Smart Cashflow Strategies for your Small Business

Two weeks back we have discussed the basic of cashflows and also how to manage individual cash flows (for details plz see my blog dated 12^th March 2016). This time we are discussing more about business Cashflow,

Cash inflow is the lifeblood of your business and comes from sources like payments from customers, interest on savings or investments, receipt of a loan, or monetary infusion from an investor. Cash is very important because through this payment are made for things that make your business run: expenses like employees, rent, stock or raw materials, and other operating expenses.

POSITIVE CASHFLOWS:

As we all understand that positive cashflows are required to run any business smoothly and successfully. For positive cash flow any business has to plan its all inflows and outlfows in advance and organize them systematically.

The positive cashflows are the cash in hand, this could be money we have invested in the business, cash in the business bank account, loans received, or an investment from a partner.

After that we have to determine your monthly expected cash sources. These can be projected sales, loans that may be coming in at a certain date, investments from partners or investments. If we are in a new business we should be projecting sales conservatively (better to outperform and have a better inflow of cash than you thought). If we have already started our business or are purchasing a business from someone else, we have some clarity regarding: sales history. History can’t predict the future, but it can paint a decent picture of what the future looks like and what business changes are required.

After assessing the infows we will need to assess the monthly expenses. This can be a bit complicated because some time we overlook things and get a surprise which we don’t want. Monthly expenses to factor in can include employees salary, rent or mortgage, insurance, advertising, marketing, website hosting, travel, utilities, payroll, inventory, taxes, loan payments, working capital, and last but not least paying ourself!

How to improve Cashflows:

Improving the cash inflows and utilizing them efficiently will help to run the business comfortably further it can improve the overall profit or return on the business as well. There are some tips for that.

• We should be issuing the  invoices promptly and follow up on them regularly. It is very  simple, but  still many people don’t pay till you remind them as its common mentality and people don’t like parting with their money.
•  By giving some incentive for early payment we can get our payments more timely. Say if our standard contract has a sixty day term, we give a  discount of say 5% for payment within 10 days or 2% if within 30 days. BY this we can encourage the early payers.
•  For long term projects we can structure the payment with an upfront deposit or partial payment based on the level of completion throughout the project lifetime. This will ensure that we are getting some cash regularly and all the money is not stuck-up  and we are putting all pur cash throughout the project life.

MANAGING CASH-OUTFLOWS SMARTLY:

There are certain bills like electricity, telephone, internet etc which are to be paid regularly and on time, It’s to always better to  pay them in a timely fashion by this we build trust with your creditors and also get discounts on prompt payments like we offer.

Managing Bills/Expenses Smartly:

There are ways to pay your bills in a smart way to make sure that your cash flow remains positive:

•  Use the payment term to its fullest. If got thirty day term on a bill, we should use the thirty days to build up the cash. That way, you’ll have a better handle on what your cash flow looks like than if you simply write a check the day you receive the invoice. However if we are getting discounts/incentives we should check whether its beneficial to pay within discount period or till the last day. For example is some one is offering a 5% discount if paid in 15 days as compared to 45 days normal period means we are saving 5% by paying 30 days means 60% annualized (5*12%). As this is a return we won’t get normally so its better to pay in discount period.
•  Negotiate the payment terms when dealing with a vendor. we’ll get something if we ask for it so don’t feel ashamed to ask for it. However be cautious with this though:  don’t ask for flexible payment terms before a deal is done can raise suspicion.
•  Make online payments through NEFT/ECS/RTGS/IMPS. That way we can pay immediately when a payment is due, but won’t have to let go of the funds before we are ready and also get the confirmation immediately.
• We should build a real and healthy relationship with  vendors. If they trust us and we are honest with them it would help in doing the business easier and smoother. This will also make our life easier if we need to ask for an extension or an accommodation.

Putting idle cash on work:

• Don’t keep idle money in Current account. Money is something which should always be earning not lying idle. So if we have extra money in current account where we don’t earn anything its better to put this money on work by investing in Mutual Fund’s schemes especially structures for that purpose. Liquid or Ultra Short term bonds funds are those where we have almost negligible risk on our capital and we can earn a decent retur. BY investing the surplus money in mutual funds we earn extra cash without hampering our normal business operations and we can get our money back within one day so as to run the business smoothly.

