(learn to earn book summary – formula to become rich)
We are taught a lot in our childhood in school. Like- Accounts, Economic, Mathematics, Science. Even Cooking and Drawing. But he has forgotten to teach us the most important thing. That is, investment means investment.
We talk about patriotism. We talk about Army. But we forget one thing. That makes a country great and strong in its business. Due to business itself, our Gross Domestic Product (GDP) also increases. Our economy grows. Because of this, people get jobs. get the job.
Finally, there is growth of the country. But have we ever thought? That's how businesses grow. Then they grow. When someone invests money in them. Today we will learn about this. After all, what is an investment? How do companies grow?
In what things can we invest money? So we hope that you will enjoy this book summary as much. As much as we have enjoyed while writing this. (learn to earn book summary)a short history of capitalism
First of all let us understand what is a company. When many people together, want to do a business. So he forms a company. Building a company is not a difficult task. Just, you have to give some legal paper. Fees have to be filled. Then the company is formed. Now it has become even easier. The Government of India has allowed company formation only on submission of Aadhar card.
Many people think that company means a building or an office. But the company is a folder of some legal papers. In the eyes of the law, a company is a different person. like you and me. Which the government can also punish. Can put fine on it too.
The advantage of this is that suppose you opened a company. You invested ₹ 100000 in that company. Tomorrow there is a mistake with that company. So the matter will be on the company. not on you. In this you can lose a maximum of one lakh. The same one lakh, which you had invested in the company.
Government cannot take your personal assets like house, car, gold. This is the biggest advantage of forming a company. That you have limited liabilities. That is, you are liable for the same number of things. How much have you invested? That is why the word limited is put in front of the name of the company. Now let's know about the types of companies. There are two types of company. (learn to earn book summary)Private Company – It is called private company. In which the general public cannot invest money. If you want a share in a private company. So there is only one way. You have to marry the owner.
Public Company – These are those companies. Whose shares can be bought and sold in the market. Anyone can buy their shares. Whether you are rich or poor. You just have to have money to buy them.
Whenever we buy shares of any company. So legally, we become the owner of the company. Of course, only a little. But you definitely become the master. We can buy shares of any company of our choice. (learn to earn book summary)
The Basics Of Investing.
It is often seen that most of the people think of investing very late in life. Because that’s what they have to say. That job is not done yet. I will fulfill my responsibility. But the sooner we start investing. The more we benefit. (learn to earn book summary)
The very first lesson in investing is. That we have to start saving. Lets understand it with an example. There is a boy Rajiv. Who has just got a new job. to be shown to the people. that he has become rich. He thinks that now why not take a good car up to 20 lakhs.
To buy it, he takes a loan. He takes out all his savings and gives a down payment of ₹ 2 lakh. Then takes a loan of ₹ 18 lakhs. He took a loan of 5 years at the rate of 11.6%. Now every month, he pays around ₹40,000 in his installment.
Initially, whenever Rajiv would park his new car somewhere. So people would keep waving. But after 5 years, the car started looking out of date. Now seeing such a car, who would wow? But in order to buy such a car, Rajiv took a loan. To repay the same loan, he had to pay an extra six lakh rupees. That is, 26 lakhs were spent on a car instead of 20.
After 5 years, when your loan is repaid. Then he had such a car. Which he no longer liked. The price of which remained only ₹ 8 lakh in the market.
On the other hand, another intelligent boy named Rajesh also got a job at exactly the same salary. Rajesh also took the car. But second hand, that too without taking any loan. He understood this. That the car is, for him, just a means of transport. Which can take him from one place to another.
He didn't mind if there were any dents or scratches on the car. That's a major part of his salary. was investing. Then came such a time. When Rajesh bought his own house. He rented out the 2nd floor above him. Then started earning passive income every month.
That is Passive Income. In which no human being has to do anything actively. But still, he keeps earning. Now Rajesh was getting rent along with his salary.(learn to earn book summary)
Five Basic Investments.
who have understood this. How important is it to invest? They have five options to invest money.(learn to earn book summary)
Savings Account – This is a very simple concept. Which most of us use. In this every month we put some money in the bank. The bank uses that money to give loans to others. On the money given on the loan, the bank takes more interest. Gives us less interest than that. That is, by saving money, you can earn more money from that money.
It is our purpose to save. We can at least beat inflation. That means inflation. Lets understand it with an example. Suppose today you deposited ₹ 100 in the bank at the rate of 6%. After 1 year you will get ₹106. That is, ₹ 6 as interest.But unfortunately, inflation that year was also only 6%. That is, the goods you bought earlier for ₹ 100. Same same today, you will get it for ₹106. This means that your real return is 0%. That is, your money could not earn anything for you.
