Do not depend on anyone for your financial freedom

          How would you feel if you would get Rs.1 lac every month without doing anything which would take care of all your household needs ? Then you could also call yourself financially free.

But who would give you 1 lac for doing absolutely nothing ? It can happen only if you have a fortune of crores .But majority of us don’t have that fortune and we are not born with a silver spoon either. So the next best option is to plan our finances in such a way which takes care of our daily needs and the money we save is able to beat inflation . As the saying goes , a penny saved is a penny earned.

This is also called financial freedom .

                Why do you need financial freedom ? 

Now that we know what is financial freedom, the second thing is why do we need financial freedom ? Many people in our society keep working for salary for years. They have a family commitment and some basic needs . To fulfill that ,they keep on working till retirement and finally receive some pension. Their personal hobbies or interests which they wanted to do remain unfulfilled in keeping up the financial commitments. I feel there are various alternate ways through which they can attain financial freedom and then go after their dreams or hobbies. 

There are some options like health insurance and mutual fund which help a lot in achieving financial freedom. I have written a article on it. You can read it here https://sidworld.in/8-best-places-for-investment-in-india/

          The last important question is how to achieve financial freedom ? I will give 5 ideas which someone follows, then they can easily achieve their goal of financial freedom. 

So, what are the five steps ? I am assuming  that the person has no ancestral property though this depends on person to person. 

        So the first step is buying a commercial property. I am taking the example of a person working in a firm and having a salary of 75000. A salary of 75000 can be achieved in India if a person starts as a fresher at the age of 21 in an organization and continues for 7 – 8 years .

For illustration purposes, if he buys a residential property, it will cost him 45 to 50 lac on average in let’s say Delhi NCR depending on the location . Now if he rents out the property, he won’t earn much because the rent on that property will fetch not more than 15000. But if the person invests the same amount in buying a commercial property worth 50 lac ,the rental income will increase 3 fold depending on the property. If he buys office space ,it has a different rental income and if he buys a shop in some mall or high street, it has a different income ,but it will be way more than residential property.  In some cases ,it can ever exceed the salary of the person. 

            The second step or option in achieving financial freedom is rental income. If the person has land in a good location, he can build some commercial property like a hostel, or hotel , or hospital, or market depending on the location . The location can be anywhere depending on the person’s preferences . In this case the income will be definitely more than the income which he can earn through salary. 

              The third option through which one can earn financial freedom is through investing in stocks . Share market is a place where there are all types of companies and we can invest in any company we want depending on our understanding. Suppose a person invests 50 lacs in buying Reliance shares. Then ,he will get 2000 shares of Reliance and as the share price increases ,his investment will also increase and he will also start receiving dividend every year which the company will distribute. Sometimes the dividend income will be more than the salary which the person is earning as salary . Here ,I want to add one more point that if the person had bought reliance shares 4 years ago, he would have needed only 20 lac to buy 2000 shares ,since the price was nearly 1000. It has increased over time and will increase further. 

https://www.businesstoday.in/markets/top-story/story/share-market-update-sensex-falls-866-pts-nifty-below-16450-bajaj-twins-among-top-losers-332520-2022-05-06

             The fourth option through which he can attain financial freedom is working as a mutual fund distributor. In mutual fund the income model is very unique. If he starts a SIP of a customer of Rs10000, the first month ,he will recieve Rs.15 as commission, but if the customer continues his SIP for 20 years, the commission from the same customer would have increased to 8000 per month. Now if he puts in extra efforts over time and acquires 1000 customers over 10 years , he won’t have to work for anyone. Of course some will take back their investments, but this job requires to maintain healthy relationship with the customer. 

          The last option in achieving financial freedom is starting a startup and selling it for a profit. It means that rather than being a employee of some organization, the person chooses to start his own firm . And if he gets a good offer from some organization or person to buyout his company ,he can exit by selling his stake or the firm itself and making a investment out of the proceeds. 

These were the five options through which the person could attain financial freedom . There can be more options of achieving financial freedom by working somewhere else and you can tell me about them in the comments section. There are some basic investments also which need to be done like motor insurance, health insurance,life insurance among others which I have explained in my previous blog. https://sidworld.in/8-best-places-for-investment-in-india/

https://akm-img-a-in.tosshub.com/businesstoday/images/story/202208/tata-motors-sixteen_nine.jpg?size=948:533

          There is also one thing which is the most important among all which is ignored by most of the people. It is the mindset of the people. Most of the people want an assurance that their efforts should be awarded as soon as possible. For this they look for a job which provides them a monthly salary or at a fixed interval. But what they don’t realize is that the employer earns 10 times what he gives as salary. There is nothing as free lunch anywhere. So if someone is getting Rs.50000 as monthly salary , he is obviously doing work which is worth 500000 to the employer. The work type can differ industry to industry. 

          I can give an example of a simple bank manager working in a private bank. At the time of starting a career, a student joins a bank as a marketing manager. His job role will consist of bringing 10 – 15 customers every month, who will buy life insurance or health insurance or share broking account or mutual fund in the form of SIP. Now ,if he continues this for 3 years, he would have given the bank 540 customers . Now he gets promoted in another organization and work for 2 more years, he would have given 360 more customers to the organization. 

So in 5 years he gives 900 customers to the bank or organization he is working for. Of course he will earn a salary for this . But just for example if he would have started a agency and taken the license of all the financial products, and done the same work for himself , a client base of 900 would generate so much income that he would not need a job for lifetime. Of course he would not recieve the salary and had to put in some investment also.

https://www.itprotoday.com/compliance-and-risk-management/what-it-risk-management

         But he is not willing to take the risk so he will have to continue working till his retirement age or lifetime . In this example only a single change of mindset would have turned fortunes but still everyone looks for job and it is no surprise that 80 % of the people work for 20% of the people because these 20 % are risk takers. 

  Hello friends,” India is a developing economy” we have been hearing this for the past many years. I will try out to figure out the reasons today. In the previous blog I mentioned that people in India don’t like to take risks. Neither with their career nor with their investments. I explained in the previous blog about the various types of returns which can be expected when money is invested in different asset classes. I believe india is still a developing economy because people in India don’t want to take risks with their career also. 