Surviving Lean Months:

• Business don’t run in a normal pace always. We have some good months and some slowdown times however the regular expenses/bills aren’t going to magically disappear or change their due dates, So we should be ready for that. We need to have cash buffer to survive those periods when the flows are not sufficient.  

Be prepared for rainy days:

• We should build up some cash reserves to avoid this problem. Review the cash flow history and arrive at a reserves estimate that would cover our business for three months, six months, and a year. Just knowing those numbers can help us to paint a better picture and, thus, make better business decisions.
• We can also arrange a line of credit with your bank. When we are flush it’s easier to get money than when we are running on cash negative position, So its better to talk to  banker about having the ability to borrow up to a preset limit any time you need it when we are in comfortable positions rather then waiting for the time when actually we need it.

How Different Color Affects Our Spending

Find out which colors are subconsciously associated with certain feelings, and how that affects how much we spend at the Shopping mall.

This week we would be celebrating HOLI, the festival of colors. Colors are very important in life or else the life will be like a Black & White TV of 80s. Colors impact all part of life and they have lot of psychological impact on human’s brain. Our various decisions are impacted based the colors. At the mall, we can spot nearly every shade of the rainbow on signs, labels, doors, shopping bags—you name it and its there. They are not just put for the hack of it but those colors have been strategically placed to influence our spending. Various studies shows that people subconsciously associate specific colors with specific social or cultural messages. Knowing this, retailers carefully select the colors they use in an effort to get us to loosen our purse strings. Let’s understand how different shades affect your purchasing habits.

Black

Black is associated with power, elegance, formality, death, evil, and mystery. Black is a mysterious color associated with fear and the unknown (black holes). It usually has a negative connotation (blacklist, black humor, 'black death'). However Black is also the signature color of sophistication or royalty (the black party-wear), it dominates high-end makeup packaging and can even make inexpensive blushes and lipsticks seem more upscale.

White

White is associated with light, goodness, innocence, purity, and virginity. It is considered to be the color of perfection. White means safety, purity, and cleanliness. As opposed to black, white usually has a positive connotation. In branding, white suggests simplicity and purity. (Seventy-five percent of top skin-care brands are packaged in white.) It also stands for modernity and honesty, which may be why Apple swears by it.

Red

Red is the color of fire and blood, so it is associated with energy, war, danger, strength, power, determination as well as passion, desire, and love. Red is a very emotionally intense color. It enhances human metabolism, increases respiration rate, and raises blood pressure. Although plenty of shops embrace this color (and still find financial success), market experts warn that, just like a stop sign, a red placard can make consumers hit the brakes. It serves as an alarm, triggering a more careful consideration of our outlays.

Pink

Pink, a delicate color that means sweet, nice, playful, cute, romantic, charming, feminine, and tenderness, is associated with bubble gum, flowers, babies, little girls, cotton candy, and sweetness. The color pink is the color of universal love of oneself and of others. This is the favorite color of ladies especially the young girls.  It has calming effects, according to research published in the Journal of Orthomolecular Psychiatry. Scientists found that seeing pink slows people’s endocrine systems and tranquilizes tense muscles. How that might influence your wallet: Feeling relaxed may make it less painful to part with cash.

Orange

It is associated with joy, sunshine, and the tropics. Orange represents enthusiasm, fascination, happiness, creativity, determination, attraction, success, encouragement, and stimulation. To the human eye, orange is a very hot color, so it gives the sensation of heat. Nevertheless, orange is not as aggressive as red. The color is associated with equality and affordability, which is why you’ll find it at stores offering good value, like Big bazaar etc.

Green

Green, the color of life, renewal, nature, and energy, is associated with meanings of growth, harmony, freshness, safety, fertility, and environment. Green is also traditionally associated with money, finances, banking, ambition, greed, jealousy, and wall-street. This is the color of people who have eco-friendly and environment preservation in mind. Shoppers keep this color to impress eco-minded clients. However please keep this in mind that: Just because an item is green doesn’t mean that it’s environmentally friendly.

Blue

Almost everyone (especially men) likes blue. Blue is the color of the sky and sea. It is often associated with depth and stability. It symbolizes trust, loyalty, wisdom, confidence, intelligence, faith, truth, and heaven. Blue is considered beneficial to the mind and body. It slows human metabolism and produces a calming effect. No wonder it signifies trust and dependability and is a favorite logo color for financial institutions to assure its customers for safety. Blue also improves customer loyalty: Patrons are more likely to return to stores with blue color schemes than to those with orange color schemes, according to a 2003 study published in the Journal of Business Research.
 

