N/A Two weeks ago, a post by Vaibhav went viral on Linkedin. "I have a house in Gurgaon.. and I need Rs 7.5 lakhs per month... ...to breathe." We are not talking about pollution. That exists! The EMI costs Rs 2 lakhs, because the house is worth Rs 3 crores. The maintenance cost of the fountain costs Rs 12,000/ month. The car's EMI costs Rs 60,000.. because Swift doesn't look good in such a big house. Maid, cook and driver.. Everyone's salary comes up to Rs 30,000. Rozgaar Yojna is practised too. The expenses at night clubs and fancy dinners costs Rs 20,000/ month. The clothes and lifestyle costs Rs 12,000. Birthday and wedding gifts costs Rs 15,000. An expense of Rs 10,000.. which has been spent and forgotten. The total lifestyle costs accounts to Rs 5 lakhs. But since he comes under the 30% slab: then the income must be around Rs 7.5 lakhs/ month. We neither have savings nor do we have insurance.. and I haven't eaten lunch either. If it's written jokingly, then it's ok. But If the situation is such... then who is at fault? This seems like a rich man's fantasy (to spend lavishly). My name is Money Minded Mandeep and I teach people how to build wealth. And trust me when I say this, 'Wealth is a game of mindset and common sense'. I have met a lot of people, when they disclose their income to me.. it makes me wonder, what kind of problems would they have. But when they explain, it makes me realise.. that they could have been happier, if their income was half of what they make now. So, let me actually share, '5 STUPIDIEST mistakes people make with their money!' and how you can buy happiness with money. This video is powered by 'slice'... who are offering flat repo rate as interest on savings account. And 8.5% interest on FDs for everyone. More on them later. Welcome back to the channel! N/A The myth of compounding. Albert Einstein stated that "Compounding is the 8th wonder of the world." Most of us would agree, but tell me which are the initial seven? See, I will blame my own set of people in this... We have taught you that, 'Compounding is magic.' Start early. Start small. Invest for a long time. So you will start building exponential wealth. But If you start early and start small, then you'll be able to observe compounding occurring mathematically on paper. But you will not be able to build wealth in real life. Because, by doing this, you will be bearing a huge opportunity cost. In the early stages of your career, you will be able to build massive wealth, when you invest. Not in stocks or mutual funds. But rather in yourself. If you invest time developing valuable skills, building a professional network, pursuing educational opportunties. So you won't have to wait 30 to 40 years for compounding. You can literally go from a Rs 25,000 salary to Rs 1,25,000 salary. within just three to four months of effort. This is a 70% Annual Growth Rate. Whereas, you are happy with just 12% in the stock market... and to 10x your wealth, you will require 14 years. This is a very sad reality. People who earn Rs 25,000 or Rs 20,000 in salary. They are happy by investing just Rs 2,000 SIP.. presuming that they are atleast disciplined. But they are not actually building wealth, they are losing on their time. They have spent not hours, but weeks, months and years... learning a lot of finance content from YouTubers like us. They don't decide when to learn finance. Instead, they decide when creators upload videos, or when companies raise IPO (Initial Public Offering). They invest their precious time into researching. And you might know this that IPO is not a sure shot way of making money. But it is definitely a sure shot way of losing your time. You might have heard this quote, "If you spend 10,000 hours on a skill, you become a master of it." Maybe most people get demotivated after listening and don't learn anything new. But now, there is another quote, "It only takes 20 hours to become good at something." You could become best in the world within 10,000 hour, but that is not your goal. If you can read English, understand English, but you can't say it. then you can change your life within just 20 hours of practise. If you don't know how to achieve it, then definitely read this book. THE FIRST 20 HOURS. How to Learn Anything Fast. You will learn about the challenges of your life. What should you learn, If you want to learn something.. and what is the approach to learn? So that, after 20 hours, we are able to overcome one of our weakness. And don't presume that you might have endless time to do this. 20 hours is a very short time. But you will lack that too, once you get responsibilities in your life. After that you will not have the luxury to quit your job.. or to travel, attend seminars, meet new people or make connections. And let me actually show If you focus on investing in SIPs of 2,000.. then how much loss would you incurr. Let's stay 5 years ago, you started a SIP of 2,000. Although we teach not to expect more than 12% annual returns. But let's say you are a good investor, you get 15% return. even then you would be earning Rs 1.75 lakhs, as of today. Now, let's say you didn't invest for 5 years. You didn't bother about compounding. But in these 5 