                   The economy will grow if people will add to the economy by purchased India made products and services. For this they will have to do business. For doing business they will have to take risksand the first reason I find why people don’t want to take risks is mindset.

In business ,one has to take risk. In job ,the risk is taking someone else, the employee is only responsible for some specific department of which he is incharge, like marketing or operations. Most people don’t want to do additional work and take risks also at the same time. They want assurance that they will get money in terms of salary just in one month. But the only difference I find between job and business is of mindset. 

You can see this video also for reference.https://www.youtube.com/watch?v=VltgwL3ToGM&t=469s

              If a person is not willing to take risks ,he continues to do a job for a business owner who is willing to take risks and provide him what he needs, i.e .salary every month. But the employee does not understand that the salary which he is getting is coming from the same work which he is doing for his employer.  And the difference is not small to be ignored. It ranges from 500 % to 1000 % every month. Because of this mindset ,the business owner continue becoming rich and employee remains in the middle class economic juggling between employer and family responsibilities. 

The difference is only of mindset. If the employee becomes mentally ready to take the risk himself instead of depending on someone else, it will not be possible for him to continue in the job. This, I feel is the second reason.

                   Economy will increase only if the people do business and become self sufficient. The question is that how people in India became like this in the first place . The reason is low quality of education and no mentorship from family or educational institutions. In this day and age where everyone talks of digital India and booming economy, we should not forget that till today after 75 years of independence, India is still a developing economy because people don’t want to take risks.

There are some communities in India in which their families promote enterpreurship since childhood because they know the importance of business and taking risks and the have become the richest people in India . They are Marwaris, Gujratis, Punjabis, Parsis and a Jain community .

The richest people in India like Tatas is Parsi and Ambanis are from Gujrat. They have provided so much employment in India which even the government has been unable to do . This is just for proving my point that if provided right guidance from family and friends with a mix of quality education , India will become a developed economy much sooner than anticipated.   

                 The third reason is the education system. One more point is that the quality of educational institutes in India. There are more than 1000 universities and more than 50000 colleges in India with more than 2 crore students studying in them, but no college of India features even in the top 200 colleges of the world apart from some IITs . With such a quality of education ,students are forced to look for jobs even after spending so much time and money in education. 

                 Fourth reason is students have no idea of share market and how it works. The difference between business and job is that in job only a part of the work needs to be done . In business all the aspects need to be looked after by the same person. And share market is a place where the business is listed and then the balance sheet is made available in public. In colleges , students are only trained in one specific area and told that you will get a job . To sum up,they are only generating employees and not business owners .

Even if a student becomes a good engineer , he has no knowledge of the business aspect of the product . So he starts looking for job. Similarly if a biology student becomes a doctor , he starts looking for job in hospitals because he has no idea how the hospital is run. Or he is not at all ready to take risk and open a hospital or even a clinic. In Max hospital, which is a chain of hospitals,  the management is run by someone else and doctors are paid a salary and they have little idea of how much the patients are being charged for their treatment. 

               Compare the situation with USA where most of the good colleges are located , there are a lot many students who after graduation start a business,  scale it up and list the company in share market and become millionare within few years . Some examples are facebook https://www.facebook.com/, Twitterhttps://twitter.com/home,  Amazonhttps://www.amazon.in/, and much more. Same situation is missing in India and the students are unaware of this . Many companies started small and has become so big that some companies in valuation are similar to some countries.

                  The last and most important part is digital marketing. Digital marketing started in the 1990s and social media like Facebook started in 2003. Before digital marketing, marketing was done through offline channels like print, media, television, radio among others. Digital marketing helps reach a large audience at a very low cost compared to tradational medium. There are some companies which are only online with very less offline presence but have millions of customers. Many of the are foreign based like Amazon and flipkart .

            The point which I want to make is that the resources which are available today is a lot more than 20 years ago and doing business has become much cheaper that before . Many companies are taking benefit from this changing market dynamics. But in absence of knowledge and guidance, our country’s youth has no idea where to start and how to start . If this problem of mentoring is removed India can grow a lot faster. 

                Today with the evolution of digital marketing, many opportunities have emerged which were not available earlier. So in a way doing bussiness has become easier than before . You can read about digital marketing in my previous blog. https://sidworld.in/wp-admin/post.php?post=184&action=edit

And finally one more point ,if people start taking enterpreneurship seriously and start business instead of choosing job, they will also understand the importance of investing and then start investing themselves . 

    In India,investment is not a preferred option and people are risk -averse. Nobody wants to take any risk . Neither in their investments nor in their career. But they forget that not taking risk is the biggest risk which they are taking . 

       Investment mindset will only be developed if people invest or do business. But in India everyone wants job, because of this mentality India has the the most number of job seekers in the world . To be exact there are 53 million unemployed people as of December 2021. Today , we will cover why people don’t want to take risks regarding their investments.

If people in India plan their finances properly and invest in right aveneues, they can easily achieve financial freedom. To know more about financial freedom visit this linkhttps://sidworld.in/5-ideas-for-financial-freedom/

      The first reason people don’t take risks is because they have no knowledge. Sometimes people have no knowledge about the investment products. For many people, they have no knowledge where to invest their hard earned money .

They know only 2 places , one is the life insurance agent ,other is fixed deposit. India has 150 lakh crore worth of fixed deposit lying in the various banks. Insurance does not give the required return . The required return can be understood as some product which can beat inflation .Today as I am writing this blog ,the inflation is 7%. and fixed deposit rate is 5% in State Bank of India. So the real rate is negative. Similarly the rate of return in Recurring deposits is 6%. Still the real rate interest earned is negative .

Then comes insurance which is for a general tenure of 20 years . If Sum assured is 1 lacs and term is 20 years . And on maturity the life insurers double the money ,it still translates to a return of 5 %. Now where should one invest, so that he can earn a decent return which can beat inflation.

Life insurance is important but it should be taken for its primary purpose, i.e.life insurance https://sidworld.in/insurance/

        There are some places where they can invest which also beats inflation and gives decent returns .The first among them is equity. Equity market or share market gives the best returns one can ever imagine . Just to prove my point, I will give a simple example . Most of you must have heard of a company called Wipro . In 1980 if someone had invested in Wipro shares ,it would be worth 700 crore today. There are hundreds of good companies in which if people would have invested in their growth years ,they would have become rich.

