How To Live off 35% of Your Income & Retire by 40

In the age of Silicon Valley, a lot of us dream of launching the next Warby Parker, Instagram, or Airbnb—a wildly successful business that will leave us financially set for life. But the game is kind of rigged. Research says that, on the whole, entrepreneurs aren’t the fearless, high-achieving heroes we imagine them to be. They’re just rich kids—people with inherited wealth and safety nets who can afford to take risks that would bankrupt the rest of us. A 1998 paper published in the Journal of Labor Economics concluded, “individuals who have received inheritances or gifts are more likely to run their own businesses.” And economist Ross Levine told Quartz last year that the chances of becoming an entrepreneur “drop quite a bit” when your family isn’t loaded.

But those of us born without trust funds need not cry into our IPAs. What if, instead of going into business to get rich, you got rich so you could go into business? Take Peter Adeney, better known as the blogger Mr. Money Mustache. Adeney initially won Internet fame because he “retired” at age 30. Working as software engineers, he and his wife, Simi, saved and invested their income until they’d amassed a nest egg of about $700,000. At that size, their small fortune could generate returns substantial enough to live on. So Adeney quit his job and set about doing, well, whatever the hell he wants. He’s since become the face of the early retirement movement—sometimes referred to as FIRE, for Financially Independent Retired Early—and inspired thousands of people to follow in his footsteps.


I’m one of them. For the last five years, my husband and I have been using Adeney’s basic blueprint so that we can retire decades early, too. And we’re in good company. Mr. Money Mustache now racks up around 750,000 unique visitors and about seven million page views a month. Like Adeney, I don’t conceive of retirement as endless leisure. Forty years of golf and reruns would turn my brain into applesauce. To my mind, the most interesting thing about Adeney—and his relevance for would-be entrepreneurs—isn’t that he retired so young. It’s what he’s done with his retirement. Namely, as he explains on his blog, “the Mrs. and I started a cozy new two-person company that does whatever we want it to do.” So far, that’s included carpentry projects, building and selling a house or two, and the Mr. Money Mustache blog.

It’s almost as if Adeney built his own trust fund and turned himself into a rich-kid entrepreneur. Some of his achievements are directly attributable to the fact that he didn’t need that business to generate a profit in the short term, or even much of a profit in the long term. Adeney’s success as a blogger has been expressly built upon his financial independence. It gave him his subject, for starters, and allowed him to write in whatever tone he wanted, instead of catering to advertisers. Readers took to his irreverence—and no wonder, when most personal-finance writing is gratingly chipper and seems like filler in between credit-card ads.

Readers could also trust Adeney, knowing that his advice wasn’t contingent upon what would fatten his own bank account. While this kind of personal credibility probably should be de rigueur for a money guru, it’s still more the exception than the rule. It’s not a great big leap to say that Adeney ended up making around $400,000 a year from his blog in large part because he didn’t need to. The advantages don’t stop there. His self-built trust fund also insulated him from the brutal realities of the online media business, in which Google and Facebook scarf up around 90% of new ad dollars and many fledgling outfits crash and burn. He’s also been able to take breaks and work on the blog when he wants to, rather than adhering to the sort of ruthless schedule many entrepreneurs are stuck with.

I totally get that saving up your retirement nest egg decades early might seem like an even tougher dream to realize than just going ahead and starting your business. Judging by the “Mustachians” who post and comment on the site, the demographic appears to be reasonably high-earning folks with naturally frugal tendencies. Not everyone is in a position to save and invest, of course. A single person earning $70,000 in New York might not have much left over after taxes, rent, food, and the odd late-night Uber. A married couple in Cleveland earning $200,000 (nearly four times the median household income, let it be said) probably wouldn’t find this tactic very difficult at all. Such high-paying jobs are very much the exception, not the rule—and that’s to say nothing of those who can’t find jobs at all.

