He Generates Passive Income 6x Of His Salary | 1 % Life
Summary
TLDRIn the '1% Life' series, the host interviews Mr. Bin Parikh, a financially independent director at Crystal, to understand his journey to wealth. Parikh emphasizes the importance of passive income exceeding active income and shares his strategy of investing in stock options of companies he believes in, which has led to substantial growth over time. He advises viewers to become experts in their fields, give before expecting, and be open to new opportunities. Parikh also discusses his asset allocation, including a significant portion in equity and startup investments, and stresses the value of learning from financial news and connecting economic dots.
Takeaways
- 💼 The interviewee, Mr. Bin Parik, has achieved financial independence through a combination of salary and investment income, with the latter being 6 to 8 times his salaried income.
- 📈 He emphasizes the importance of passive income from investments exceeding active income from work as a key to financial independence.
- 🏦 Mr. Parik shares his experience with stock options from companies he believed in, such as Oracle and Backbase, which grew significantly over time, contributing to his wealth.
- 🚗 Despite his wealth, Mr. Parik maintains a modest lifestyle, choosing comfort over extravagance, as evidenced by his 10-year-old Honda Mobilio car.
- 🏡 Real estate and a single expensive car purchase are among his major expenses, indicating a preference for investing in assets that appreciate over time.
- 👨👧👦 Mr. Parik has instilled financial discipline in his children, who are successful in their respective fields without relying on their father's wealth.
- 📊 He suggests that achieving mastery in one's field can lead to financial rewards, as expertise can attract higher income opportunities.
- 🤝 The mindset of giving before expecting and not being selfish is highlighted as a key to attracting wealth, according to Mr. Parik's personal philosophy.
- 🌐 Being open to new opportunities and having a growth mindset are recommended for those aiming to achieve financial independence.
- 💼 Mr. Parik's asset allocation includes a significant portion in equity, mutual funds, and startups, with a smaller percentage in gold and real estate.
- 💡 He stresses the importance of learning about finance and investing, even without a formal degree, by reading financial news and connecting economic dots.
Q & A
What is the key to achieving financial independence according to the guest?
-The key to achieving financial independence is having a passive income that is greater than your active income, meaning the money made from investments should exceed salary income.
How did the guest's investment income compare to his salaried income?
-The guest's investment income is six to eight times his salaried income.
What was the initial stock value given to the guest when he joined his first company, and what is its current value?
-The initial stock value given to the guest was 165 rupees, and the current value is 8,000 rupees.
What is the guest's advice on stock options for those looking to invest?
-The guest advises to take stock options, especially from small companies that offer them, ensuring the company is ethical and has good fundamentals.
How has the guest's lifestyle changed after achieving financial independence?
-The guest's lifestyle has changed to remain comfortable without being extravagant. He still drives a 10-year-old car and does not indulge in unnecessary expenses.
What is the most expensive purchase the guest has made in his life?
-The most expensive purchase the guest has made is property.
What is the guest's approach to spending and saving money?
-The guest spends money mainly on traveling and vacations. He does not liquidate his investments and keeps them growing.
How much of the guest's wealth has come from the stock market?
-70 to 80% of the guest's wealth has come from the stock market.
What are the common mistakes people make according to the guest that prevent them from achieving financial independence?
-Common mistakes include keeping most of their money in safe assets like bank accounts or fixed deposits, not investing in equity or mutual funds, and not diversifying enough.
What is the guest's asset allocation strategy?
-The guest's asset allocation includes 5% in gold, 15% in property (excluding his house), 40-50% in equity, 20% in mutual funds, and 20-25% in startups.
How did the guest develop his understanding of finance and investments?
-The guest developed his understanding through reading financial newspapers, connecting the dots between current events and market impacts, and working in financial services companies.
Outlines
💹 Stock Investment Success and Career Insights
The speaker, Mr. Bin Parik, discusses his financial journey, highlighting the exponential growth of a stock he was given at 165 R which later multiplied to 8,000 R. He emphasizes the importance of passive income exceeding active income for financial independence. Parik shares his experience working at Oracle for 14 years, where he benefited from stock options that significantly increased in value. He also mentions his investment in startups and the importance of believing in the companies he works for, as well as the value of staying invested in good companies with strong fundamentals.
