How much is enough ?
Years ago, many people held stable government jobs that came with pensions. Though the salaries were modest,
people were content because their needs were limited and opportunities to spend were few. A smaller pay check
during work years and a pension in retirement was enough for a comfortable life.
With industrialization, the game changed. Now, many work twice as hard for a higher salary, yet expenses have
multiplied too—movies, dining out, travel, social updates, and so on. Pensions are largely a thing of the past,
raising the big question: how much do we need to save for retirement? What's enough?
There's no one-size-fits-all formula for this—it really comes down to our own sense of satisfaction and
happiness. Take, for example, the variety in costs for life's essentials: clothing can range from Rs. 1,000 to
lakhs, cars from 5 lakhs to crores, and the same goes for homes and daily necessities. While most people suggest
controlling expenses and increasing savings—good advice in theory—it's harder to pull off in reality. Scaling
back from a lifestyle we've grown accustomed to isn't easy.
But if we can adjust our expectations, our satisfaction and contentment grow too.
Happiness, as described by #AseemDhru in his interview with #ShantanuDeshpande from #Bombay Shaving Company,
boils down to three conditions:
- What you want should be available,
- You should be able to afford it,
- And, you don't want it!
If we embrace this mindset, our savings will likely be enough. Without it, we may find that no amount is ever
truly enough.
So Do you have enough??
All that Glitters !!
The Reserve Bank of India (RBI) has been actively increasing its gold holdings and recently repatriated part of
its reserves from London back to India—a move that strengthens the country's financial security in multiple
ways.
So, Why is the RBI Buying More Gold?
The RBI's gold purchases serve several strategic purposes:
- Diversifying Reserves : Traditionally, the RBI's reserves are heavily dollar-denominated. By investing in
gold, the RBI diversifies its assets, reducing reliance on a single currency and adding stability in times of
currency fluctuations.
- Protection Against Inflation : Gold tends to maintain value over time, even when inflation erodes the value
of other assets. By holding gold, the RBI safeguards the purchasing power of its reserves.
- Global Uncertainty Buffer: Gold is widely seen as a “safe-haven” asset, less impacted by geopolitical
instability. Adding more gold provides a reliable cushion for the RBI against global uncertainties.
Why was Gold Repatriated?
- Direct Control: Storing part of the gold within India's borders allows the RBI closer oversight and greater
control over these reserves.
- Reduced Geopolitical Risk: Holding gold domestically protects against potential restrictions or challenges
that may arise in foreign jurisdictions.
- Cost Efficiency: Bringing gold back also reduces custodial and insurance costs associated with overseas
storage.
In essence, the RBI's steps to buy and repatriate gold enhance India's economic resilience, diversify its
reserves, and build a stronger buffer against inflation and global risks.
Do you keep substantial gold in your portfolio like RBI?
The Monk who bought a Ferrari !
Back in the 70s and 80s, life was pretty simple (or boring, depending on how you look at it). People stuck to
one job for their whole lives, retired, bought a house, maybe a car, and lived happily ever after. Then came the
90s, and everything changed! Nowadays, your iPhone's EMI is deducted before you even see your first paycheck,
you're booking a car within a few months of starting a job, and snagging a house comes after you go permanent.
Welcome to the juggling act of living with EMIs!
Remember when a family cinema ticket was about Rs. 200? If we were lucky, we could grab a samosa for just Rs.
5. Now? A ticket is around Rs. 2000, plus Rs. 1000 for popcorn and another Rs. 2000 for dinner. We're spending
in a single day what used to last a whole month!
In this age of endless swipes, are we just racing to collect trophies without pausing to enjoy what we have or
what we've achieved? Have we become so focused on instant gratification that we've lost sight of long-term
happiness?
So, would you rather chill like a monk, or are you already living the high life in a Ferrari?
The problem of plenty !
Normally, most people face problems with cash flow and struggle to make ends meet, often going from one loan to
another. In contrast, there is a privileged class that encounters a unique issue. They have enough money and
investments in nearly all asset classes, yet they often find themselves unsure about what to do with their
surplus funds. This is when their minds shift into “out of the box” thinking, leading them to invest in
businesses they know nothing about or purchase large insurance-linked investment plans with high administrative
costs or take any other risky bet!
Once this money is invested in these exotic schemes, they feel a sense of accomplishment and peace. However,
over time, that money begins to disappear, taking along with it other investments as well.
