Working For Pi!

Pi means “Passive Income” – Money working for you.

Let me make a small correction. Pi is not “money working for you”; it is “making money work for you.”

The difference is that in the second definition you still have to actively work to make money work for you.

As we move into a more richer world- where there are more Investors, a more complex & rapidly changing world – where old formulae don’t work automatically, there is a realization that Pi is not as passive as it used to be. Now more active involvement & effort is required to earn a better level of Pi.

Preparation is required in greater degree for an Investor. Alternatively, you can choose to be a “Saver” and invest in Tax Free Bonds which might result in true “Passive income”.

However, an “Investor” has to “make money work for him” and hence it is a more active form of Pi.

The most active form of Pi is “Entrepreneurship”, where the risks & rewards are much higher.

Just a recap, Preparation = Training + Courage + Sacrifice (TCS formula).

What will you do when you grow up?

One of the most common questions we end up asking our kids- What will you do when you grow up? The focus is on Active income (Ai) – How will you work for money?

I wonder why we never ask them “How will you make money work for you?

The consciousness of Passive income (Pi) dawns at a very late stage. Sometimes it never dawns at all.

Shouldn’t we do something in this direction?

Would love to know your views on what should be done and how we can achieve this objective. Remember Robert Kiyosaki “Rich Dad, Poor Dad?”

Please write into to aipichai@gmail.com, or leave a comment below.

 

Losing your Chai

I have learnt that nothing, just nothing, is worth losing your CHAI. That is the biggest cost one could pay. We pursue Ai and Pi in the hope of getting more CHAI; however in the process we get immensely attached to Ai and Pi that we become victims of anxiety. What if I lose the Ai and Pi? I think the key is to have the confidence that I will not lose my CHAI under any circumstance. This is a matter of training your mind, for it is the mind which creates this anxiety about the future, the fear that you will not be able to cope with any setbacks in life.

We have a wrong notion that growth is or should be a straight line which will gradually move upwards. The fact of life is that growth is like the stock market graph. There will be ups and downs. You will never be able to stay at the peak for a very long time. Accept the fact that once you have reached the peak, you will again have to come down to the base camp. In future, again you will ascend more peaks. There is no harm in spending some time in the valley also! Once in the valley, relax and prepare yourself for the next summit.

Preparation= Training +Courage +Sacrifice (TCS)

You can prepare in the valley, not at the peak.

My sacred rules about wealth

As I turn 50,  I am wondering whether I have become wise as well and what are my sacred rules about wealth. I have never written down these sacred rules and this gives me a good opportunity to share my personal views / sacred rules.

1. When you start your financial life, your foundation has to be very strong. Money has time value. Rs.1000/- saved today will become Rs.1 lakh after 20 years. So in the initial phase of your career try and save money.
2. Always be a creator, not a consumer. So there must be savings at all stages. This way you grow your wealth instead of eroding it.
3. Pi should generally never be consumed. Your personal consumption must come from Ai and Pi should be used to build assets.
4. If you have received certain benevolence from your parents, then it is your moral obligation to give at least the same benevolence to their grandchildren. Your parents love your children more than you love them. You owe it to them.
5. Conserving and protecting your wealth is a duty. You cannot be careless with your wealth. So conserve your wealth and protect it from your enemies.
6. You have to take control of your health and your wealth. You may take professional advice in these matters. However, you have to take charge, total responsibility about your wealth. Nobody else will do this for you.
7. Savings instrument is only a temporary station. You have to convert your savings into investments.
8. Give priority to Pi also. Do not become so busy in Ai that you do not have any time for Pi. Great investments demand your money as well as your time. So always allocate time for Pi out of your busy schedule.
9. Do financial exercises regularly; this will lead to more insights into your wealth and open up new possibilities.
10. Share your knowledge about wealth with others and try and learn from them as well.
11. Talk about money & wealth with others. This can help you in forming your vision & your plan. If you cannot discuss financial affairs with friends, then you must spend time reading books on the subject. Even otherwise, if you are serious about wealth, then you will invest your time to understand more about it.
12. It might be worthwhile to engage a Wealth Coach who can mentor you, guide you & motivate you on your financial journey. He might be the only person with whom you share all your financial details.
13. Remain away from vices. These can erode your wealth in no time, without you realizing it.

You are free to add to these sacred rules! Do write in.