Similarly the share price of Titan in 2003 was Rs 3, today’s it is Rs.2334 ,a gain of 778 times. There is another company called Bajaj Finance .Its price of 1 share in 2002 was almost Rs.6 . Today closing price was 7076. Simply put if one had bought 2000 shares worth Rs.12000, it would have become 1.41 crores today. 

          The other place where one can earn decent return is mutual funds . Mutual funds are a type of funds which invest in shares and debt of a company but the money is managed by a professional. It is less risky than shares but gives much more return compared to fixed deposit and recurring deposits. Mutual fund has many schemes in it like large cap fund fund ,mid cap fund , small cap fund , balanced advantage fund and various other schemes.

There are 46 Mutual fund companies, some are government bank sponsored and some are private bank sponsored. Some are foreign bank sponsored or backed by a financial institution. There are more than 6000 schemes in different mutual funds so one should invest wisely and consult a financial advisor before investing because every person’s goals are different.

Another place where one can invest is ELSS or equity linked saving scheme . It is not at all  new or different .It is a type of mutual fund scheme only with some minor modifications. The difference between normal mutual fund scheme and ELSS is that there is a lock-in of 3 years in ELSS. It means investor cannot withdraw money from it before 3 years . ELSS comes under Section 80 C . Means if a person invests in this product ,he can get a tax rebate upto 150000.

For Mutual funds you can visit my bloghttps://sidworld.in/wp-admin/post.php?post=100&action=edit

            Another place where one can invest is fixed deposits . I personally feel, this should only be considered by people who are above the age of 55 or more because they cannot take the risk of investing in equity because it involves risk. They need guaranteed return and safety of money which a fixed deposit can provide. But a person whose age is 40 and earning a good amount in salary and still investing in fixed deposit does not make any sense.

           The forth place where one can invest is life insurance . Life insurance is also a important aspect of investment . The primary purpose of insurance is providing life cover for the bread earner of years family. Suppose a person is married with 2 kids and earning 1 lakh per month, he should get a life cover of 1 crore because if some unfortunate event happens with him , his family will get 1 crore which will take care of immediate expenses.

Of course ,in life insurance return will be low compared to equity or mutual fund but it will provide life cover if he dies unfortunately. There is no alternate to life insurance. Government on its part provides rebate in taxes upto 150000 if someone invests in insurance. It is called rebate under Section 80 C of the Income tax Act. 

            The fifth place where one can invest is health insurance.  It does not provide any return but provides cover against any health emergencies. Some health issues keep happening in anyone’s family ,sometimes kids ,sometimes grandparents. Absence of health insurance and some medical emergency like an accident can mean expenses in lakhs and can wipe out months of savings . Government also provides some relief in taxes under Section 80D of the Income Tax Act,1961. This is in addition to Rs.1,50000 provided under 80C.

          The sixth investment option is NPS or National Pension Scheme. It is deposited keeping the retirement in mind . People can deposit on a monthly basis or lumpsum, but it will be withdrawable only upon retirement.  Government also provides tax rebate under Section 80CCD of the Income tax Act upto Rs.50000  in a year . If we total the amount in tax free investments ,it will come around 225000 (150000 +50000 +25000).

            Seventh investment option is gold . Some part of the portfolio should also be kept as gold. It is all time favorite and the price is always increasing.

             The eight last investment option is real estate or property. Land or property is the best investment and the price is always increasing. The only demerit in this assest class is liquidity.  If someone has to buy land ,it requires a huge sum of money and if someone is in need of money the owner cannot sell it . It is also possible that he may have to sell at a loss instead of profit because the buyers are not always available .

For getting your portfolio reviewed for free you can contact me on siddharth@sidworld.in

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I have made a video for the different options.Have a look .

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    Hey friends , I want to ask all the teachers ,businessmen , and agency owners. Are you worried about the dwindling sales in your business ? Post covid, majority of the business owners are worried that their sales which were visible before covid are not returning even though the restrictions have been lifted.  Where have all the customers gone  ? Here is your answer – Online .

             During covid many business were forced to shut . Be it schools , offices , Gym owners and all the types of business . While some found alternatives and some managed, some were forced to wind up.

But there were a segment of people which increased their business by a huge margin. These were people who took there business online. For example in teaching ,there were schools which started online classes, coaching institutes which started their online classes, payment systems were digitalized via phonepe and Google pay, people who used to go to movie theaters started subscribing to Netflixhttps://www.netflix.com/in/ and Amazon Primehttps://www.primevideo.com/.

People started shopping online , meeting started to be hosted on platforms such as webexhttps://www.webex.com/ and zoomhttps://zoom.us/. And some of them have become so used to the online lifestyle that it has become the new normal. 

           I have also realized that my business also need to be there where people actually hang out ,which is online . Some startups in the digital space have become unicorns in India ,like Nykaa , Zomato Paytm, and a lot more. I have also started learning digital marketing and I have enrolled in Digital Deepak Internship programme . 

            But some things don’t change, like fundamentals of marketing .Marketing is based on science and not on creativity. 

          Marketing starts before creating the product not the other way round . Marketing includes selling and has various components such as creating a perception of the product or service in the minds of consumers who need the product. Market research also needs to be done before starting the business https://nmrguides.com/starting-out-with-market-research-description/

          Digital marketing has reduced the cost of acquiring the customer to a large extent but it is also limited . It purely depends on the advertiser who are the targeting and which medium they choose for their product. I have also written a blog on digital marketing.https://sidworld.in/digital-marketing-in-india/

            Before we understand Marketing, we have to decide what is the product or service which we intend to sell and who be will be target customers . In traditional marketing , a different audience is targeted compared to digital marketing Tradational marketing means advertising in radio , television and newspapers which will reach a completely different audience. These are the middle – class people with average income. If we target via digital marketing like Facebook ads, Google ads, Instagram ads ,it will be targeted to a different audience compared to traditional marketing . 

          If we have clarity of product and the target audience both, we can scale our business easily which is the basic purpose. 

            There is also a funnel called CATT marketing funnel which helps agencies in finding the right product mix and ensure that it reaches the right target audience.  It is defined as Wealth = n ^ CATT

n is the Niche which one specializes in. 

