The Piggy Bank

The Piggy Bank

The Ultimate Gulluck ATM….

So where do you go if you need money and you’re not a famous actor or business tycoon with a back pack of large bills ?

What kind of ATM do you need to complete that transaction ?

Right now, I’m betting, the primary “money machine” in your life is you. You might have some investments, but let’s say your haven’t set them up with income in mind.

If you stop working the machine stops, the cashflows stops, your income stops –basically your financial world come to a grinding halt.

It’s a zero Sum Game, meaning that you get back just what you put into it.

Look at it this way: you’re an ATM of another kind— only in your case, the acronym might remind you of that lousy “time-for-money” trade.

You’ve become an Anti– Time Machine.

 It might sound like the stuff of science fiction, but for many of you, it’s reality. You’ve set things up so that you give away what you value most (time) in exchange for what you need most (income)—and if you recognize yourself in this description, trust me, you’re getting the short end of the deal.

Are we clear on this?

If you stop working, you stop making money.

So let’s take you out of the equation and look for an alternative approach. Let’s build a money machine to take your place—and, let’s set it up in such a way that it makes money while you sleep.

Think of it like a second business, with no employees, no payroll, no overhead. Its only “inventory” is the money you put into it.

Its only product? A lifetime income stream that will never run dry—even if you live to be 100. Its mission ?

To provide a life of financial freedom for you and your family—or future family, if you don’t have one yet.

Sounds pretty great, doesn’t it?

If you set up this metaphorical machine and maintain it properly, it will hold the power of a thousand generators. It will run around the clock, 365 days a year, with an extra day during leap years—

The “machine” can’t start working until you make the most important financial decision of your life. The decision ?

What portion of your paycheck you get to keep. How much will you pay yourself—off the top, before you spend a single dollar on your day-to-day living expenses?

How much of your paycheck can you (or, more importantly, will you) leave untouched, no matter what else is going on in your life?

I really want you to think about this number, because the rest of your life will be determined by your decision to keep a percentage of your income today in order to always have money for yourself in your future.

The goal here is to enable you to step off the nine-to five conveyor belt and walk the path to financial freedom. The way to start off on that path is to make this simple decision and begin to tap into the unmatched power of compounding.

And the great thing about this decision is that you get to make it. You! No one else!

Understand, this money represents just a portion of what you earn. It’s for you and your family. Save a fixed percentage each pay period, and then invest it intelligently, and over time you’ll start living a life where your money works for you instead of you working for your money.

And you don’t have to wait for the process to start working its magic.

In the end, it doesn’t matter how much money you earn. As we have seen, if you don’t set aside some of it, you can lose it all.

But here you won’t just set it aside stuffed under your mattress. You’ll accumulate it in an environment you feel certain is safe but still offers the opportunity for it to grow.

You’ll invest it—you’ll watch it grow to a kind of tipping point, where it can begin to generate enough in interest to provide the income you need for the rest of your life.

You’ll put money into it every pay period—a set percentage that you get to determine. Whatever that number is, you’ve got to stick to it.

In good times and bad. No matter what. Why? Because the laws of compounding punish even one missed contribution.

Don’t think of it in terms of what you can afford to set aside—that’s a sure way to sell yourself short. And don’t put yourself in a position where you can suspend (or even invade) your savings if your income slows to a trickle some months and money is tight.

What percentage works for you? Is it 10%? Or 15%? Maybe 20%? There’s no right answer here —only your answer.

What does your gut tell you? What about your heart?

There are many stories of Dalal Street, which holds true at least mathematically, if you have invested Rs.2,00,000 in Wipro when it was listed your value todays would be roughly Rs.8100 Crore (apart for the dividend you have consumed).

If you had done a SIP (Systematic investment Plan) in the equity index (sensex assuming you could buy from 1977) on a dividend consumed basis your returns should be in excess of 20 per cent per annum. Not bad ! 

If you have started investing Rs.1000 through SIP from 1977 to 2018 which is 41 years in senex, you have had a corpus of Rs 2 Crore and 41 Lacs today.

But for now let’s just lock down this basic savings piece, because your financial future will flow from your ability to save systematically. Most of you probably know this, on some level.

But if you know it, and you’re still not doing anything about it —well, then you just don’t know it.

Contrary to popular wisdom, knowledge is not power—it’s potential power. Knowledge is not mastery.

Execution is mastery. Execution will trump knowledge every day of the week.

Are you starting to see how the power of compounding can work for you, even with just a few small, consistent actions ?

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