Personally, I’m not exactly frugal—I just prefer to live like a grad student because it keeps life simple. Right now, my husband and I live on about 35% of what we make, net. We earn more than we used to, but we’ve been able to avoid lifestyle creep because our tastes haven’t shifted much and certainly haven’t improved much. (We splurge on food and travel. But we still drink $6 wine, buy used books, and get t-shirts from Uniqlo, none of which I regard as any kind of sacrifice.) In business, you’d call this operating leverage. Market willing, we should be able to retire in five years, when we’re 39 years old. Then we’ll start a company that “does whatever we want it to do.”

So how much money are we talking? To size your nest egg, you calculate your yearly living expenses and multiply them by 25. Then you invest and use the magic of compound interest to help you reach that goal. (Adeney suggests index funds—simple, low-fee investment vehicles that typically track the returns of the stock market.) Once you’ve hit your number, you withdraw funds at a rate of 4% a year, known as the Safe Withdrawal Rate. A $1 million nest egg, for example, would yield $40,000 each year. A $2 million nest egg would yield $80,000. Simulations of model portfolios suggest this rate allows for lifelong withdrawals in nearly every market scenario. That means that you should still have money left at the time of your death, even 30 or 50 years hence.

I’m aware that the tone of this advice could seem money-obsessed or money-grubbing. But I don’t say it out of the conviction that the world’s already abundant supply of rich jerks needs adding to. (Parts of this article were written on January 20th, an auspicious day for rich jerks everywhere.) Rather, I think the dream of financial independence is worth chasing because I’m convinced that freedom is one of the worthiest goals around. If you’re a person with big-time creative dreams, it would be a tragedy straight out of Arthur Miller to spend your life working for someone else—or waiting around for the world to change. We seem to be decades away from instituting a universal basic income. So it might be time for you to try to DIY one.

Rich kids may dominate the entrepreneurial landscape. But over time, you could become one of them yourself—a person for whom many of the usual risks don’t apply.

  • QZ


How To Short A Stock & Make Money

To a novice investor, short selling sounds like one of those sophisticated, mysterious techniques that professional traders use to rob others blind. In reality, anyone can short a stock and make a profit if the stock drops in price.Short selling can be a powerful tool in your investment toolbox, but you need to understand the operator’s manual before you use this tool. Try to short a stock the wrong way and you could drill a hole in your own hand.

short a stock

What is short selling?

Every investor understands the conventional way to make money in the stock market (if they don’t, they shouldn’t be in the market!). You buy a stock today, wait for its price to go higher than you paid, and then sell it for a profit. This is known as being “long” the stock. Pretty straightforward.

Short selling is the same process in reverse. You sell a stock today, wait for the price to fall below what you paid, and then buy it at a lower price. This is known as being “short” a stock, or short selling. Sounds a little weird and complex at first, but it’s actually rather simple to do as I explain next.

When you are long a stock, your goal is to buy low and sell high.

When you are short a stock, you want to sell high and buy low.

How do you sell a stock you don’t own?

The quick answer is you borrow the stock.

How do you do this? Your broker will locate shares for you to borrow. In fact, many brokers require you to borrow shares before they will accept your short sell order. When your broker fills a short sell order for you, another investor agrees to buy the shares from you. It’s your responsibility to deliver the shares to the broker by settlement date—normally three business days later. The graphic below makes it easy to grasp the procedure.

Read the rest of the interesting article here


9 questions to ask before investing

You would think that managing an investment portfolio for returns and risk should be sufficient to protect your interests as an investor. But costs and taxes are an integral part of financial products, and they can bleed the returns your money can earn. Not only does it take a bite out of your returns, but you miss out on compounding benefits too as this portion is no longer available to be invested and earn returns.

The impact of expenses on the returns can be significant. For example, an increase of just 1% in the annual expenses charged to an investment translates into a difference of close to 16% in the final value of your investment over a 20 year investment period. This difference goes up to over 20% if the holding period is 25 years. Similarly, taxes are dues that you have to pay on the returns that you earn which diminishes the amount you have to invest further and earn.