C is the Content that attracts people from your Niche

A means Attention .In online marketing drive attention to your content via SEO, Social Media ,Paid ads and refferals 

T is the Trust which one builds with your audience with trip wires ,marketing automation and retargeting.

T is the Transaction which the customer does after following the natural sales methods.

           Integrated Digital Marketing Framework is a system which is designed in such a way that all the different components of digital marketing such as email marketing, paid advertising,  seo , and ads on social media complements each other and helps one another in bringing even more customers .

            Personal Branding is also equally important. People tend to remember people instead of brand . They feel more connected or secure and trust builds automatically. That’s the reason companies hire celebrities to endorse their brand . Sometimes a person becomes a influencers to such a extent that they become brand ambassador for the companies they run. 

           In marketing ,whether offline or online ,one thing is more important to remember,i.e. The importance of communication skills . Good marketing is all about good communication . If you are able to communicate your message to the concerned person properly ,there is a high chance he will purchase from you .

            Today, the market has changed dramatically. I am not saying that offline marketing will be closed forever but some business have been hampered and they should make some changes in their business model so that their revenues increases . They can take their existing business online also . Or give their customers the option of ordering online also. Take the example of restaurants. They have the option of dining out also and take away also from zomato or swiggy.  Both options are available . Similarly the restaurants which do not have the zomato option will lose out customers to their competitors who have the delivery option.

              I also have a agency. I have become sub- broker of Motilal Oswal Financial Services . But I am doing business offline . There are many problems in acquiring a customer offline.

For example take an example of a 50 year old man who wants to invests 20 lacs in a fixed deposit . He goes to a bank and says to the bank manager that he wants to invests 20 lacs in a Fixed Deposit . The managers tells him that you will only get 5 % rate of interest in a Fixed Deposit , instead he can invest in a debt fund of mutual fund scheme which will give him 9% returns . The old man agrees within 5 minutes. As a agency owner ,I also have the same mutual fund  agency ,and I also could have invested the amount in the same scheme, but people have trust in the bank more than in me. 

   In business acquiring customers online is cheaper than through offine mediums. The most important medium in digital marketing is through google ads snd facebook ads and email marketing

    Please comment whether you liked the article or not and way in which I can improve .

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Hi Friends,
Today I am going to discuss about life insurance. Life Insurance is something which is very important in life. Before independence, hundreds of companies were running insurance business but after independence government merged all the companies into just one entity called Life Insurance Corporation of India.https://licindia.in/

Very few people know that at the time of independence,there were 300 companies offering life insurance services but after independence, government took over all the companies and merged them together to make a single company called Life Insurance Corportation of India.

It was the only company in life insurance sector till 2000 when life insurance sector was opened for private players to insure healthy competetion and more choice for the customers. There are 23 private life insurance companies in India like HDFC Life https://www.hdfclife.com/, ICICI Prudential Life Insurance https://www.iciciprulife.com/ Bajaj Allianz Life insurancehttps://www.bajajallianz.com/ and many more.

          People believe life insurance is not important because its returns are not enough. Many people, even if they have insurance have very less compared to their income. Insurance should be bought for the purpose of insuring lives. Adequate cover should be bought so that if the person is no more his income should be replicated.

Life Insurance is of 2 types -term plan and endowment plan.

           People think that who will block money for 20,25 years? Instead, let’s get ourselves some endowment plans. And on the other hand, they say the return is very less.
          People should understand that life is much more important and insurance is the first step in investing. If you don’t invest in your family, who else will? 

Daily in India, hundreds of accidents are reported. But still people think “Mere saath nahi hoga”. People should come out of their illusion and understand that anything can happen to any person. People should learn from others mistakes. It is not possible to make mistakes and learn . Life is too short for that.
          I want to share my experience with you. It was 2011 and I was riding my father’s bike. I had not gone too far from my home and I was overtaking a truck. Trucks and big vehicles keep moving because my home in Bokaro is on a national highway.

In the blink of of an eye, before I could understand anything ,I had an accident and when I opened my eyes I realized the date and place has changed. I was in ICU and date was the next day.  My body had injections in six places. And everybody was asking what happened. I was trying to recall how the accident happened and when I felt unconscious.

I just remembered the crash but I had never dreamt even in my wildest dream that an accident of this sort would happen to me. For five years I did not touch any bike after that day. The accident happened on a Pulsar and till date I do not have the courage to buy a bike having disc brakes.

When I was in hospital doctors told me I had internal bleeding. It took me 8 months to recover.
          I just want to say that people should understand the value of their life. In my first article, I spoke about financial freedomhttps://sidworld.in/5-ideas-for-financial-freedom/. Insurance is the first step of insuring your family.
         People take so many steps to ensure the families well being. Some take home loan some take car loan. Everyone has some sort of liability.

If they buy insurance at least they can be assured that in their absence their family will not have any burden. Or obligation to pay any dues. For this they should take term insurance. It is relatively cheap compared to traditional plans. For 10000, you can get 25 lac cover from LIC and 1 crore from private insurers.

So the first reason for taking life insurance is safety for the family .Insurance should be taken because every person has many commitments towards his family . Insurance provides a cover that in case any unfortunate event like death of the breadearner happens,the family gets total sum assured to the nominee so that some help can be provided. Larger the premium , larger is the sum assured . So, a person should always aim for higher cover .

The second reason is tax saving . The government also gives tax benefits under section 80 C upto 150000 . Simply put, your investments in life insurance of Rs 150000 will not be taxable.https://www.incometaxindia.gov.in/Pages/tools/deduction-under-section-80c.aspx

The returns which you get in insurance is also not taxed compared to fixed deposits ,where the returns are taxed.
      The third reason for taking life insurance is that it helps in achieving long term goals .Goals like retirement or saving for child’s education, their marriage requires a lot of money after factoring in inflation.https://economictimes.indiatimes.com/definition/inflation In that aspect life insurance helps in achieving a lot of goals because there are many plans from different life insurance companies which provide good plans keeping these goals in mind.