Burgundy

Burgundy is a deep shade of red. It is named after Burgundy wine. This wine is named after the Burgundy region of France. This color reminds us of all things rich and refined (just like red wine), so don’t be surprised if a dress in this color costs more than a white one in a similar style. Its prismatic cousin, brown, has similar connotations of luxury.
 

Violet

Purple combines the calm stability of blue and the fierce energy of red. The color purple is often associated with royalty, nobility, luxury, power, and ambition. Purple also represents meanings of wealth, extravagance, creativity, wisdom, dignity, grandeur, devotion, peace, pride, mystery, independence, and magic. Purple reigns in the beauty industry, especially in the category of anti-aging products. When people see it, they think of royalty. Consequently, a purple box may help persuade us that the product has special properties and is worth a princely sum.

Yellow

It's associated with joy, happiness, intellect, and energy. Yellow produces a warming effect, arouses cheerfulness, stimulates mental activity, and generates muscle energy. Yellow is often associated with food. Bright, pure yellow is an attention getter, which is the reason taxicabs are painted this color. A mainstay at fast-food restaurants, yellow evokes energy and increases appetite, perhaps explaining why your stomach may start to growl when you pass those golden arches.

Make your Kids financially educated

Last week I went to the market with my six years old daughter. She was continuously pestering me to buy something or other which I didn’t want to purchase. So I told her that I don’t have money to buy, she immediately advised me to go to ATM and take out the money. For her the money comes automatically in few seconds from these Automatic Teller Machines. That make me realized that for the kids the value of money is the only efforts we make to take it out from ATMs, not how much work we put in to actually get the money in these ATMs.

By the age of three, most kids comprehend that money can be exchanged for something they want. Kids see you pull out your wallet to pay for things such as food, toys and books etc. Because children are exposed to this frequent exchange of money for stuff, they understand at a very young age that money can be used to buy things they want, what they might not understand is what exactly money is and how it ends up in your wallet.

It takes few seconds to purchase all these goods but it takes months to earn the money spent to fulfill our child’s desires. Hence, it is very important that children are aware about the value of money and moreover, feel confident while handling finances by themselves. Here are few useful ways that parents/guardian/techers can employ to make them more aware of money and its uses:

 1. What is Money?

Point out to the child that money comes in all shapes and sizes and is used to pay for everything. Most countries have two forms of money: coins that are made from metals and notes that are made from paper. In India, we have a variety of coins (50 Paisa, 1 Rupee, 2 Rupees, 5 Rupees & 10 Rupees etc,) and Rupee Notes, and each is worth a different amount. It is helpful for children to see all the different coins and notes so they can compare sizes, shapes and colors. Learning the names and values of each coin and bill takes practice. It’s okay to simply explain to small kids that each coin and note has a special name and is worth a certain amount of money.

While the concept of credit may be little complicated for small kids, we can still explain them that people can buy things even if they don’t have coins and rupee notes with them. People also use credit cards, debit cards, mobile wallet and cheques to pay for things. It is important to help the children understand, however, that credit cards and cheques are not free money and that we have to "pay back" the money with real coins and notes that we have worked to earn.

 2. Make them learn the value of Money:

children should know how the money is earned. This does not mean that children should quit studies and do a full-time job. But we can guide them to make a little income in various ways. For example, if my daughter makes brilliant colour paintings on clothes or accessories, she can hold a small exhibition at home/your neighborhoods/society during summer holidays. Or a group of youngsters can organize a society sale selling items they don’t need at discounted prices. Earning money on their own is one of the best ways by which kids understand the rupee’s worth. Further we can give some weekly pocket money and ask them to save and use it properly as explained here.

3. Giving Allowances & Teaching Saving Habit

We can give certain allowance to our child if they do certain housework or chores. But we have to be consistent on this if allowance is not tied to chores, we should not withhold payment because they didn’t finish their milk etc.. If your child is expected to "earn" his or her allowance by doing chores, don’t pay them - or pay them a pro-rated amount - if they do not complete all their jobs on time.

