How to Double Your Money? 💰 | How to be Rich? | Financial Education

Summary

This video script discusses the impact of inflation in India over the past 60 years, illustrating its steady rise from 1.78% in 1960 to 7.66% in 2019. It emphasizes the financial strategies of the wealthy to combat inflation, such as investing in businesses and mutual funds for compound growth rather than relying on low-interest bank savings. The script introduces the Rule of 72 to calculate the doubling time of investments and uses the example of Apple's stock growth to highlight the power of investing versus spending. It concludes by encouraging viewers to seek financial education and strategic investment planning to secure their future wealth.

Takeaways

• 📈 Inflation in India has been on an overall upward trend over the past 60 years, starting from 1.78% in 1960 to 7.66% in 2019.
• 💡 The impact of inflation is significant on individuals, especially those who are aware of it and take steps to protect their wealth from its eroding effects.
• 🏦 Banks and governments are perceived as entities that can devalue one's savings through inflation and low-interest rates.
• 🛍️ The example of mango prices increasing from 100 rupees per kg to 108 rupees with an 8% inflation rate illustrates the direct impact on consumers.
• 🔢 The concept of compounding is introduced, explaining how both wealth and inflation can grow exponentially over time.
• 🤔 The script challenges viewers to consider whether their income or profits are keeping pace with inflation and what steps they should take if not.
• 💰 The script emphasizes the importance of not just saving money but investing it wisely to grow wealth and combat inflation.
• 📊 The difference between linear growth (fixed returns) and compound growth (variable, potentially exponential returns) is highlighted.
• 🎯 The 'Rule of 72' is introduced as a simple tool to estimate the time it takes for an investment to double at a given interest rate.
• 🚀 The potential for wealth multiplication through consistent reinvestment and compounding is demonstrated with a hypothetical example of a businessman starting with 2 crores.
• 📚 The script concludes by encouraging viewers to seek further financial education and to engage with the provided financial experts for personalized investment advice.

Q & A

How has inflation in India changed over the last 60 years according to the script?

The script indicates that inflation in India started at 1.78% in 1960 and has seen various fluctuations, including reaching as high as 28% in some years. By 2019, the inflation rate had increased to 7.66%.

What is the impact of inflation on the cost of purchasing a mango as mentioned in the script?

The script uses the example of a mango to illustrate the impact of inflation. If inflation increases by 8%, the cost of a mango that was previously 100 rupees per kg would increase to 108 rupees per kg the following year.

What does the script suggest about the role of banks in relation to inflation?

The script suggests that banks may not be the best place to store money during inflation, as the interest rates offered by banks (typically 3-7%) are often lower than the rate of inflation, leading to a loss in purchasing power.

What is the 'Rule of 72' mentioned in the script, and how is it used?

The 'Rule of 72' is a simple formula used to estimate the number of years required to double the invested money at a given annual rate of return. It is calculated by dividing 72 by the percentage rate of interest.

How does the script differentiate between linear growth and compound growth?

Linear growth is described as receiving a fixed return on investment, such as government bonds or certain insurance policies. Compound growth, on the other hand, refers to investments like the stock market or mutual funds, where the returns are reinvested and can potentially lead to exponential growth over time.

Outlines

00:00

📈 Inflation's Impact on Personal Finances in India

The speaker begins by presenting a 60-year data set on inflation in India, highlighting its steady increase from 1.78% in 1960 to 7.66% in 2019. The impact of inflation on daily life is illustrated through the example of the rising cost of mangoes. The speaker emphasizes the importance of understanding inflation to protect oneself financially, suggesting that banks and governments are not safeguarding the average person's wealth. The narrative points out that while savings are essential, they should be complemented with investment strategies to counteract the eroding effects of inflation.

05:04

💼 The Power of Compounding in Wealth Creation

This paragraph delves into the concept of compounding as a means to grow wealth, contrasting it with linear growth from fixed-income investments like government bonds. The speaker introduces the 'Rule of 72' as a tool to estimate the time it takes for an investment to double. Using the example of a businessman who reinvests his profits, the speaker demonstrates how compounding can exponentially increase wealth over time, especially when starting with a significant capital base and achieving high annual returns.