The fourth advantage of taking insurance is that it helps in retirement planning https://www.franklintempletonindia.com/investor-education/planning-for-retirement/article/head-start-15/what-is-the-importance-of-retirement-planning . Life insurance are generally of long duration . Some even extend upto 35 years . So if a person takes a insurance policy in his early years, he can get a larger life cover at a cheaper premium because premium generally increases with age.

So at retirement , he can get a good amount through life insurance if the policy is of big amount and larger duration.

The fifth reason of investing in life insurance is safety of investment . A life insurance company is always profitable and all the insurance companies in India work under the strict rules of IRDAI https://www.irdai.gov.in/,the government regulator for life insurance . So the public is also assured that their investments are in safe hands.

There is also some ambiguity in the people’s mind about private company and government company called LIC .But all the companies work under the same guidance of IRDAI and there is no difference in private insurers and Life Insurance Company of India.

Please comment below if you have any suggestions how this article can be improved.

Hello friends, have you used a credit card recently. If not ,today I will give a walkthrough credit cards and the advantages of using a credit card.

          Credit card is a type of plastic money like debit cards. The basic difference in both the cards is that in debit cards we can use money that we keep in our bank accounts, but in credit cards we get a limit which we can use for shopping even if we don’t have money in our bank accounts.
              If we talk about India, the number of cards in circulation is nearly 6 crore and the amount of transaction done via cards is around 6 lakh crore in the last financial year. This is just 10% of the amount compared to the credit card industry in US.
The industry is growing at 25% Compound annual growth rate (CAGR) . The users of credit card are the people in age group of 21-40. It is not preferred by the people of old age groups.
           In the credit card industry in India, the majority of the market is dominated by only a few players like Hdfc Bank which has the highest market share of almost 25%. Then the second position is held by Sbi Cards https://www.sbicard.com/ which is a affiliate company of Sbi. It has a market share of almost 20%.

You must have heard that “credit card is bad”and “you should not use credit cards” but I am going to list out six advantages of using credit cards .

• Discounts and offers- There are many companies providing credit card services like like Axis bank credit card https://www.axisbank.com/retail/cards/credit-card and ICICI bank cards and various other companies.These cards provide a number of benefits if it is used properly.
  • The first benefit is that the cards usually have a tie up with a number of outlets which provides attractive discounts on various products. It can be beneficial in the month end if ever there is a urgent need for payments.
• Reward points- The second benefit is that there are also reward points on behalf of the bank which has issued the card which we get on spending a certain amount. They also provide the time ranging  from a few days to 3 months. They also tie up with airlines or railways for people who like to travel more.
  • In India, the card industry also got a push from the Digital India initiative taken by the government. People are moving to online platforms of payment and shopping. And credit card options are available, whether it is for online shopping or any petrol pump retailer.
• Credit score- The third benefit of using credit cards is that it can also help in increasing your credit score and achieving financial freedom https://sidworld.in/5-ideas-for-financial-freedom/ .
  • The credit score of the person increases if he continues paying on time regularly for a long period of time and the credit limit also increases. The only advise of caution in using cards is not using it carelessly and buying only things you need.

It also helps in shopping at a discount and EMI facility is also available. In various festivals many products are available at a dicount only if you pay through credit card.

• Wide acceptance-The fourth benefit is that it can be used for international transactions . Also ,in digital marketing https://sidworld.in/digital-marketing-in-india/ there are many tools which you can access only if you put in your card details.
• Easy credit -The fifth benefit of using a credit card is easy access to credit. You can use the limit for your current expenses and pay later. It helps in rotation of money.
• EMI facility – Many card companies also provide the facility of converting your outstanding dues into comfortable equated monthly installments.

The only condition on these cards is you have to spend carefully within a limit so that you can repay in time. If you are able to manage it carefully ,then it will be beneficial but if you spend more than your monthly income , you can fall into a debt trap.

The interest rates for these cards is usually among the highest. The interest rates on credit card is generally 30 to 40 % per annum.

This is because it is a type of loan without any collateral. So you have to be cautious that you do not over spend and fall in a debt trap https://www.moneytap.com/blog/debt-trap/. These card have many benefits but only when used cautiously.

  Stock market is not taken seriously in India. But first of all, what is stock market https://en.wikipedia.org/wiki/Stock_market Stock market is a place where buying and selling of shares takes place. 3 parties are involved in it .A buyer,a seller and a broker who sells and buys the shares on behalf of the customer.

Stock market was started in India in 1875 by Premchand Roychand https://en.wikipedia.org/wiki/Premchand_Roychand. Today ,it has become one of the top 10 exchanges in the world .The stock exchanges also signals the performance of the country as whole.I believe that all the students and people should know about it.

But in India, 90 percent have no idea about the stock markets and above all many have misconceptions about it.Many people go to the extent of labeling it as gambling.

In US, 58% of the people invest in share market compared to India where only 3 % of the people invest in share market .https://swastika.co.in/blog/population-participating-in-stock-markets-by-country/

I tried to figure out the reasons for it. I found out that our education system does not give any information about the stock markets from school to post graduation.The family also advises to stay away from the markets just because they also do not know about them.But if we see from positive view it has many advantages of which I will list out 6 major benefits.

• The first benefit is that it helps in financial planning .For more information on financial planning ,you can visit my blog post here https://sidworld.in/5-ideas-for-financial-freedom/
  • Financial planning is planning for your future in such a way that when your expenses increases slowly ,your income also increases and you plan for your child’s expenses and retirement in advance and simultaneously create some alternate sources of income ,so that it does not create tensions in family when you really need it.

• Passive income- The second benefit of investing in stock markets is you start getting passive income in the form of dividends. Every good company distributes some of its profit to shareholders as dividend. It can vary from company to company .Some company gives once a year and some multiple times .So it results in additional income for the person holding the share. For example if a person has 1000 shares if ICICI Bank and the company declares dividend of Rs.50 per share ,then the person will recieve Rs. 50000 as dividend income .If the person holds the shares for 20 years, he will continue getting dividend for 20 years.