Another play we can use it to Create three money boxes – each labeled “Saving,” “Spending” or “Sharing.” Every time child receives money, whether for doing chores or from a birthday, divide that money equally among the jars. Let him/ her use the spending jar for small purchases, like candy or stickers. Money in the sharing jar can go to donate to a friend’s cause. The saving jar should be for more expensive items but not that expensive that it can’t be attained in reasonable time. Also to motivate them further we can give them some bonus money if they have saved certain amount of money.  Let’s say If my daughter wants to buy a Barbie Doll game of Rs. 1000/- I tell her first you save Rs. 800/- and then I will give you a bonus of Rs. 200/- and then you can buy it.

 4. Teach them to operate the Bank Accounts:

The next step is to open a savings account for your child. Teach him/her banking procedures such as withdrawing/depositing cash, issuing cheques or net banking etc. Take kids to the bank every month so that they are familiar with the surroundings. Encourage them to put their pocket money saved in the bank. Youngsters are quick at grasping digital knowledge and will be well-versed with the online processes in no time. If you have invested money in your child’s name and receive interest/dividend, let them go and check that it is duly deposited in the account. An independent savings account will instill a habit of saving and give adolescents a sense of financial independence as well.

 5. Let them take few Decisions

We should include our child in some financial decisions. For instance, explain, “The reason I chose the unbranded sugar or Rice is that it costs Rs. 10/- less than the branded one. Or talk about deals, such as buying everyday staples like flour,  rice, pulses, edible oils etc in bulk to get a cheaper per-item price.

Give her some money, like Rs. 100/-, in a supermarket and have her make choices about what fruit, toothpaste, biscuit to buy, within the parameters of what you need, to give them the experience of making choices with money.

When you’re shopping, talk aloud about how you’re making your financial decisions as a grown-up, asking questions like, “Is this something we really, really need? Or can we skip it this week since we’re going out to dinner?” “Can I borrow it?” “Would it cost less somewhere else? Could we go to discount store and get two of these instead of one?”

6. Discuss financial goals:

Make children a part of the financial planning process. Make them practically understand the value for money tell them that you can buy your toys/other items when you are able to save that much money by not wasting it on unnecessary items. If you wish to go to Disneyland next year, set a goal and explain them how the family plans to set aside funds for the vacation. This will help them understand how money can be saved by cutting down unnecessary expenses.

7. Inculcate the habit of sharing/giving:

Speak to your child and understand if he cares for animals or wants to help the needy. Persuade teenagers to donate part of their savings to their preferred cause even if it’s a small amount. Charity is not just an effective financial lesson but it also imparts social responsibility and sharing from haves to don’t have.

Implementing these methods at an early age will go a long way in teaching your kids the importance of money and how to spend every rupee wisely.

 8. Teaching how money makes more money

Describe compound interest to the kids (age 10-12) and explain them how money attracts more money if it is saved properly. For example, telling her that if you save Rs. 100/- every year starting at age 10, you’d have Rs. 53,777 by age 60, but if you start at age 35, you’ll only have Rs. 7,100 by age 60.”

Guide them to set a longer-term goal for something more expensive (like her own I-Pad) than the toys she may have been saving for. “Those sorts of tradeoffs, called opportunity costs — what are the things you’re giving up to save money — is a very useful thing to talk about. At this age, kids are trying to not save because they want to buy stuff, but thinking of what long-term goals are and what they’re having to give up shows that it’s a good decision,”. For example, if your daughter has a habit of buying candies or other eatables after school every day, she may decide she’d rather put that money to buy her own I-Pad.

 Many study shows that People with a high degree of financial literacy are more likely to make plans for retirement, and those who do plan for retirement have more than twice the wealth of people who do not plan. People who are less financially literate tend to accumulate less wealth, borrow more, pay more in financial product fees and are less likely to invest or know the terms of their mortgages or other loans.

 Money is an exciting topic for kids, and many are eager to learn about earning, spending and saving money, even at a very young age. Most young children are ready to learn the basic concepts explained above: however we have to Keep in mind that much of the results will come by repetition, experience and practice.

How to become wealthy...

India is top growing economy as per IMF and surpassed china on growth front. The major villain to our current account i.e. oil is trading at historically low level, Our forex Reserves are all time high, WPI inflation negative and CPI in RBI’s targeted zone. Government is trying to push major reforms at home although not very successful in this front. Stock market touched a new high in 2015 but with a year it is trading at pre BJP era government. So how these things are affecting investments in short term yes there will be lot of volatility but when we talk about long term investments will they really matter or there are some other important things we should looks for. Lets see what matters most when we talk about investments especially for long term:

1   1.  How much we save: Obviously this will be the major factor for the investments. Normally we save the leftover after our monthly consumption i.e. saving = Income - Expenses. However the actual way should be Income-Saving= consumption. So we should first takeout our savings and only after that remaining part should be consumed.

