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These are few things done by the author. We need to take action and consistently performing the same for achieving the goal. We have to learn from others, experiment those learning and has to do what is really suitable for our temperament.

Disclosure – Companies mentioned in the article are just for an example & educational purpose. It is not a buy/sell/ hold recommendation. 

Read for more detail: Rich Dad Poor Dad: What the Rich Teach their Kids About Money that the Poor and Middle Class Do Not!


There is an opportunity available, we need to train ourselves to see it. There are 10 steps mentioned by the author which he has used for creating wealth.

1) Find a reason greater than reality: the power of the spirit

There is always a reason for doing something which is a combination of what wanted to do and what we don’t want.

The author mentions that he does not want to get employed, want to get financially free which provides him with freedom of time. If our reasons do not strong enough then we do not get ready to work hard for doing a thing which we have decided to do. We should understand that without a strong reason or purpose, anything in life is hard. First, complete this step before proceeding further.

2) Make daily choices: the power of choice

We have a choice while we get a rupee. With this rupee, we can choose to become a rich, poor or a middle class through our spending habits. As we have discussed the assets and liabilities so that we need to work on increasing our assets column.

We do not have money then OK but how we spend our time, money which is our choice. We have a precious time with us and we can choose it for learning or just pass it out. As we have a single rupee and choice is us for how to use it. Similarly, we have every single minute and the choice is us how to spend it. When someone teaches us something then without getting arrogant, we need to understand why he is saying such, keep our mind open. We need to keep on learning and after that requires to make a mistake which helps us to understand it in detail. We can learn from the mistake of others. We have to invest in our greatest asset which is our mind. One or two of the successful investment does not make us a successful investor but we need to keep on learning and growing.

3) Choose friends carefully: the power of association

We should not have a friend with comparing to the financial statements, rather we have a friend by looking at their vow of becoming friends. We can learn from rich or middle-class friends also.

Many of the people have their point of view and we need to listen to them with an open mind. We can come to know something new also. We need to know what we are doing and true to ourselves. We do not have to go with the crowd for wealth building.

4) Master a formula and then learn a new one: the power of learning quickly

We have to learn many things and have to master particular things. We have to be disciplined to implement what we have learned. After master into the one learning, we need to move to another learning to master it. In the current fast-changing world, we need to learn fast otherwise our learning will be outdated.

5) Pay yourself first: the power of self-discipline

If we do not have self-control, then we cannot able to become rich. Without self-discipline, lottery winner also broke.

The three most important management skills necessary to start your own business are the management of 1.  Cash flow 2.  People 3.  Personal time

These skills help us to grow and richer but require greater self-discipline. So that pay yourself first is self-discipline and important concept.

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This means what Mr Buffett has mentioned

Income – Investment = Expenses

We should not get trapped of the liabilities and if we owe liabilities then we should not work to pay for it rather others need to work to pay for it.

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Rich knows that savings and investments are for creating more money, not to pay bills.

This rule does not encourage self-sacrifice or financial abstinence. It doesn’t mean to pay yourself first and starve. Life was meant to be enjoyed.

06) Pay your brokers well: the power of good advice

Many a time, we try to save cost and focus on removing intermediaries but we forget that paying well to the professional help us. They provide us with a piece of useful information and services which can help us well.

We have to separate genuine and fake professional and then appoint them as our advisers.

As we have seen that we require to have the skill to manage people. The real skill is to manage and reward the people who are smarter than you in some technical area.

07) Be an Indian giver: the power of getting something for nothing

As we all are an Indian and we people want to know how fast they get their money back.

Wise investors must look at more than ROI. They look at the assets they get for free once they get their money back. That is financial intelligence.

08) Use assets to buy luxuries: the power of focus

It seems easy to use assets column to build a cash flow but difficult in practice. When we are on a diet, many noise and temptation affect our strict actions do not follow our plan. Similarly, when we have prepared a plan to follow our investment and build assets column then outside noise and temptation to fulfil the needs going stop us. In the current environment, very easy to get a loan for any need. And that creates a temptation among us. But we should focus on the creation of the assets column rather bring liabilities on the balance sheet.

