This book is about investing in equity through mutual funds (MFs). Before you read further, the author would like you to keep a few things in mind.
Mutual fund investments are subject to market risks, so you should read all the scheme-related documents carefully. The Net Asset Value (NAV) of the schemes may go up or down depending upon the factors and forces affecting the securities market, including the fluctuations in the interest rates. The past performance of the MFs is not necessarily indicative of the future performance of these schemes. As an investor, you should review the offer document carefully and obtain expert professional advice with regard to specific legal, tax and financial implications of the scheme You should also understand that any and all references to indices, sectors, securities, schemes, et al. in the book are for illustration purposes alone and should not be considered as recommendation(s). As the reader of this information, you should understand that statements made herein regarding future prospects may not be realized or achieved. The distribution of this book in certain jurisdictions may be restricted or totally prohibited, and, accordingly, anyone who comes into possession of this book is required to inform themselves about, and to observe, any such restrictions.
All the stories of people in the book are inspired by true events but the names and situations have been changed to protect identities. All stories from the author’s life and experiences have been depicted truthfully
1
How I Gained My Freedom at 45
On a warm summer evening in 1947, my grandparents packed their bags and left their life behind. Freedom. That was the chant in the air. History was being created as the British left a partitioned India behind. For millions of people, this meant leaving behind everything they owned—their life’s work and savings, the security and comfort of their homes—and moving to unknown lands with an uncertain future. My grandparents, too, made their way from Dera Ismail Khan in the Khyber Pakhtunkhwa province of what is now Pakistan to Lucknow, Uttar Pradesh.
But start again, they did! And they did it quite successfully too. Why am I telling you this? What does a story about uprooting and migration have to do with a book on wealth building?
Well, in this story, there is a lesson—that life is unpredictable, that ups and downs will happen, that, sometimes, everything you take for granted will be disrupted. But it is important to not lose your wits. Financial success is all about thinking of the long term. As the poster boy for long-term investing, Warren Buffett said, ‘Successful Investing takes time, discipline and patience.’1
I learnt important life lessons—resilience, optimism and street-smartness—from my parents, grandparents and my alma mater La Martiniere, which have helped me immensely on my path to financial freedom.
What would you do if you had all the money you needed to live a comfortable life? Would you still pursue the job you currently have? Would you go after something that you are truly passionate about? Would you give and contribute to the world? Would you spend time travelling the world, experiencing new things and gaining different perspectives?
So, my aim was to find a career path that would help me realize my retirement goals (yes, I was thinking of retirement when I was 20!) by the time I turned 45—a highly ambitious goal given India’s economic situation, then. However, in a series of seemingly unconnected events, I found my calling. From a starting point of ₹5,000 per month to a sizable corpus of a few crores, I have come a long way, retiring at 45 as I had envisioned. I have lived well. I have indulged in my passions and in things that interest my family and me. We have travelled extensively and experienced the world closely. From whisky trails to the Northern Lights, we have made our way to 29 countries across five continents.
The idea of this book came from my experiences of sharing my technique with friends and family members who wanted to quit the rat race and pursue other life goals and passions. And most of them have benefitted by following my technique.
I realized that there is an overload of irrelevant information, no dearth of wealth-destruction products and an acute scarcity of good advice in the investments industry. Gain Your Financial Freedom is my passionate attempt to bring about an easier understanding of the opportunities and to simplify long-term wealth creation. In my 25 years of experience in the financial sector, I have gained a fair idea of the practices in the banking industry, the insurance industry and the quality of the advisory businesses across categories. I have worked with several financial planners, attended many workshops and dived deep into the subject of financial and investment planning. I’ve looked at all asset classes—real estate, gold, debt, equity, foreign equity, etc.—from the lens of factors such as returns adjusting for risks, returns adjusting for inflation and taxes, liquidity, volatility, convenience and costs of investing. I’ve realized that equity MF (EMF) is where the best balance can be achieved. In fact, I’ve been able to pull out of my term life insurance policies because of the corpus I have built through EMF investments! 1.get a better understanding of the opportunity India offers, how long will it remain and how exactly to benefit from it 2.get the right perspective on share markets, understand emotional hurdles and mistakes on the way to financial freedom and gain insights on how to benefit from the markets 3.learn a simple equity-based technique to build wealth and to create your own ‘salary–pension’ stream for retirement That said, in the coming pages, there is a wealth of knowledge and tried and tested methods that work. I hope you find them as useful as I have and apply them to achieve your financial free
2 You Don’t Need to Be a Finance Whiz Kid to Be a Financial Success Have you ever wondered how people get rich? Let me give you a hint. Who are the richest people on this planet? The year-end rankings on the Forbes website for 20221 listed the top 10 as: 1.Elon Musk of Tesla, with his personal wealth valued at $219B 2.Jeff Bezos of Amazon at $171B 3.Bernard Arnault of Louis Vuitton Moët Hennessy at $158B 4.Bill Gates of Microsoft at $129B 5.Warren Buffett of Berkshire Hathaway at $118B 6.Larry Page of Google at $111B 7.Sergey Brin of Google at $107B 8.Larry Ellison of Oracle at $106B 9.Steve Ballmer of Microsoft at $91.4B 10.Mukesh Ambani of Reliance at $90.7B What’s the one thing that is common among all these people? They own a large number of shares of successful business enterprises—they own equities! In the process, not only did they create a whole lot of personal wealth but also enhanced the riches of all the stakeholders who partnered in their business by buying their shares. One of the best examples of such shareholders is also on the list—Warren Buffett. While all others on the list have built business empires from the bottom up, he made his riches from his expertise in identifying and investing in successful companies built by others. All the (now) developed nations—Japan, the United Kingdom (UK), France, Italy, Germany and the United States of America (USA)—have had their periods of highest economic growth rates correspond to the peaks in their working-age population. These were the years that eventually made them economic superpowers! This phenomenon is now working in India’s favour. Let me elaborate on how this happens through my own example.
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