Make your money work for you

I write a little bit about startup experience through our ZipBoard blog. But this will be slightly different, here I wanna write about things which are on my mind other than zipBoard. Again i am a bullet point person so will try to keep this point wise (just the way i like to read and write). Most of my writings will be inspired by legendary Warren Buffet. So if you already follow him, you’ll find few things repetitive.

  1. every one in finance world say 2 things, and they are worth repeating- always keep some spare money for investments and start early.
  2. If you don't know what when how, the easiest is SIP — what is SIP? systematic investment plan- invest small but every month!
  3. if you think you don't know anything about stock markets start with Passive investing. Passive means investing in Index Funds. Different parts of the world call it differently but it means investing in Indices of your local country.
  4. Over long run investing in Index funds always give you substantial tax free returns — why? Because every generation will live a life better than the previous
  5. In the end see everything as a Price to Earnings Ratio written as P/E. Example- should you buy a house which cost you 1200k$ and will get you rental of $10k every month, your P/E for such home is 1200k/(12*10k) = 10. Compare this to bank, if interest rate is 5% then P/E = 1200/60 = 20. Clearly buy the house because you earn a 1$ for every 10$ investment compared to bank.

enough for first post. i will write more about Warren’s letter to shareholders and esp the 2013 letter. happy weekend :)