2016 will be different

The domestic stock market has reacted negatively to demonetisation and opened lower after digesting the intense social media heat both for and against demonetisation. However, the market gained sanity later and reacted calmly by the close of the week. 

Much has been said about demonetisation but no one denies the pragmatic outcome of the same. Banks have started reducing interest rates and some of the private lenders have already reduced rates by 15 to 20 bps. The stock market is altogether an independent animal with has scant regard to demonetisation, if any. However, such moves should bring a positive shift towards a cashless economy. Combined with GST, it would possibly help tame corruption and a new era of meritorious society should emerge. 

In the stock market, open interests in index futures have fallen sharply and are running on the lower side of the annual averages. Volatility, too, is cooling down slowly, which is good for the health of the market. 

Stocks that are banned in the derivative segment stand at a negligible level, indicating a moderation in leveraged positions. Normalcy is creeping back into both the stock market and the economy. 

The stock market is limping back to normalcy. Greed and fear seem to have abated and all the external macro-factors have almost been discounted. 

The massive fall in stock prices on fears of a slowdown seems to be overblown from market’s perspective. It is well known that the market is a six-monthly forward discounting machine. 

Any negative event, whose effects are to be felt within one or two quarters, is almost always discounted. Thus, there is nothing that investors must worry about regarding the effects of demonetising high-value notes, as it has already been discounted by the market. 

The recent fall, therefore, creates a compelling opportunity to buy great businesses. 

Investors should take the opportunity and start purchasing Equity Mutual Fund for long-term portfolio.

views and recommendations expressed in this section are personal. Please consult your financial advisor before taking any position. 

Principle of Wealth Building 5 of 5

If you thought building wealth was about how much you make then you would be wrong: it's about how much you keep. 

The single biggest expense standing between your earnings and savings is (drum roll, please)... taxes. 

Nothing else comes close. 

When you add together all taxes on items like income and consumption, factor in the pass through of all other taxes like corporate taxes, import duties, etc., you quickly see what an extraordinary burden taxes have become regardless of your income level. 

That's why legally controlling this expense is the 5th essential wealth building principle. You must learn how to keep more of what you make. 

The key point is how your government (in it's infinite "wisdom") has decided to favor certain financial practices through tax incentives. 

How does this all fit together? Well, remember a few emails back when I taught you the 3 Principle of Wealth Building - paper assets, real estate, and business? 

At the time, I explained how paper assets were a wealth parking vehicle, but real estate and owning your own business were wealth building vehicles. This critical distinction surprised a lot of readers. 

While the stats make this claim indisputable, I wanted to give you two reasons why it's true. 

The first reason was contained in the last lesson - leverage. Few leverage opportunities exist in paper assets (and all carry significant risk and cost). However, business ownership and real estate offer maximum leverage opportunities (many without increasing risk or cost - some even lower costs). 

Now you're learning a second reason these two asset classes are favored wealth building vehicles - tax advantages. Real estate and business ownership offer tax advantages not available to Salary earners or paper asset investors. 

(Yes, I know I'm using India-centric terminology; however, similar laws and principles apply in most common law countries for my readers outside India) 

The government has decided to make these two asset classes the most tax-favored wealth building vehicles available. 

For example, it's entirely possible to own real estate that puts cash in your pocket every month while providing valuable tax deductions that give you a bigger tax refund at the end of the year as well. You can't do that with earned income from your job or capital gains from stocks and bonds... without going to jail. 

Similarly, when you own a business many expenses are paid partially by the government as legal tax deductions. This can put more money in your pocket for any given level of income. 

Now, it's beyond this brief email instruction to give detailed analysis of all the deductions available or how they work. There are too many countries, too many rules, and everyone's situation is unique. You'll need to learn the details from one of the many books focused exclusively on this topic or consult with a competent tax professional. 

Instead, what is important for this lesson is to understand how real estate and owning your own business are two wealth building vehicles that afford both valuable tax deductions and leverage opportunities. 

The leverage and tax advantages can dramatically affect your rate of compound growth which will shorten the amount of time it takes to achieve wealth. In short, these two principles allow you to create more wealth with fewer resources - both time and money. You can't apply these two principles to paper assets. 

