Financial Independence = Current Personal Wealth, generating enough Income over one's Expenditures to cover the basic necessities & lifestyle.

Financial Freedom = Is beyond basic necessities & lifestyle. It is primarily, 'what one wants to do with one's Money'.

Financial Independence # (does not equal) Financial Freedom

Income > Expenses = Asset Creator ➡ 'Master of Assets'

Expenses > Income = Liability Creator ➡ 'Master of Slavery'

Assets create more Assets.

Liabilities kill Income & create more Liabilities.

"Financial Independence + Financial Freedom = A happy & a fulfilling Money Life."

Note: Expenses include any recurring tied up payments (EMIs, Unnecessary Insurance Premiums etc...).

Michael Phelps - 22 individual Olympic medals & 26 in total. Going strong and more to come in a couple of days 🙂

Everyone calls him the Greatest Olympian - Yes, in terms of medals, undoubtedly.

Let's dig in a bit of data points -

There are 17 Disciplines (17 golds or be won) in an Olympic Swimming event (next only to athletics).

All his medals have come in from 'freestyle', 'butterfly' & 'medley' styles of swimming.

All in 100 & 200 meters of swimming, only. Including the team events where he had to swim for a maximum of 200 mts

He is an Olympic swimmer since 2004.

We don't need tonnes of Investment Options in a portfolio to make money.

We just need limited, simple options delivering more than ordinary results, consistently & over a longer time frame.

Participating in 17 events was not necessary for Phelps to earn the 'Greatest Olympian' title or 26 +++ medals.

A small portion of a portfolio delivering superlative results is the only requirement for a 'Greatest Portfolio Medal'.

Phelps never had to swim for more than 200 mts to win a medal, but an investor definitely has to swim in a 'Portfolio Pool' for a long time before earning Golds 🙂

Golds - for Consistent, Simple yet Effective long term options.

A couple of assets which present the greatest challenges in succession planning are, 'Real Estate & Business Ownership'.

If clarity of thought can be achieved, Business Ownership succession might not be difficult to manage; but, the Real Estate demon is too big an issue.

Issues of -

Partition (in a suitable way) - we can't split an apartment by giving one bedroom to a successor & the other to the 2nd 😳

Dispute Resolution (within family).

Litigation (external forces).

Regulatory (govt related).

Documentation (😱).

Liquidity (we can't sell one room in an apartment, we have to sell the whole piece).

Illiquidity (we can't sell, when we want to sell).

Cash Components (Parallel Market).

Probate Costs.

Lawyer / Attorney Fees.

Illegal occupation of the property by miscreants.

Rental issues.

Overall Management issues.

& on transmission -

New problems to a successor - 'what should i do with this piece of land / apartment?'

Development?

Sell?

Maintain status quo?

If so, how long can I keep it? Should I keep it?

If selling is an option -

What is the right market price? Can I get all money into a bank? How will I take this money out (NRI)?

Am I getting a good price?

Above all - Own (more than required), Operate, Maintain, Sell or Transmit - TAXES are inevitable in this Asset Class, at each & every stage 🙂....No respite, there.

Real Estate or Reel Estate - having a plan is necessary ⛳

Olympics - 2016

Novak Djokovic – losing in the 1^st round

Willian Sisters – Losing early in their doubles match

Abhinav Bindra – Losing a medal by a whisker

Archery team – losing by a point

Gymnastics – Athletes breaking their legs while competing, and still smiling after.

When medals are decided by a ‘decimal point’ in shooting & by an arrow in ‘archery’…there is nothing to look back at. It’s the best one could do against all odds.

In reality, it may be their bad luck on that day. Else, all of them are great sportsmen / women, competing at the highest level in their chosen sport.

At the end, some don’t get a second chance to win a medal; but their sporting journey in itself a great ‘Life Medal’.

But, or investing journey is not so ruthless. It provides us with some enormous opportunities all thorough one’s life. We just need to pick the right, ‘Medal of Opportunity’.

A decimal point or 1 point in differential returns will not let us down for life. We will still be quite good at Money Life as long as we choose the appropriate ‘Medal of Opportunity’.

It’s only that, most focus on a decimal point & miss the broad target completely.

If we focus on the target, decimal points don’t matter.

Ken Fisher in his book, ‘How to Smell a Rat’, shares some valuable insights for investors –

“The regulators didn’t catch these swindlers earlier is a pretty good indication that you cant count on them to protect you. Only, ‘YOU’, can protect you.” – Buyer Beware, Investor Beware.

“Friends make nice dinner companions & give a good shoulder to cry on. But a tip from a friend – no matter how smart or sophisticated that friend – is never sufficient due diligence. Friends, don’t let friends in the middle of decision making.” -Do your due diligence before drawing conclusions.

