Wealth creation

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Creating and Growing Wealth


Finerva• Finerva = Finance + Minerva

(Roman Goddess for Wisdom)


IntroductionFinerva

• India’s First Company dedicated to Personal Finance Education

• 3 core values:• Simplifying Personal Finance• Make Meaning• Create Value


Tools to Create Wealth


• Basics of Cash Flow• Is there a difference between assets for

Companies and Individuals?• Asset Vs Liability Chart

• Mark the table in your workbook appropriately


Tools to Create Wealth

• Cash Flow Chart


Applying Cash Flow to Our Lives

•Exchange of phones



•Bike with high resale value



• Having assets and heavy loans



•House that we live in



•Vehicle loans



•Borrowing for tax saving investment


Tools to Create Wealth…

BalancingReturn & Risk



• What is risk? • Any deviation from expectation is risk• Which has higher risk?

• When I expected 10 % I got 9%. • I expected 35% I got 31.5%• I expected 100% I got 90%


Which decision is better?

• An army general has 250,000 soldiers.



If he fights:

• The probability to lose 37,500 persons is 50%





• If he retreats he will lose only 15% of his army.

• Which decision will reduce the loss of lives?


Risk…

• Is there zero risk?• No. That is why Countries are rated too.• Sometimes the sovereign rating can be

lesser than some companies in the country.


…Tools to Create Wealth


…Tools to Create Wealth

• Tools to meet my requirement• Comparision chart for differen

t investments• Increase the sources of

Income


Sources of Income

• Myth to break: Salary has to be my main source of

income.

– Types of People – Employed, Self Employed,

Businessman, Investor

– Be an Businessman / Investor – Leverage OPM, OPT

– Leverage Technology


Calculating My Needs


Calculating My Needs

Financial Planning Includes: 1. Protecting our Family2. Planning for our Milestones3. Planning for Emergencies4. Planning for Retirement5. Planning for Estate


Protecting My Family


Protecting My Family

• Do I need Insurance?

• How much Insurance do I need?


Planning for My Milestones & Retirement

• Have I planned for – My Children’s Education?– My House?– My Car?– My Parents?– My Business?– My Retirement?


Milestone Planner Retirement Planner


Where is the money?

• I know I need to save. But where is the money?–This month my in-laws were in town–The TV / Washing Machine / Fridge

failed this month


Where is the money?

–Surprise hospital expense came up

–Child’s School Term Fees had to be paid


Where is the money?

–Soft Loan had to be repaid–Surprise Trip from Company. Claim will

take one month for reimbursement.–Aadi Month / Deepavali / Ramzan /

Chirstmas / Pongal / New Year / School Holiday Purchases


Budget – Myths And Reality

• What ever I plan does not work? So why plan?


Budget – Myths And Reality

• A plan does not ensure that the goal is achieved.

• Plan is required to first set a goal and then to remind you to reach it

• And alert you when there is a deviation• A company has become big because they

have a budget…


Budget is for big companies.

• Any company has become big because it functioned on a budget


Budget Myths & Reality

• Anything on sale can be bought• A sale is profit for the sales guy• Is the thing on sale what you

want?• Buy anything based on a list of

needs and excess cash.


There is not enough money for everyone to be rich

• Money is not a limited quantity commodity (at least at our level)

• The more value you create for your company and others, the more money you have.


That guy is filthy rich! He should have done some criminal activity some time in life.

• This is a statement out of guilt and jealousy / envy

• Sometimes used to protect our image in front of our children.

• “Money is not evil after all – in good hands” – Swami Vivekananda

• “Jealousy is the root of all evil, and a most difficult thing to conquer” – Swami Vivekananda



My Present Budget

• Fill in your Budget Worksheet


Creating a Surplus for My Goals

• Can you see where your goals are being SPENT?????

• Identify expenses which can be reduced

• Identify loans which need to be closed immediately

• Identify investments that need to be started immediately


Net Worth

• The Net Worth Sheet summarises our assets and liabilities.


Symbols of Social Status Vs Wealth

• Wealth is generally associated with the ownership of social status symbols such as Huge Cars, Palatial Houses, Servants, Jewels, Silk Sarees, etc.


Symbols of Social Status Vs Wealth

• Social status symbols are more often, than thought, liabilities.


Wealth Defined


Wealth Defined

• Wealth is defined not

in quantum of cash but

in TIME


Wealth Defined

• A person's wealth is

defined by how long a

period of time one can

sustain one’s lifestyle if

he/she stops working.


Wealth Defined

• The longer you can go on living your life without working another day, the wealthier you actually are.


Your wealth is therefore defined by three things

• Your monthly expenses

• Your liquid assets and

• Your passive income.


Myths Summarised

• Safest option in life is to get a secure job and stay there always• Only doctors make a lot of money• Sale! Sale! I buy always when there is a sale• I will never understand how investing works• They have a big house, they must be rich…• There is not enough money for everyone to be rich• People who make mistakes are stupid• Fixed deposits are safer than stocks• I will never be rich…• Investing in stocks is gambling. • Only crooks become crorepathis


Mantras for Wealth


Mantra 1Time The largest of treesstart from the small seeds. Allow time and nurture yourinvestments.


Mantra 2Income – Investment = Expenses

If spending money brings you enjoyment, you will never be rich.

However if making money brings you enjoyment, then your wealth is guaranteed.

Make list based purchases

Given a choice – see what the excess amount could be


Invest with a Goal and Make Goal Based Investments

If your goal was 10% gain sell once you get it. Don’t get Greedy.

Life Goals give clarity for the quantum and term of investment.

A purpose will ensure money is not usedotherwise or spent.


Economy & Finance

Wealth creation