The questions arises how much should we save?  As savings is very crucial to our financial well-being. Well, actually it would be difficult to put down a number, but it is determined by several factors like your age, income level, number of dependents and financial goals.

It's the amount of savings that matters for our future net worth. Our savings should translate to proper investments because if left (like in banks saving account) idle they would lose their purchasing value over time.

2. How long we remain Invested: As the saving amount is very important for investment, the value of these investments grows according to the length /time period we kept those savings in the investments. Compounding is the eighth wonder of the world. For example Rs. 5000/- per month for 5 years @15% gives Rs. 4.48 lakhs on total investments of Rs. 3 lakhs, but if we keep investing Rs. 5000/- per month for twenty years the future value of these investments grows to 75.8 lakhs i.e. 16.91 times whereas our investment amount increased by 4 times only. So the early we start we get more benefit out of the same amount of investments.

3. Where we keep our savings: The proper allocation of investments is equally important factor to determine our future wealth. Investments should be properly diversified across various asset classes so as to minimize risk on any particular category. Savings should be properly allocated among mutual funds, shares, bonds, real estate and gold etc. The proportion may depends upon various factors like age, risk appetite, income level, no of dependents, source of income and financial goals. Further building an asset allocation is not the end of the story but rebalancing from time to time is equally important.

4. How much Taxes we Pay: Taxes are another important factor to determine the class of assets. Like Income from Equities and Equity mutual funds is tax free after one year and in Debt Mutual funds there is long term capital gain tax benefits after three years. Whereas in Fixed Deposits we pay TDS on the income accrued even if it is not paid. By selecting the proper financial products and going for the right options (growth/dividend payout/dividend reinvestment) and holding investments for adequate time periods can minimize the tax outgo and shold be kept in mind.

5. Which of the Schemes we invest: As we all know that over a longer duration equities will out beat inflation, however in equities also there are various options like to invest in blue chip stocks, or mid-caps go for some specific sectors etc. or invest through mutual funds. In debentures and bonds also there are various options based on maturity, credit profile and tradability etc. Right scheme selection based on our specific requirements and risk appetite is equally important.

BSE sensex started in 1979 at 100 and today is is around 25000 i.e. 250 times return in 36 years which means if a person remains invested and keep the money for longer duration chances of negative return/ losses are very rate. To summarize market may keep moving up and down based on various factors but if we talk about long term investments what matters more is amount we are investing where it is being invested and for how long we keep this money to earn along with proper tax efficient choices to earn more in honest and ethical way.

Cashflow: Its important in life of an individual or business

Cash inflow is the lifeblood of any individuals as well as in the business. Positive cashflow is very important to run a normal stress free life or even the business. Cashflow is divided in two parts Cash-inflows or called as positive cashflow and Cash-outflows or negative clashflows.

What is positive and negative Cashflow:

Cash-inflow comes from cash received like in case of individuals it is by receiving regular salary, interest or dividend received on savings/ investments. In business it comes from sources like payments from customers, receipt of a loan, monetary infusion from an investor, or interest on savings or investments. Cashoutflows are expenses like your regular expenses on household items like electricity, telephone grocery items, school fees, medical expenses, rent on house etc.,  in business to make your business run: expenses like stock or raw materials, employees, rent and other operating expenses. You need cash for meeting/paying for these expenses.  Cash is also important because it later becomes payment for things that.

Which one is better:

Naturally, positive cash flow is preferred. Positive cash flow means your personal daily life or business is running smoothly. High positive cash flow is even better and will allow you to make new investments (buy new car or home, hire employees, open another location) and further live luxuriously or grow your business. We love that, right!?! Conversely, there's negative cash flow: more money paying out than being coming in which is going to create problems as we need to borrow more to payout the expenses or deteriorating our current life standards or business.

What is managing Cashflow:

Managing you Cashflow is basically managing the income and expenses in a smart and prudent way. Normally we all know our income say in case of individuals it’s normally monthly salary and may be some interest or dividend from savings/investments. However when it comes to expenses we are not sure and have vague idea. Normally our cash-inflows are fixed but cash-outlfows are variable and much volatile as compared to inflows.

