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3 SIMPLE rules to get SUPER Rich! - YouTube
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if you would have decided to invest in
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hdfc bank 10 years ago so roughly let's
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say here at 700 rupees then let's see
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that if the stock price doubles every 5
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years hi everyone welcome to today's
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video
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so let me start today's video by stating
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out a very useful and an important fact
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and the fact is that if you go and speak
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with any rich person in the world
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literally any rich person in the world
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they will all have one quality which is
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common amongst them
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that quality is that they are very good
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at motor motor math now what is motor
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motor mat muta motor mat simply means
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that they are very clear about how they
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are going to make money and how much
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money they have to make number two they
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will be very clear about where to invest
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it and what type of investment style
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makes sense for them third they will be
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very clear about how much of money they
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would like to spend and on what things
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these are three questions around which
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our personal finance journey also
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revolves we keep on trying to get
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answers around the questions like how
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much money should i be saving how much
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money should i be earning how much money
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should i be spending so i am going to
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break down three very simple easy to
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understand rules for you on this video
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that will help you understand this motor
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motor math and become wealthy over time
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so super important super interesting
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super fun video so please give it a like
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and we'll get started also a very quick
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shout out to upgrade it is an excellent
[73]
upskilling platform if you want to get
[75]
rich in your life the best way and i
[77]
keep on speaking about this on my
[78]
channel the best way to do it is that
[80]
you need to amplify your skills i have
[83]
curated a list of courses that i like
[85]
from upgrade you can go and check it out
[86]
on the description box so let us get the
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video started so the first rule is
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called as the karurpati rule or you can
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call it 15 15 15 rule i have touched
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upon this rule on some of my earlier
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videos but let me speak about this rule
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in a holistic manner now so let me
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demonstrate this point by taking you to
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a sip calculator
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and show you the power of this rules so
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15 15 15 simply says that if you invest
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monthly investment 15 000 at an expected
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return per annum of 15
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for a period of 15 years then you end up
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making this much amount of money which
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is in excess of one crore so let me play
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around with these numbers to help you
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illustrate some of the key points that
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you need to take away from this rule so
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the first key thing is that your time
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period is of a lot of value for example
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if you do not change any parameters you
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just change the time horizon to just
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five years right instead of 15 just five
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years you only end up making total value
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of 13.45 lakhs so your portfolio shrinks
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a lot if you take this to 25 years so
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instead of 15 25 years then what is the
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impact so you will see that the impact
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is 4.92 crores so all the parameters
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same 15 years you make roughly one cr 25
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years you make 4.92 cr 5 years you only
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make 13 and a half lakhs so the first
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key takeaway is that time horizon is
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very important and you must start
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figuring out your financial goals as
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early as possible because it gives you
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something called as compounding benefits
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what are compounding benefits i just
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explained you let's move on to second
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key takeaway the second key takeaway is
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that this rate of return is very
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important rate of return is very
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important here we are assuming that we
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will be able to grow our wealth by 15 so
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let me break this number down and let me
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help you clarify how easy or difficult
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it is to grow your wealth by 15
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the first sub point that you need to
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remember here is that if you take a look
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at the last 10-year kagger of nifty 50.
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so if you just literally do passive
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investing you go and invest in nifty 50
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index fund you would have roughly made
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12.2 percent 12.2 percent as kagar so
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close to 15 if you do direct equity
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investing then your returns will really
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depend on your skill set people make
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negative returns also and people make 40
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returns also so it really comes down to
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your skill set but the point i'm trying
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to drive home is that it is not too
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difficult to make this 15
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a counter argument that i keep on
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getting is that akshat if it is so easy
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to make 15
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why is it that mutual fund managers
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mutual fund managers they are not able
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to grow their wealth at 15
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this is an entire discussion in itself
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but let me give you a very quick
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synopsis of that first and foremost
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majority of the mutual fund managers
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they do not put their own money in their
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own mutual funds that's point a number
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two mutual fund managers play it safe
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now what is meant by playing safe so
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imagine this that who are the customers
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of mutual fund
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the customers of mutual fund are people
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who are not very active in terms of
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direct equity investing so they go they
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feel that if i give my money to an
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expert that expert will at least grow my
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money more than the fd rate so that
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becomes a target for mutual fund
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managers because think about it this way
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that what is the best alternate for you
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for example if you don't know direct
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equity investing
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your only option is to either go and
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give your money to mutual fund managers
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or do a fixed deposit these are your
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primary options if you're doing fixed
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deposit then you are making five six
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percent but if your mutual fund manager
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is giving you a return of eight nine ten
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percent then you will be happy with it