Majority of the people cannot able to master their self-discipline and that stops them from becoming rich.

I do not say that do not buy a luxury or stay away from it. But rather to buy it through the liabilities, buy it from the cash flow generated from the asset’s column. And till the time, we do not build our assets column, we have to stop our temptation.


09) Choose heroes: the power of myth

When we have a hero, we try to become like them. And this act helps us with lots of learning. I have a hero in my investment career who are Neeraj Marathe Sir, Kuntal Shah Sir, Warren Buffett, Charlie Munger, Howard Marks, Benjamin Graham, and my friends Mr Amit Pandey, Mr Swapnil Modi. I learn from them; I look at them and try to develop skills into myself. These concepts teach me a lot. Having a hero inspire us to make a decision and act to achieve our desired goal.

10) Teach and you shall receive: the power of giving 

When we want to receive something, first we need to give it to others. As a famous saying – Give respect, take respect. So, what we give, we receive it in a multifold.

So similarly, when we teach to those who want to learn then we get more learning in return. With the same mindset, I have started writing a blog so that I can distribute my learning to others and I got multifold learning over some time. I still keep distributing and keep getting back in return. And for that, I am grateful to all the readers.

Disclosure – Companies mentioned in the article are just for an example & educational purpose. It is not a buy/sell/ hold recommendation. 

Read for more detail: Rich Dad Poor Dad: What the Rich Teach their Kids About Money that the Poor and Middle Class Do Not!


It is not necessary that people with decent earning having a Financially literate. And The financially literate person also is not able to create a good asset column. The five reasons are 1.  Fear 2.  Cynicism 3.  Laziness 4.  Bad habits 5.  Arrogance

  • Overcome fear

Everyone has a fear of losing money. It is not a problem but the problem is how we handle it and react to it. Whether a person is rich or poor, he does not like to lose money. Sometime and somewhere, the rich person also has lost money.  “Everyone wants to go to heaven, but no one wants to die.” when we met a loss then we need to learn from it so that we grow stronger and smarter. We need to learn how to convert losses into profits. We have surrounded by failure. We can fall while walking but we cannot stop walking due to the fear of falling. If we fall then we learn lessons from it and walk again carefully. But we never decide to not to walk. If we want to win then we must have to accept the failure also. We do not only get winning. We must have to be focused on getting success but with accepting failure also.

  • Overcoming Cynicism

Noise coming from inside us or from outside through friends, media, family, etc. Which disturb us and impact on our decision making and emotional ability.

There are many opportunities available to make money but our doubts and cynicism stop us from doing it. It led us to play safer and that brings us back to the area where we only remain with the poor or middle class as an option.

Loser involves into the criticism and winners involves into the analytical part. The analysis opens our mind and we can also come to know our mistakes if we have made. Also, we can come to know how to improve our correct decision in a better way.

If people directly choose not to lose money without making any analysis then it will start creating an unavoidable problem. And actually, it will become impossible to get money.

We fear failure but many of the successful people become successful after failing for many of the times.


  • Overcoming laziness

We always staying busy into many of the stuff and avoid an important part of our life. It can be running behind wealth, health, leisure, etc. So that for remains little less lazy, we need to be greedy.

Rich dad believed that the words “I can’t afford it” shut down your brain. After that brain doesn’t have to think anymore. “How can I afford it?” opened up the brain and forced it to think and search for answers.

I can’t afford it close down all the possible doors, and creates a depression. But reversely, how can I afford to open many possible doors, help us to bring a possibility to afford it. This creates a stronger mind.

When our mind stops us, we need to ask to our mind that what’s for me into this? The mind automatically starts working, greed for our betterment kills our laziness. So, greed is good but excess of everything is a poison and we should keep it to the limit.