When you've worked hard and saved diligently, why not simply place your money in traditional investment options
with marginal risks? This approach can help beat inflation and allow for a more anxiety-free life, rather than
opting for risky ventures that could jeopardize hard-earned wealth. What will you do if you have loads of money?
The silent investor !!
Over the past few years, we've seen some wild developments in startup investments and SME listings, but it
seems like we've overlooked one key player in the game—the banking system, especially our PSU banks. These
institutions have been quietly fuelling growth in India for ages, asking only a few questions and offering funds
with modest returns, yet they play a huge role in our economic development.
Let's be real: without banks, we wouldn't have the infrastructure we do today. They've been dishing out loans
for everything—from agriculture to major infrastructure projects, and supporting both new (Green field) and
established entrepreneurs.
A lot of startups seem to think that investor money is free money, leading them to chase inflated valuations
instead of focusing on real business growth. One big reason startups often skip traditional bank financing is
the collateral requirement. But if you believe in your business enough to give away equity, why not put up some
collateral? Plus, banks can actually fund up to ?10 crore without asking for collateral, which is a solid chunk
for early-stage startups.
So, wouldn't it make more sense to team up with the banking sector as your first investor? You can use their
support to scale up your business and, once you hit a solid level, leverage your company's equity for further
growth. Just a thought!
Tennis Menace !!
Recently, my 13-year-old son wrote a birthday note for a friend who plays tennis, using the game as a metaphor
to impart life lessons. He advised his friend to embrace and respond to challenges just like one would handle a
fast-moving tennis serve. Initially, I was impressed by how well he articulated his thoughts. But then, it hit
me—this wisdom was coming from a 13-year-old. I couldn't help but reflect on what we were doing at that age:
living carefree lives, playing outside, getting drenched in the rain, and indulging in simple pleasures without
a second thought. Our biggest concerns were typically finishing homework, while this kid is already channelling
the role of a life coach, offering profound insights.
In today's fast-paced, competitive world, are we pushing our children to be so informed and mature that they
lose their sense of carefree innocence? It feels like the purity of childhood, once cherished, is being replaced
by a relentless focus on knowledge, all-round development, and making children into "smart" adults too soon. Is
the innocence of our youth becoming an unplayable ace, overshadowed by the demands of modern education and
expectations? What are your thoughts?
The American Pie
For salaried individuals, tracking disposable income is straightforward, as the exact amount deposited into
their bank accounts can be easily allocated between expenses and savings. However, for entrepreneurs, it's more
complex. They need a solid grasp of cash flow management and profitability, as cash flows in their bank accounts
result from operating, investing, and financing activities.
For instance, if your annual revenue is ?120 lakhs with a net profit margin of 10%, your disposable income
amounts to just ?1 lakh per month. In contrast, the total deposits might be around ?10 lakhs per month.
Entrepreneurs who limit their spending to less than ?1 lakh per month are likely to retain profits within the
company, which is beneficial for long-term sustainability. On the other hand, those who spend more than ?1 lakh
per month risk depleting their revenue and could face cash flow issues in the future.
The ability to manage this balance effectively is what sets successful entrepreneurs apart from the rest. The
choice of whether to consume only a portion of the profit or the entire revenue can significantly impact the
financial health of the business.
So next time when we order an American pie, do we eat “out” of the pie or the “whole” pie will determine the
stomach ache
#CAAnupamBhusari #ThinkingTuesdays #Capital Avenues #Funding #Startups #WorkingCapital
Working capital overdose ?
Recently, RBI had once again raised concerns about the increased risks in the unsecured lending sector,
advising caution for lenders extending personal loans for consumption purposes. While this is a valid concern,
it seems we're overlooking the data on unsecured funding provided by NBFCs to MSMEs with interest rates ranging
from 11% to 36% and repayment periods varying from daily to 36 months. They are often extended to MSMEs that
already have existing credit lines. Given these high-interest costs, it's questionable how many businesses can
generate sufficient returns to cover such expenses.
So why are so many MSMEs turning to these loans? Are they using the funds for capital expenditure (CAPEX), or
merely to keep operations running and majorly to service existing loans? Many of these loans are granted based
on AI algorithm considering clean repayment histories, which are often maintained by continuously taking out new
loans.
It's time for MSMEs to critically evaluate their actual working capital needs and focus on traditional working
capital management practices rather than continually increasing their debt load.
#CAAnupamBhusari #ThinkingTuesdays #Funding #Startups #WorkingCapital