So how to manage our Cashflow:

To manage our cashflows firstly we have to get all the relevant details and pen it down. All the inflows on one side which may include salary, interest or dividend income, bonus or rent received etc. On the other side we must putdown all the expenses at least those which are regular like electricity , phone, credit card bills, school tuition fees, monthly grocery or regular items, transportation expenses etc. At the start of this exercise we may put some extra money on expense basket so as to get the actually status of the cashflows. Now lets find out how much is the difference between inflows and outlfows. If we get positive cash with us means we are at right direction. This extra money left should be saved initially in saving account or liquid mutual funds, Once we get the better idea about our cashflows we can start investing the surplus money in long term investment options like equity, mutual funds, physical assets etc with a proper financial goal in mind.

We should also keep in mind that the expenses may vary and not remain constant in all the months (like insurance or mediclaim premium once in a year, some special fees for a course, an unplanned visit to home town etc.  We should keep some emergency fund in our saving account or liquid mutual funds so as to meet those surprise on unplanned expenses. In the first year we will get the full idea about regular and one times expenses and will get the clear picture about our cashflows.

To some extent, we unknowlingly already manage our cashflows on a daily basis. However with proper planning we will not be caught unawares should there be need for money and will be able to take better spending decisions.

Once we are clear about our expenses we need to ask ourselves the important question: is the income minus savings equal to expenses or is income minus expenses equal to savings? Do savings comes first or expenses. What are the unnecessary expenses which could be avoided and money could have been saved instead of.

Once the cashflows are in order we should start saving the surplus money in the right investment products based on our financial goals like building an emergency fund, to achieve certain financial goals like owing a house or car, childrens higher education, self-retirement etc. We should also remember that to achieve different financial goals we need different financial instruments like we cannot cover a distance of 5 km by a plane similarly we cannot cover a distance of 5000 km by a cycle.

In our next article we will discuss various investment options to achieve different financial goals and also  how to manage cashflows in business.

Investments is a Test Cricket not a 20/20

An investment in equity market to create wealth is like running a long distance marathon (or a five day cricket match) not just finishing a 100 meter race (or 20/20 in cricket). We cannot time the market but if we spend time in the market we are going to run the race. Like in a race where a sprinter overtakes a marathoner at the beginning, but these gains are slowly reduces and by the end of the race it may be totally reversed. Similarly in the capital market or the investment world we need to spend more time and with consistency to have a bigger wealth. Many times it happens that the returns are not as per our expectations or sometimes even negative for short duration, this is the time to have patience and may be to strategies your investments; not to take out everything from the market. We have seen historically , many times the biggest portion of returns come from short periods of time but trying to identify those periods and make investments only on those period is an almost impossible task, so better to remain invested and let your investments itself get that time and grow rather than trying to get in and out. By trying to time the market we also run a risk of being out of the market at that particular time when we could have earned the most. For example last week on 29 Feb’16 (budget day) market was very volatile and ended in negative but by the next day market had found the reasons to cheer and by the end of the week it was up by almost 6.5%, If we sold out on 29 Feb due to budget proposals we would have actually lost a 6.5% gain just in one week, the biggest weekly gain of last four years.

Take for example the biggest investment guru Warren Buffett, If we look at his past performance we may find that he is not always being the best investor. There have been many other sprinting money managers who have produced better returns. But what separates Buffett from others is that he’s been doing it for more than 50 years. He didn’t rely on the strategy of coming in and out of the market to create his wealth but by simply choosing the right stock and remain in the market. No wonder, 90 percent of Buffett’s wealth was created after his 60th birthday.

Peter Lynch, the legendary and extremely successful fund manager, revealed a very surprising and interesting statistics about his fund. According to him more than half of the investors in his fund lost money. And these were those investors who were trying to time the entry and exit to Lynch’s fund. They would jump in just after a couple of good quarters and went out after few bad quarters. Those investors who stayed invested with the fund for long time, benefited the most from his long term performance.

Wealth creation and Investments is like a five day cricket match (not a 20/20) where it is more important to remain on the crease as much as possible, the run rate is secondary, If we stay on the wicket runs will keep on coming some time more sometime less. You have to be ‘in the game’ to win it.

Remember in investments what counts is the time we remain with the market and not timing the market.

So if we wish to be an investor and want to create wealth, we should treat our investments as marathon or a test match where slow steadily wins the race. By trying to predict the market we may actually burn more of our capital then earn and also moving our blood pressure along with the market.