🛣️ Lifestyle Choices and Investment Philosophy
The conversation delves into Mr. Parik's lifestyle choices post-wealth accumulation, noting that he maintains a comfortable but not extravagant lifestyle, as evidenced by his 10-year-old car. He discusses his views on spending and investment, revealing that his investment income far exceeds his salary and that he has not liquidated his investments. Parik also touches on his children's careers and his approach to parenting, ensuring they are not spoiled despite his wealth. He stresses the importance of not succumbing to lifestyle inflation and focusing on wise investments rather than material possessions.
📊 Asset Allocation and Diversification Strategies
Mr. Parik provides insights into his asset allocation, which includes a small percentage in gold, a moderate portion in property excluding his residence, a significant allocation in equity, and a portion in mutual funds. He also discusses his involvement in angel investing in startups, which accounts for 20-25% of his portfolio. Parik explains that while he takes calculated risks with concentrated bets in startups, he maintains a balance by keeping the majority of his portfolio in safer assets. He also addresses common mistakes people make with their investments, such as under-diversification and a preference for safe assets over equity, which can limit wealth growth.
🌐 Global Events and Their Financial Implications
The speaker elaborates on his method of connecting global events to investment opportunities, using the example of geopolitical tensions affecting gold prices. He shares his approach to learning about investments, which involves reading financial newspapers and staying informed about market trends. Parik also discusses the potential for investment returns around election times, based on historical data suggesting that investing in financial services companies prior to elections can yield high returns post-election.
🚀 Non-conventional Investments and Life Lessons
Mr. Parik talks about his ventures into non-conventional investments, including peer-to-peer lending and early investments in cryptocurrency, which unfortunately resulted in a loss. He reflects on the evolution of his investment strategy over time and shares a life lesson on the importance of not comparing oneself to others and instead focusing on one's own financial goals and limits. Parik concludes by reiterating the value of a growth mindset and the pursuit of financial independence tailored to individual circumstances.
Mindmap
Keywords
💡Financial Independence
💡Stock Options
💡Investment Income
💡Asset Allocation
💡Equity
💡Lifestyle Inflation
💡Angel Investment
💡Mutual Funds
💡Real Estate
💡Peer-to-Peer Lending
💡Cryptocurrency
Highlights
Achieving financial independence through passive income exceeding active income.
Investment income is six to eight times the salaried income.
The importance of long-term stock investment with an example of stock growth from 165 R to 8,000 R.
The value of staying with a company for a long time and the benefits of stock options.
Lifestyle inflation and maintaining a comfortable lifestyle without extravagance.
The most expensive purchase being a car worth 15 lakhs, emphasizing the importance of not overspending.
Investing in startups as a high-risk, high-reward strategy with a 20% allocation of assets.
The significance of asset allocation with 40-50% in equity and 20% in mutual funds.
The benefits of investing in financial services companies before elections for potential post-election returns.
Common financial mistakes such as keeping money in safe assets and not investing in equity or mutual funds.
The importance of not being afraid of change and having a growth mindset.
Achieving the first crore through mastery in one's field and not focusing too much on salary.
The concept of giving before expecting and the role of karma in financial success.
The role of diversification in investments and the common mistake of over-allocating to real estate.
Learning about investments through reading financial newspapers and connecting the dots.
The experience with peer-to-peer lending as a non-conventional investment method.
Lessons learned from early crypto investments and the importance of being prepared for risks.
The evolution of investing strategies from early career days to achieving financial independence.
The final advice on not living someone else's life and setting personal financial goals.