10:09

🚀 Hypothetical Wealth Growth Through Reinvestment

The speaker presents a hypothetical scenario where a businessman starts with a capital of 2 crores and doubles his money every two years, achieving a 36% return on investment annually. By the age of 50, the businessman's wealth would have grown to 2032 crores, illustrating the dramatic effect of consistent reinvestment and compounding. The speaker also touches on cultural observations, noting that certain communities in India are known for their wealth accumulation through similar practices.

15:10

📊 The Importance of Mindset in Financial Success

In the final paragraph, the speaker discusses the mindset of wealth accumulation, emphasizing the difference between spending and investing. The speaker uses the example of Apple's stock price growth from $1 in 2000 to $123 in 2021 to illustrate the power of investment over consumption. The narrative encourages viewers to engage with financial experts for personalized investment advice and to continue learning about financial education to achieve financial goals.

Keywords

💡Inflation

Inflation refers to the rate at which the general level of prices for goods and services rises, eroding purchasing power. In the video, inflation is described as increasing in India over the last 60 years, affecting the cost of goods like mangoes, which would rise from 100 rupees per kg to 108 rupees per kg with an 8% inflation rate.

💡Compounding

Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. The video explains how inflation compounds, increasing the cost of goods over years, and also how compounding can multiply wealth, using examples of doubling money over time.

💡Banks

Banks are financial institutions that accept deposits, offer credit, and provide various financial services. The video criticizes banks for offering low interest rates on savings, which do not keep up with inflation, leading to a real loss in value for depositors.

💡Interest Rate

Interest rate is the percentage charged on borrowed money or earned on deposits. The video discusses how banks offer low interest rates (e.g., 3-4%), which are insufficient to offset the inflation rate, causing a net loss in purchasing power for savers.

💡Rule of 72

The Rule of 72 is a simple formula to estimate the number of years required to double the invested money at a fixed annual rate of interest. In the video, this rule is used to illustrate how quickly wealth can grow through business investments or higher interest rates, highlighting the importance of understanding this concept for financial planning.

💡Linear Growth

Linear growth refers to a constant growth rate over time, often used in the context of fixed-income investments. The video contrasts linear growth with compounding growth, explaining that while fixed returns provide stability, compounding returns can significantly increase wealth over the long term.

💡Mutual Funds

Mutual funds are investment vehicles that pool money from many investors to purchase securities. The video mentions mutual funds as an option for achieving compound growth, typically offering higher returns than traditional savings accounts over the long term.

💡Business Profit

Business profit is the financial gain obtained when revenue from business operations exceeds expenses. The video explains how business owners can achieve higher returns (e.g., 24-36% annually) compared to traditional savings, emphasizing the potential for significant wealth accumulation through business activities.

💡Capital Gain

Capital gain is the increase in the value of an asset or investment over time. In the video, capital gain is highlighted as a key aspect of wealth generation, with examples of how significant gains can be achieved through business investments and the stock market.

💡Investment

Investment refers to the allocation of resources (e.g., money) in expectation of generating income or profit. The video emphasizes the importance of investing money rather than merely saving it, to protect against inflation and grow wealth, with specific examples like stock market investments and business ventures.

Highlights

In India, inflation has been increasing over the last 60 years, starting from 1.78% in 1960 to 7.66% in 2019.

Inflation's impact on purchasing power is exemplified by the cost of mangoes, which could increase from 100 rupees per kg to 108 rupees per kg with an 8% inflation rate.

The concept of compounding inflation is introduced, which not only erodes purchasing power but also affects wealth growth over time.

Banks are criticized for offering low interest rates that fail to keep pace with inflation, effectively 'robbing' customers of their savings' value.

The importance of financial education for individuals to protect themselves from the erosive effects of inflation is emphasized.

Investment strategies of the rich are contrasted with the average person's approach to savings and spending, highlighting the benefits of compounding wealth.

The 'Rule of 72' is introduced as a simple method to estimate the time required for an investment to double in value.

A hypothetical scenario illustrates how a businessman with a 2 crore capital can exponentially increase his wealth to 2032 crores by the age of 50 through reinvestment and compounding.

The transcript discusses the importance of mindset in wealth accumulation, distinguishing between those who earn and those who earn returns on their investments.