Read rest of the article here


Why millennials are choosing shares over home ownership

Chris Brycki founded Stockspot, an investment firm that focuses on millennials who have chosen to skip home ownership in favour of shares, in 2013.  “Between 5 and 10 per cent I’d say of our clients are specifically investing to save up for a house deposit,” he said. “The rest either have decided they either don’t need to save up for that or they’ve chosen that that’s not what they’re saving up for.” Mr Brycki said according to the firm’s research renters who invest in shares are likely to be better off than property owners over the next seven years. That matches up with the Reserve Bank’s analysis that Australian property is 19 per cent overvalued. “Now after two years our average client has around $60,000 invested with us, which is starting to get a lot closer to what you’d need for a house deposit,” Mr Brycki said.

Read rest of the article here


Venky's to buy Blackburn Rovers

Blackburn have edged closer to opening up a new frontier in English football by becoming the first Premier League team to have Indian owners.

The club confirmed that talks with the Venky’s conglomerate over a £46million deal are close to conclusion and a takeover should be completed next month. The price includes £25m to buy the club from the family of the late Blackburn benefactor Jack Walker and a further £15m to clear debts.

Venky’s managing director Balaji Venkatesh Rao, whose father founded the company, said: ‘It’s very much confirmed and we will be announcing it formally in the next 10 days.

‘It’s a £46m deal. I wouldn’t say that is cheap or expensive but we will have to pump in some more money later on. The money is up front from our own sources. We are not here to compare with anybody but this is a first for India. It’s a prestigious moment for everybody and one we should cherish.’

Read the full article here


Just Read – Common Stocks & Uncommon Profits – Philip A Fisher

Happened to lay my hands on the audio file of this book and managed to finish the audio / book in 2 days flat. Its obviously an advantage getting the audio of books so that i can just transfer the files to my mp3 player and listen to them on my travels to work. Holding a book in hand; trying to read them during rush hour is a chore and these audio books are indeed coming handy for me.

Philip Arthur Fisher was an American stock investor who wrote this book Common Stocks and Uncommon Profits way back in 1958.  Just like Benjamin Graham’s bible of investing, The Intelligent Investor, this book is also considered to be a must read for anyone planning to invest in the stock markets.

Philip Fisher is considered a pioneer in the field of growth investing. Morningstar has called him “one of the great investors of all time”. In Common Stocks and Uncommon Profits, Fisher said that the best time to sell a stock was “almost never”. His most famous investment was his purchase of Motorola, a company he bought in 1955 when it was a radio manufacturer and held until his death in 2004.

Perhaps the best-known of Fisher’s followers is Warren Buffett who has said on some occasions that “he is 85% Graham and 15% Fisher”.  (source: Wikipedia)

Fisher goes on to give a lot of Do’s and Don’ts for investors.  A few of the Do’nts include

  • Dont buy into promotional companies
  • Dont ignore a good stock just because its traded over the counter
  • Dont buy a stock just because you like the tone of its annual report
  • Dont overstress diversification
  • Dont be afraid to buying on a war scare
  • Dont fail to consider time as well as price in buying a true growth stock
  • Dont follow the crowd

Fisher also goes about sharing his ideas of how he goes about finding a growth stock.  Fisher talks about using the Scuttlebutt method to investing.  This means that the relative points of strength and weakness of each company in an industry can be obtained from a representative cross-section of the opinions of those who in one way or another are concerned with any particular company.  Also he talks about talking to the vendors, customers etc to find the correct information needed for your investment in that particular company.

Common Stocks and Uncommon Profits
Author – Philip Arthur Fisher
Pages – 271
Publisher – John Wiley & Sons

Above picture courtesy: Nickgogerty


Equity Updates – Asahi Songwon Colours

Sold off Asahi Songwon for a very good profit.  The below shown chart should give you an idea of how much the stock grew in the past 1 year.

Also bought more stocks of MIC Electronics & Graphite India

This year the dividend payout has been pretty good. Add to that bonus shares from both Dabur (1:1) and & TVS Motors (1:1)


Random post

Been swamped with work. Have no time to read websites let alone update this one. Have taken a break from reading books too as i realised that the business magazines that i had bought are gathering dust in a corner.  So, carry them in my bag to and fro work hoping to read them than stare at other people’s faces in bus/train.

