What are some of the money strategies that have worked for you? Here are mine...

 Minimalism:

Minoo Jha

 · 6y

Could minimalism be the key to financial freedom?

Hi, You asked, Could minimalism be the key to financial freedom? Yes, short of living in a tent, I am comfortably off because of living a minimalist life. Here’s how I did it… I internalized Suze Orman. I started meditating. (The book “How God Changes Your Brain” gave me both my motivation and my technique). I stopped being a nervous Nellie about my future, accepting that the future was hamarey bas ki baat nahi (Hindi for “beyond my control/capacity/competence”). I channeled stories such as the Farid ud-Din Attar story about King Mahmud and the Beans. I started tracking my expenses. I found that knowing my average monthly expenditure was within a certain range made me oodles less anxious. I searched for and read books on downshifting like Your Money or Your Life. I found out how simply some folks were living (friends and relatives in India) and how happy and content they were. It helped me develop perspective. I realized that things are not always what they seem. That people who looked better off than me with expensive cars, nice houses, the latest gadgets and who went on fabulous holidays might actually be reeling in debt and have negative net worth. I also observed how many people who are better off than me fret more than me. This is because though they are rich in externals (the visible accoutrements of a successful life), they are poor in internals (their internal life is messy). Peace and contentment can’t be bought. It is a gift you give yourself. You can be at peace even living in a crowded noisy apartment complex, whereas you can be in a state of turmoil even in the quietest most luxurious and secluded waterfront mansion. I know this sounds like a “sour grapes” rationalization, but I really do fret less than many people who are materially far better off than me. I discovered “Asteya” and made it one of my goals. Asteya is the discipline of taking from the world only what you need – without greed, excess, or wastage. I realized that producing something (expression) was more satisfying than owning anything (consumption). I observed that more stuff made me less happy rather than more happy – giving me more house cleaning, maintenance and security to worry about. And finally, I observed what made me happy. They were not things, but experiences. A good conversation. A good read. A walk or talk with a friend. A simple hearty meal. A guest post (hint,hint). A satisfying workout at the gym. Giving and receiving appreciation. Learning something new. My meditations. A fear or weakness conquered. An intellectual puzzle solved. A physical challenge met. And realizing this, I was able to cheerfully and contentedly declare “I’m good!”

Passive Income:

Minoo Jha

 · 6y

What are some of the books that are really worth reading that you can recommend?

You asked, What are some of the books that are really worth reading that you can recommend? Rich Dad Poor Dad by Robert Kiyosaki is one of them. So is Your Money Or Your Life by Vicki Robbins. I will tell you why. I lent Rich Dad Poor Dad to a friend who was originally from Russia. She told me it was the best financial book she had read since Das Kapital. She took Kiyosaki’s passive income message to heart, and started buying rental properties with OTM - Other People’s Money. She even relocated to a small city in another state, so that she could achieve the passive income dream that Kiyosaki’s book had planted in her head. Today she owns multiple small property rentals. My own experience After reading Rich Dar Poor Dad, I went from “giving no thought to money matters” to giving thought to all money matters - from taxes to interest rates to asset price fluctuations. Kiyosaki planted the seed in my head that you can be income rich and asset poor. I did not want to be income rich and asset poor. I did not earn a lot of money. But Rich Dad Poor Dad had planted the desire in my heart to become financially free through owning assets. I started tracking my expenses. I got back into the stock market. I had been out of it, since the Harshad Mehta crash in India. Kiyosaki’s book dismissed stocks as “paper assets”. I decided to ignore what he thought about stocks. I decided stocks were the way to go for me. I read a lot of financial books after reading Rich Dad Poor Dad - Suze Orman’s books, David Bach’s books, Charles Schwab’s books. In fact, I read all the books I could find in the library. Your Money or Your Life was one of them. It is another mind blowing book. You can live an abundant life with little money. That is its message. Thanks to these 2 books, I was able to confidently give up a regular paycheck for consulting work, starting 2010. By taking the message of these 2 books to heart, you can put yourself in a very different place - financially, physically, emotionally. I did. This is me saying thank you to these 2 books (and all the other financial books I have read) in this Quora answer.

Long-term focus:

Minoo Jha

 · 6y

I'm 35. How much money should I have saved for retirement?