  • Overcoming Bad Habits

Our habits make or break us rather our education. If we have a good education but having a bad habit then good education is of no use.

Majority of us first pay due bills and then pay to ourselves if anything left. This is not a habit of rich people. We need to pay ourselves first then to anyone else.

When we pay ourselves first then we have pressure to pay to our creditors. This pressure motivates us to work hard and generate extra income to pay them.

If we have a good money habit to pay ourselves first then we can grow stronger mentally, financially. This is a habit which helps us to grow more.

  • Overcoming Arrogance

Many times, the majority of people does not know about the money. But they do not tell the truth. Rather we should accept that we do not know it and start finding an expert or a book for educating ourselves.

Disclosure – Companies mentioned in the article are just for an example & educational purpose. It is not a buy/sell/ hold recommendation. 

Read for more detail: Rich Dad Poor Dad: What the Rich Teach their Kids About Money that the Poor and Middle Class Do Not!


The 12th part of Series “Once a darling, now an evil”. This series is based on the companies which were once upon a time darling of the market and now, it has wiped out the majority of all those gains. I am trying to put some of the number-crunching facts by which we have identified ongoing issues in the companies and have saved our wealth.

I am starting this part with one of the company is in the business of global education company, with presence across the US, 40 counties in the UK, Pan India, Singapore, 9 countries in MEA, Hong Kong and 2 countries in the Caribbean which has an all-time high price of ~Rs.437 in 2008, ~Rs.338 in 2012 and now last traded price at Rs.1.77.


In the first instance this company having huge sales & PAT growth. Also, the narrative of the business seems good. But such growth and good narrative should not be a reason for investment.

So, we go deeper ….


Here, we can see that debtor day and inventory days are growing rapidly with fall in payable days which has to turn out a cash conversion cycle to positive from negative & growing rapidly. Assets utilization & return ratio are falling.

I would like to go further detail of it.


Here, we can see that CFO is lower than PAT with cumulative CFO of FY07-12 is Rs.779 cr whereas cumulative PAT is Rs.982 cr so that CCFO<CPAT which indicates that company has a working capital issue which we have seen in debtor days and inventory days also.


If we here look at the depreciation cover then initially it was higher but that is due to lower depreciation rate. Later on, that depreciation rate has become almost double. This has an impact on CFO.


We can see that the borrowing part is growing in overall sources of funds and on the other side the highest part is other assets.

Let’s go deeper into it one by one.


Here, we can see that company has software development is in inventories but similar inventories are not available with Infosys and TCS annual reports, even not in their initial years’ reports. The company is capitalizing inventories as well as few other expenses on the name of inventories which has boosted profits but has affected balance sheet and cash flow statement.

Journal entry of Inventory

Cost of goods sold expenses Dr

            To Inventories

So when inventory gets sold costs are recognized into income statement but if you keep showing inventory not sold out then cost also gets understate which boosts profit artificially.


Here, we can see that company has intangible assets under development is Rs.529 cr in FY2012 and Rs.313 cr in FY11; Goodwill on Consolidation (arises due to investment in subsidiaries) Rs.118 cr in FY2012 and Rs.70 cr in FY11. These two items are 18% of the balance sheet. This is again a capitalization of expenses to balance sheet.

Journal entry of cost capitalization into assets

  • Assets Dr

                        To Cash

When we recognize assets created as expenses –

  • Expenses Dr

                       To Assets

So that cash keeps on reducing but borrowing keeps growing because there was just a capitalization of costs and not actual assets creation. This again boosts profits but when we look at the FCF then FCF always comes negative.


The company got an advance from group companies which increases the current liabilities part.


Here, the company has created provisions for fringe benefit taxes which a tax that an employer has to pay in lieu of the benefits that are given to his/her employees. A company has a pending to pay it means either company does not have enough money to pay it or they have created provision during the good time so that they can write back to boost profit.

Journal entries

When provision/liabilities get created

Profit & Loss A/C DR

           To Provision/liabilities A/C

When the provision was written back

Provision/liabilities A/C DR

            To Profit & Loss A/C

The company can boost profits whenever it requires to do.