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why because you are getting more than
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the fd now imagine a scenario that one
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year some mutual fund manager gives you
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a return of twenty 20
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right
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next year what will be your expectation
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your expectation will be that hey give
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me more return than 20 percent otherwise
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i'm pulling my money out why because you
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might have gotten used to seeing that 20
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return so therefore mutual fund industry
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is a safe industry mutual fund managers
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active mutual fund managers even
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according to mr warren buffet they are
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not able to generate more than the
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passive index return which are more than
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12.2 percent return this is what the
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data tells us this is not just me saying
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if you do a little bit of digging these
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are exactly the facts that you will be
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able to uncover so coming back to the
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rule that i was explaining so there are
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two very important concepts here number
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one is that time horizon you need to be
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really aware of that number two you must
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invest in instruments that are roughly
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giving you 15 if you do that you will be
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able to grow your wealth to a
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substantial level now before moving on
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to the next point let me elucidate the
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concept that this is not a very
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difficult thing to do so the word of the
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day today is elucidate let me know what
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does that mean now think about it this
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way that it is not too difficult to say
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15 000 rupees if we cut our expenses
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here and there start a side income
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making this 15 000 is not too complex
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you can definitely grow it at 12.2
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percent if you learn little bit of stock
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investing you can grow it at 15 also so
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this is also not difficult the only
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thing is that when do you decide to get
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started even if you're getting started
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at 35 you can still stay active in the
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stock market till that time you are 60
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so that still gives you 25 years which
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is not a small time you can still easily
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become crorepathy so that is the power
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of this 15 15 15 rule once you have
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figured out your goals and you have
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learned a little bit about money making
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second rule comes about investing that
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where is it that you should invest and
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the primary question that people ask is
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that akshaya i want to double my money
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can you suggest some assets where i can
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make really quick returns or i'm a very
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low risk taker i just want to invest in
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super safe assets so taking either of
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these approaches might be bad i'm saying
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might be bad so for this there is a rule
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called as rule of 72 which i will
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explain now rule of 72 simply says that
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how much time does it take for you to
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double your money if you take this
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number 72 and divide it by the return of
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the asset for example if we pick fixed
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deposit the usual rate that fixed
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deposits pay is roughly 6 72 divided by
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6 this gives you 12 years so roughly it
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takes 12 years to double your money in
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fixed deposit let's pick one more
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example that if you pick 72 and if you
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divide it by 15 based on rule of 15 15
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15 how much time it would take for you
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to double your money so it will roughly
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take you 4.8 years now you as an
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investor have to make a choice that hey
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should i just keep on doing my fixed
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deposits only or should i take a little
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bit of risk and move to equity market
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similarly there are a range of
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instruments where you can go and invest
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your money depending on your risk
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appetite but the motor motor math tells
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us that if i'm picking an asset like
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fixed deposit then it will take a lot of
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time for me to double my money so there
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are three key takeaways from this rule
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that you must avoid bad assets that have
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a very slow growth rate for example
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something like gold now i'm saying
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something controversial and a lot of
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people might start creating rakas but
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please try to look up the historic
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kaggar of gold you will realize that it
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is roughly around five to six percent so
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again it will take you 12 13 years to
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double your money whatever you are
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putting in gold so it's a lot of time
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span and it does not help you so ideally
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you should take very little positions in
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something like gold second key takeaway
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is that what is a target that i should
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try to grow my money at so a rough good
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target is roughly 15 now why is that
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because think about it this way if you
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start with a capital of 6 lakhs you will
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double it in 5 years it will become 12
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lakhs then you will double it in another
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5 years it will become 24 then you will
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double it again it will become 48 then
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you will double it again it will become
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roughly 1 crore so how many times you
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have to double it 1 2 3 4. so roughly in
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18 to 20 years time your money from six
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lakh will become one crore that is the
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power of compounding and growing your
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money at a decent rate of 15 so this is
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the target rate that you should keep in
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mind
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now comes the third and the most
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important point which is that majority
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of your money should be in sensible
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things now you decide whatever is
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sensible i have met a lot of people who
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will invest all their money in crypto
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currencies or they will keep all their
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money in fixed deposits now if this
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style of investing works for you great
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nothing wrong with that but bottom line
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is that you should be a balanced
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investor you should take positions on a
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range of different assets and together
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it should give you 15 return so that is
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the goal right so let me demonstrate it
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by giving a very specific example of a
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stock right now there's a lot of noise
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about hdfc now all of us are aware of
