‘Equality’ is our right since constitution! And we have been fighting for it since ages! Gender equality, caste equality, colour equality and many more! But one thing we Indians are still to ask about is WEALTH EQUALITY!
Wealth inequality is described as unequal distribution of wealth amongst the population ~ Google says!! In today’s world, when even the domino’s pizza is cut into 8 equal halves, let’s see what’s the actual position of “wealth pizza” in India –
Shocking! Isn’t it! Everybody pays for the pizza equally – the tax, but only some gets the most of it while some still struggling to taste it atleast!! Global inequality is growing, with half the world’s wealth now in the hands of just 1% of the population, according to a new report. Yes!! More than half of the world’s wealth with just 1% of the population!!
The middle classes have been squeezed at the expense of the very rich, according to research by Credit Suisse. And do we know the reason to this! Let’s analyse some of the reasons (apart from the commonly cried over reasons of less education, unemployment, rich by birth etc!) point by point!
- India 2nd-Most Ignorant Nation In The World, Clueless About Key Issues ~
Most Indians “underestimate” how much of their country’s wealth is concentrated in the hands of the top 1 percent – a survey said, adding that the top 1% actually own an “incredible” 70 percent of all wealth. And how many of us realise this! Probably none!
- The thought process! ~
Now this is what we are emphasising on! Your thought makes you rich or poor! A normal middle class person believes in working for some handsome 10 to 12 hours, and then going back home, eating and sleeping! And from next morning, the same routine continues! We switch on the TV to only see Ambani’s next achievement and say – they are great people and some are born lucky!! And then get back to our work again!but, had Dhirubhai thought in the same manner, we wouldn’t hve got THE AMBANI’s today!
We have to realise that THE DHIRUBHAI was a simple middle class Dhirubhai someday! What we should see is his journey and not the destination! What made him reach there is his out of box thinking and his strength of taking risk! his need to be “financially free”!
The biggest problem of middle class – they don’t understand this term of being financially free!! Financial independence is generally used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income that is greater than their expenses. Only running day and night and not still being financially free is one biggest weakness that we face each day. This is probably because our expenses are pretty too high and we don’t have that high saving to create income generating assets for ourselves!
The chart says the unsaid!!
Now let us talk about what can we do to reach the stage where we are financially free.
Saving!! But how?. How do we save from this ever increasing inflation. The simple answer to this is what we always ignore. Small savings! Even the counting to a crore starts from 1!!
Here is a small pie chart that will describe the difference in holding pattern of a middle class and the high class :
The top class mostly holds high percentage of business equity, real-estate and financial securities! That is to say they hold assets which give them income which in turn makes them financially free!!
Today, share market is one platform where small investors also have great opportunities. Risk is a common factor to every work you undertake, but returns you can generate from this is unparalleled. In an recent interview, Rakesh jhunjhunwala – India’s best known private investor- said – “There are two to three reasons why one should invest in the markets. The one advice I offer to young couples is that they must invest all their savings in a house. After a house, devote 80% of your savings to the market. Here’s why: India is in a growth phase — the index has gone up from 100 to 28,000 over the past 30 years. I don’t see why this situation will not repeat itself over the next decade. This being a stock market, valuations have to grow. If India grows, earnings have to grow. India saves over $650 billion a year. In four to five years, this figure will go up to a trillion dollars. Even if 10% of that money flows into the equity markets, that adds up to about a hundred billion dollars. Why will this money not come to the equity markets? In 1991, 18% of savings flowed into equities and by 2007, this figure stood at 13%. So, there is going to be an upsurge in earnings and money flowing into the market.” So these statistics easily describe the extent of growth in stock market. [Please dedicate some time to read this –
The simplest reason I would explain is you run the entire day and then you pay huge tax on what you earn and what you get is the income nd not an asset! Here, when you invest in the share market, you get an asset created for yourself which gets you atleast dividend as income, plus, after an year all that you sell is tax free! So that’s like cherry on cake!
To earn form stock market is not difficult. The only thing is we need to be well informed and well educated about the markets plus – we need to be content with the profits we make initially and not be greedy! Implementing stop loss strategy, making steady profits instead of quick profits properly planning your trading and proper averaging the profits are some key to gain from the stock market. Once you get into it and start analysing the trend – HURRAH! You’re there!!
Start trading with a small amount and limit your expected gains. Don’t flow the greed of the gains. Trade in small quantity. And simple, first learn and then earn! Educate and inform yourself about your stock and keep constant watch on the market patterns.
Trading in nifty~ when you’re trading in nifty you’re probably investing in a portfolio of stocks which ensure that the “beta” of your portfolio i.e the risk underlying is reduced to minimum! Trading in just one stock might increase your risk! NIFTY is an Index computed from performance of top stocks from different sectors listed on NSE (National stock exchange). NIFTY consists of 51 companies. NIFTY stands for National Stock Exchange’s Fifty. The companies which form index of NIFTY may vary from time to time based on many factors considered by NSE. If the market does well, Nifty: will anyway rise (and vice versa).
Then there is something called NIFTY BeEs.
Nifty BeES is an ETF (Exchange Traded Fund) by Goldman Sachs, which tracks the Nifty Index. To explain in simpler terms, Goldman Sachs has a computer program which takes your money and uses it to buy the equivalent number of all 51 stocks that the component of Nifty Index. Each single share of Nifty BeES is priced at 1/10th of the Nifty Index.
If Nifty is at 7600, the price of Nifty BeES would be (about) Rs.760. So if you buy 1 stock of Nifty BeES, the ETF would have invested in all of the 51 shares in Nifty. But you can say one can’t buy all of the stocks with just Rs.760. Right, but when lakhs of people buy it, the fund can buy enough stocks and your returns will be weighted according to your investment.
Whenever a company is removed from the index and a new company is added to the index, the ETF automatically makes the adjustment in the investment. It is exactly as if you are investing in these 51 front line companies. When invested in the long term you would definitely have increased your investment multiple times.
Apart from trading, it is the best available platform for long term investments. What more I say as example – I know somebody personally who purchased ITC shares many years ago and held on to it till date and today – he managed buying a house for himself buy selling some of his shares! Don’t ask how many times his money has earned!!
So there are certain companies where we can start investing, a small amount initially and wait patiently. All you need is to study various companies and invest wisely in them!
Plus! Those who are scared in investing in the market directly have can have an indirect route to market! There are many SIP (systematic investment planning) schemes of various mutual funds specifically designed for small investors. You invest a petty 1000 rupees per month which can fetch you a handsome return that too tax free! Mutual fund gives you many tax benefits too. Like ELSS (equity inked saving scheme) upto Rs 1,00,000 per year qualifies as an exemption under section 80C so along with the tax deduction, the investor also gets the potential upside of investing in the equity markets. To get the best out of investments in mutual fund schemes, investors have to be patient and learn to ignore daily market fluctuations. And amazingly, if you wish to hold mutual funds for some time with patience, you can get as high as 20% returns TAX FREE!
Without elongating this, I would just like to say that there are ample areas in the stock market apart from ones discussed above where we can invest or trade and become rich by holding REAL ASSET in hand. All we need to do is take a little risk, think out of the box, properly educate ourselves and feel the urge of being FINANCIALLY FREE and not dependent on somebody for our income!
Wealth inequality is not only hampering individual class of people but the nation as a whole. To change the scenario, we need to be better informed and well educated about the economic circumstances around us. Middle class has the equal chance of getting richer given we ourselves strive towards it and take that risk to move a step further!