The company has Rs.58 cr in the current account and Rs.37 cr of cheques on hand which is combined 60% of total cash and cash equivalents. Why does the company need to keep large funds into a current account where it does not get any interest?

In addition to all the above factors, the company has given a loan to related parties worth of Rs.116 cr in FY12, investment into subsidiaries worth of Rs.34 cr in FY12. We can see that company has put good efforts to hide many aspects but if we go into deeper, understand numbers, and read annual reports then it can visible to us.

Disclosure – Companies mentioned in the article are just for an example & educational purpose. It is not a buy/sell/ hold recommendation.


When we talk about the mindset of rich and poor people then both have a very reverse mindset. Rich people work for learning and poor work for security. These mindsets help to the rich for becoming richer. And poor to poorer. When we spend time for learning, the time we start creating our fortune.

We all focus on getting specialized knowledge to get promoted at the job. But rich dad suggests learning many in the basic. We should focus on every department and learn about all. When we have at least basic knowledge of every department then we get help while we start any of the ventures.

Rich dad valued learning to lead men out from dangerous situations. “Leadership is what you need to learn next,” he said. “If you’re not a good leader, you’ll get shot in the back, just like they do in business.”

If we are working somewhere then also, we need to focus on learning. Learning only help us to grow well. We try to implement what we have learned and if we got failed before the age of 30s then we have a chance to recover. Fear of failure and rejection stop us from acquiring learning and implementing it. It stops us from thinking about how and from where we get new learning. This mindset turns out to be unsuccessful. Our learning will prove more important in the long run to become richer. If we stop learning then we stop ourselves from growing. Learning can lift us in terms of the wise decision, wise person, better growth potential and become richer.

We need to learn the selling and marketing aspects of the business. If we can sell what we are good then we can earn a good amount of money.

For receiving more money, we need to give money also. It is a law of money, the more we give to the needy, the more we receive. It is also detachment from our wealth. The more we get detached, the more we receive back.

Disclosure – Companies mentioned in the article are just for an example & educational purpose. It is not a buy/sell/ hold recommendation. 

Read for more detail: Rich Dad Poor Dad: What the Rich Teach their Kids About Money that the Poor and Middle Class Do Not!


Often in the real world, it’s not the smart who get ahead, but the bold.

Our financial geniuses require both financial knowledge as well as courage to build wealth. If our fear is so strong then our geniuses also do not work. So that we have to be bold, have to take a calculated risk. We need to convert our fear into power. When our mind is emotionally unstable then we cannot make a wise decision and also, we invite situations which are harmful to us only.

Many of us waiting for the opportunity but we should create an opportunity to get out of the rat race. This thing requires financial intelligence.

We have to understand that money is not real, the important is our mind. If we train it well, then we can defiantly create an enormous fortune.

We can use many available opportunities or can create an opportunity for inventing money. Many of the people save money and invest in the assets from where they get safer interest. But this interest is being taxed. This is a safer option but not a smart option. We have to be financially intelligent to think and make all such wise decisions.

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The problem with “secure” investments is that they are often sanitized, that is, made so safe that the gains are less.

Great opportunities are not seen with our eyes. They are seen with our mind.

Winners do not have a fear of losing in the mind. But losers always have it. This fear stops losers for achieving success.

If we want to become a more professional investor then we need to acquire skills such as –

  • Find an opportunity which everyone else missed – we have to focus on the opportunities which all others have missed and work on it.
  • Raise money – we need to identify alternatives for raising money except for bank.
  • Organize smart people – we need to hire people smarter than us to get advice.

What we know is our greatest wealth and what we do not know is our greatest risk. We need to manage risk, need to learn rather avoid it. More we train our brain; more we acquire knowledge the more we can become opportunistic to acquire more wealth.

Disclosure – Companies mentioned in the article are just for an example & educational purpose. It is not a buy/sell/ hold recommendation. 