The difference between linear growth and compound growth is explained using the examples of government bonds and the stock market, respectively.

The potential for wealth multiplication is underscored by the example of Apple's stock price growth from $1 in 2000 to $123 in 2021.

The transcript challenges the audience to think critically about the true value of investments over time, using the example of investing in Apple shares versus buying an iPhone.

A call to action is made for viewers to engage with financial experts via a Google form to receive personalized investment advice and strategic planning.

The transcript concludes with an invitation for viewers to continue learning about financial education and to participate in the discussion by commenting on the video.

The importance of not spending but investing money is highlighted, using the example of the difference between buying an iPhone and investing in Apple shares.

The potential for significant capital gain through strategic investment is illustrated, with a net gain example of 2030 crore from an initial 2 crore investment.

Transcripts

Here on my screen, you can see that in India how inflation is increasing. Here we have a

data of 60 years, that in India in last 60 years how much inflation has increased.

In 1960 you can see that from 1.78% the inflation started to increase and in between, it went a 28% in

some years it has decreased but overall what you are seeing is that inflation is increasing.

Now 2019 data which we have is at 7.66% inflation has increased, but what difference

does this make to you? The knowledge which I am going to give you today, with it you will

understand that with this inflation only you suffer and special would be those people

who will understand this information today. See banks are robbing you, the government is taking

money from your pocket. If you want to save yourself, if you want to make your yourself

financially secure, then the information which I am going to give you, the information with which

rich people are protecting themselves from inflation not only they're protecting them, but they're also multiplying

wealth, doubling it so how they are doing it. You will get to know it step

by step and I hope that this financial education will help you a lot. So I am going to tell

you that from 7.66% inflation has increased what does it make a difference. Today when

you go and purchase a mango now when you purchase a mango it is for hundred rupees per kg

You get mango at hundred rupees per kg if inflation increase by 8% in 2020 the data

will be with us soon. So this means that next year we will get the same mango which we purchased

for 100 rupees we will get at hundred and eight rupees per kg inflation is increasing

next year it would increase again, next year again. Here inflation is also compounding now

this compounding not just multiplies your wealth it increases inflation also through

compounding, means if today you are getting mangoes hundred rupees per kg and compounding

happens at a rate of 8% then after 10 years you will get this mango at how much cost this

is a question which I have given you because I will tell you about this you would comment

below, that after 10 years how much does mango would cost if it is increasing by the rate

of 8%. Now let's move forward, my one more question with you, if you're a businessman then your profit

is increasing with this inflation, is your income increasing or if you are in job then

is your salary increasing according to that if not then what should we do? now there is

one more thing let's understand that today I am saying that banks are robbing you. If

you put your earnings in the bank let's assume that in a year you save 1 lakh, ok and you keep

it in the bank most of the banks give you an interest rate of three to four percent some banks give

6% for 7% in today's date, you can Google about them. So most of the people's money is in SBI

Kotak or HDFC so these are the popular banks, they are giving this much interest that means

after one year they will make your 100000 as 103000 that means your money is growing by

3000 rupees but inflation increased 8% so the interest you got after that also you bore

a loss of 5,000 because inflation increased 8%. Now Muslim people don't keep

the money they get from interest, some of my friends who earn good, they have a good amount in the bank too but

the interest they get either they donate it or do a charity out of it according to their

religion the interest they get is bad for them so they don't use this money so with

this we get a loss of 8000 although they can do business and recover it but it is a loss

if it was kept in the bank because money every second loses its value. Money loses its value

so money is not such a thing which you can save, this word save is a good that you should have savings

but that much only that is for your emergency fund you should have money. That should be in your

savings account other than that you can invest it. Let me tell you one more thing here, now rich

people have a different game most of the rich people are in business now because rich people

are doing a business they at least in their capital, even if they are a big businessman

they are on their capital, work on interest of two to three percent means on my capital

I get an interest of two to 3% interest as and profit so they get that if they are getting

a profit of 2 to 3 % monthly, you will see yearly profit would be 24 to 36% now my question

is that by doing business you get a profit or you get a fixed amount from Government