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hdfc i'm not talking about hdfc bank i'm
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talking about the parent company hdfc
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housing development finance corporation
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so a lot of people are getting panic
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that akshat hdfc is falling i'll go
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bankrupt this that so let us take a look
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at the numbers and try to figure out if
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something like hdfc is a sensible
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purchase decision or not or should
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majority of your wealth be invested in
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similar stocks this is not a stock
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advice but i'm just using hdfc as an
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example so what helps a business grow
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if you have to answer it in one word it
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will be profits if a business is
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profitable it will grow so let us very
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quickly take a look at the hdfc numbers
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and you will see the net profits in
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rough 10 years have grown at a kaggar of
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15
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right and we discuss the 15 rule now let
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us also see if the price of the stock
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has also gone up if you would have
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decided to invest in hdfc bank 10 years
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ago so roughly let's say here at 700
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rupees then let's see that if the stock
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price doubles every 5 years in 2017 2018
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it should have roughly moved to 1300
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1400 so yes it is moving to roughly 1250
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so almost doubled so then let's take a
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look at 1200 11 1200 levels now let's
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take a look that if the stock price
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doubled by 2020 2021 so 1200 and we are
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at 2400 so yes it has doubled again so
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what will be this scenario like if
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something like hdfc continues to churn
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out profits at a 15
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it will continue to double its stock
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price also every four or five years that
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is a simple thing that we miss out on
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and we keep on looking for really risky
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stocks all that stuff the point being
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that majority of your wealth should be
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invested in these type of sensible
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assets now if you have set a target that
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i'm going to make one crore in 15 years
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second i will invest it properly in good
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assets third thing is how much money
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should i be spending now and how much
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money should i be saving again a simple
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rule here will be that you can follow
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the rule of 4 withdrawal what is the
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philosophy and math behind it let me
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very quickly explain
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so first and foremost let's assume that
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you have 100 rupees right
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now in india the inflation is roughly
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six percent now you are withdrawing four
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percent why four percent because that's
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the four percent rule and if you can
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grow your wealth at ten percent
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ten percent then this wealth of hundred
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rupees will stay the same why because
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you spent six percent due to inflation
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you spent four percent in terms of your
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expenses the money that you have
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withdrawn but you are growing this 100
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rupees at 10 rate so you're not losing
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money per se so this is a very
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oversimplified rule because a lot of
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time people ask me that accept how much
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money should i be spending in a year my
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salary is one crore so you should be
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spending four lakhs if you want your one
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crore to stay intact now there is a very
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important caveat here the caveat being
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that you should not undertake lifestyle
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inflation now what is lifestyle
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inflation lifestyle inflation simply
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means that if i'm using this phone so
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i'm using honor x phone i genuinely have
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this phone and this is my primary phone
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so if i'm using honor x phone then it
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should not happen then after 10 years i
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start buying iphones or a series of
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iphones by the way i shoot my videos
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through iphone 11 that is my work phone
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so to say but in personal life i do not
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spend too much money on materialistic
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things so back to the discussion that
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your lifestyle inflation bigger house
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bigger car bigger phones all that stuff
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should not happen if you are following
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that simple principle then this four
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percent rule works wonderfully well for
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you another key related question that i
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keep on getting is that okay how much
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money should i save in order to retire
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is there some formula there yes there is
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a very good formula and it was suggested
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by mr money mustache so the formula is
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that if you are able to save 70 or more
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of your salary for a period of 10 years
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or more without undertaking any
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lifestyle inflation then you can retire
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i'll repeat that again if you are able
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to save 70 or more of your salary for a
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period of 10 years without undertaking
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lifestyle inflation then you can retire
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today so that's the formula now please
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do not tell me that hey this is very
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difficult yes of course it is very
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difficult because you are talking about
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retirement and you are trying to retire
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by 30s 35 40s etc then of course it's a
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difficult goal no doubt about that
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that's the formula that's the target
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that you must keep in mind so three
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simple rules that we studied one was the
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karpati rule which is 15 15 15 rule the
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second key rule that we studied was the
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rule of 72 which directs you to invest
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in right set of assets and third and
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final rule that we studied was the four
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percent withdrawal rule which gives us a
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sense as to how much money we should be
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spending but here is the bonus rule that
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if you want to get really wealthy really
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rich then the best way of doing it is
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through compounding your skills the more
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skills that you have the more money you
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can make for example if hypothetically
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speaking today you are making 10 lakhs
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but if you are able to 2x or 3x your
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skills then 3 years or 4 years from now
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you might be making 50 lakhs so that
[834]
gives you a lot of earning potential so
[836]
always be on a lookout for improving
[838]
your earning potential and the best way
[839]
to do it is to upskill yourself learn
[841]
new skills and upgrade is a good
[843]
platform i have curated some list of
[844]
courses you can go check it out thank
[846]
you so much and i will see you tomorrow
[867]
you
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