Guru says: The Secret of Riches is that there are No Secrets!
ROI 20% Path of Riches is the Formula which World’s Riches Follow to Become & Stay Rich!
To become Rich you need to Ensure you have ROI 20% on your Total Net Worth
ROI 20% Path of Riches
Return on Investment 20% is the Secret to Riches. Rich People ensure they have 20% Average Growth per Year. All the Financial Decisions they make include this factor:
- Stocks | Mutual Funds
- Real Estate
- Automobiles | Car | Private Jets | Yacht
Total Net Worth
Riches keep an Audit of Net Worth every Quarterly, Half-Yearly & Yearly.
They put down all the Assets, Liabilities & Calculate the Total Networth along with the Appreciation %.
They ensure ROI 20% on Total Net Worth!
How Riches handle Depreciation?
Depreciation is minimized by the Appreciation of other Assets. So it is important to have High Appreciation Assets at Higher Value to cover the Depreciation.
In the above example we can see the Asset ‘Cars’ is causing 15% depreciation – but the Overall Networth ROI is kept above 20% through High Appreciation Assets like Stocks, Mutual Funds on High Value.
Riches enjoys Toys like Cars, Yachts, Private Jets etc. as it creates Spirit of Living. At the same time they make sure the Depreciation caused by it is covered through Assets Appreciation.
How Riches buy Home?
House is an Emotional Decision for almost all people whether poor, middle class or rich!
Riches handle House Buying in a different way. First they calculate the Cost of Ownership – how much money is coming in Or going out with a property. They use Professional Valuation tools for same.
If they see the Home Purchase is affecting the ROI 20% of Net Worth they will postpone the buying decision & go for Rent instead.
Note: Since house is a Low Appreciation Asset the Riches keeps it under 5% of their Net Worth & put the remaining 95% at work to grow faster.
Riches make Money work for them!
You can play with our Rent vs Buy Calculator tool which Futurecaps specially created for Indian home buyers.
How Riches handle Loans?
Loans is also handled in the same perspective. If a Loan is adding value of bringing more money to the table aligned with ROI 20% then Riches will not hesitate in taking a loan.
For example, taking a Car Loan causes -10% on Loan Interest & -15% on Car Depreciation. But for a Rental Car business if it brings 50% Cash Flow then the Car Loan is a good deal. So riches takes it!
Loans helps ROI 20% Path of Riches!
How Riches handle Insurance?
When it comes to Insurance, I always tell people to go for Term Insurance Plans. It is because Term Plans are the perfect form of Insurance.
Insurance Premium should be Negligible compared to the Sum Assured and we should not expect to get the money back.
Riches takes Insurance to cover Life, Medical & even Property too. But they don’t go for Endowment plans & never care about paying the premium. They think about the Big Disaster Loss to Net Worth saved through the Low Insurance Premium.
Insurance helps ROI 20% Path of Riches!
Why Riches love Bear Market?
The same goes with the Love for Bear Market by Riches!
As you know Warren Buffet keeps aside 30% of the Investment Capital for Bear Market purchases. He knows that when the Value Bargains are absorbed in a Bear Market – It will provide Higher ROI in the upcoming years.
Bear Markets are Wealth Boosters for Riches! Even though the Net Worth won’t grow during bear market, we can fetch more returns on the upcoming years through Bear Market Investment.
Bear Markets helps ROI 20% Path of Riches!
Summary – ROI 20% Path of Riches
So now you understood why Riches like Ambani, Warren Buffet, Bill Gates see every 5 year doubling of Net Worth – It is the ROI 20% under work!