Transcripts
that stock value price which was given
to me was 165 R and today the price is
8,000 R 50 times it is multiplied by
that much so why are you still working
I'm not that rich I invested in around
12 startups wow in past 3 years how much
is your investment income as a multiple
of salaried income 6 to eight times wow
if you invest into financial services
company 6 months before the election it
gives the very best return post elction
ction can you touch upon some of the
mistakes that people of your generation
have made due to which they are not
financially independent but you
[Music]
are hey guys Welcome to our latest
series the 1% life where we talk to
people who have achieved Financial
Independence that is they've achieved
the superpower to not be controlled by
money they control the money we have Mr
bin parik who is a director at Crystal
Mr bin thank you so much for coming on
the show it's my honor to be here the
honor is all our sir because we would
love to know how your journey has been
and I'm sure millions of people would
love to know how they can Achieve
Financial Independence in their life
because a lot of people think that's
unachievable for them right so we want
to learn from you so let me start by
first asking are you Financial
independent yes very much it's quite
some time but how do you arrive at that
because a lot of people when you ask
them what is that amount of money they
need after which they can just Netflix
and chill for the rest of their life in
most people's mind that number is 100 CR
200 cres because there's no like real
logic or math behind it one simple rule
which you have to follow your passive
income should be greater than your
active income meaning the money that I'm
making from my investments profits
should exceed my salary income income
okay so that and then for you that's
happening yes like how much is your
investment income has a multiple of
salaried income like is your invest like
for example your stock market plus
mutual fund plus gold returns is it like
3x of your salaried income so that's
what I wanted to understand like how
much has it become as a proportion 8 six
to eight times wow so your investment
income is six times your salary income
yeah I mean it is multiplied by that
much I say so why are you still
working my five will say
that you can't sit home no no but I
enjoy you thought about it have you
thought about just sitting at home and
no no not not at all not so for the
audience who's been hearing so far they
would be like oh this guy would have had
a you know very coming from a rich
family has a very high salary from day
one so can you talk a little bit about
uh you started working at the age of 2
to 23 I'm assuming right right so can
you talk about what was your first
salary and how it has progressed over
time yeah so my first job was from
campus and that was uh with Tata game
girls Limited in mapor okay and that was
for 3200 rupees a monthly salary and I
was with Oracle for quite some time
obviously yeah I was there for 14 years
what I I I see see this a pattern
because a lot of our uh the previous
generation they have the tendency to
stick in a company for a very long time
right but the current generation likes
to move every 3 years or four years so
what made you stick in the same company
for 14 years so so one is that I was
traveling okay so I travel a lot of
countries maybe at 10 12 countries okay
so that's where I didn't realize okay so
I mean at any point of time you won't
get bored other thing was that now there
was a stock option which was given to me
in 2005 I don't remember exactly when it
got listed yeah 2005 2008 so when it got
listed lot of people sold the stock they
said that oh I I mean it is giving a
good return kind of a thing whatever 20
30% 50% they sold the stock they they
made money at that point of time but I
continue to remain invested so that
stock value price which was given to me
was 165 rupees okay okay and today the
price is 8,000 rupees so 80 times 40
times 50 times you can say that 50 times
growth yeah growth in 20 years 20 years
yes interesting okay so that is what in
equity if the company is good
fundamental is good okay then you have
to remain invested and again as I said
connect the dots I like it okay so that
is one after that I moved to backless
Bank okay where again I got so wait
after 14 years of working at Oracle what
was your ending salary there at Oracle
close to 2 lakh 2 lakhs a month yeah
then again after join polar okay again
they also give the stock option okay
okay and there I stayed for 8 years okay
and as I said 22 I moved out now their
stock option also is like they give me
whatever the price which is there they
give me at 40 rupees okay and now the
price is, rupees wow okay so I have not
sold any option big learning for people
is to take stock options yeah stock
option is a very good thing I think you
should go for stock option you go for a
small company who offers a stock option
okay but please ensure that now company
is doing sort of a ethical thing so now
I understood your secret it is not your
salary growth it is that you chose
companies which you really believed in
and rode that Journey along with the
company by taking some stock options
correct correct interesting you had a
phenomenal career growth right uh one
thing that happens when people become