Investment in Collectible – It means this. buy something like that. For which people in future should be ready to give us more money. For example, old coins, some antique items, some unique painting etc.. (learn to earn book summary)
When we invest in these things. So we think. In the coming time, it will appeal more to the people. Like the painting of Monalisa. People will give us more money for that. But its biggest disadvantage is this. Maybe this honor is broken. Get burnt or stolen. In such a situation, our investment may be 0.
House and Apartment – This is one such investment. Which can be called a good investment. Because in this we can use Other People Money (OPM). That is, by using the money of others, one can become rich.
Which means that loan is available for such investment. In this, people often spend only 20% of the full cost of the house out of their pocket. The rest 80% comes from loans. This is the purpose of most people investing in a home. can give it on rent.
So that their rental income becomes so much. That it is more than the installment of the loan. So that even ₹ 1 of loan is not spent from their pocket. If seen, he got 20% of the property that he had given the down payment. found on it. Not only this, even after repaying the loan, he will continue to get rental income from that house. That is, passive income for a lifetime. Along with this, whenever the price of his house will increase. His rent worth will also increase.
Investment in Bonds - Bonds are just a piece of paper. Which says that you have given a loan to someone. whom you have given loan. When and how much money will he give you? Because more interest is available in bonds than in savings account. That's why people invest in bonds too.(learn to earn book summary)
From government to public companies, all sell bonds to us. That is, take a loan from us. If we are afraid to take risks. Or we are of secure mind set. So we go to Govt. Bonds can be bought. Because just like the bank, they also have the support of the government behind them. There is another option. Taking bonds from a public company. Everyone has this doubt in their mind. If we buy Bonds of any company. Then that company itself was closed. then what will happen.
In this case, our money is still secure. Because if the company goes bankrupt. Then the assets of this company are auctioned. The money that comes from this auction. It is first given to the bond holders. After that, to the shareholders. Our investment is then at risk. Even after selling all the assets of the company. That much money is not collected. So that the money of all Bond Holders can be paid. Because of this, many people go to Govt. I like to take Bonds only.(learn to earn book summary)Investment in Stocks – Many people consider Stocks i.e. Share to be the best investment. Because we don’t have to take care of it. In this type of investment, the company will grow as much as %. Our wealth will also continue to grow by the same %. The most interesting thing in this is this. That we will not have to do any work in that company.(learn to earn book summary)
who are the bondholders of the company. That is, those who have given loan to the company. They are given only that amount of money. As much as it is written in that Bonds Certificate. Then that company later on, whether it has become Microsoft or Reliance. But those who are shareholders. He fully enjoys the growth of the company. That is, if the company will grow 20 times. So their investment will also become 20 times.
If we want to start investing. So it is not so. We have to be millionaires. Or to be a millionaire. You can start it by investing even ₹ 500. Today's share price of 'State Bank of India' is running at ₹ 447.65. This means that we can buy some part of 'State Bank of India' for Rs 447 and 65 paise.
Author says if we don't want to do this also. So we can start tracking a company. Then by reading his financial statement. Can imagine this. that we have bought his shares. Now we have to see this. Are we able to predict the fluctuating behavior of that company in the long term or not. That is, whether the value of our imaginary share has increased or not.
That's when we started having some idea. Then we can actually start buying shares. When people incur losses in shares. So it is not the fault of the shares. Rather, the fault lies with the buyer of the share. Because the amount of time, we spend in buying the air conditioner. That much time, we do not spend in buying shares of any company. Investing in a company in a hurry is very stupid.
Investment in Mutual Funds – If we do not want to invest our own money. So the author says that we can also invest money in Mutual Funds. There is an expert in Mutual Fund. Which is called Fund Manager. It works. Studying different company in the market. To see which company can grow in the future.(learn to earn book summary)
Many people invest money in Mutual Funds. For example, you paid ₹ 10000. I gave ₹ 20000. Now the fund manager invests all this money in many different companies. If all these companies grow. So all this profit will be given to the investors according to the money invested by them. Similarly if there is a loss. That too the investors will have to bear it. Now because Fund Manager works for us. So for this, he takes a commission from us. Which is called Expenses Ratio. (learn to earn book summary)
So, this is the short summary of the comfort crisis book. hope you liked it. If you find this informative then also check out some more book summaries like The 5 second rule , The magic of big thinking , Finish book by john acuff, Hooked book summary in my blog section.
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