It's why more people build wealth through real estate and business entrepreneurship than any other asset classes. It's also why paper assets are generally used to park and preserve wealth built elsewhere. 

Sure, you can still achieve financial security the traditional way with aFixed Deposits and savings plan invested in paper assets (which we will cover in detail in the next several lessons). This strategy works (without leverage or tax advantages) if you have the time and discipline to make it work. 

It is well-proven financial path that is governed by strict mathematical limitations. 

However, many people want to turbo charge their results. They want financial security in 10-15 years instead of taking a lifetime. If you're one of those people then there is no getting around the necessity for leverage and tax advantages. 

Your homework from this lesson is to develop a working knowledge of the various tax strategies that apply to your chosen path to wealth. Develop this knowledge or find a professional to help you because it will pay you dividends for a lifetime. 

I know it has for me. That's why it's your 5th wealth building principle. 

I hope you've enjoyed these first 5 principles to wealth Building. Yes, there are many more wealth principles. Course on wealth Building teaches you everything required in carefully structured, step-by-step, learning modules so you walk away with your own personal plan for wealth. You can learn more about it.

In the next blog in I'll share more ideas explaining exactly how the traditional passive investment approach using paper assets can be applied in your wealth plan, and I'll show you the two essential factors required to make it work. This is important material since nearly everyone applies this strategy - for at least a portion of their wealth - me included. 

Thanks for your support, and I'll see you in few days...

Principle of Wealth Building 4 of 5

Dear Customer,

Unfortunately, other tasks require prioritization right now, and I'm not willing to rush the writing and sacrifice quality. Principle of Wealth Building. 

In other words, Principle of Wealth Building 4 and 5 lesson delayed. 

If you are disappointed then that is a good thing because it means I've been delivering value to you. 

Principle of Wealth Building 4

Why? You have limited time and capital resources. 

Time and money spent one place cannot be used elsewhere. At some point your financial growth hits a wall because it's limited by your personal resources. 

However, the world has unlimited time and unlimited resources. Your financial growth is literally limitless when you leverage other people's resources. It's how all fortunes - large and small - are built. 

Leverage is your 4th wealth building principle because it multiplies your results for any given expenditure of effort. It must be a part of any properly designed wealth plan. 

However, leverage can make the good times great and the bad times unbearable (if you apply it incorrectly). 

In other words, a common myth about leverage is it increases risk. This is only true for certain types of leverage such as financial leverage. 

Other types of leverage can actually increase results while reducing risk. 

Surprising... but true. 

For example, I'm using technology leverage to deliver this message to you. I write these lessons (knowledge leverage) once and leverage technology to build relationship and add value to thousands of people's lives. 

No risk - unlimited reward. 

Understanding leverage's many aspects at a very deep level is one of the most important principles in your wealth building plan. 

It's another make-or-break issue (like so many others... that is why so few people succeed financially. Each one of these principles is critical to your financial success.) 

Using my own life as an example, I became uncomfortable with the dangers inherent in financial leverage in late 2000. I sold all my holdings prior to the huge decline to eliminate financial leverage. As a replacement, I consciously chose to increase my knowledge and technology leverage instead by focusing on this business. 

None of that was by chance, yet it has been worth millions. It was the conscious matching of an appropriate leverage strategy to the current market environment that resulted in eliminating risky leverage because it was inappropriate. This is an essential wealth building principle that you would be wise to emulate. 

Your homework for this lesson is to look at your wealth plan. Where are you including leverage? Where could you add leverage without increasing risk? What changes would you have to make to open new potential for increased leverage and results? 

The answers to these questions can make-or-break your wealth. 

In a few days I will send you the 5th wealth building principle as part of this base education for developing a proper wealth plan.

I hope you are enjoying these insights. My goal is to help you break from ordinary thinking so you can produce extraordinary results. 

See you in a few days with the 5th principle...

Principle of Wealth Building 3 of 5

I know this principle is stupidly obvious... but very few people actually do it. 

In other words, you already know the 3rd wealth building principle, but odds are very high you aren't walking-the-talk. 

To know and not do is to not know at all. 