richer or they make more money is that
they sort of go all out you know
lifestyle inflation as they say it how
has your lifestyle changed has it
changed firstly um I'll say uh it has
changed to just remain uh I'll say
comfortable okay and not like extravagan
kind of a thing obviously for example
what car do you have I dve um Honda
mobilo which is a 10 years old car okay
and it's very comfortable why should I
sell it if I mean so a lot of people are
saying oh you should buy electric Eevee
you should buy this new that one I can
buy and they're not financially
independent I'm
assuming I don't know see for giving
advice anyone can give advice right so
you should buy do this that but I I
don't believe in that so what is the
most expensive purchase uh of your life
so property only I say that no apart
from property the car I mean when I
bought it it was 15 lakh yeah that's it
one car 15 lakhs and then how that's no
other expensive purchase like what about
your children and all what do they do
how have you taugh um my daughter is
again btech computer science and she's
working with a JP Morgan and my son is
just uh completed his 12th and he's in
IIT Bombay okay so so you've done a good
job of
parenting I don't know whether you not
created spoiled kids like as they say
when kids are born of Rich parents
absolutely Absol I I don't I don't
believe in that in fact um so nobody's
spending money then you're not spending
money kids are not spending money so why
are you making so much money I want to
spend money I'm spending money on the
traveling basically going on the
vacation or so I mean your investment
income is far more than your salary
right like the returns that you're
generating from Investments is far more
right so if 100 rupees is your salary
plus investment income out of that how
much percent is going into kcha so so
see I mean in my investment is
generating whatever income okay but
income is in the sense my investment is
growing of course you're not you're not
I'm not liquidating it of course I know
that right yeah so I'm just keeping it
there only investment I'm not
liquidating it huh no no I know that but
some people you know don't look at like
what you think right they'll be like ah
last year I made so much profit I'll
just sell this now and I'll make some
money from my salary 30 30 to 40% that
you're not even touching yeah not
touching that investment part I mean
when did you sort of achieve your first
CR and what kind of advice would you
give to the audience here to achieve
their first CR like Cor when you you
become a ky like they say I'm not amitab
bachan but when you become a koty so
maybe 10 years back or so I'll say that
so in your early 40s you became a so
what advice would you give somebody to
achieve their first Crow as quickly as
possible so I my advice will be that you
try to achieve the Mastery okay
expertise in your field of area okay or
knowledge okay don't try to focus too
much on the salary when you become a
sort of a I'll say expert which people
look to you okay or I'll say thought
leader that's where now you money will
start coming to you so that's number one
become a subject matter expert in
whatever your chosen field what are the
second or second or third lesson uh
second lesson is that see um earlier
also I used to be like no what is there
for me okay today's youngster thinks
like that only what's it for me what's
it for me okay so don't think like that
okay first try to give something before
you expect something h don't be selfish
okay so that I feel that I am doing lot
more for others and that is where I
think karma is giving back to me so this
is more like a mindset mindset have this
mindset and then money will come to you
correct got it and what's the any other
last and third thing is that see um try
to go with the flow really lot of people
say that I'm going with the flow yeah so
try to go with the so something new
comes up people are very hesitant okay I
mean people are very ERS to change so be
open to new things new things you should
you should have a growth mindset right
okay something new comes up try to do it
that way so that is third thing which
I'll request so is like is the is stock
market your biggest source of wealth
creation exactly correct so if I were to
ask you let's say today our net worth is
100 rupees how much of 100 rupees came
from stock market um I'll say 70 80 70%
of your wealth has come from stock
market 70 to 80% yeah wow because I feel
that salary is only for your day-to-day
expenses okay day-to-day life what are
you spend it okay you should ear more
than that then that is a kind of a
financial Independence for you so that's
a great point because I know a lot of
people in my circles people who are like
four five years older than me like in
their mid-30s okay they're making like
40 50 lakhs perom income right but when
I talk about their Investments 10 lakh
20 lakh savings that's it yeah I know so
I have the same kind of a I'll say
examples from my colleagues or from my I
want to double tap on that because
that's a very interesting question sure
because you're talking about your
colleagues right who are also in their
early 50s right but you and they're
making similar kind of income right but
you have achieved Financial Independence
but they have not so can you touch upon
