the shortcomings and how things can be better. In this process, you will discover certain traits and abilities have been left out, you can then add them with your re-skilling abilities.

IDENTIFY: In this step what you need to do is identify your skillset and your performance gaps. Conduct assessments and surveys to determine what you know and what you need to know to achieve your goals.

possess right now, and learning these skills will help you fill the gap you have in your business right now. Invest in a re-skilling program, it’s highly recommended.

PLAN AHEAD: Remember, re-skilling is a continuous process. It is not a one-time thing. You might acquire a re-skilling program that will enable you to fight your current shortcomings but what about tomorrow? You need to plan ahead and keep training yourself so that you stay ahead of the times, not let the times stay ahead of you. You must maintain a timeline where you can periodically re-skill yourself and always plan ahead for the future.

DEVELOP: What you now need to do is develop a re-skilling program for yourself. You can either do this yourself or take special help form re-skilling consultants. Either way, you must enroll yourself into a program. A program will help you develop skills you currently don’t

Reskilling is often a matter of necessity in the business world. If you want to be rich and stay rich you must make sure that you must learn new skills and keep updating yourself.

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Money CREATE AN APP, INVEST IN MARTIAN POTATOES AND CORIANDER:

GET RICH, STAY RICH It is said that change is the only constant. A successful individual employs tactics to exploit change to get rich, stay rich. A young man of about eighteen creates an app, sells it to a Chinese multinational, invests in a project that shall grow a variety of potatoes on Mars, uses the profits from this ‘ego good’ to finance his investment in premium quality coriander grown in Gujarat and buys exchange traded funds floated by the government of India and purchases a farm in the outskirts of Delhi to engage in peri-urban agriculture.

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H

e then uses his constant income to purchase an urban space on the twenty second floor of a building in Mumbai which he divides in half to rent out to a restaurant and set up a recreational centre for an ageing population. What you just read about is the dream life of a millennial in 2030. This is also the way wealth is created, retained and multiplied; by exploiting all opportunities that appear with changing times.

THE POLE STAR OF THE CORPORATE WORLD:

HOW DO ENTREPRENEURS STAY RICH?

As technology changes the way we do things, it is essential to re-skill. This re-Skilling should not be merely about learning to code for big data or consulting, which are going to be base level requirements for most jobs of the future.

Ever noticed how some people do not work, but stay rich? One word answer to how that happens: Financial markets. They have been around since the first entrepreneur invested money in the first ship that sailed from Europe to explore the world for commodities that could be sold in the home market for a huge profit.

MONEY

Re-Skilling for the ones aiming to be rich involves learning to identify opportunities, embracing failures, moving on, starting again and walking through the maze of challenges of a changing society to get rich. Ambition has to be navigated using the pole star of the corporate world: money. Once you have reached your destination to stay profitable; navigate faster. In a changing world, it is paramount that you embrace all opportunities that come your way. If Elon Musk had continued working for PayPal, the explosive entry of SpaceX and disruptive forces of Tesla would have never happened. Intelligent navigation through the stormy waters of business involves being an adept captain:

The fixed deposits, treasury bills, National savings schemes, IPOs, ETFs, derivatives, futures, bonds, mutual funds, pension schemes; these are a part of the financial market. The intimidating jargon is only so in appearance. It works fairly simply: recently the futures of Coriander on an Indian stock exchange regained value in the wake of demand for premium Coriander in foreign market. Coriander is a part of the commodity market. Had you purchased a future of coriander for six thousand rupees last sowing season, you would earn rupees nine thousand from it this month.

The vision is as important as the model.

Did you know the savings interest rate that you gain when your money lies idle in the bank is a derivative of the manner in which financial markets operate?

A talented employee is your best investment.

Three things you require to stay rich:

Break-even should not elusive forever.

Hawkish eye (which is a trait acquired by experience)

You are the golden asset for your business. Listen to the market, listen to your employees (look at them like consumers of your product) and rely on data. Data is called the ‘new oil’ for a reason.

Risk appetite: Idle wealth is worthless in practice

Never ever ignore an opportunity to expand. But navigate using the pole star only!

Awareness of the limits to your risk appetite Once you have mastered the above mentioned mantras of ‘wealth awareness’, get on and sail on the ship to explore the treasures that lay hidden in the sea of constant change! Bon Voyage!

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Money THIS MONTH’S FEATURE STORY

DIAMONDS ARE NOT FOREVER - A FEATURE ON DECLINING PRICES OF DIAMONDS Diamonds are forever – Definitely one of the most popular proverbs used by the marketers. Well, practically speaking, it is quite a hard stone so it will probably last for a long time. But financially speaking? Is it durable in nature? Will it hold good or increase in value over the years? If we look at the data of the past 30-40 years or so as well as the current diamond price index, unfortunately, diamonds are probably not forever as is claimed.

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Money A BIT OF A BACKGROUND: A popular diamond industry benchmark, the Rapaport Diamond Index, states that the prices of top quality diamonds have gone down by as much as 80% in the last 35 years. And this collapse is real time, in inflation-adjusted terms. For example, if a diamond cost $6000 in 1978, as per the index it costs around $11,000 now. Even though this might look like an increase, but if one was to adjust it against the inflation, then the stone has actually lost about half its value in reality! Diamond prices had again picked up during 1980, but after the market crash in that year, it reached lows and from then have not really gone up again. They have kept up with the inflation, but if one was to include all the related costs – broker’s fees, commissions, retail percentages, insurance costs, etc then the prices are still very much in the abyss. As a comparison, people who had invested in government bonds or stock-index funds, have multiplied their money several times.

THE RECENT PAST: Going a bit forward, if we look at our recent past, just 9 years ago, world famous diamond producer De Beers opened Snap Lake - its celebrated landmark project in Canada which was their first underground diamond mine outside Africa. By 2014, $2.2bn had been spent on development and operations. However, not even a single diamond is now produced at Snap Lake and last year, the mine was closed along with a massive 400 job cuts. The family

responded that they are facing the worst diamond market downturn in years. This temporary close down of the mine basically sums up the issues faced by the diamond industry in current times. The downturn gained momentum last year and has resulted in considerable financial pain for all stakeholders including miners, dealers as well as retailers.

THE CURRENT PRICE FALL: Coming to the present, according to Rapaport’s report in January 2017, the average price of 1-carat diamonds fell by 5% and of 3-carat diamonds by 8.5% in 2016. In the Indian context, after PM Mod’s Demonetization move on November 8th, where high value bank notes were illegitimated, diamond sales suffered all the more in the fourth quarter. Since demonetization wiped out 85% of money in circulation, orders from local jewelers faced a huge dent. Domestic Indian demand saw a huge fall in demand even with the wedding season and valentine’s season being at the forefront. Average price of half carat diamonds and one-carat diamonds fell another 4.8% and 3% respectively in the fourth quarter. Only the 3-carat diamonds were seen to hold their stand with a 1.4% price rise over this period. Rough diamonds faced the same fate as that of their polished counterparts. Thus, it can be safely concluded from past data that irrespective of what marketers say, diamonds might not be a woman’s best friend after all, and definitely are not forever!

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