years, you were focused. You invested your time, in learning new things.. and as of today your salary is Rs 1.5 lakhs, which is not much. But now you can start an SIP of Rs 50,000. It will only take you 4 months to cross the 1.75 lakhs amount. It means you earned your 5 years back, within just 4 months. And then If you just continue that for 20 years, you will have Rs 6.5 crores. And for the context, If someone doesn't know, why compounding is called magic. So If instead of 20, you invest for 25 years, i.e. 5 years more. Then these 6.5 crores will become, 17.5 crores. Therefore, compounding is in fact magic. But it will disproportionately favour those who have a bigger investment base. At every stage of your career, you have to think about the best use case of your money. If you are in the early stages of your career, with a lower salary.. then the best use of your savings is not stock market or mutual funds. The best use of your savings is in your personal development. N/A Businesses build wealth, not jobs! Yes, you read that right! Businesses build wealth. Jobs don't. But listen to the entire thing.. There is a fundamental difference between businesses and jobs. In jobs, your salary is directly linked to your time. If you work, you get paid. If you don't work, you don't get paid. And even If you are a machine, you will always have only 24 hours in your day. In contrast, this is not the case with businesses, they thrive on scalability. It means they will hire 100 employees like you. If an employee works for 8 hours and earns his salary. Businesses, in one day, receive work amounting to 800 hours. And let's assume the bare minimum. Any business only hires you... When he is able to retrieve 10x output from you in comparison to your salary. And in return, reinvests the profit earned for business expansion. It means an employee who can only earn by working for 8 hours. On the other hand, a business owner is earning profit even while he is sleeping. In fact, a business doesn't just reinvest it's profit.. rather applies for loans from banks and expands his business. Repays the loan based on the future cash flows. This concept is known as 'Leverage'. A salaried employee doesn't have this option. In fact, understand a basic example. Once you have built a business, a successful machinery that prints money. For which, of course you require hardwork and business acumen. At the same, your small decisions will make you biggest money; without doing extra work. I searched how many food orders does Zomato recieve? The answer is 1.3 million, which is Rs 13 lakhs. If, from tomorrow, Zomato mentions that on every food order, I would charge Re 1 extra as a processing fee. Without hiring any extra person, without hiring an extra driver. Without an extra investment. Zomato will be making Rs 13 lakh/ day from tomorrow. 'This is business.' That is called 'Scalability'. And in a healthy capitalistic economy, Businesses are the key drivers of growth and wealth. Think about it, how does everything start. A population which has it's needs and wants. To fulfil that, a business will definitely form. To produce those goods and services, will hire the same population as employees. and pay their salary. After receiving the salary, these employees.. will also become the customers of this business.. who will also purchase the goods and services of this business. So who is creating wealth? The one who is producing goods and services. And If goods and services are not produced, and wealth is not being created. Then your gold or real estate won't hold much value. Because, in order to purchase that, you need wealth. You need to have something of value in order to acquire gold and real estate. But this is also a reality... that not every person can become a businessman. But atleast in the early stages of your career, your funda should be clear. To earn money against time is probably the worst way of making money. And that is possible only when you will be able to identify good opportunities. Have you ever seen a local property dealer? He is the most knowledgeable person of his area. They make 2-3 phone calls and arrange a meeting between the buyers and sellers. And If this deal is secured, they take away 1% of it's commission. But to do this, they have strong market knowledge of their area.. which means they invested in themselves. This sounds very easy in execution, because they are doing it effortlessly. But as a salaried employee, it is very difficult to identify such opportunities. Because, we have received training to earn money by working for 8 hours. "I'll immediately give you more work, once you get this work done." And it's not that salaried employees can't create wealth. He can create. But he can't create by accumulating the salaried income. He will either have to invest in his business or someone else's. This is exactly what stock market investing means. If I purchase a share of Reliance, then I become it's part owner. Because. I will also receive Mukesh Ambani's fruit of labour. Ultimately, Equity will create wealth. Either you have to create your own, or invest in someone's else equity. N/A Emergency Fund I cannot stress this fact enough. Thousands have been laid off from jobs. Thousand more are being laid off. Due to AI. And there is no law of 'Severance Pay' in India. 