Bonds, you invested in a policy, you get fixed amount which we call linear growth the

graph is going forward that means if you are getting a fixed money in fact If you invest

in share market, so in share market or in mutual fund what happens there you don't get

fixed or linear but over the period of time it increases in long term. The graph is that you did investment it could go down or up but ultimately

over the period of prime you will see

that money is growing you would see here you would get a compounded growth of 12% or 15% or

16 percent, you can get compound growth. Here you get other benefits too, see one thing this was linear there also

your money grows. The question is that the businessman is earning money, how would you

know that in how much time your money would multiply. So where I will teach you a rule

of 72, now this rule of 72 is very easy if you want to see that and how much year money

would increase so rule of 72 means that if you want to calculate the time so you divide 72

with the rate of interest. For example, you get the interest of 12% in 6 years your money would

double if you get a 5% fix then 14.4 years to double the money but the businessman

who get a rate of interest of 36% you do 72/36 in two years your money would double

and according to 24 in almost 3 years your money is getting doubled now the doubling

game because every rich man focuses on doubling his money. Now the person who would understand

the game of doubling the money, in how much time they can multiply their money that person in

his life would definitely be a millionaire and he can beat inflation. Now I will take

your example here you will see that if you have a businessman. I assume that there is

a businessman who is working with the capital of 2 crores and in every 3 year is doubling

his money. He is earning 24% it is average for a businessman so if he is applying multiplying

and not spending. He is a person with brains then at the age of 30, he has a capital of 2 crore

now my question with you is at the age of 50 how much money would he have think at the

age of thirty-year he has 2 crores and at the age of 50 how much big of a person he would be? today he has

2 crore he is a crore earner how much money he has. let's calculate, this is a very good

question you would have fun while learning this. At the age of 30, he has 2 crores here

I will write 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 at 50 we will calculate

how much money will it be? Let's see the game of doubling how rich people double their

money. Now at age of 30 he had to crore so I will assume that at 30 and 31 he had

2 crore rupees but we because double our money in two years in 3 year

also we can do so but we will take 2 years because he is getting a return of 36%

in business, people get that Businessman will will understand. So we start with 2 crores in

next 2 years we will have a total capital of 4crores then 8 crores, 16 crores, 32 crores, 64 crores, now after

Directly from 2 crores to 100 crores, from the age of 30 to 43. So here we have 128 crore

We did a jump of a hundred crores plus. You will say that, what am I saying, who grows so quickly

people do. The people who understand, here from 2 crores to 4 crores they earned and then spent it

Here only we got big cars, we started to travel the world, here we started spending it then compounding

will stop there only, it will not move forward. This is also a hypothetical situation because

people generally spend it early. After earning they don't invest all. We are taking that situation

where people are earning and investing. You would see this in India in people like baniya, Marwadi

Gujarati people do that. You have seen there Lifestyle it is very simple

but they multiply their money and you can see their history you will see a rich man

with a capital of a hundred crores or more than that. You would see that some

years before he didn't have much, 20 years before he did a very humble beginning, he didn't have

a lot of money, but in 20 years what magic happened that he is a person of 100crores or

1000 crore, because to reach at thousand crore it does not take much time, you would have heard

a proverb that with money, money can be made. I am not saying that if you don't have the

money how you will do that, we will answer that also. Because we took a starting capital

of 2 crore, you can start from 20000 also. Now see for 128 crores to multiply, how much time would

it take. This is almost 254 crores, straight multiplication and in next 2 years it is the same

multiplication Like It Happened from 2 to 4. Here from 128 To 254, you are thinking that

it is very big growth. That was also a big growth, but you were understanding this in your

mind because you were able to take in the figures. The broader your mind the more you would go far.

From 254 crore here when doubling will happen it

would be 508 crores and here almost 1016 crores and here, when he would be of the age 50, he

would have 2032 crores starting from 2 crores. Just see that in 20years net growth or net profit you can see

that net capital gain which you are getting we will say the right word is capital gain

the net capital gain which we have is of 2030 crore. Now people will say that you are joking

it is not possible. Let me prove, in front of you I will open a compound interest calculator now

you will say how to get that 36% I took it when there was a businessman. we can talk like if it's

a common man who earns 12% in mutual funds. We have not invested, here I have opened a

website of HDFC. We are talking about a person who didn't invest anything he had 2 crore capital in