“Fancy offices, expensive toys, and corporate & personal binds are a red flag. If they aren’t meant to distract you, at the very least they distract the adviser.” – Differentiate between what is needed & what is an appendix.

“Exclusivity might make sense for a social club, but it doesn’t for financial advisers. Be suspicious of claims on ‘exclusivity’ from your money manager.” – Simple solutions lead to exclusive results & not vice versa.

“Having reasonable expectations helps set a proper strategy, but also helps you identify & avoid potential financial fraud.” – Too good to be true is definitely a red flag.

“A strategy isn’t a collection of tools or product. You may have the world’s best saw & power sander, but without a Blueprint, you won’t get anything significant built.” – A nice blueprint shows the way for a better execution & an even better result.

"Everyone wants great returns with no downside. But the truth is, big returns with no down years aren’t possible.” – Time, Time & Time in the market only counts.

Happy Money Life J

Rio 2016 – Opening Ceremony

7 years was not enough for the country to have a realistic financial plan, at least for the opening ceremony L; forget the rest.

The Brazilian Govt stepped in 48 hrs. before the opening ceremony to fund millions of Reals…breaking its promise to their people that, ‘the govt will not fund the Olympics’.

The bid was won by Brazil during its commodity boom days.

A straight extrapolation of the country’s ‘Money Life’ then, got them into a bottomless pit today.

Today’s Money Life is ‘NOT’ Tomorrow’s Money Life.

Money Life Planning is not based on futuristic excel sheets.

It is based on ‘Dynamic Real Time Adjustments’ to the reality ‘in sight’.

Having a plan is good, but, being prepared for the worst is even better.

Summer Olympics – Rio 2016 – “A New World”

The 5 rings in the Olympic flag represent the 5 inhabited regions of the world (Africa, Asia, America, Oceania & Europe) and their colors; Blue, Yellow, Black, Green & Red were chosen because every nation had at least one of them in its national flag.

5 Rings for an investor –

Holding Period

Liquidity Needs

Returns

Risk

Asset Allocation

&

The 5 colors of a good investor

Patience

Strong Emotional Control

Well Defined Strategies

Focused & Disciplined

Persistent & Learning from their mistakes

Sport, ‘For a New Investor’ – ‘Investing’ is a passionate game.

Don’t invest for the sake of playing; play passionately for the sake of beating ‘Inflation’.

Losses happen only when a player quits the field. Not when he / she stands on the field & continues to play to strength.

Winning is just a matter of time.

Happy Olympics, Happy Investing J

R K Lakshman’s ‘Common Man’ walks into an electronics showroom, today.

Common Man: I want to buy an AC

Salesman: this is the model, Sir. Just, Rs.30, 000/-

Common Man: Oh!, has the price not dropped ?

Salesman: Why? NO

Common Man: GST Bill was passed yesterday. All TV Channels & newspapers said, ACs will be cheaper. Is it not?

For a Common Man – is there a victory in GST? Let’s look at it –

Mobile bills – go up

Internet bills – go up

Restaurant bills – go up

Insurance Premium Payments – go up

Loan servicing costs – go up

Hair cut at premium saloons – go up

Bottom-line, anyplace where there is a ‘Service Tax’ loaded, it is going to be more ‘Expensive’.

So, who is benefiting? Businesses.

When the ease of doing business & their input costs come down, due to a simpler tax regime, the possibility of them making ‘More Money’ increases.

Should I say, the Asset Class to park our money J

Common Man continues to pay common taxes (direct & indirect taxes).

Common Businesses might start making Uncommon Profits.

By the way, GST rates will be decided by a panel headed by the Finance Minister, Shri. Arun Jaitley.

Rajya Sabha unanimously passes the GST Constitutional Amendment Bill J

Well, nothing changes for us tomorrow. Life Continues.

Down the lane, for Service Providers, tax moves from the current 15%, to the band of GST L

GDP – Gross Domestic Product

GNP – Gross National Product

NDP – Net Domestic Product

NNP – Net National Product

And then, GNH – Gross National Happiness (Bhutan) –

4 Pillars of GNH (in brief) –

1.     Sustainable Development

2.     Preservation & Promotion (Culture)

3.     Conservation (Natural Environment)

4.     Good Governance (Establishment)

Now we get to coining new terms, again J

GIH – Gross Investor Happiness

GMLQ – Gross Money Life Quotient

Sustainability, Growth, Preservation, Governance & Development – all form a critical part of GIH & GMLQ.

GIH & GMLQ are the benchmarks for a smooth Money Life.