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How To Save Money And Become Rich? | Personal Financial Planning Course P2 CA Rachana Phadke Ranade - YouTube
Channel: CA Rachana Phadke Ranade
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Hi guys, CA Rachana Ranade here
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after watching my 2 videos on the basics of stock market
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everyone is really excited to start investing in the stock market
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before you start investing in the stock market
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You need three things
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number one
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you should have a trading account
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number to you should have a demat account
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and number 3
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money............... you need vitamin m
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what will you do if you don't have vitamin m
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you will open a trading account will open a demat account
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that is not a big thing
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what about money, that is the problem
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so today I thought that I am going to discuss about trading account
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I am gonna discuss about Demat account
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but I feel the most important point which was the third point
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I will take it to the top now
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and let us try to discuss that
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I don't have money many!
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many people whine about this
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like when I ask people about do you invest?
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They answer me
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rachana we are not like you
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we don't have money
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I say what do you mean by we are not like you
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this doesn't work like this everyone has money
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it's about the problem is not having money that's not the problem
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I don't have money that is not a problem
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according to me problem is the method used to spend money that is not right
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your budgeting is not right
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many times this happens people do not think before spending
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will earn lots of money I have two three friends who have worked for more than 10 years in IT
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but at the end of the day if you ask how much you have invested how much you have saved
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that will be very negligible
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so guys I am repeating problem is not your earning
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the problem is how much you are saving
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problem is the way you are spending
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I am sure you have learned in primary school how to calculate savings?
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Correct me if I am wrong
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income minus expenditure is equal to savings
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do you believe this do you think it is right
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I think the formula should be reversed
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income minus savings should be your expenditure
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you will say wah wah wah Rachana that is something new!
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did I say something new, yes if compared to conventional wisdom
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because what people do is they have all priorities for spending
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and whatever you remains is what they save
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and out of that, they invest
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the strategy has to be a little bit different
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the strategy has to be whatever you earn from that
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you have to set aside a part mandatorily as saving
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and then what remains
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should be your expenditure.
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In my childhood, my mum taught me
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whenever she used to give me pocket money
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she used to tell me you should always keep 20% of pocket money aside
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spend the balance
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so that is where I learn this formula
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actually, that Income minus savings is equal to expenditure
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now what should be your expenditure
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is there any Thumb Rule for it you can search it on Google
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I also search to find new ways the one which is a very common and popular 50-30-20 rule
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you can follow that
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let me tell you what is 50 30 20 rule
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basically 20% you have to save
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You have to save!
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Whan, you get that sweet message,
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You know which sweet message I am talking about?
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That your account has been credited
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by whatever rupees.
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sweet message once a month.
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But then
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"Ye ak baar ki Khushiya hai bar bar ke Gum"
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When you start getting messages
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Your account has been debited
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Your account has been debited
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this trend continues throughout the month
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but how are we going to tackle this trend of spending that's an important question
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so if you keep aside 20% from your hundred
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now what is left is 80
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now this 80 how are you going to spend
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make a further division of 50 30
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50 let us say you have to spend this on your necessities.
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necessity could be like food, clothing, and shelter.
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and these days this could be food clothing shelter and electricity
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because electricity is which charges your mobile
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you are only able to see me when your mobiles get charged
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so you have to spend a lot of money on necessities
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but I feel 50% of that
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covering the necessities of life should be good enough.
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Now remaining balance 30
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spend it on luxury
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I am not saying you should not buy an expensive phone
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I am not saying that don't go to an expensive holiday destination
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you have one life live it fully
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so how much should be your allocation let me repeat one time again
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it should be 50 30 20
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20 initially as you are saving
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30 you can take it for your luxury for your good lifestyle
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And 50 could be basic expenditures, your necessities of life.
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many people say that,
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we don't have that much income where should we save from
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you know I had this wonderful opportunity to interact with people
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which was close to Satara, Satara is a place in Maharashtra
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and there I had a wonderful opportunity to interact with people
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this program when I deliver the session was co-sponsored google and TATA Mutual Fund
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Through this program, I was taking this session.
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so there was one guy he said that,
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what is there in villages we don't have money what do you know about villages
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people like us get very low wages what rules you will teach us and don't have money to save
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so I dared to ask him a question
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actually, just before the lecture, I have noticed he was smoking
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so I dared to ask him a question
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so how much do you smoke in a day?
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so he said on an average 7 cigarettes a day
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I don't have any experience. :o :)
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It is a very serious topic, please understand.
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if you calculate one cigarette is 10 rupees he was saying 7 cigarettes a day that becomes 70 rupees per day
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to calculate what he spends for a month on cigarettes
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that is around 2100 rupees per month
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and you calculate for 12 months then the figure goes to 25000 rupees per year
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so now if you are spending 25000 rupees on cigarettes
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I don't understand why these people are saying that they don't have money to invest?
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Everyone has their own habit but I said these expenses/habits should be in that bracket
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I am not saying that is right or wrong that should be in a bracket
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that is about the discipline if you have the financial discipline
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then only you can save then only you can invest
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I have so many of my friends especially girls who said that
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you know Rachana if we don't do the shopping for a few days we start to feel uncomfortable
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I don't fall into that category I don't know why
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but if you feel similar when you don't shop for few days god bless
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I mean you can do those things but keep that into the limit of 30 that is what I am trying to say
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ok you do that I am sure you will be a very very very better position
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5 years down the line 10 years down the line I am sure you will thank me for my advice
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You will admit that our spending pattern was a little different we tried to adjust accordingly, and we have definitely benefited from that!
