I have myself written many times about how to get rich and such other topics. Now I am myself changing it – some may even say topsy turvy.
Ok if you do google you will find the steps – have a plan, make a budget, save money, invest it, put it in a mutual fund, do an SIP, buy a house,….etc.
Unfortunately the following steps are a little different – and are perhaps far more important (please allow me to change my mind – I do it quite often!). The new steps are:
1. Choose and go to a good college and do well. Doing well academically is nice – but ensure you participate in elocution, debates, quizzes, sports (co-curricular and extra curricular). I keep telling my daughter these activities are as important (if not more) as studies.
2. Get as much educational qualifications as you think necessary – it is each individual’s call. If you are planning to do a business in India it is still worthwhile going to a good college – you meet smart people and it is a good networking opportunity. If you plan to do an international business…go to an Ivy League school. It is worth the money that you invest. In an earlier post you will find education as one of the best ROI while investing.
3. Be adaptable – you will do 5-6 different kind of jobs. One day you could be selling blades, then paint, then handling HR, then heading training in a life insurance company, mentoring kids in a college, then ending up as a CEO in a consulting company. No MBA or CA degree prepares you for this roller coaster ride that life takes you.
4. Spend time lavishly on finding a good financial adviser. Initially trust him, but verify. Once he / she passes the trust and verifying stage, spend time to resolve the conflict between selling and advising. For e.g. I charge a client on his TOTAL NET – WORTH immaterial of what he consults with me. Thus I do not need to ask him to enter one fund and not the other. Or even worse I do not need to ask him to sell a share and buy a MF! This time is really well spent.
5. Never cede the control of your finances – demat a/c, cheque book, etc. to anybody. Even my parents sign their own demat a/c and cheque books. Let me repeat NEVER, NEVER, NEVER cede control of your money to any advisor – even if it is convenient.
6. Once you trust your advisor ALL your investments should be routed through him. He has to take you to a specialist – a CA, a lawyer, …or whoever. That is why you are paying him an amc based fee. Use him to say yes or say no. Make sure he has no ego – and be willing to say he does not understand certain things. If you do not understand a leveraged Structured Note, or a negatively leveraged real estate deal with a fantastic 12 year pay off, JUST SAY NO. Kill your ego. Indexing is great. Like Daal chawal it will keep you healthy and fine.
7. Remember if you are doing your own business, your own business, own office, training your own staff, your own clients, etc are perhaps the best investments that you can make. Getting your advisor on your side is rule one. If he is on the other side he may make you do sub-optimal things sometimes even UNCONSCIOUSLY.
8. Ensure that your advisor does not get stubborn about any company. Especially if he has now grown and become a merchant banker, equity or real estate broker, life insurance agent, etc! Having a good agent is not enough reason to be complacent. I found my doctor in 1983 and my ‘adviser’ in 1979. We attended each other’s wedding. I recently attended my adviser’s daughter’s engagement. We never used the word ‘Relationship Manager’. We introduce each other as friends – client or patient sounds too restrictive, does it not?
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