Read for more detail: Rich Dad Poor Dad: What the Rich Teach their Kids About Money that the Poor and Middle Class Do Not!


We have seen in the previous chapter that many of us working for the others and lastly that would keep us into the financial struggle. We consider many things as an asset such as a car, wristwatch, expensive products, smartphone etc. But does it have the same value when we going for sold?

Though we are doing a job we need to build an asset which has a real value. This act only can help us to become rich.

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When we earn during our job, we need to focus on buying an asset rather than spending money on luxury items. Rich spend last on luxury items but poor spend it on first. These luxury items will create an impression of a rich person but actually, we stuck into the more debt trapped. We should focus on not to look rich, but to be rich. We need to understand the difference between looking rich and being rich. Looking rich is easy nowadays and anyone can look rich but being rich is difficult. We have to control our emotions, saved ourselves from social traps, not falling into the debt trap, etc. We need to make an arrangement that our assets earn for us and we buy luxury from that income rather buy it on the credit. Credit help us to fulfil our temptation immediately but using that we cannot put our step forward to being rich.

Poor and middle-class people suggest that rich people should get punished through tax but actually, middle-class people get highly punished through taxes. They try to look rich and buy an asset which does not have real value so that they have to pay a tax when they acquire depreciating assets. And rich people buy appreciating assets which don’t have higher taxation compared to depreciating assets and also earn income from it.

Disclosure – Companies mentioned in the article are just for an example & educational purpose. It is not a buy/sell/ hold recommendation. 

Read for more detail: Rich Dad Poor Dad: What the Rich Teach their Kids About Money that the Poor and Middle Class Do Not!


If we see many of the richest people have failed and died in a poorer life. What happened to them? What can be the true reason?

If we have a Money without proper financial intelligence then it will sooner or later find a way to go away from us. It is not always important to make huge money but important is to learn how to keep money with us. If we make huge money and does not able to keep it with us then that is of no use.

“Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets,” said rich dad.

We must have to understand the difference between assets and liability for getting rich.

What we need to understand for understanding assets and liability are – An asset puts money in my pocket.  A liability takes money out of my pocket.

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As our income increases, similarly, our expense increases or might be increased higher than income. This will further increase our liability side such as mortgages, credit cards payments, etc. We go for the shopping, we make shopping with full of credit card, we extend our loan for 30 years to make yearly lower payments. And these all keep pushing us to the rat race. These liabilities make us helpless to continue with the rate race. But when we look for the cash flow pattern of a rich person then the rich person has many assets which help to manage all the expenses and also has multiple income streams. Creating multiple assets only help a person to become a rich person.

A person can be highly educated, professionally successful, and financially illiterate.

We keep on repeating the same mistakes again and again – get a secured job, work hard to get a good paycheck, diversify, our house is an asset, our house is our biggest investment, don’t make a mistake, don’t take a risk etc.

Fear of sports, relationships, getting socialize, career, business, money and all these attract us to play in the safe. We start evolving ourselves, outlook our fear and look inside to find out our wisdom. Our education system is designed in such a way that we get trapped into many of the fears. Schools teach us to study well, get good grades, get a good job. Does it solve our actual problems? When I look back and think then I got an answer that they produce me as a good employee but where are the good money handling skills, skill to engage money to work for myself, skill to become an employer? I have to build all these by myself and if we think calmly then similar has happened with the majority of us.

The mindset of the majority of us in the society is led us towards a safer zone which creates a distance. This mindset creates distance between rich mindset people and poor mindset people, between us and the majority of society. The same I have observed in my life. I always remain a bright student during my studies because I always taught in a way that I have to get a good grade and get a good, secure job. Though many of my family members are engaged in the business. I never have forced to do what everyone else said, I have a freedom of decision but I cannot get escape from the mindset of everyone and engage into the biggest mistake with accepting that common mindset. I have always told to my professor that one day I will become a successful businessman but my mindset was not suitable for that decision. My mindset is of getting safer and secure, fear of losing paycheck due to struggle in past. I experience that struggle with the proper mindset can build us stronger but struggle with a poor mindset builds us weaker. So that as I keep on achieving my different dreams but get distance from original dreams of becoming independent, freedom of time and getting financial freedom. I am telling this from my experience that, it is much difficult for us to change our mindset. It took a tremendous time for me. I suggest it to everyone that we should get out of the trapped from such fears in our early life, else we have to suffer a lot and have to do a tough fight with ourselves to get proper mindset.