Hi, You asked, I'm 35. How much money should I have saved for retirement? For every 10,000 of retirement expenses, you should have $250,000. So if you expect your expenses in retirement to be $20,000 per year, you should save $500,000. If you expect your expenses to be $30,000 per year, you should save $750,000. If you expect your expenses to be $40,000 per year, you should save $1M. And so on. You should subtract the annual amount you expect to get from Social Security before you do the calculation, if you expect to meet your retirement expenses from a combination of Social Security income and your savings. If your annual retirement expenses are $50,000, and you expect to get $18,000 in Social Security benefits annually, subtract $18K from $50K. $32K is what is left, which you will need to meet from your retirement savings. Divide 32K by 4% = $800,000. $You will need $800,000 to meet $32K of annual retirement expenses. Here are some tips to get you there: 1. Avoid buying more house than you need 2. Don’t take out a second mortgage for a non-essential expense 3. Don’t pay the minimum on your credit cards 4. Don’t let revolving debt grow - have none of it if carried over if possible 5. Build up an emergency cushion 6. Budget so you have money left over every month 7. Avoid buying new cars 8. Avoid expensive haircuts, expensive meals, expensive clothes, expensive vacations, expensive private schools, expensive hobbies 9. Save for retirement through 401Ks or IRAs 10. If you are married, live on one income. It’s not impossible One last tip… Steep yourself in the advice and inspiration of leading lights of the FIRE (Financial Independence Retire Early) movement such as Mr. Money Mustache and Financial Mentor. And if there is a debt problem involved, sign up for Dave Ramsey’s Financial Peace University. Do this and maybe you won’t have to worry about Social Security. You can retire even ahead of the Social Security age because of being so smart with managing your money and your savings. Even if you have nothing saved at age 35, using the strategies above, you can get to the goal of covering your expenses with your assets, and even retire early. Just depends on how much of your paycheck you are willing to save - see Mr. Money Mustache’s calculator.

Avoidance of debt:

Minoo Jha

 · 6y

In opposition to what Dave Ramsey says, can taking on debt ever be a good thing if used for smart investments?

Hi, You asked, In opposition to what Dave Ramsey says, can taking on debt ever be a good thing if used for smart investments? Most entrepreneurs (including future landlords) will have to access sources of debt in order to acquire assets and grow. Outside of business, you should take on debt very selectively - for a car, for your house, for student loans (this last, only if you can’t avoid it). And you should pay off these debts - for a car, for a house, for student loans - as soon as you can, so your net worth is all assets and no liabilities. Loan sharks will try to seduce you into taking second mortgages, and what not, and spin a “you’ll lose the tax benefit” story. Credit card companies and banks will try to seduce you into carrying your credit card debt over from month to month, and paying just the minimum, because they earn huge interest on the money you owe them. Debt, whether on cars, houses, student loans, or credit cards are like a ball and chain. Why get tied to a ball and chain, and paying creditors forever? DTD, as Dave Ramsey says. Ditch the debt.

Learning from mistakes:

Minoo Jha

 · 6y

What's something about the stock market you wished you knew earlier in life?