• Higher returns than inflation -The returns in stock markets are more than the inflation rate .The bank provides an investment product known as Fixed Deposit .It gives a turn of 5% – 9% depending on the bank or financial institution. Then there is one more product called Recurring Deposit which gives a return of 6%. But the inflation of our economy is more than that. So the real returns are negative most of the time. Besides these returns are calculated on simple interest.
  • Whereas in stock market ,the returns are compounded over time . The returns are more than the the inflation. So investment in stock market are always more than the returns provided by the tradational products like FD or RD .
  • The only caution which you have to maintain is that you have to select good quality stocks which have a good brand value in the market.

• Increase in wealth- The third benefit of investing is the most attractive reason of investing in stock markets.In Indian stock market ,there are many shares listed on the stock exchange .The prices of shares keep on increasing over time. There are many companies whose share price have increased so much over time that it has proved to be multibaggers https://multibaggers.co.in/. Some people have become wealthy just by investing in the shares of good companies.
  • For example there is a Tata Company called Titan which was listed in stock market in 2003 .The share price of Titan was Rs.3 .Today the same stock trades at Rs.2681. The increase is investment is of 890 times .
  • This example is just for 1 company .There are many companies which have proved multibaggers . So ,if there is risk ,there is return also . And the risk decreases over time if the investment is diversified and well-researched.

The returns in stock markets are so high that if you understand the concept ,you will start disliking the tradational products like Fixed deposits.

• Liquidity-There is a lot of liquidity if you buy stocks .For example a investment made in real estate https://sidworld.in/plots-as-investment/ is very good for returns but at the same time if you want to sell it at a short notice, you will not be able to get good returns on your investment. But stocks are so liquid that once you sell the shares ,you will get the money in your bank account in less than a week.

• Ownership-The fifth benefit is the sense of ownership. When you buy stocks from the stock market ,you are not just investing but you are becoming a owner equivalent to the percentage of stocks held by you. If you buy 1% of the shares of any company ,you get 1% voting rights in the management of the company .If you buy 10% of the shares of the company ,you have 10% voting right in the company.

• Easy to start- Investing in stock market has become very easy. 20 years ago, investing in stocks was very difficult. There was internet which was vey expensive and for each share , share certificate was used and the process used to take months. Today everything has become digital. A new dmat account can be opened in 5 minuted and shares can bought and sold within seconds . A person from Delhi can buy stocks listed in New York and a Canadian citizan can buy Indian shares on a mobile phone.

A person can even buy stocks if he has only Rs.100. I mean to say one does not need big capital to start investing. It can be started from small amounts also .

Besides these benefits ,a stockholder also benefits from spliting of shares, or when the companies issues bonus shares. These benefits altogether makes investing in stock markets quite attractive.

Real Estate is the best investment anyone can make. If the happens to become a prime locality in a city , it can generate passive income for generations . It is a best way of attaining financial freedom. https://sidworld.in/5-ideas-for-financial-freedom/

1. Passive income- Real Estate is the best way to generate cash flows.

Generally, you will have to save some amount regularly in a high-risk asset like stocks or mutual funds for a long period of time, so that it can grow to a substantial amount and you can expect returns from it. Or you will have to start a business and automate it so that you can have regular cash flows.

But if you have a real estate property which you can rent out, then it has the potential to generate a fixed amount as passive income till you are the owner of the property. The income will depend on the location, means the place where your property is located.

2.Hedge against inflation- The real estate property acts as a hedge against inflation. Over a period of time the owner of the property also keeps on increasing the rent, whether it is a residential property or a commercial property https://cleartax.in/g/terms/commercial-property. In other words, as the inflation keeps on increasing, the rent also keeps on increasing. The owner of the property does not have to worry about the inflation if he has a property in a good location.

3.Leverage funds- If someone finds a real estate property attractive and wants to buy it, he can also buy it and get it financed from various banks. He has to pay only a small part and get it financed. He does not need to put whole money.

       The leverage facility can be molded in way to earn great returns.

Suppose a person buys a commercial property worth Rs.25 lakhs and gets 12 lakhs financed from bank. If his E.M.I. comes to Rs.10000 p.m. and he gets a rental income of Rs20000 p.m. then also it is a great deal for him. He is ultimately the owner of the property and the value of the property will keep on increasing over time.

4. Appreciation in value – The value of the property ,whether it is land or a house or a commercial property in the market, their value always keeps on appreciating over time. Because of the development happening all around the places, like roads, highways and markets , the value of the real estate keeps on increasing over time. The owner can also increase the rent if the area develops significantly.

For example the property prices in Noida. Before the development of Noida in 2000, nobody wanted to go there . In just 20 years, it has transformed so much that it has become one of the richest places in India and has become a software hub.Most of the state government runs in debt every year but Noida has a sulprus reserve . The property prices also are on a rising trend. The people who own property in this place, need not worry about their income because tey recieve so much of rental income.

5. Portfolio Diversification- Including real estate in portfolio helps in diversification of assests held by the person. It should be definately included besides investments in liquid assests like mutual funds, shares and fixed deposits. The investment portfolio of a person should always be diversified because each of the assets have different significance.

6. Long-term Security – It provides a long term security to the owner that the property will help him in bad times.Owning a piece of real estate whether residential or commercial always provides a sense of relief that the person has some assests as back -up for bad days compared to a person who has no assets anywhere.Once a person buys a good property like a shop in a mall or a plot besides a highway, their future as well as their children’s future becomes secure because property is as asset which keeps giving return in the form of rental income and the investment value of the property also keeps on increasing.

7.Direct control of investment- The property owner has direct control of the invetment in case of real estate compared to other investments like fixed deposits or mutual funds. In mutual fund ,shares are held in an indirect way. Similarly shares are owned by the founders who later decide to dilute the equity. But in real estate, the owner is in a direct control of their assets.

8.Anyone can become a real estate investor- Anybody above the age of 18 years can own a property in major countries. According to the Indian Majority Act,1875 and Indian Contract Act 1872,a minor below 18 years is not eligible to sign any document related to property transactions.

9. Build equity and wealth- When a person buys a residential flat or a commercial property even by taking a loan , he is buying a permanent asset .Once the loan is completed ,he gets the leverage to earn rental income from the property and reinvest money into building more assets.

10. Limited opportunities- Investing in real estate needs a good research and timing is also important.Suppose some construction work is going on in an area.But before construction ,the place is always less developed .Very limited people live there ,but when the place becomes developed after construction ,everybody wants to own a place (commercial or residential) there.But after development ,the property prices increase significantly and very few people can afford to buy in a developed society compared to the prices before development. Hence ,investors need to track good investments and also have their investment ready if they want to own a good property in a good location.

