Lesson # 16 : Why Credit Cards Suck

'If the devil were alive he would probably have sold his soul to the credit card companies.'

It was like a collectable Pokemon Card for adults. Having more cards meant greater power. Greater power because one had more liquid cash than he could ever imagine. Adults and teenagers all over the world signed up for these so called Plastic money lured by the fancy logos and advertisements of Visa and MasterCard.

What people forgot was that the money they were borrowing was not actually theirs and that someday someone was going to pay it and that the banks need to make money and the only way they are going to be able to do that is by thrashing the consumer with high rates of interest compounded monthly.

As a result people's debt goes on piling up and in order to pay off the monthly debt of one card they take on another and so on. The chain goes on till their debt has exceeded their net worth and the day has been ruined by the greatest collectable card in world history.

Credit Cards today charge an average consumer 40-50% interest which through various hidden costs and clauses is actually legal. They also charge you for every purchase you make. A person pays 3.5% - 5% surcharge for every purchase made with a credit card.

For every cash with drawl there is a surcharge of roughly 1 %. Similarly, for every late payment a daily interest is charged in some cases.

Still want to get a Credit Card?

I would suggest you sell your soul to the Devil instead.

With a hope of no debt

Udit Sabharwal { On behalf of Doodle inc}

Lesson # 15 : Why A Business Works Better Than A Job

There are four sorts of people in this world. The first who get a job and continue doing the job for the remainder of their lives, the second who get a job then start of with their own business, the third who inherit their family business and the fourth who do absolutely nothing.

The reason why a business works better than a job is relatively simple.

Say work done by a person in the office is with an efficiency of  60%. The same work when done by the same person for himself would be in the range of 80 - 90 %. The reason is relatively simple. When all the money goes into your pocket you would rather work harder and get maximum utility from that work rather than work for someone else and get only a negligible share of your efforts.

Chance's of promotion in a job are relatively lower. Whereas the sky is the limit when it comes to a business. A business can grow every single day, every single hour, every single minute. As a result while the salary from a job is fixed the salary from business is often increasing and at an incredible rate.

The only problem perhaps is that of risk. But the fact is that probability of a failed business venture and the probability of losing a job are more or less in the same range.

So going over the pros and cons it is more than less obvious that a business is definitely better than a job.

Happy Business

Udit Sabharwal { On behalf of Doodle inc}

Lesson # 14 : Earning the first 1,00,00,000 without working for it

Wealth is created over a long time and perhaps no one would understand that better than the average Indian. But there are certain shortcuts to creating this wealth. Diverting a certain portion of the savings or income towards various instruments can help generate income beyond imagination. A person can have a crore rupees in less than thirty years by investing just 18,00,000 over a period of 30 years or just 5,000 rupees a month.

Year	Amount (5000 a month)
5	3,90,412
10	10,32,760
15	20,89,621
20	38,28,485
25	66,89,452
30	11,396,627

The following are the returns on investments made at 5000 a month for 30 years at 10% per year compounded annually. 

This makes creating money a lot easier. Now, if a person invests 10,000 rupees a month then the time reduces to half and the same target can be achieved in a lesser amount of time.

In the end remember that The money works for you and not the other way around.

Happy Investing

Udit Sabharwal { On behalf of Doodle inc}

Making sense of the previous lessons

Most of you would be probably wondering why out of the blue for more than five lessons I have been talking about the market and various factors that influence the market. Well the fact is that it is because of these factors that actually determine your wealth. If a person is able to make sense of all the things that are going on with the market he can easily use that information to exploit that situation and make profits.

For instance, if a person learns that the price of crude is going to increase then who should purchase crude and probably trade in crude futures. Similarly, if a person sees the price of gold declining then he should hold on to his stocks as the price of his shares is bound to rise in the near future.

Keep your eyes wide open and learn from every person. Every little rumor has the potential to make you a billionaire.

Happy Money Hunting

Udit Sabharwal { On behalf of Doodle inc}

Lesson # 13 : The Market and The Banks

The Markets are influenced by The Banking system to a great extent. As the banks are the major source of money in the economy they also influence the market greatly. The market is affected by certain factors such as the interest rate, bank rate, repo rate etc which are determined by the Reserve Bank of India which also monitors the working of the banks.

If the loan rate is increased people will take less of loans. As a result, the amount of money in circulation will decrease. The bank’s will earn less profits and would in turn produce less earnings in that quarter. As a result the stock would tumble. Since the stocks of the banking sector are highly priced it would greatly affect the market and as a result the market would fall.The opposite would happen if the interest rate is decreased.

Another thing that should be understood is that since a greater number of these banks also offer Mutual Fund services and Demat Accounts. Therefore, as the people would invest less as the market falls the market would fall further as there wouldn’t be enough money to pull the market up.

Loads of wealth

Udit Sabharwal  { On behalf of Doodle inc}

Lesson # 12 : The Market and acquisitions, takeovers

When mergers and acquisitions take place various things can happen in the market.

For instance, if an Indian company is taking over a global counterpart then the Indian market would rise.

If a global counterpart is buying out an Indian company then the share of that Indian Company would rise.

Similarly, if two corporations decide to merge then the one which gets greater benefits from the merger sees a larger rise in price.

Remember if a smaller company is being bought by a larger company then the smaller company is the one which is bound to rise in price and not the larger company.

Sometimes, it may happen that the price of the larger company may decline as the shareholder’s may feel that the parent company’s decision to buy a smaller company is simply going to add to that company’s liabilities.

If a company decides to split it’s company into various sectors then the sector which generates the maximum revenue will see the largest rise in the price of shares.