Hi Francisco, You asked, What's something about the stock market you wished you knew earlier in life? Here are some that blew my mind in the early days (the surprises were all related to some foolish notions I had): 4 Foolish Notions I Had About Stocks And How You Can Avoid Them Foolish Notion #1: Great products equal great stocks I used to think if a company made a great product, it would ring up huge sales and net huge profits. What a quaint idea. For a classic example (where experience put paid to that idea) consider Tivo. Tivo invented the DVR. Tivo’s DVR is the #1 DVR in the market. But has Tivo’s stock gone anywhere as a result of it? Type the ticker into the search box at Yahoo Finance and see for yourself. Profits and consequently, stock price appreciation, have continuously eluded Tivo. Lesson to be learned: Don’t equate a great product with a great stock buy. Whether the company is Tivo. Or Vonage (whose product I love and have enthused about in the post 4 decisions I wish I had made earlier). Or Krispy Kreme. Even if you find their donuts irresistible, you may want to read my cautionary post How I Lost A Thousand Dollars on Donuts. Where I confess to foolishly trying to ape Warren Buffett and to one of my most painful and humiliating investing blunders. You don’t want to lose money that way. And you don’t want to lose money by making the mistake of investing in wonderful products that do not have wonderful companies attached to them. Foolish Notion #2: Conglomerates make good investments I used to think if a company had its fingers in many pies – meaning it was a group of companies rather than a single company (usually referred to a conglomerate) – it was a superior investment to a company with just one line of business. Bone-headed thinking! Not only are companies with widely different businesses daunting to manage (think of the Lilliputians trying to deal with Gulliver which explains Jack Black's appearance in this post), shady and shadow accounting is also a much higher risk with them. So if you are invested in one these conglomerate companies, I suggest you keep a close eye on them. And if they decide to break themselves up into different businesses each focused on its own area of strength, say a hallelujah! It’s what shareholders of Fortune Brands are probably saying, now that FortuneBrands has decided to sell its Titliest golf balls business, its Moen faucets business, its Master Lock business, in fact all of its non-core businesses. Once the sales are complete, Fortune Brands (which will be renamed Beam) will be able to concentrate on just one business, its core business: wine and spirits. Lesson to be learned: If you are tempted to invest in a conglomerate, whether United Technologies or GE or Fortune Brands, you should do so in the knowledge that you are being self-indulgent and that a company with a single line of business will usually fare better as an investment. And don’t be surprised to find that sooner or later, the conglomerate itself will come to the same conclusion and move to sell or spin-off non-core businesses. Foolish Notion #3: The Daughter Ship is Not As Good as The Mother Ship Sometimes when a company owns more than one line of business, it will decide to spin off a secondary line of business to shareholders. The spin off might be an automatic spin off. Or it can be one in which you as a shareholder, are asked to choose whether you want to continue to hold all your shares in the holding company, or to exchange some of them for shares in the company being spun off. What should you do? My advice (and I learned this through non-buyers remorse) would be to exercise the exchange option, even if you are nervous that the daughter ship may not do as well as the mother ship. A classic example is when McDonalds spun off Chipotle. Had you declined the offer to exchange some of your McDonalds shares for Chipotle shares, it would have been a serious mistake. Because Chipotle has increased 12 fold since it was spun off from McDonalds. Whereas McDonalds, while being on a tear itself, has only doubled in price. Lesson to be learned: If you are given the option to exchange some of your shares for shares in a company being spun off, always always exercise the option, even if you are a Nervous Nellie about it. You should exchange a small percentage of the mother ship's shares if that's all the courage you can muster. Foolish Notion #4: An Investment is Happily Ever After My post Yoga for Investors aptly sums up my philosophy about investments. I have developed a gritty Till Death Do Us Part determination when it comes to investing. However, I've learned that plans to stick with a stock for better or for worse, for richer or poorer, in sickness and in health don't always pan out. Just as bonds sometimes get called away, I have discovered cherished stocks can also get snatched away from one's portfolio in the blink of an eye. How? How is when a company you are invested in gets taken private. This is what happened to the shareholders of Neiman Marcus (Needless Markup, as my boss Judy used to wryly call it) - when it got taken private in 2005. And this is also what happened to the shareholders of Allied Domecq. Shareholders in Allied Domecq, the company that owned Baskin Robbins, Togos and Dunkin Donuts, were denied the privilege of baskin' in the sunshine of lifelong ownership. Because Allied Domecq sold itself. The Baskin Robbins (reason you might have bought Allied Domecq in the first place if you are like me) and Dunkin Donuts part of the business went to a clutch of private equity firms. The rest of the business (the bread and butter alcohol and spirits business) was sold to Pernod Ricard. And that’s how there was no Happily Ever After for Allied Domecq shareholders. Lesson to be learned: Don’t get too attached to the shares you buy. Private equity and other companies can snatch them away from you at a moment’s notice. Of course M&A doesn’t always result in a Where Did My Shares Go experience. Sometimes there’s the head-spinning (think Linda Blair in Exorcist head-spinning) Whip Lash experience, in which the original shares you bought are subjected to relentless M&A, so much so you get whip lash from keeping pace. For instance, you may start out by owning SBC shares, only to find out your SBCshares have become Comcast shares, only to find out your Comcast shares have become Cingular shares, only to find out your Cingular shares have been rechristened AT&T. This is the Whip Lash experience. The Allied Domecqexperience is different. In the Allied Domecq scenario, you have to bid your shares goodbye as they vanish into some private equity portfolio or get swallowed up by a larger company in an all cash deal (as Skype was swallowed up by Microsoft recently). Since both these scenarios happen quite frequently, my advice to you is to practice detachment from your shares from the get-go. It will save you from heartbreak and acute SWS - Share Withdrawal Syndrome.

Avoiding some of the 7 deadly sins:

Minoo Jha

 · Sep 17

What is one psychological hurdle that often prevents new investors from sticking to their long-term plans?

The 4 psychological hurdles are: * Greed * Sloth * Envy * Fear We think we know