11. Tax benefits- Owning a property is also promoted by government by giving tax benefits.A person can claim tax deductions upto Rs.2 lakh on his home loan interest payment if the person buys a home for himself under Section 24 of the IT Act.There is one point to keep in mind that the property should not be sold before the end of 5 years of possession. For more details you can visit this website https://tax2win.in/guide/tax-saving-benefits-for-home-buyers.

   Mutual funds in India have come in the limelight in the past 7 to 8 years . It has increased after government started campaigning as Mutual fund sahi haihttps://www.youtube.com/c/MutualFundsSahiHai

I hope this post helps you in reaching your goal of financial freedom with your existing job and resources.
              The mutual fund industry in India can be understood by the fact that in US, as of 2019, there where more than 8000 mutual funds compared to 44 in India. The industry size of mutual funds in US is of 22 trillion dollars compared to 37 lakh crore in India.

It means only 15 % people invest in mutual funds. In figures, only 2 crore people invest in mutual funds. In number of agents also there are only 1.25 lakh compared to 13 lacs agents of LIC. The industry has huge scope both for job seekers and investors. New companies have entered in mutual fund like NJ Wealth, Samco Mutual Fund and Navi Mutual Fund . I am providing a list of all the mutual fund houses in India along with their websites.

       1. BOI AXA Investment Managers Private Limitedhttps://www.boimf.in/
        2. Canara Robeco AMC Limitedhttps://www.canararobeco.com/
         3. Union Asset Management Co private limited (formerly Union KBC AMC Private Limited)https://www.unionmf.com/index.aspx
          4. IDBI AMC Limitedhttps://www.idbimutual.co.in/
          5. UTI Asset management limitedhttps://www.utimf.com/
          6. IIFCL AMC LTDhttps://iifclmf.com/
          7. LIC MF AMChttps://www.licmf.com
          8. DSP MF LTDhttps://www.dspim.com/
          9. EDELWEISS AMC LTDhttps://www.edelweissmf.com/
         10.Navi Mutual Fund https://www.navimutualfund.com/
         11. SBI Mutual Fund https://beta.sbimf.com/
         12.BARODA Asset Management India Limited (formerly Baroda Pioneer Asset Management Company limited)https://www.barodabnpparibasmf.in/
          13.IDFC AMC LTDhttps://idfcmf.com
          14. IL&FS INFRA AMC LTDhttps://www.ilfsinfrafund.com/
          15. Indiabulls AMC limitedhttps://www.indiabullsamc.com/
          16. ITI AMC limitedhttps://www.itiamc.com/home
          17. J M Financial AMC limitedhttps://www.jmfinancialmf.com/
          18.Kotak Mahindra AMC Limitedhttps://www.kotakmf.com/
          19. L&T Investment Management Limitedhttps://www.ltfs.com/
           20. Mahindra AMC private limitedhttps://www.mahindramanulife.com/
           21. Motilal Oswal AMC Limitedhttps://www.motilaloswalmf.com/
           22. PPFAS AMC Private Limitedhttps://amc.ppfas.com/
           23. Quantam AMC Private Limitedhttps://www.quantumamc.com/
           24.Sahara AMC Private Limitedhttp://www.saharamutual.com/
           25.Shriram AMC Limitedhttps://www.shriramamc.in/
           26.SREI MF AMC PRIVATE LIMITEDhttps://www.srei.com/srei-mutual-fund-asset-management-private-limited
           27. SUNDARAM AMC Limitedhttps://www.sundarammutual.com/
           28.TATA MF/www.tatamutualfund.com
           29.TAURAS AMC Limitedhttps://www.taurusmutualfund.com/
           30. Whiteoak Capital AMChttps://mf.whiteoakamc.com/
           31.BNP PARIBAS AMC India Private Limitedhttps://www.barodabnpparibasmf.in/
           32.Franklin Templeton AMC Private Limitedhttps://www.franklintempletonindia.com/
           33. HSBC AMC India Private Limitedhttps://www.assetmanagement.hsbc.co.in/en
           34.Invesco AMC India Private Limitedhttps://invescomutualfund.com/
           35.Mirae Asset Global Investments (India) Private Limitedhttps://www.miraeassetmf.co.in/
           36. PGIM India AMC Private Limitedhttps://www.pgimindiamf.com/
           37. Principal AMC Private Limitedhttps://www.principalfunds.com/
           38.Aditya Birla Sun Life MFhttps://mutualfund.adityabirlacapital.com/
           39.Axis AMC Limitedhttps://www.axismf.com/
           40.HDFC MFhttps://www.hdfcfund.com/
           41.ICICI PRUDENTIAL MFhttps://www.icicipruamc.com/
           42. NIPPON MFhttps://mf.nipponindiaim.com/
           43.QUANT Money Managers Limitedhttps://quantmutual.com/
           44. IIFL Asset Management Limitedhttps://www.iiflmf.com/

45.Samco Mutual Fundhttps://www.samcomf.com/

46.N J Mutual Fundhttps://www.njmutualfund.com/

            Mutual Funds, in simple words can be understood by the returns they generate over a relatively long period of time. For example, in 1996 a scheme was launched by Aditya Birla Sun Life MF by the name of Aditya Birla Sun Life Tax Relief ’96. If someone invested 1 lakh in this scheme, it would have become 1.52 crore over a period of 23 years. Now, how did this happen?

The simple answer is that the investment in mutual funds gives you compound interest compared to simple interest in fixed deposits. SIP is another way of investing in mutual funds.

         It means that you allocate a fixed amount like 1000 or 2000, or any amount you like to be deducted from your bank account to the mutual fund scheme on a regular basis. This is to be continued on a long term basis if you want to achieve your goal. Your goal can be anything like, early retirement, your child’s education, your daughter’s marriage, your own house, etc.
Some mutual funds also offer additional benefits like  term insurance cover in addition to your monthly investments. For example, in ICICI MF, you get insurance coverage of 100 times the amount you invest per month in SIP. For first year it is 10 times the amount, in second year,, it is 50 times. Now such service has been stopped by the fund houses.