So at the risk of irritating you with the obvious, here is wealth building principle #3... 

You must produce more income than you spend and invest the difference. 

That's it! Like I said, this isn't rocket science. 

The problem is almost nobody does it. If they did then they would be wealthy over time. It is just simple math. 

Why? Wealth is a form of deferred gratification. When you save money you are building a small army of soldiers that self-duplicate into additional soldiers that grow until you have a massive army that supports you for a lifetime. 

However, when you spend money you not only slaughter that one soldier but you also eliminate every soldier he would have duplicated into over your lifetime. It is a multiplicative effect. 

Earning more than you spend and saving the difference is one of those principles that is "easy to understand but hard to live". 

I know from first-hand experience how violating this obvious principle can hurt. I've blown it myself and it literally cost me lac's. I've coached countless clients who have made similar mistakes. 

It is a really common problem. It is why most people never achieve wealth. 

Yet, if you want financial security then you must obey this principle. That is not my opinion. It is simple, inviolable, math. 

Your homework is to look at your own savings rate. How much of your earnings is growing into wealth? Is this consistent with your values and goals? 

In the next lesson we will continue with the fourth wealth building principle in this series. 

Finally, if you're liking these principles of wealth building then you'll love module 5 in my course teaching you how to design your own wealth plan.

See you in a few days with the 4th principle...

Principle of Wealth Building 2 of 5

Have you ever noticed how the wealth plans provided by traditional financial advisers just sit on the shelf and collect dust?

Who really uses them?

The problem is they aren't wealth plans. They are investment plans... and that is the crux of the problem.

These "investment plans" are nothing more than a computer simulation that applies historical return assumptions to a static portfolio mix.

No wonder they sit on the shelf and collect dust - there is nothing for you to do except save the money and send it to your broker to invest. It is passive. It is not a working document that governs how you'll build wealth.

That's because traditional financial advisers are in the business of managing the wealth you already built. They are not in the business of helping you build the wealth in the first place.

Shocking... but true.

If you aren't completely clear on this fact just try and get a financial adviser to return your phone call after you tell him you have no money to invest. (It will be a long wait.)

What you need is a plan to build the wealth in the first place. Not a plan to park the wealth you built elsewhere.

An essential principle to this plan is that it must be based on your unique values, skills, interests, goals, and resources in order to produce results. It must harvest your unique competitive advantage and be an expression of your life today as well as where you want to be in the future.

Generic, cookie-cutter, computer simulation, "wealth plans" won't work. It must be unique to you and an expression of your life.

For example, I have one client building wealth through single family homes because his wife is a realtor with great "deal flow". 

The area he lives in offers positive cash-flow at retail pricing (not to mention the great deals he gets through his wife).

The key point to notice is how this plan specifically capitalizes on the unique skills and competitive advantages this client enjoys. 

It harvests the low hanging fruit... and your plan should do the same.

Continuing with examples, another client is building wealth by growing his law practice and parking that high income in both paper assets and the commercial building that houses his law practice.

The key attribute to this client's situation is the high earning capacity of his law career. He won't improve his earnings by diverting attention elsewhere so the focus of the plan is to better maximize his already strong income into optimal asset growth. Again, notice how each client is harvesting his competitive advantage. You must do the same. Your homework is to figure out your competitive advantage. Where is the low hanging fruit in your life that can be developed into a wealth plan? Identifying these strengths is the key to designing your unique wealth plan that will actually work.

It's why no two coaching clients of mine have identical wealth plans. Every plan is different because each client is different... yet they all obey similar principles.

In the course on designing your wealth plan (where these lessons are excerpted from) the entire first Module is dedicated to developing your competitive advantage by connecting those personal attributes into your wealth plan. There's even a cool 3 part series of lessons in Module 1 called "You Inc." showing you how to efficiently organize your life activities for life balance and efficient wealth growth - both at the same time!

In your next lesson of this course we'll continue with the 3rd in this 5 part series of essential principles that must be included in your wealth plan.

See you in a few days...

Ritesh.Sheth CWM^®

CHARTERED WEALTH MANAGER

              Helping you invest better...  