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I am sure you will be able to do that.
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So you have understood Vitamin M,
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Now comes the Trading Account and second is Demat Account.
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by the way, before I move on to that
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let me tell you there are many such mobile apps
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which you can download from Google Play and app store
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I was just searching, let me tell you frankly
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I have not used any of such apps I was just trying to search apps for money management
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see the first one is Money Manager expense and budget
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second is your Monefy app third one is your money Manager app
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fourth 1 is wallet 5th one is a monthly budget planner and Daily Expense tracker.
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I found many such apps
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which have such features where you can connect your cards with these apps
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so what happens when you connect your cards with these apps latest understand if you swipe your card anywhere
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let us say you swipe this card at BookMyShow
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then automatically app notes this spending in the entertainment category,
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if you swipe your card at the petrol pump automatically app notes that spending in necessities category.
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So without any extra effort
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you have ready monthly expense tracker to show you where and how you have spent your money
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is that could be a very good thing to have for your financial discipline
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these apps will help you definitely
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so coming to the next point, about the trading account and Demat account
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many people get confused over Demat and trading account they know what is Demat account but don't know what is a trading account?
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so first I will try to explain what is a Demat account?
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The Demat account in simplest words is nothing but a place where you can store you are shares.
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it is similar as you deposit your money in the banks,
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as you store your jewelry in safe vaults,
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like your clothes which you store in your cupboards similarly,
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for your shares, there is an account and that account name is Demat account.
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so what is the work of a demat account nothing but to store your shares we should buy that is what the demat does.
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But this just storage place
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but if you have to buy or sell from that place
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demat will not work in that situation demat is only for storage demat is not for buying and selling
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so what do you need for buying and selling?
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buying and selling is called trading
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so for buying and selling of shares, you need a trading account.
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so please understand you need three things first demat account second trading account and last vitamin m
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for that, of course, you can open a savings account in any bank
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there are many banks which will offer you to open 3 in 1 account
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which will include your Demat account trading account and savings account 3 in 1
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but let me be very Frank with you there are many banks
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which charge brokerage at high levels
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so it is not bad to have Demat account with any bank
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but definitely, your charges whether it might be Demat charges or your trading account charges generally with banks are higher.
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having your demat and trading account with one provided is always good
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o I will give you a simple example when I started trading
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I did not know about this my Demat account was with a bank and my trading account was with a different broker
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so the problem was when I had to check how many shares I had of X company
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I had to always check bank statement and back then there were no online systems
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so always I had to go to the Bank get my statements updated then I would get to know about my shares and then go and sell it!
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it used to take so much time
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so don't do this Demat account is with a bank and your trading account is with a different broker
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according to my opinion that is a bad strategy, I've done this mistake at the start of my career you don't repeat that please
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so what I did afterward was shifted to a broker
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who had the Demat as well as a trading facility.
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initially, I started with edelweiss broker
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even today I am using the same broker but this concept known as a discount broker
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so what is a discount broker?
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let us understand it first see these brokers
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will provide services at bare minimum charges so let me give you a simple example
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so I only edelweiss any other big brokerage house it could be Motilal Oswal it could be Share Khan it could be ICICI Securities
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unless and until you take a big advance brokerage plan generally your brokerage is high
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generally, it would be at least 0.4 or 0.5 of your total buying and selling amount.
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So 0.4% of your total buying and selling amount you have to pay as brokerage.
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For example, if you buy a share of hundred rupees 100 x 0.4% is equal to 0.4 Rupees will be your brokerage
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As your trading amount increases the brokerage increases
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so I thought I was giving so much brokerage hot and what can I do for it and I came across this concept of discount broker
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I just checked google searched best discount broker and Zerodha came up
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Zerodha is one of the leading Discount brokers
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So I have opened a second account with Zerodha I found their charges very nominal
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everyone has their comfort zone for many years I have used Edelweiss as my primary broker
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and I don't want to close that account so I am simultaneously kept that open
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so a very important lesson for you all again
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can we have 2 Demat accounts, Yes!
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can we have two trading accounts, Yes!
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it is your choice you can open as many accounts you want
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only thing is you have to pay annual maintenance charges for both accounts
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so for Zerodha, the account opening charges is 300
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annual maintenance charges are also 300 it has best brokerage plans
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and there is no comparison with any other broker according to me
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so that is why I thought I should try it
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have done very few trades prove it my personal experience was amazing
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so I thought I should share this with my audience
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in fact, there were so many students who bought my course who said that
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can you suggest us some brokers
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so that was the reason I tried to trade myself because unless I am satisfied I cannot recommend a broker
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so had that good comfort good experience trading with this
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let me give you this recommendation you can also open your account with Zerodha and if you want to open an account
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I have given a link in the description and I just click on that link you can upload your documents to get your account open
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I got my account opened in 3-4 days so it was a very wonderful experience
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so keep watching my videos keep absorbing more and more knowledge
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and please pass on these videos most of your friends family relatives
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so that's it from my side Jai Hind Jai Bharat!
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