          There are also various schemes in Mutual Funds like large cap fund, mid cap fund, small cap fund, banking fund and others. Large cap fund means the mutual fund will invest in top 100 companies by market capitalization. This has a relatively low risk and can be preferred by people of young age.
             There is also dividend income in mutual funds. The fund houses on a regular basis distributes the profits of the fund as dividends. This also adds to the fund value if it is not taken out by the investor.

In addition to the value provided by the mutual fund to the investors ,it is also a great source of income for the distributers. Since mutual funds have been in focus recently ,the number of distributors is very less compared to life insurance agents. According to the data, India has 1.18 lakh mutual fund agents till December 2021 compared to 25 lakh life insurance agents in India.

The income of mutual fund agent is more than the life insurance agent but the structure is completely different. In mutual fund , the commision keeps on increasing gradually but in insurance it start decreasing. The commision is fixed for insurance agent but it keeps on changing in mutual fund.

This is because the value of funds keeps changing according to the market conditions whereas in insurance the returns are fixed so ,commision can be determined exactly.

At present here is a list of 10 mutual fund schemes which are performing very well.

1.Nippon India Growth Fund

2. Parag Parikh Flexicap Fund

3.Aditya Birla Digital India Fund

4.Axis Bluechip Fund.

5.HDFC Flexicap Fund

6.Edelweiss Largecap Fund

7.ICICI Transportation and Logistics Fund

8.ICICI Balanced Advantage Fund

9.Kotak Smallcap Fund

10.Mirae Asset Bluechip Fund

These schemes have performed very well in the past year despite tough market conditions.
                 Please comment below if you have liked the article and you can reach out to me on siddharth@sidworld . You can also check my other articles .https://sidworld.in/

Today, I am going to talk about broking business. This is because there are nearly 8 lakh bank employees in India compared to only 300 registered brokers in India and 93 % of people have no idea of share market. This is in sharp contrast to USA where 50% of the people invest in share market. My point is that it is a very untapped market and there are a lot of opportunities available.

And broking business offers provide a lot of benefits which I will list below. People in India wants safe job and safe returns also on their investment .They invest in safe assets like “Fixed Deposit” and recurring deposits in banks and post offices. In fixed deposit and recurring deposits also , a government bank is preffered. Similarly in life insurance also , Government owned “LIC” is preffered. India has 150 lakh crore of fixed deposits and 40 lakh crore in “LIC” https://www.moneycontrol.com/news/business/ipo/lic-ipo-company-8th-largest-life-insurer-in-terms-of-assets-among-global-peers-8087181.html

But if you observe closely ,the bank provides the same products as a broker . In fact it is also a broker and I believe that if a person through his efforts reaches a managerial post , he can very well start his own broking business. Broking business is a business which includes all the investment services like investing in shares ,trading in shares, mutual funds ,health insurance, life insurance and general insurance .Many services provided by the brokers are also provided by banks. There are some differences though.

One major difference is that when you will visit a bank, there is high chance that the bank will promote their own product. For example if you visit a branch of State Bank of India and ask for a life insurance , there is very high probablity that they will explain a life insurance product of SBI Life and not of any other company even though you have more benefit in plans of other insurer.

Similarly if you ask for a dmat account for share trading, they will open an account of their own subsidary company of SBI Securities https://trade.sbisecurities.in/ and not of any other company .

But a broker has life insurance of various companies like HDFC Life ,ICICI Prudential Life among various others. Similarly for mutual funds ,if you go to SBI, they will give you a scheme from SBI MF only but if you go to a broker ,they will have mutual funds of all the companies. In this blog I will list out 7 benefits of starting a broking business .

• Recurring Revenue- Broking business provides a recurring revenue model. All the products generate recurring revenue for the broker.
  • For example mutual funds have commission on a small basis but it continues on a recurring basis till the investment of the client is present with the broker. Similarly in life insurance also ,some commission is paid to the broker every time the customer pays the premium amount. Same is the concept with health insurance and general insurance also. So eventually as the number of customers increase , the income of the owner of the broking house also increases.

• Easy to start- The broking business is very easy to start. If you have money, you can start by registering with the government regulator and if you do not have money , you can become a sub-broker with any of the registered brokers with as low as Rs.10000. You can even start from your residential area. It is not mandatory to start by investing a large amount initially.

• Low investment required- The broking business has become easy to start now compared to 10 years ago. Today the competetion has increased and customers have a lot more options than ever before. This has forced brokers also to bring down the eligibility criteria of onboarding partners to a bare minimum and as a result , today very low investment is required.

• Compounding returns-The broking business provides compounding returns to the owner. There is simple maths. If a broker makes 20 clients per month , in the first year ,he will have 240 clients. The second year ,he will have 480 clients ,the third year 720, fourth year 960 and so on. Besides ,the revenue from the earlier clients will keep coming and new clients will also add up.And 20 clients is assumed keeping in mind that he has no employees initially and only he is working independently. So the revenue keeps on increasing and the broker starts getting compounding returns.

• High return on Investment- The broking business provides a high return on investment compared to what he has put in initially. For the first 2 years (initial phase),maybe he will not earn any substantial amount, but in later years ,the effect of compounding starts to show its effect.

• Helps in financial freedom- This business model helps in achieving financial freedom in a few years only . For more information about financial freedom you can visit my blog here https://sidworld.in/5-ideas-for-financial-freedom/.
• Entrepreneurship- In India ,many people are looking for jobs ,more particularly ,bank jobs.But if some people change their mindset (I am talking about people in mid or senior level ) and start their broking business instead ,they can make a lot of money and even provide employment to some people. I am saying this because banks also provide similar services compared to a brokerage firm. The products are also same to an extent like life insurance, general insurance , mutual funds and stock broking business . The difference just lies in the mindset of people .If some of the people start taking some risk and open their office ,then they can earn much more than they earn in salary .But most people are not able to start their own business because of the lure of salary and family responsibilities. But if they take calculated risk and compare the risk-reward ratio in job versus in business , they will find that in business the reward is much more because of the benefits which I have listed above. This can only happen if the person changes his mindset because the mindset of a businessman is very different compared to the mindset of a person who is in a job.