Mergers and acquisitions are bound to affect the market irrespective of the size and volume of the trade.  In some cases it is positive and in some negative.

Loads of money

Udit Sabahrwal { On behalf of Doodle inc}

Lesson # 11 : Crude and the Market

There is an inverse relationship similar to gold between the market and crude. Crude in general refers to the price of oil in general. Oil as we all know is a rare commodity and due to it’s limited availability and restricted geographical locations the price of crude undergoes a change on daily basis.

The location of crude is mainly restricted to the Middle East and the amount of supply is directly controlled by a few powerful nations in the Middle East.

When the price of crude rises it affects almost all the industries in general.

For instance, Industries using petroleum as a source of energy to run their machines now have lesser production as the amount of petrol they can purchase decreases. Similarly, a consumer who owns a car has to spend in excess on petroleum if the price rises as a result the amount of his salary he is bound to spend on other goods decreases. Thereby, affecting the profits of those companies. This also results in lower investing in the Market. As the number of people purchasing shares are less the chances of the market going up are almost negligent.

When the crude was at it’s peak at around 150 $ a barrel the market was at it’s rock bottom.

The only stocks that go up when crude is up are those that deal in alternative sources of energy. For instance, stocks such as Jaiprakash Hydo { Hydro electricity} and Suzlon { Alternate sources of energy} were amongst the bullish stocks on the market.

Loads of Wealth

Udit Sabharwal { on behalf of Doodle inc}

Lesson # 10 : Dip Proof Sectors

There are certain sectors which are market proof. That is irrespective of the market fall or rise these sectors are bound to give returns and that too at continuous intervals.

The sectors are:

Power: In an economy where power is erratic and the government has decided to privatize the distribution of power this sector is headed in the upward direction. Moreover, with newer forms of power being generated in the form of hydro electric power, solar power etc. this sector is bound to give positive results. Moreover, the Government plans to remove the subsidy that it is offering to the citizens which would mean higher prices of electricity which in turn would result in higher profits. Thus, greater increase in values of stocks.

Banks: As long as the markets prevail so will the banking system and even if the markets don’t the banking system would still prevail. With banks making huge profits as a result of the large number of loans that they are offering and the increasing credit card users the sector is aimed to generate some of the highest returns in the economy. An investor is strongly advised to invest in Government Institutions as the chances of the stock falling in that case are almost negligent.

Fertilisers: In an economy which is roughly 50-60% agrarian in nature it shouldn’t come as surprise that fertiliser companies are bound to do well. Also understand the fact that these companies may have relatively lower margins but since they have a relatively larger consumer base it results in greater revenue each year and therefore higher profits and greater dividends. A sector where most of the stocks are relatively highly priced this is one of the best sectors to invest in.

Fortune 500 Companies: The magazine fortune annually comes up with a list of the top 500 companies in the world. If an individual invests in one of these companies the results are assured and guaranteed. The main reason behind this is the fact that a lot of research is put into this list. Fewer than 10 Indian companies feature on this list and as the choice is limited the investment amount can be diverted depending upon individual needs.

Happy Investing

Udit Sabharwal {On behalf of Doodle inc}

Lesson # 9 : Gold and the Market

There is an inverse relationship by theory between the markets and the price of Gold. Gold is a commodity that since time in memorial has been used to judge the level of development of a country. The gold reserves of a company actually highlight how secure a country actually is.

Some times it may happen that the price of gold and the market may increase at the same time. This is a very unlikely situation and it only happens once in a blue moon.When the market starts falling the investors look for alternate sources of investment. In a country like India where gold has always been considered as a safe and sound investment huge sums are thereby diverted towards buying gold.

Gold in the form of units can also be purchased from the MCX which is a sort of commodity market like the sensex.

Remember that however Gold purchased in the form of jewellery is not beneficial because:

Firstly, selling this sort of gold is only possible if you go back to the dealer who you actually purchased it from.

Secondly, When you actually do sell this gold around 5-10% depreciation charges are cut.

Thirdly,  In most cases if a person wishes to avail loan against gold the amount allotted is much below the market value.

Thus, the best gold that a person can purchase is in the form of gold units on the MCX or pure gold in the form of Gold biscuits and Gold coins{ Though it is recommended by professionals that individuals should avoid gold coins as far as possible} 

Loads of gold 

Udit Sabharwal { on behalf of doodle inc}

Lesson # 8 : Market Basics

In India shares are traded on the Nifty and the Sensex. The street on where the Bombay stock exchange is located is called Dalal Street. Dalal was a very famous and powerful businessmen in Mumbai. Fortunes are made in a day and often live savings are lost on this very street. At one end of the spectrum there are people who are filled wit joy and relief and at the other end there are those who are reduced to tears by the market.

The market regulator in India is SEBI. SEBI handles everything related to the markets from fair share trading to mutual funds.

The market is influenced by a variety of factors and is controlled by those at the top who hold a significant amount of shares and whose purchase or sale can make or break the market.

When people start buying shares rapidly with the hope that it would increase in the near future it is called a bull market. Whereas when people start selling or don’t buy at all then the market is called a Bear market as the investors sort of undergo a hibernation like state.     

The Stock market is strongly influenced by it’s global counterparts. For instance, The Sensex and Nifty are influenced by The Dow Jones, Nasdaq, Nikkie, Hang Sheng to name a few. The performance of the peers is an indicator of the performance of the market.

The market is influenced by a lot of other indicators which shall be explained in the next lesson.

Loads of wealth

Udit Sabharwal {on behalf of Doodle inc}