Want to Become a Millionaire? Do this Simple Math First.

millionaireIf you live long enough, if you keep earning some money consistently, you will eventually end up becoming a millionaire. The word millionaire may not mean having a million US dollars but it stands for being financially independent and not having to worry about money for the rest of your life. 

Whatever your financial goal may be, reaching that goal doesn’t necessarily mean that you need to hold all that money in CASH. Because unless you are in a deflationary economy, inflation will eat away your savings. When you have converted your earnings into different forms, how do you calculate your net worth?

Your Levels of money:

  • Level 0 – Cash Balance: Liquid Cash in hand and in savings/current account. The money that you can use to buy something today.
  • Level 1 – Cash in Fixed Deposits, Loans to Friends & Family – things that can be liquidated quite soon if you need the money.
  • Level 2 – Cash locked up in precious metals, jewelry, fixed-term bonds, pending payments on a later date (accounts receivables) – things that can’t be liquidated immediately but is quite easy and quick to convert into cash if you sell at a below market rate.
  • Level 3 – Money locked up in the value of own house, real estate, work of art, equities etc. that take a long time to liquidate & mostly will never be liquidated.

Total Net Worth = (L0+L1+L2+L3) – Liabilities

if {total net worth > $1,000,000}, millionaire = YES!
else {keep thinking, working & making things happen}

You can notice that lower the liquidity of an asset, higher the appreciation over time. It makes sense to have least of L0 & L1 and most of L2 & L3. Ratios can differ from person to person depending on needs. I seem to have nearly 85% in L3+L2, 15% in L1+L0.

Your assets will appreciate or depreciate in value with time. You can update the numbers once in 3-6 months and watch how your net worth grows or shrinks. This exercise will help you to invest more in good assets and less in bad assets. Your brand new imported car is a bad asset which depreciates in value. Your home and real estate appreciates in value.

Data Reveals Why Housing Prices in India Will Start Declining after 2017

House-Prices-FallWe have seen only real estate prices go up in our generation. We have never seen it decline in India. That’s because the demand is high, not because everyone believes that “Real estate prices should always go up”. Fortunately, we now know that real estate prices can also go down.

In Spain, housing prices have gone down as much as 65%. In US, as everyone knows, housing prices crashed in 2007 and then it has recovered artificially because of some government policies like QE. Experts say that US housing pricing doesn’t have any other place to go except down, down, down.

Many people don’t want to believe that real estate prices can go down due to lack in demand. The housing price crash in US is largely attributed  by the media to unethical banking practices. Though the policies, rules and regulations have played a part in blowing up the housing bubble to even larger extent, the bubble would have never formed in the first place if there was no demand.

So where did the demand come from in USA? Who blew up the pricing?

Harry Dent’s research points to the fact that people buy big houses when the male/boss of the household is at 41-43 years of age. That’s because they will have teenage children and hence the need for a bigger home.

[Continue reading]

How to Make a Living as an Author


If you are good at writing, you can make a living out of it. But you also have to be good at business and marketing. If you are only good at writing, you will end up publishing books and will end up "trying" to market it via social media, blogging … [Continue reading]

How to Safe Guard Your CAPITAL when Inflation Eats Away Your Savings


Inflation is often misunderstood by the general public. It takes a lot of thinking just to understand how inflation works and how it can hit you and your saved up capital. Inflation is the rise in prices of goods and services over time. Big … [Continue reading]

Loans on Credit Cards in India Have a Hidden 12.36% Service Tax on Interest!


When the banker called me an said that they have a "Great Offer" for me on my credit card, I was interested. They said that I can get a cash loan on my card at an "amazing" interest rate of 0.99% per month. It worked out to be 11.88% annually … [Continue reading]

How to Cherry Pick the Best Performing Keywords in Adwords?

Screen Shot 2014-02-27 at 11.04.38 am

Adwords is a great tool for getting targeted traffic who will come to your website and buy what you are selling. But if you are not careful, adwords can also deplete your bank account and you may not have any sales to talk about. Usually, no one can … [Continue reading]

The Business of Selling Display Ads

Blogging as an income or business model became famous basically because of the Google AdSense program which made selling of ads easier. Media companies have sales people who go and sell their ad inventory to companies but individual bloggers don't … [Continue reading]

Doing What You Love – Isn’t it a little Over-rated?


Do what you love and the money will come. This is the phrase that has been repeated several times and for certain reasons I feel that it is over-rated. It is said that 70% of Americans hate their job. I believe it should be similar in other developed … [Continue reading]

What is The Most Secure Way to Earn a Living?


Today's job market is a wake up call to everybody who is working as an employee in any company. If you have experienced the corporate world, you will know that no job is secure in the world. Even if you have never been fired from any job before, you … [Continue reading]

You Don’t Need a New Original Idea to Win in Business


Have you ever thought that having original ideas can help you succeed in business? If you do so, you cannot be further from the truth. I have been in a position where I thought having original ideas was the key to business success. I am not saying … [Continue reading]