some of the mistakes that people of your
generation have made due to which they
are not financially independent but you
are yeah correct people feel that now
they want to keep money safe okay and
that's where they keep it in the bank
account or in the fixed deposit okay
including my father also okay I'm other
way I have hardly any money in my bank
account okay okay investment is very
much required in Wise manner so that it
mul multiplies yeah so so one mistake is
people are putting most of their money
in safe assets yeah what other mistakes
are people doing uh other mistake is
that now people don't invest in the
equity or mutual fund huh that's the
same thing and Equity of mutual fund a
little riskier compared to Safe assets
so they're not putting no no no it's not
the same thing because see people once
they have money they will say that okay
I'll keep it into a say property or I'll
keep it into gold so when you see a
property a physical thing people feel oh
it's good actually and they will invest
into that but if you see property will
grow Maybe by 2x or 3x in whatever 10
years 15 years cor okay but if you see
Equity it will grow maybe a 10x 15x 20x
okay in whatever 15 years so you see the
kind of a difference which is there so
that is a second mistake not putting in
stock for Equity any other mistakes
other mistake is that they have to
little bit diversify also uh but if you
look at the reports which RBI keeps uh
you know calculating from time to time
uh 76% of an average Indians wealth is
in the real estate right and around 10%
is in gold and another 10% is in your
durable goods like your smartphones
refrigerator furniture and all that
goods and like 5% is in actual assets
let's understand more about you let can
you tell us what is your asset
allocation and how do you really think
about asset allocation okay 5% in maybe
gold uh maybe starting with the smaller
things yeah maybe a gold when you mean
like jewelry or like gold coins both
both gold coins also you have gold coins
also gold
biscuits I'm not that rich I wish
that yeah but um yeah gold coins small
gold coins okay and then maybe um I'll
say property uh 15% when you mean
property the house that you living in or
like plots of land and all yeah
something more than that yeah not not
where I'm living it but yeah something
you're excluding your house excluding
house yeah yeah yeah and uh then I'll
say that U
uh 40 40% maybe Equity 40 to 50% Equity
again 20% mutual fund okay and then
recently I also discovered about uh
Angel investment in the startups so I'll
say maybe 20 25% also into startups wow
okay so I invested in around 12 startups
wow in past 3 years got it so that is
like how how much did you say 20% of
your money is in uh startup yeah correct
20% is in startups and the expected
growth rate for investing in startups I
would assume like 40 50% cagr over a
longterm period yeah correct right that
so but you have to forget money for five
years at least of course like I I had
recently spoken to anupam on a podcast
where he said that uh wealth creation
doesn't happen through asset allocation
it happens through taking concentrated
bets right so you have kept 20% of your
net worth into startups where you're
taking some concentrated bets because
you've invested in like 10 10 12
companies cor and very high chance that
even half of them might go bust but the
remaining half will grow by like 10x 20x
so overall portfolio Grows by 40% or 50%
and that creates wealth creation correct
the remaining 80% of your portfolio you
have kept it in safer assets so preserve
your wealth like you've worked so hard
all your life so you want to preserve
that right so you're not gambling all
your money no no right correct right so
hopefully that 20% Which you invested in
startups will be equivalent to this 80%
soon and then again you'll do the sa
that's the idea hope right right correct
so now let's talk about your safe assets
because I think that is what's more
relevant for the audience correct um so
you mentioned that around 40% is in
stocks what what did you study because a
lot of people think that if I have to
pick stocks I need to have a CA degree I
need to have a CFA degree I need to be
an investment banker they think that I
need to have a finance degree so what
did you study so my learning is only
through reading the newspaper okay and
maybe blocks nowadays right so I don't
actually go by tips or Etc like that
okay unless and until someone is working
in the company okay and he I mean when I
talk to him he says that okay these are
the sort of growth avenues for the
company or there is a new territory
where we are expanding that's what even
raak J he used to actually go to
titans's office and spend hours with
those management people to understand
yeah he was into full-time but I don't
have that much time but yeah obviously I
I do that kind of a reading so I
normally read just a financial newspaper
daily read the news okay and you have to
connect the dots okay which most people
don't do say for example Israel Iran War
is there right now what is the
implication of that you see gold prices
is rising why because all the major
economies are moving the money in the
gold okay because there might be impact
on the oil okay right so so that is how
you to connect the dots I mean just that
is how the gold price is increasing