I have discussed in the previous chapter that we should use emotion to favour our financial decision. But we get much emotional when it comes to making a financial decision. Especially house, I have a personal experience regarding it. All of my relatives forced to sell off my old house and moved to the bigger house by taking a huge loan for 20 years. In our society, the house is our status symbol, good big house for welcoming society people, proof of getting more wealthier (as we get wealthier, we have to move from old smaller house to new bigger house), proof that we are working with a good paycheck,  getting lots of hate & humiliation if not upgrading your house, vehicles, lifestyle with an upgraded paycheck. But no one guides an investment, how to make extra money which can support cash outflows, they advise how to stay with rat race only.

We should buy a house but first, we need to create an asset which supports the cash outflows due to purchase of a new house.

Why rich get richer? The answer is into the above image. Rich having a more asset than liabilities which generates enough cash flow to support all expenses and left with huge for reinvesting it for an asset. This process helps them to grows their assets and income from assets. Such activities led to make them richer.

Opposite activities performed by the poor and middle-class people. And that brings them down more and more. Also, keep them into the rat race. This class only has one source of income and that is salary. So, for increasing their income they have to be strongly performed into the rat race. Poor and middle-class people are taking the major risk by playing safer and not taking a risk.

People attract towards the products which seem to be safer to them. If we want to sell any of the products to the people then show it as a safer product, everyone stands into the queue to purchase it.

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Mr Fuller has defined wealth – Wealth is a person’s ability to survive so many numbers of days forward—or, if I stopped working today, how long could I survive?

When we have a lesser expense, lesser liabilities compared to the income and assets then obviously we will survive for a longer period. Else, we will go out of the game soon. Similarly, we can compare with the companies in which we want to invest.

Disclosure – Companies mentioned in the article are just for an example & educational purpose. It is not a buy/sell/ hold recommendation. 

Read for more detail: Rich Dad Poor Dad: What the Rich Teach their Kids About Money that the Poor and Middle Class Do Not!


I have mentioned during the series of Warren Buffett’s letter that buyback done by the company considers good. Also when the market value of the company is available at discount from intrinsic value and company does not have a better opportunity to make an investment then company has to repurchase own shares. We have heard that the company having good management then they come up with a buyback and others will come up with a dilution of capital. The buyback is one of the criteria for judging a capital allocation decision of management that whether good or not.

What is Buyback?

For Detail Issue, Click here —> SIMPLE IS BETTER – ISSUE -13 – BUYBACK


We have seen in the previous simple is better to issue regarding profit and loss account in Issue-8, balance sheet in Issue-9, Relationship between balance sheet and profit & loss account in Issue-10, and Cash flow statement in issue-11. Analysis of balance sheet is essential for a better understanding of the financial strength of the company. Balance sheet majorly focuses on the sources from where we have brought the fund and at where we have deployed that fund.

Equity and liability side shows us a source of funds and assets side show us an application of the funds which we have brought.

We have to check in detail that does fund get proper utilization which company has to bring or not. For proper understanding, we need to prepare and analysis fund flow statement. Using fund flow analysis, we can come to that fund is effectively utilized by the management or not. This analysis also helps us to know where the fund is going and from where the fund is coming to the business. Does fund utilize to the wrong places or does fund brings from the sources which can be not favorable for the owners of the company?

For Detail Issue, Click here —> SIMPLE IS BETTER – ISSUE -12 – FUND FLOW ANALYSIS