I recently read the book 'Rich Dad, Poor Dad' by Robert Kiyosaki. Sandeep was reading it in the cab when both of us were on our way to Agra from Delhi. He recommended the book very strongly. Now, I don't read a whole lot of books. But he told me a few things he read in the book and I found it interesting. So, when I got home, I bought the e-book on my iPad and read it.
Its a good book overall. However I am not sure how much of it is relevant in the Indian context. It is written keeping a lot of things, which are very US-specific, in mind
For example, the book talks about how someone bought an apartment with a loan taken from the bank and how the rent the apartment fetched was used to repay the EMI the bank charged and after that still left some money on a monthly basis. This would rarely happen in India where the interest rates are about double those in the US.
Many of the concepts presented in the book are interesting. The book suggests that we should never use our earnings directly to meet our expenses. The money must be invested in something that earns money which should then be used for our monthly expenses. That way the primary money always remains with us. Makes a lot of sense. Now, the tough part. How do you find an investment that could fund our monthly expenses on a regular basis? Let me know if you find an answer!
The interest rate difference in different countries changes things quite dramatically. What is true in the US just isn't true in India. If I invested some money in the US in the equivalent of an Indian Fixed Deposit, the returns just wouldn't make as much sense as they do in India. I am not saying FD returns in India are fantastic. Its just that in the US, they are much worse.
Another idea the book gives is to start a company to do all your investments because in a company all your expenses are deducted before you calculate and pay your tax whereas for an individual, whatever money you spend cannot be deducted from your income before you compute your tax. I am not sure it is that simple. But this is definitely worth trying.
The book is definitely an interesting read but would require caution before you start following everything that it recommends. I tend to get swayed by these kinds of books initially but after reading some criticism, I usually think in a more level-headed manner. What seemed like the miracle-cure for all my financial problems suddenly didn't seem very practical!
Its a good book overall. However I am not sure how much of it is relevant in the Indian context. It is written keeping a lot of things, which are very US-specific, in mind
For example, the book talks about how someone bought an apartment with a loan taken from the bank and how the rent the apartment fetched was used to repay the EMI the bank charged and after that still left some money on a monthly basis. This would rarely happen in India where the interest rates are about double those in the US.
Many of the concepts presented in the book are interesting. The book suggests that we should never use our earnings directly to meet our expenses. The money must be invested in something that earns money which should then be used for our monthly expenses. That way the primary money always remains with us. Makes a lot of sense. Now, the tough part. How do you find an investment that could fund our monthly expenses on a regular basis? Let me know if you find an answer!
The interest rate difference in different countries changes things quite dramatically. What is true in the US just isn't true in India. If I invested some money in the US in the equivalent of an Indian Fixed Deposit, the returns just wouldn't make as much sense as they do in India. I am not saying FD returns in India are fantastic. Its just that in the US, they are much worse.
Another idea the book gives is to start a company to do all your investments because in a company all your expenses are deducted before you calculate and pay your tax whereas for an individual, whatever money you spend cannot be deducted from your income before you compute your tax. I am not sure it is that simple. But this is definitely worth trying.
The book is definitely an interesting read but would require caution before you start following everything that it recommends. I tend to get swayed by these kinds of books initially but after reading some criticism, I usually think in a more level-headed manner. What seemed like the miracle-cure for all my financial problems suddenly didn't seem very practical!
Comments
But you're right, it is important to do the right thing month after month, year after year!
What is your full name, btw? I have a feeling I know you!
Can I find your writings on the internet somewhere? I could do with some tips on money management!
pls check this link
http://www.dnaindia.com/columns/sandeep-shanbhag
it contains a listing of all my write ups - i used to write weekly for dna for about five years or so. apart from dna, i have written for various other papers and websites (moneycontrol, rediff etc). a google search will give you the complete picture I guess :))
but yes, money management is important for everyone but very little attention is being paid to it.
let me know what you think of my "ramblings"
kamal@kamaldshah.com