Contents
Acknowledgements
Chapter
1: Introduction: The Road to Financial Freedom
Why
You Should Read This Book
Purpose
of the Book
Why
Do You Want to Stay Poor?
What
is Stopping You from Earning Money and Growing
Wealthy?
How
to Grow and Stay Rich
Am
I Qualified to Write Such a Book?
My
No
Retirement Planning in This Book
Money
Cannot Solve Your Problems
Chapter
2: Commandment 1: Thou Shall Make a Proper
Asset Allocation Plan
Importance
of Asset Allocation
Take
Charge of What is in Your Control
Understanding
Economic and Business Cycles
Take
the First Step — Resolve to Make a Plan
The
Different Asset Classes
Asset
Allocation is Successful When You Invest in
Non-Correlated Assets
Determining
Your Ideal Asset Allocation Plan
Model
Asset Allocation Plans
Some
Other Considerations in Asset Allocation
Reviewing
and Rebalancing Your Asset Allocation
Lessons
From This Commandment
Self-Understanding
Questionnaire
Chapter
3: Commandment 2:Thou Shall Earn the Right Category
of Income and Protect Your Money from Predators
Income
Earning Categories: All Incomes Are Not Equal
Legal
Financial Predators
Legal
Financial Predator 1: The Government
Legal
Financial Predator 2: Bankers
Legal
Financial Predator 3: Brokers
Legal
Financial Predator 4: Corporate Retailers
Legal
Financial Predator 5: Residual Category
Level
1 Protection: Your Income Earning Category
Level
2 Protection: Your Income Earning Vehicle
Mutual
Funds: Protections from All Investment Robbers
Lessons
From This Commandment
Self-Understanding
Questionnaire
Chapter
4: Commandment 3: Thou Shall Do Proper Budgeting
What
Exactly is Budgeting?
Surplus
and Deficit Budgets
Achieving
Budget Surplus
Reviewing
Your Financial Status
Budget
Deficit or Surplus — The Choice is Yours
Rules
for Creating a Budget Surplus
Measure
Saving as Percentage and Expense in Absolute
Rupee Terms
Spending
Your Way to Riches
Lessons
From This Commandment
Self-Understanding
Questionnaire
Chapter
5: Commandment 4: Thou Shall Not Commit These
Financial Mistakes
Common
Financial Mistake 1: Sunk Cost Fallacy —
Throwing Good Money After Bad
Common
Financial Mistake 2: Dealing Differently With
Profits and Losses
Common
Financial Mistake 3: Loss Avoidance
Common
Financial Mistake 4: Mental Accounting
Common
Financial Mistake 5: Decision Paralysis
Common
Financial Mistake 6: Selective Thinking
Common
Financial Mistake 7: Endowment Effect
Common
Financial Mistake 8: Buyer's Remorse
Common
Financial Mistake 9: Confusing Saving with
Investing
Common
Financial Mistake 10: Bigness Bias
Common
Financial Mistake 11: Believing that Experts
Can Consistently Beat
Common
Financial Mistake 12: Over Confidence
Common
Financial Mistake 13: Under Confidence
Other
Common Financial Mistakes
Lessons
From This Commandment
Self-Understanding
Questionnaire
Appendix
5.1: The Incredible Human Brain
Chapter
6: Commandment 5: Thou Shall Remember These
Principles While Investing in Equities and Fixed Income Securities
Determinants
of Equity Returns
While
You Buy Stocks, Businesses Sell Stocks
Factors
That Drive Stock Prices
Investor
versus Speculator
The
Investment Cycle
Are
Equities Risky? Understanding the Difference
Between Risk and Volatility
Equities
Help You Beat the Biggest Risk of All —
Inflation
Equities
and High Interest Rates
Different
Techniques of Equity Investing
Equity
Investing Lessons from History
Bear
Market Bottoms
Lessons
from Bear Market Bottoms
Different
Market Phases
11
Common Mistakes in Equity Investing
Characteristics
of Successful Equity Investors
Classic
Equity Investment Principles
The
Determining Factor — Psychology of Equity
Investments
Investing
in Fixed Income Securities
Lessons
From This Commandment
Self-Understanding
Questionnaire
Appendix
6.1:The Madness of Crowds
Chapter
7: Commandment 6: Thou Shall Use the Power of
Positive Leverage
Leverage
The
Magic of Positive Leverage
Is
Leverage Risky?