'Severance Pay' means when company lays you off, then they lay off after paying certain months of salary. So that you have enough money, until you find another job. That means, you will be on your own, If you get laid off from your job. In that case, you must have expense money saved upto 6 months. So that you are able to look after the family obligations including paying off your loans, EMIs. Or else you might become a defaulter. And If you have a variable income. It means you are not a salaried employee, but a freelancer. Instead of 6, you must have expense funds amounting to 12 months. And this money should not be in stocks or mutual funds, because you can't take risk on this. This should be available for you to withdraw almost every day of the year. Hence, you can invest in "Liquid Mutual Funds', which are very low risk Mutual Funds. and are only invested in instruments having a 91 days maturity.. and provide you a basic 6 to 7% return. Or else you can invest in FD, which currently provides more return than liquid funds. Tell me one thing. How much interest does savings bank account offer? If you don't know, then check it. You get 2.75% interest. Have you ever thought why don't banks provide more interest? There are multiple factors impacting savings account and FD interest rates. One of those factors is 'Repo Rate'. Repo Rate means the interest rate at which banks apply for loans from RBI. And not just RBI, banks opt for loans from us too. Our money kept in the savings account is ideally loans for banks. Because banks pay us interest on it. What If the repo rate increases. What will happen then? The cost of borrowing for banks from RBIs will increase. So in this case, banks will have to take loans at cheaper rate from the customer. That is, taking savings deposit is more beneficial compared to RBI's repo rate. But, slice, which is a fintech turned small finance bank. On savings account, they will offer 100% of repo rate as interest. Currently, the repo rate is 5.5%. So on your slice's saving account, you will get 5.5% per annum interest. And this interest will be credited daily instead of quarterly. And there is no hidden condition in this.. For eg: Banks do offer 7% interest rate most of the times. But there is a condition stating that.. you will get 7% on the balance exceeding Rs 4 lakhs. Now, let's be honest who keeps Rs 4 lakhs in account. There is no such condition in slice's 'zero balance savings account'. It means, you either keep Rs 100 or Rs 10 lakhs, you will receive 100% of repo rate, which is currently 5.5% interest. At the same time, slice currently has an interest rate of FD for 1.5 years is 8.5%. This is not just for senior citizens, but for everyone. Your savings and emergency fund, i.e. FDs both are sorted. And needless to say, it's a bank. Therefore, every deposit, up to Rs 5 lakhs is insured under DICGC (Deposit Insurance and Credit Guarantee Corporation). The process to open slice's savings account is completely digital. I am providing it's link in the description and pinned comment. At the same time, there is a referral code for you to earn some rewards. N/A Insurance. Earlier I used to mention that 'One medical bill can destroy your entire wealth'. and can adversely impact your entire family. And I know certain people who have experienced this. I met a taxi driver who came to pick me up in a Volkswagen Ameo. I asked him, "This car might incur a lot of expenses. How are you driving it as a taxi?' That's when he told me, during covid, he not only lost his father. But he himself was in a severe condition and was saved by God's grace. By the time, he recovered, he was diagnosed with black fungus. And the total treatment cost exceeded Rs 55 lakhs. He had to sell the house, take loan, and he also lost his job. Hence, he is driving a taxi. He earns a profit of Rs 15,000 - 20,000, on which he has to pay rent and EMIs. And the quality of life has also been reduced severely, because he has to rest every few hours in order to drive more. But before all this, he had a house, and he also had a job with a salary of 40,000. He was in a decent condition, If you think about it. The child was growing up gradually.. The man would have built a stable career and generated enough wealth. The child is still growing. But this misfortune (illness) put the family into debt. Illnesses or accidents don't arrive after announcing. You should have adequate health insurance cover for every family member. It's premium will save you from such losses. If you are a bread eaner, and your family is dependent on your income. You must have a term insurance upto 20 times of your current annual income. So that your family will be able to build their career after you. and will be able to pay off all the loans taken by you. And before anyone invests your hard-earned money.. and locks it in useless policies for 20 years. Please definitely watch my Insurance Guide. N/A Never borrow for Depreciating Assets. You might have seen this type of loan.. In which you will borrow the money at a set interest rate.. As you keep paying your EMIs, your balance of outstanding loan reduces. Similarly, the interest levied also reduces. This loan is known as a 'reducing balance loan'. It means you have to pay interest based on the amount currently mentioned, you don't have to pay interest on the loans paid. Now look at this other loan. Loan amount of Rs 10 lakhs. 