Being money-rich means having a substantial amount of money available without the need to spend it. How can one become wealthy if they continue earning and spending the same amount, resulting in a zero bank balance?
If asked what they would do with a one-crore rupee, people would list their desired purchases, such as a car, a flat, a mobile phone, and jewellery. However, no one would say they would do nothing with the money because they don’t need to spend it. In contrast, the second type of person would be one-crore rupee richer than the first because the first person has already spent all their money on their desired purchases, leaving their bank balance at zero. Nevertheless, the second person still has one-crore rupee.
Now, if the person who still has one-crore rupee knows how to invest, trade, or increase their wealth, they can convert that one-crore rupee into many other crores, potentially becoming ten or even a hundred times richer than the first person.
In my understanding, the first condition for making money or becoming wealthy is to not have a need for the money. In other words, you can easily make money when you don’t have an emotional attachment to it.
This may sound contradictory, but let me try to explain it further.
If we love money excessively or have an urgent need for it, we’re likely to make poor investment decisions and lose money instead of increasing it. This emotional attachment to money, coupled with the desire to quickly increase wealth, leads to impatience and a lack of patience when our investments decline in value. We become easily swayed by our convictions and switch from one investment to another, often due to the perceived time-consuming nature of the first one.
On the other hand, if we don’t have a need for money, don’t have emotional attachments to it, or don’t love it, we can make unbiased investment decisions and stay committed to them for a long time with great conviction. We’re not in a hurry and have the patience to weather short-term losses. Even if an investment turns out to be wrong, we don’t mind because it doesn’t upset us since we don’t have a strong emotional connection to the money. After committing to a wrong investment, we can easily try another one without fear of losing money, as we’re using our existing capital or principal amount to create wealth.
However, this isn’t the case for those who love money too much or need it. After losing money in one investment, they become too afraid to try another one. They forget that over time, with patience, some bad investments can turn out to be good ones. Or at least they don’t cause significant distress or fear of losing money, which is crucial because the ultimate goal of wealth is a peaceful life. If our investments are causing us constant worries and fear of losing the principal, then they’re not good investments in the first place.
The person who is emotionally attached to money can never think of the principal amount or capital as a tool. They will always be afraid of damaging or losing it.
Consider this: imagine a carpenter who is so attached to his tools, like a hammer, chisel, and saw, that he doesn’t want to take the risk of using them because he fears they might get damaged. As a result, he can’t take up any job and complete it, earning nothing with those tools. In this case, the tools, which are new and shiny, are useless. However, if he uses them, he’ll earn much more and be able to buy other tools. It’s possible that he won’t earn anything on his first few jobs or may even lose or damage a few of his tools, but that’s okay because he’s learning how to use them and gaining experience with the job.
The farmer’s scenario best illustrates this point. A farmer’s work is farming, and they hope to earn from it. It’s the same way an investor hopes to earn from their investment.
If, for example, crops are destroyed by heavy rain or drought in one season, the farmer still continues farming, hoping for a fruitful next season. They never stop farming just because they’re incurring losses. They know nothing but farming, while the investor or trader only knows investing or trading.
The farmer’s condition is much more akin to that of someone who is dependent on money for their needs, love, and emotional attachment. Limited time, adverse weather conditions, and the fear of losing capital are the primary challenges faced by farmers. Consequently, many farmers in India are impoverished and commit suicide because if their crop fails in a single season, they lack the additional capital to sustain farming for the next season. Sometimes, they are compelled to sell their lands at low prices, and in other cases, they have no choice but to take up loans, incurring substantial interest charges (This is the case with F&O traders and traders with margin as well).
Since farming and its earnings are integral to a farmer’s life, they persist in their efforts, investing considerable time and money. However, if the weather is favourable and the harvest is good, they face another challenge. As other farmers also have bountiful harvests, the market is flooded with fruits, vegetables, and crops, exceeding the demand. Consequently, they are left with no alternative but to sell their harvest at extremely low prices, which fail to cover the cost of production. In extreme cases, they resort to dumping it on roads, feeding it to animals, or even burning it in anger.
This situation is similar to selling your equity or stocks at a price lower than the buying price, as you no longer have the option to hold them.
On the other hand, the person who has no love, emotional attachment, or urgent need for money is more like someone who enjoys fishing but doesn’t like eating it. This person’s hobby is to catch fish, so they can spend long hours waiting, trying, and not being afraid of not catching any fish on the first, second, or third day. They’ll keep coming back to the river on the fourth day. If the weather isn’t good, they’ll simply skip fishing and use that time to prepare their net or hook for the next season. While fishing, they don’t use all their bait (capital) at once, but they do it gradually because they enjoy the long-term aspect of the game. Sometimes they lose their fishing hook, break their fishing line and rod, and lose a lot of baits. But they know it’s all part of the game and that it will provide them with what they need. experience neededFor this game, and if nothing else, it provides happiness and joy by allowing players to enjoy themselves without losing any peace of mind.
Imagine if this person had to sell fish in the evenings to meet their daily needs or wished to eat fish at night. They would get frustrated with every unsuccessful cast of their fishing net or line, and the worry of not catching any fish by the end of the day would ruin their peace of mind.
The moral of the story is that being rich means having money without the need to spend it. Emotional attachment to money can lead to poor investment decisions and fear of loss. A detached approach, viewing money as a tool for wealth creation, allows for more patient and successful investing, similar to a fisherman enjoying the process rather than relying on the catch for sustenance.
- Enjoy the process fo wealth making by learning how to invest or Trade - Don’t be in hurry.
- Make separate arrangement for your bread and butter - Do not depend on your investment profit to fulfil your needs.
- Don’t use all your bait at once, use it bit by bit - Do not invest all your capital at once or in one stock.
- Put your tools to work - Do not affair of losing your capital, invest it to learn and earn.
- Dont eat the fish, use it to make your bait big - Do not utilise your profit for desire but put it back to principal to make a larger capital size.
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