Positive
and Negative Leverage
Characteristics
of Positive Leverage
More
Cash Flow, Positive Leverage, Higher Returns —
Money From Nothing
Never
Leverage for Portfolio Income
Never
Leverage with Margin Money
Inflation
is Your Partner With Positive Leverage
Unleashing
the Ultimate Power of Positive Leverage
Create
Your Own Investment Assets
Rental
Real Estate Has the Highest Leverage Factor
Know
the Difference Between Cheap and Costly
Leverage
The
Most important Leverage of All — Your Financial
Knowledge
Are
You Caught in a Debt Trap?
Lessons
From This Commandment
Self-Understanding
Questionnaire
Chapter
8: Commandment 7: Thou Shall Buy Your Own House
for Self Occupation
Is
Your Own House An Investment Asset?
You
Own House Is a Bad Capital Asset
Your
House — Whose Investment Asset?
How
Should You Finance Your House?
Fixed
or Floating Interest Rates?
The
Best Time to Buy Your House
Who
Should Own Your House?
Should
You Consider Shifting to a Bigger House?
The
Break-Even Price of Your House
Will
Your House Appreciate in Value?
Factors
Influencing Real Estate Prices
Factors
Influencing the Price of Your House
Rental
Real Estate
Brokers
and Property Managers
Avoid
the Wealth Effect Trap of Your Owned House
Lessons
From This Commandment
Self-Understanding
Questionnaire
Chapter
9: Commandment 8: Thou Shall Not Over-Invest in
Speculative Items
What
Is a Speculative Item?
Different
Types of Investments
Speculative
Items
Gold
Determinants
of the Price of Gold
Silver
Derivatives
Currency
Art
Self
Occupied House / Non-Rental Real Estate / Land
Club
Membership
What
Do You Invest For?
Should
You Invest in Speculative Items At All?
Lessons
From This Commandment
Self-Understanding
Questionnaire
Chapter
10: Commandment 9: Thou Shall Take Proper
Financial Insurance
We
are Constantly Insuring Ourselves Against Every
Possible Catastrophe
Financial
Insurance
Other
Important Categories of Financial Insurance
Insurance
is Either Getting Everything Or Nothing for
Something
Never
Confuse or Combine investment with Insurance
What
To Do With Your New-found "Wealth" — the
Insurance Claim Money?
Lessons
From This Commandment
Self-Understanding
Questionnaire
Chapter
11: Commandment 10: Thou Shall Learn the Rules of
Money
Money
Rule Number 1: Money is Not the Solution to the
Problem of Money, Financial Knowledge is
Money
Rule Number 2: Be the Master of Money
Money
Rule Number 3: Don't Run After Money
Money
Rule Number 4: Invest Time Before You Invest
Money
Money
Rule Number 5: Be In Control of Your Money
Money
Rule Number 6: Don't Work for Money; Make Your
Money Work for You
Money
Rule Number 7: Understand the Nature of Your
Incomes and Expenses
Money
Rule Number 8: Spend Money and Grow Rich
Money
Rule Number 9: Recognize the Actual Money
You are Dealing With
Money
Rule Number 10: Invite Good Money and Drive Out
Bad Money
Money
Rule Number 11: Don't Be Afraid of Money
Money
Rule Number 12: Money is Unfair
Money
Rule Number 13: Print Your Own Money from
Nothing — It's Available In Abundance
Money
Rule Number 14: Learn How to Deal With Money
Addiction
Lessons
From This Commandment
Self-Understanding
Questionnaire
Chapter
12: Financial Freedom: Putting All the Commandments
Together
Stage
1: Earning Money
Stage
2: Protecting Your Money
Stage
3: Budgeting Your Money
Stage
4: Saving Your Money
Stage
5: Spending Your Money
Stage
6: Leveraging Your Money
Stage
7: Investing Your Money
Stage
8: Insuring Your Money
Chapter
13: Battling Against Yourself
Why
Do We Battle Against Ourselves?
The
Psychological Battleground
The
Enemy's Troops
Your
Troops
Failing
Forward — Journey from Initial Failures to
Final
Success
Inspirational
Success Stories of People
What
Is Holding You Back?
Winners
versus Losers
Steps
to Become a Winner
Conclusion
Chapter
14: If You Can't Give, You Won't Be Able to Receive
If
You Can't Give, You Will Not Be Able to Receive
You
Owe It Back
Even
If You Don't Willingly Give, It Will Be Taken
From You
Our
Don't
Feel Great, Be Grateful
So
Poor That Their Only Possession is Money
Don't
Just Give a Fish, Teach Fishing
Succession
Planning
It's
Cool to Give Back
What
Will You Permanently Take With You?
Afterword
Personal
Spiritual
All
the Best
Glossary for the Financially Free