10% interest rate for 7 years. Do you know how much interest will be levied? What's 10% of 10 lakhs? It is Rs 1 lakh for one year. The loan is for 7 years, which amounts to Rs 7 lakhs. Your total interest would be Rs 7 lakhs. The total payment would be Rs 17 lakhs. This will be further divided over 7 years. And this would be your EMI. This is known as 'Flat rate loan'. It doesn't matter how much money you have repaid. It charges interest on the entire amount.. for all the years. The 10% loan comes equal to loan of reducing balance of 17 to 18%. It means the iphones or fancy items that you purchase on loans. Check it once. It could be a flat rate loan. It might seem 10% lesser, but in reality it could be double, maybe. Then there is personal loan. If you take it from bank, then it's 15 to 16%. And If you take it from an instant loan app, you might be levied 30 to 40%. And the marketing calls I have been receiving these days, have also become quite creative. They are saying stop getting jealous after watching your friend's travel stories. Take loan from us and travel on your own. So If you want to grow your wealth by 12 to 15% by investing. Then If you keep paying interest at 18%, how will you be able to build wealth? Coming to 'Buy Now, Pay Later!' Whether you believe there is no interest levied on it. Make 2 Rules. 1. Never buy something you do not need. 2. And always buy depreciating assets in full. If you want to purchase a car, then pay the entire amount and purchase it. If you don't have the entire amount, then please earn money, save money. Focus on your career and then buy it. And even If you earn decently, and don't want to show off. You must not! If you want to purchase a small car for your basic needs, then definitely follow this rule. You must pay 20% down payment. Your loan tenure must be 4 years or lesser. And your total interest cost should not be more than 10% of your monthly income. Make another rule. I will avoid 'buy now pay later' and credit cards. Buy now pay later traps you! If your salary is Rs 50,000.. and you wanted to purchase a product costing Rs 30,000. But you would be paying that products money in three installments, i.e. you could pay Rs 10,000/ month over three months. This will give you false sense of affordability. Because, you could only spend Rs 30,000. Since you put yourself in the 'buy now pay later scheme' of 3 products costing Rs 30,000 in total. And after paying 10,000 per month, you will have 3 products after three months. when you could only afford one! You will be happy knowing that you didn't have to pay any interest. But you don't realise, that you bought 3 products, which you couldn't afford earlier. That money could have been used for a better purpose. This is not a very responsible thing to do. Whether you look at your parent's mindset or any business functioning.. people will only be able to spend, when they afford something. If your focus is only on over consumerism. Then you won't be able to focus and build a successful career and wealth. Even If you receive the salary increment, then you will have an answer on where to spend this money. Because you only keep on creating your shopping list. Credit card has the same nature. If you keep paying all your bills on time, then you won't have to pay any interest. But If you have poor discipline. Then by using a credit card, you will buy all the stuff that you can't afford.. or the one you didn't require. So until these disciplines are sorted in the early stages of your career. Stay away from credit cards. There is only one exception, wherein you can take loans and it is justified too. If you are borrowing for assets that will appreciate or will generate a cash flow. If you apply for a car loan and you drive that car for Uber and Ola, then purchase it. Because you are not doing that to show off, rather for your business. That is what we call leverage, which you was earlier mentioned in point number 2. Similarly, education loan is justified. These were as per my observations. 5 STUPIDIEST mistake people make with their money! Making money is a challenge. Managing money is an even bigger challenge. If you are in such a situation, then I would request you to go and ask your society.. "I have achieved a lot to show it off to you people. I am stuck at the moment. You are the society. I have done all this for you. Help me from this situation." Let's see who helps you then. Sorry. But this is the harsh reality. Hence, you must never do anything just to show it off to the society. You became a high individual income, but you failed to buy happinness from your money. Please don't make this mistake. Do check out slice. You will find the link to open a completely paperless savings account... you will find in the description and top comment, along with the referral code. Click on that. Open your savings account and earn higher interest.