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.

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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 & events.

writerWhen you publish a book through the traditional publishing channel, you will not make much money to support yourself even if you hit 10,000 sales. I don’t want to get into the economics of book sales. And you don’t want to know it. The royalty income that authors make are so low that if I told you how much they exactly earn, you would look down upon them!

Ok, since you are good at writing, you may think that starting a blog, writing a lot and getting some revenue through display advertising will help you pay the bills. If you think so, you will be wrong again. Since the barrier of entry is so low, everyone is trying to start a blog on a topic they like, get some traffic and earn revenue via display advertising. High supply, low demand. You will be a poor blogger living in a hut with a laptop and 4 mbps internet connection :P

I am not saying content marketing will not work. Content marketing will work for the right reasons. For example in DigitalDeepak.com I do content marketing to expand my professional network and get more job and consultancy offers. Here I blog just to organize my thoughts. Content marketing no longer works if you are trying to sell display advertising.

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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.

inflationInflation is the rise in prices of goods and services over time. Big Brother usually make us believe that inflation is a problem that arises due to a weak economy and rise in demand of goods and service because of increasing population. Those are true to some extent but the main reason for inflation is the rapid increase in money supply by the central bank.

When the government needs more money for its “responsible” spending, RBI buys government securities and through this process, new money is released in the economy. When the inflation has to be controlled, RBI will sell the bonds/securities and the money paid to RBI will reduce money supply in the economy.

If you invest your savings, say 10 Lakhs in a fixed deposit and earn 10% interest every year on it, you are not making any money because inflation will be at least 10%. Though you will have around 26 Lakhs after 10 years, your purchasing power would not have gone up.

When inflation is more than 10%, you are losing money because your buying power is reduced. If you are able to buy X amount of food, clothing and shelter today with 10 Lakhs, you would be able to buy only 0.5X of food, clothing and shelter after 10 years – even if you grew your savings at 10% per year. 

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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 and I said OK. What he didn’t tell me was that there was a 12.36% service tax on the interest component of the EMI! 

Now the total cost of funds increases from 11.88% to 13.35%! This credit card loan is different from the normal home, car and personal loans which is taken from the bank. This is a fact that bank sales people always hide and many card holders do not realize this small service tax creeping into the credit card statements for months or even years!

This service tax is applicable even if you are paying your minimum dues and postponing the payment of the entire due to the next month. Let’s do some math here. Let us say you have swiped your card for a total of 50,000 rupees in a month. Your credit card dues are Rs.50,000. But the banks allow you to pay minimum dues on it which is 5%. So you pay Rs.2500 and plan to worry about it later.

Now the remaining Rs.47,500 attracts a rate of 3.25% per month (or around that depending on the bank). This is 39% per year! Your savings account returns 3-6% per year! But this 39% is for the bank. The government wants a cut from this. So at the prevailing rate of 12.36% service tax, you end up paying 39% X 12.36% = 43.82% per year in interest including service tax.

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How to Cherry Pick the Best Performing Keywords in Adwords?

Screen Shot 2014-02-27 at 11.04.38 amAdwords 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 get adwords right in the first go. Only with experimentation we can know which keywords perform well and which drives the revenue.

The biggest mistake that I see many adwords “experts” make is that they THINK if a keyword gets higher CTR and if the CPC is low, it is a good keyword. But they often fail to check if those keywords actually drive the conversions. Yes, adwords has conversion tracking facility and it can show you metrics like who landed on your landing page and may be converted into a lead, but it doesn’t show you if they converted into a buying customer later on. So the end conversion where the prospect has become your paying customer is the REAL conversion which has to be tracked.

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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 have the volume or the time to sell ad inventory directly. But ad networks like AdSense make it damn easy to just put up the codes and make monthly income from their websites.

The income from such a business model is highly volatile and you have no control over the traffic that comes to the website. Most of the traffic usually comes via search engines and everyone knows that they change their algorithms every now and then and then the amount of traffic that comes to the website suddenly changes. The amount of control you have over the income is very low and hence this business model is not as strong. Even if you have very high traffic and the man power to sell direct ads, display ads in general are not very effective and hence it is not a great “product” to sell. If advertisers do not get a direct ROI on their ads they will not keep their ads running.

Many company go for display ads only for branding purposes and they are not consistent. Hence I would say the business of selling display ads is one of the weakest business models online. Big websites are now exploring other opportunities to generate revenue like conducting live events, selling membership tickets etc.

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 and developing countries as well. To understand this, we need to understand basic economics.

Imagine a tribe in an island. If the people there have to survive, each one has to do a task. Some can catch food, some can cultivate crops, some can build huts and so on. I don’t see any really exciting job opportunities here. On some level every human has to endure hard labor and it is essential for the survival of the tribe.

Now, since we live in a global village of 6 billion+ people, it doesn’t mean the laws of economics has changed. Every human has to labor on something and contribute to the society to get other things he needs. This is division of labor.

If I do something that contributes something of value to the world, If I believe it makes the world a better place – I am more than happy to do that work even if the process of the work doesn’t make me love it or simply be happy about it. Even if it means stretching myself a little bit – I would do it as long as I have a fair give and take condition available.

Do you still think that you have to love your job? Isn’t it a utopian state to fall in love with the work you do? May be the best you can do is fall in love with what you believe in and what you stand for.

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 would have seen hardworking, well-intentioned people being asked to leave abruptly.


So that brings us to the question – what is the most secure way to earn a living?

To make money – you need to sell something. Sell. Something.

Most of the people think that they have nothing to do with sales because they are employees and not businessmen. But, every employee sells. They sell their skills, time, productivity, ideas and themselves. Personal branding is very important as a human being – it helps one to earn a living. Being employed or being a businessman is not so different when you look at it from the perspective of contributing something to the world.

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

ideaHave 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 that original ideas a unnecessary – but honestly it has been overrated and glorified by the media. Usually media covers the hot business stories only – like the young kid who had a start up company and sold it to a big conglomerate for millions of dollars.

Media covers such stories because they are extra ordinary (meaning, they are out of the ordinary and hence interesting). Which means that such success is not ordinary. But when we hear stories after stories like that, we cannot stop thinking that new – original – revolutionary ideas are the key to success in business.

We don’t read about the guy who is having a janitorial services company and became a multimillionaire. Or the guy who owns a auto spare parts manufacturing company. Those businesses are predictable and there is nothing to talk about it. The media doesn’t cover such stories because they are ordinary. They are not extra-ordinary.

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