2 crore capital he didn't invest anything and we took a game of 20

years and maximum there is 36% because in the market, it is according to share

market. Generally, there is not a growth of 36%, so if you even consider 30 although

it should be 36, so he will have 749 crore here with every percent The Game Changes

749 crore, if he started with 2 crores, if it was 29 because there is no 36 then this

figure would have changed, it would be directly 614 crores, so here you are seeing that

if I did a 1% difference so from 614 and 749, more than 120 crores difference more than that in

fact because of 1% difference, so every one percent growth matters. That is why you see those rich people

you would think they're a bit miser, they know the compounding of each rupee if we spent

10,000, then how much that 10,000 could have earned us. Here we did the investment of 2

crore. That with an investment of 2 crores a person in 20 years can reach 750 crores at an interest

of 30% with 36% growth of 2000 crore. So here the thing is this is possible

When you will understand that you don't have to spend money. Today I will give you an example,

What poor people do, they will earn money say 1 lakh rupees and they will purchase

iPhone of 1lakh. Now they purchased the iPhone and the money becomes 0. It is not like that

rich people don't buy it, they buy it but at first, they know how to invest it.

Rich isn't the person who has 1 lakh rupees, rich is the person who is getting returns of 1 lakh rupees per day

Everyone has a different satisfaction level if you are not getting one lakh

you are getting 10,000 or 2000 but this is not earnings, these are returns on investment.

My investments are increased and I am increasing them, that is a rich person because he has

a different mindset. Now finally if a person purchase an iPhone of 100000 what difference

does it make you spent it. A person who purchases shares of iPhone, Now iPhone shares, in 10 years you

can see the growth. I will talk about 20 years, now I will show you something that your mind

would be blown. I am considering that 20 years growth will be the same in next 20 years

So we are talking about shares of Apple, we're talking about share price of

Apple. Here we will take the max amount, Apple's share price in 2021 is 123 USD. We can later multiply by 70

20 years before i.e in the year 2000, oh my god 1.14 almost this is in front of you $1 in April

this was a $1 share. 123 times the money has multiplied means if you will understand this meaning then it

would be fun. 100000 rupees you think that the money has been X and 123% you're thinking

this that the money from 100000 would be 1crore 23lakh. You're thinking wrong I'll tell you why

This answer you have to give in a comment that this money would not be 1crore 23lakh and why not. Because now

you're learning financial education from me and if you will not learn how to calculate it

then I will feel very sad that I taught you so much and you didn't calculate it. From $1

123 dollar this share is but I want to tell you that and I will give you the answer in next

video but before that comment below, 1 Lakh rupee investment in 20 years is not 1crore 23lakh and why not.

If someone would have invested like this, if a person today fights with his parents

that they want iPhone, buy me an iPhone I won't eat food, just buy me iPhone. Mother and father

took the burden and purchased an iPhone of 100000 to the kid, one more kid says that he wants

he wants Apple..... he wants Apple mom-dad gave him One Lakh rupee to him and he bought shares of Apple

Here you can get many examples but if you took the shares of Apple why it would not

be 1crore 23lakh. In the next video when I would give the answer your mind would be blown, so we have to do that. If you want to see more videos

on financial education then comment below because this has not ended here. I was teaching

you doubling. Now there is one more question of mine, people say if we want to do investment where

should we do? How to do investment linear, Or in share market or in mutual funds, there are so many questions

so whatever questions you have, see you can talk to our team of financial

experts. In the description below, you can fill up that Google form our team will contact

you and according to your requirement, our financial experts will guide you, they will send you

a presentation that how you should invest. What should be your strategic investment

planning, with which you can get your financial goals. So you fill-up the form I will help

you. I will see you in the next video and I know you are very very curious to learn

a lot about financial education because there is so much to teach. Video is extending on

taking time also and there is so much to teach you, but we will teach you. Stay with us, share

this video so that people could also get a lot to know about financial education and

stay with us. I'll see you in the next video, for your love you can like this video

and if you have questions comment below I also asked some questions from you. My questions

were in 10 years what would be the rate of mango. I asked what would be the rate of the apple

apple we talked about that, So if you do investment of 1 lakh rupees in an apple in 20 years how

much would it be? What would be the returns comment below and tell me let's meet in the

next video till that can you go self made