Wealth creation

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Creating and
Growing Wealth

Finerva
•Finerva = Finance + Minerva
(Roman Goddess for Wisdom)

Introduction
Finerva
• 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…
Balancing
Return
& 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
different 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 Family
2. Planning for our Milestones
3. Planning for Emergencies
4. Planning for Retirement
5. 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 1
Time
The largest of trees
start from the small
seeds. Allow time and
nurture your
investments.

Mantra 2
Income – 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 used
otherwise or spent.

Wealth creation

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