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Money and common sense …

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To achieve a goal one needs a strategy, and every strategy needs a plan.  To plan, one needs to understand what is important and what is not.

How rich are you?

It does not matter how much one inherited, how much money one makes per month, because I have seen some people loose that money inherited or earned in bizarre ways.  What really matters is how one manages money they have to make it grow with time and use it to satisfy personal needs and help others in need, which is in my opinion called being rich.

What’s your priority?

  • Feel Secure
  • Live in comfort
  • Become rich

You guessed it right, “Becoming Rich” is the best option, it will not only make you feel secure and live in comfort but make one wealthy too, it is not impossible however it needs comprehensive and continuous planning fueled by perseverance and focus.

Why Plan?

Anyone who has financial challenges to solve or financial goals to achieve needs financial planning. Financial Planning can help to achieve both greater wealth and financial security. Inadequate or improper planning can be financially disastrous. An uninsured loss can wipe out accumulated wealth; insufficient savings for retirement can force a reduced lifestyle and/or postponement of retirement; and improper tax planning can result in higher than necessary taxes causing money to be lost to an accumulation plan or to one’s heirs.

How to plan?

  • Identify goals and objectives (must be realistic, specific and measurable)
  • Gather necessary data (establish budget, monitor cash flow)
  • Analyze present situation and consider alternatives (asses net worth, prepare financial statement)
  • Develop strategies to achieve goals
  • Implement the strategies
  • Review and revise periodically

Choosing investment tools?

There are plenty of tools in the market (stocks, mutual funds, bonds, real estate and so on), they are just tools one could use to reach a goal, what suits one might not suite the other, as needs of each is unique. One can choose all of the tools to be a part of a strategy.


I often hear from friends that they will time the market to make money, I say that’s wrong!  Just remember that it is never too late to start, and time never waits, the earlier you start, the better it is.  By trying to time, one looses time, as the old saying goes, time is precious, time lost is never found again.

Making money or getting rich?

If your idea is just to make money, trust me that is just temporary, you might earn X today, and loose Y tomorrow.  Getting rich is a broader perspective, so ones mind must be constantly planning to be rich, this way you will be an exceptional investor and planner instead of becoming just a trader.

Manage risk!

If you consider investments are risky, try to manage risks.  Without taking risks, it is difficult to achieve anything.  Do not compete, you want to become rich, so there is no point in competing with another one to get rich, as it leads to more ups and downs.  Remember, needs are unique.

Being financially literate

Understand that investing is a plan, know about the different avenues available to invest.  Know what is really an asset, liability or an expense.  To me, asset is something that can generate money to manage my expenses incurred in a month without the need for me to work, this is indeed a state of being rich.  If you own a house on which you have mortgage to pay; it is taking money out of your pocket, so it will be a liability, it does not become an asset if you’ve occupied it (even after paying back the mortgages).

Team Work

Investing is team work, Communication with your financial adviser (being open and honest), legal adviser is important.  Sharing ones experiences with other investors (learn to differentiate the investor from others) enhances knowledge, learning from others mistakes and correcting the course of your action is always helpful.

Gaining Control

Self Control: This determines your success in the long run.  It takes time and one should learn that there are multiple right answers.  Each decision one makes impacts the future course of action.

Control over income, expense, asset, liability ratio: The way one manages cash flow, personal expenditure.  Liabilities should not become expenses.  Expenses should not increase with raise in income.  Remember not to get into rat race.  Being an investor simply means acquiring assets that put money in your pocket, just that simple.

Control over management of investments and taxes: Know where the tax advantage is, what tax laws are.

Control over when to buy and when to sell: Delayed gratification is important.  Timing does not help in most of the time, patience however pays.

Samprathi (The present!)

The world has changed in few years, the way things are presented have changed so will these common sense make sense now?

Yes, it’ll make sense, frugal living and increasing saving booty will help in a long run, but the tools (avenues) for investment have just changed.  So you need to go with the tide, find the right tools now, the old tools may pave way for new ones (just as one will recycle them).  Choosing the right tools are just as subjective as this subject of money is, hence I’ll let that be taken up individually.


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