Allaudin Bldg Shop No 1,Manchubhai Road,Malad East,Mumbai - 400097.Shop No.9,Param Ratan Bldg,Jakaria Road,Malad West,Mumbai - 400064.Tel:28891775/28816101/28828756/28823279. CELL:9930444099  www.tejasconsultancy.co.in | E-mail Us: ritesh@tejasconsultancy.co.inGo Green...Save a tree. Don't print this e-mail unless it's really necessary

Disclaimer:This blog is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this emailer. The views are personal. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this blog and is not responsible for any errors or omissions or for results obtained from the use of such information. Investopedia definitions are used for educational purpose. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis only for educating investor. In case of investments in any of our schemes, please read the offer documents carefully before investing. 

Principle of Wealth Building 1 of 5

The first principle of wealth building is there are only three paths to choose from in this journey... 

1. Paper assets (stocks, bonds, etc.)
2. Investment real estate (not your home) 
3. Owning your own business 

Your wealth plan should include at least two of the three paths and occasionally will include all three (depending on personal circumstances). This increases safety and certainty in the outcome. 

Surprisingly, paper assets are rarely a wealth building vehicle despite the avalanche of media propaganda leading you to believe otherwise. They are typically a parking place for preserving and growing the purchasing power of wealth earned elsewhere. 

The reason this is true is because of strict mathematical limitations to paper asset growth. It is the only asset class out of the three that is governed by these limitations. 

(Side note: Did you notice the irony that paper assets are not really a wealth building vehicle when that is the only thing included in a traditional adviser's financial plan? That may not make sense until you realize that financial advisers are in the business of helping you manage the wealth you already created. They are not in the business of helping you build wealth in the first place.) 

In other words, there are really two steps to the wealth process (but most people only think in terms of one). The first step is to create wealth and the second step is preserve and grow that wealth through investing. 

So how do most people create wealth in the first place? 

Statistically, the answer is real estate and owning your own business. Why this is true will be explained in wealth plan principles 3 and 4 over the next few weeks. These reasons are an important part of your plan. 

A small proportion of the population can save their way to wealth by applying frugality and deferring earned income (wealth earned elsewhere) to wealth vehicles 1 & 2 (real estate and paper assets). 

However, saving your way to wealth is less common because it ignores wealth plan principles 3 & 4 and because it requires discipline, persistence and starting early enough in life to allow compound growth to work its magic. Yes, it is a workable strategy, but not many people fit this profile. 

Your homework from this lesson is to start thinking about which of the three paths to wealth you would like to include in your wealth plan. 

In your next lesson I will explain how to match the various paths to wealth with your unique life situation to begin formulating your personalised wealth plan. This is critically important to actually reaching your goal. 

There are many ways to achieve wealth, but only one path that will uniquely fit you. I will explain how that works in your next lesson. 

Finally, if you're liking this series, consider taking it to the next level with my course on designing your wealth plan. In Module 2 - Lesson 4 of that course I show you exactly how mathematical limitations to asset growth get integrated into your wealth plan design, and I provide the necessary resources showing you realistic rates of growth for each of the assets in your plan. Also, in Module 4 of the course, I explain the principles underlying each of the 3 asset classes so that you know how to properly utilize each asset class in your wealth plan.  

Okay, see you in a few days with your next lesson from this course... which will be wealth plan principle #2 of 5. 

See you then...

Ritesh.Sheth CWM^®

CHARTERED WEALTH MANAGER

              Helping you invest better...  

Allaudin Bldg Shop No 1,Manchubhai Road,Malad East,Mumbai - 400097.Shop No.9,Param Ratan Bldg,Jakaria Road,Malad West,Mumbai - 400064.Tel:28891775/28816101/28828756/28823279. CELL:9930444099  www.tejasconsultancy.co.in | E-mail Us: ritesh@tejasconsultancy.co.inGo Green...Save a tree. Don't print this e-mail unless it's really necessary

Disclaimer:This blog is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this emailer. The views are personal. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this blog and is not responsible for any errors or omissions or for results obtained from the use of such information. Investopedia definitions are used for educational purpose. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis only for educating investor. In case of investments in any of our schemes, please read the offer documents carefully before investing. 

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