Have taken tons of pictures too. No time to even sort, upload and share them.  Sometimes i feel that 24 hrs is not enough in a day.  Wish there was some way to increase the number of hours in a day.  It would be good as long as the extended hours doesnt mean that i need to spend them at work 😉

As expected, my investments havent slacked, infact they are on the upswing.  Bought a few shares in SREI Infrastructure, Alok Industries.  But my biggest mistake has been to ignore Tata Motors.  Its the kind of multi bagger that can make you rich for life.  A year ago i bought very few of them around 140 rupees and then left it at it.  Today, Tata Motors is trading above 750 rupees.  At one point of time, it had even crossed 800.

That’s the kind of shares i should have been chasing instead of stagnant ones  like BILT and NHPC.  Another multi-bagger is L&T.  I had bought a few at around 650 rupees and today it is consistently trading above 1600 rupees.

Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well  –  Warren Buffett

I should try to follow the above mentioned statement more faithfully and only then will i be able to cash in on the opportunities that lie ahead.

Picture source: MIT Admissions


Anyone wants free advice?

The self appointed leader of the Hindu community in the US, Rajan Zed is on an advising spree for the past few months.  From advising Mischa Barton about sitar player gurujis to protesting about Playboy’s investments into India to rubbishing Vanity Fair on their list of best dressed celebrities to advising Claudia Ciesla to seriously explore Hinduism.


If indeed he is worried about westernization of the Indian society, why does he hang around in the US in the first place? Wonder if Rajan Zed has ever heard this quote

“It’s better to keep your mouth shut and have people think you are stupid than to open your mouth and remove all doubts about it.”


Nano to launch today

Tata Motors said it will launch its ultra-cheap Nano car in Mumbai on Monday — a vehicle meant to herald a revolution by making it possible for the world’s poor to purchase their first car. But few predict the snub-nosed Nano will be able to turn around the company, which has been beset by flagging sales and high debt, anytime soon.

tata-nanoThe Nano, which is priced starting at about 100,000 rupees ($2,050), is a stripped-down car for stripped-down times: It is 10.2 feet (3.1 meters) long, has one windshield wiper, a 623cc rear engine, and a diminutive trunk, according to the company’s Web site. It does not have air bags or antilock brakes — neither of which is required in India — and if you want air conditioning, a radio, or power steering, you’ll have to pay extra.

Tata Motors has been hard-hit by the global downturn. Commercial vehicle sales, its core business, have been decimated as India’s growth slows, and consumers have had trouble getting affordable car loans. The company declared a loss of 2.63 billion rupees ($54 million) for the October to December quarter, and it has been struggling to refinance the remaining $2 billion of a $3 billion loan it took to buy the Jaguar and Land Rover brands from Ford Motor Co. in June. Even the launch of the Nano has been scaled back.

The car is arriving six months late because of violent protests by farmers and opposition political party leaders over land, which forced Tata to move its Nano factory from West Bengal to the business-friendly state of Gujarat. Company officials have said it will take at least a year to complete the new factory, and until then, Tata will only be able to produce a limited number of Nanos from its other car plants in India.

Tata Motors hasn’t yet given details on production volumes, but most analysts doubt the company will be able to make more than about 50,000 cars in the next year — a far cry from the 250,000 the company had planned to roll out initially. Vaishali Jajoo, auto analyst at Mumbai’s Angel Broking, said even if Tata Motors manages to sell 250,000 Nanos a year, it will only add 3 percent to the company’s total revenues.

“That doesn’t make a significant difference to the top line. And for the bottom line, it will take five to six years to break even,” Jajoo said.

Still, in this new age of global thrift, the Nano sounds appealing to more than just the struggling farmers and petty businessmen across India that Tata initially had in mind for the car. “What do you think the chances are that the Nano will come to America? Personally, I’d love one,” Steven Smith, whose first car was a Volkswagen Dune Buggy, wrote recently on the Nano Facebook page.

Tata Motors unveiled the Tata Nano Europa, a slightly more robust version of the Indian model, at the Geneva Motor Show this month, with a planned launch of 2011. But the company has no plans to bring the Nano to America anytime soon.

Above news source: Associated Press