right now looks like okay give me
another interesting example like this
say uh stock market is going up then you
see the stock related to BC
cdsl right their prices are going up why
because more people are investing into
stock market more demate accounts are
getting open and more uh those broking
uh companies prices are also going up
right so based on certain event you have
to connect the dots you to figure out
okay how it will impact the market or
how it will impact the company like for
example right now the elections are
coming right A lot of people are like
you know probably the ruling party will
win again so the markets will rally more
right I would love to know your analysis
of how should I invest uh the was some
statistics which was published whereby
it said that now if you invest into a
sort of a financial services company 6
months before the election okay then it
gives a very best return post election
okay what is this analysis who published
this so it was a general statistics
which was published okay through
newspaper the historical data historical
data based on hist and they had given
that now which sector is giving a good
return pre-market Rel postmarket Rel
right and how did you build this uh
skill set right because you don't have a
finance degree like what did you study
exactly I'm uh B computer science
exactly right so a lot of people over
here watching our teis so how do you
build that you know that so there are
two ways okay okay one is that when I
was doing my graduation somehow it
clicked to me that now I need to
understand a little bit of accounting so
30 years back this is yeah 30 years back
okay years back you thought I need to
learn I while I was studying the
technology but I felt that I need to
have a basic understanding of
good all like moneyed from day one
second was that since I started working
into this financial services company
okay so the company which iflex
Solutions which was earlier called SLE
and now it has become Oracle okay so I
was there for 14 years in my first phase
of my career okay and that are they are
into particularly banking uh Services
okay they have banking software so
because working to the that company you
working in the financial servic
financial services so I got an idea
about okay banking full full so I mean
that encouraged me to get deeper into
other this one so that's about stocks
now mutual funds and other Investments
that you're doing um like everybody is
aware okay there is stocks there is
mutual funds there is gold there is real
estate right uh but you are also
investing in some other interesting
assets right so can you talk about a
little bit about some non-conventional
non-conventional investing things that
you're doing yeah so apart from this
standard things as I say startup is one
part of it uh second is about uh doing
this peer-to-peer lending also okay
whereby uh what is that peer to-peer
lending peer-to-peer lending is whereby
uh for example I I know you today but
for example yesterday I was not knowing
you right and I you wanted to borrow
some money highly unlikely but but I I
know that you wanted a money and I just
lend you money okay through some L you
give me one L yeah through some platform
I lend you that money and U since you or
maybe anyone who was not having sort of
a means of borrowing it he's ready to
give higher interest because I didn't
get loan from the bank bank right
because of xise reason or maybe it is
going to take time or whatever reason
right so you said Okay I I want to
borrow money and I I'll lend you money
but at the higher interest rate so what
else do you do apart from these things
do you invest in crypto crypto in fact I
had invested quite early but uh one of
that exchange shut down and hence I lost
that oh okay so it was a small small
crypto I mean it was 10 years back so I
lost money also I mean that's what I'm
saying so you have to take a risk okay
that's what I feel that interesting so
right now because you achieved Financial
Independence you are investing like this
right uh but how has it changed right
now you are 52 but when you were in your
20s and 30s was this investing strategy
different or has it evolved over time uh
it has obviously evolved over the time
but that time also I used to invest in
the stock any last money lesson before
we wrap up for achieving your first grow
because you all talking about the
mindset and I like that because uh
whenever you ask this question people
only tell you know stock market this
that but I like these kind of life
lessons which you have gained right very
simple but makes a lot of sense when I'm
hearing it yeah so I think um don't try
to leave someone else life okay so when
I say if people are spending money
people are putting something on
Instagram okay then you also want to do
it don't try to do it that way okay
figure out what are your limits okay
where you want to reach okay how much
money you have to save or how much money
you have to invest okay to make it
whatever we you want to reach yeah thank
you so much V I thoroughly enjoy talking
to I'm sure the audience who've been
listening for so long they have a lot
more clarity as to how to achieve
Financial Independence in their own
lives on that note guys thank you so
much for watching so far and I'll see
you in the next one
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