Smart ways to invest and attain early financial freedom

Every now and then I meet people who tell me with a sense of pride that “I have never taken any loans and never will.” And on the other side of the spectrum, there are people in IT industry who have taken such large loans (for buying a premium apartment) that the EMI load is creating tensions in home, now that most IT companies are slowly downsizing. So here are my thoughts on taking loans. Loan by itself is not a good or bad loan. It becomes a good or bad loan based on: 1. Your ability to pay the EMI’s after taking the loans. A good loan is one where you can repay it without too much of liquidity issues. Your repayment capacity defines whether a loan is a good or

Warren Buffett is the greatest investor of all time. His decisions about buying shares and companies have beaten the stock market year after year and made him one of the richest person in the world. As far as I know, there are only two documentaries on Warren Buffet – where he has collaborated and helped them during the production – one from BBC a few years back and one from HBO that was released ten days back. The one released by HBO was keenly awaited by his fans for more than six months. This documentary traces his life from his early childhood days, to his college days, his marriage and his kids and the way he started his investing journey and the way he has decided to give away most of his $73 Billion to charity. The documentary has some very rare family photos and videos. It has focused on him as a person and his humble lifestyle and clearly shows what an independent thinker he is. But the documentary does not share how he identifies his investments.

2016 was a year of black swans – Brexit, Demonetisation and Trump – all these changed the investment landscape dramatically. Not many would have made decent returns in their overall asset base in 2016 – at least I did not. Does 2017 look better? Well the answer is a NO. As of now, the risks are still there. Modi is still talking tough. Trump is expected to do the unexpected in 2017 (and beyond). And we still have to contend with a Chinese devaluation and Duetsche bank problems. In such a situation, I would recommend conservatism. Stay focussed on keeping your assets safe – do not lose money and live to fight another day. In India, there are chances of further interest rate reduction – that me

This is the most common query that I get from mid/senior professionals. Here is a framework that you can use to get your answer. The key approach to answer this question is to focus on four parameters – Your financial assets (net of all your loans) as of now, Your cash flows coming from your financial assets as of now, Your annualised expenses and The large future expenses that you need to budget for (like wedding, foreign education etc). Once you have retired, assume that there is no salary and your annual expenses and large future expenses have to be met from wealth created by your financial assets. Assuming you have two k

Meeting two such people in the same day is not normal – but I guess I was lucky to have had these meetings on the same day. Let me start with the story of the person with 98 flats – let us call him Ravi (that is not his real name). He is a simple soft spoken guy. Met him at a friend’s place. His father had bought four acres of agricultural land in the outskirts of Bangalore in 1991 at a cost of Rs 35,000 per acre (this was around my annual salary after my MBA in 1989 – so this investment was equivalent of my four year’s income then and I was in Bangalore in that period – so I could have also done the same if I had the foresight then). This land was bought purely for agricultural purposes and the family did farming in the land. Around 1995, the area where this land was situated became Electronic city. The govt acquired neighboring lands and allotted it to companies wanting to establish factories in that area- a few software companies too bought land and am