“If you hate rich people, if you hate money, if you hate how economy works, you are destined to die poor,” a wise man once told.
During my recent Bangalore visit, I got to meet some start-up founders. One of them was a lady probably in her mid-20s. Her company is into digital marketing. They call themselves “branding experts” and they claim themselves to be “quite creative.” I went through couple of videos made by them and also couple of their works. They also do social media marketing. I asked, “how much do you guys charge for handling a page?” She said “depends…starts from 2 lakhs.” She employees 15+ people in her start-up.
Met another team who runs a research company. They charge anywhere between 5-25 lakhs for conducting a market research. Likewise, had also met entrepreneurs, business enthusiasts, freelancers. They all have similar stories, similar spirits and passion and they all are hungry for money, bold enough for money.
By meeting them and listening and checking out their works, I didn’t find myself small or inferior, nor I find people from my hometown less creative or less talented, but I noticed there is something in them that we don’t have. That is, guts to throw numbers, guts to dream big numbers, guts to chase numbers. Personally, my heart would tremble to ask 6-digit fee for a consultancy or a month-long research and there they are, asking the number just for a social media handling.
By the time, they start their business, they are in few crore valuation. In a year or two, 10 cr company. In 5 years, 100 cr company. That’s the trend and target, they all are up to. On the way back home, I was thinking, why do we fear so much to dream big numbers? why do we tremble? why are we so cheap? why do we settle with peanuts? and many similar questions. Maybe because we grew up thinking as if it’s insane to think big numbers, chase big numbers. We label it with madness, greed, and what not all. Maybe in all these, I am somehow psychologically and culturally programmed to think big, dream big, ask big. In this mindblock and hesitation, I die.
Financial Literacy: Don’t invest all your money. Save some.
An informative article on importance of saving in wealth management.
When it comes to money management, many people tend to think investment is the only thing to do but actually the wise thing to do is, diversify your fund.
lf you put all your money in investment, you are playing too risky, because investment is subject to market risk. A country can turn up and down overnight because of politics or natural calamity or many other reasons, and thus diversifying funds is the most important thing to do. As you can see in the illustration below, part of your money should be invested, part of it should be put in savings, part of it should be put for insurance and other long-term plans, to never suffer because of unexpected turmoil in the market.
Saving accounts thus should be part of your financial plan, where a bit of your money should be allocated. It also works as a passive income source, where your money grows with interest. As someone said in the comment in an earlier post, “For the current year, the inflation rate of Np is 4.2-4.3%. If the interest rate is more than this, then your money is increasing. Else, enjoy deterioration of your wealth in bank lockers.”
What the gentleman is trying to say is, your 100 rupees saved in a bank account will become 96 rupees in one year because of inflation and to retain it in the same amount or bit more, you must find a bank that offers interest rates more than inflation rate. As you must have learned through an earlier survey, most banks seem to offer interest rates on a saving account at around 3% P.A. To be honest, that will not work in your favour and you must find a bank that offers more than 4% P.A.
Like for example, Muktinath Bikas Bank offers 5.01% interest rate for saving account according to their product, “Muktinath Sambriddhi Bachat Khata.” There must be few other banks as well who may offer at a similar rate. You must keep your money in those banks.
In short, to call yourself financially literate and grow your wealth,
1. Saving accounts should be part of your financial management.
2. While having saving account, make sure you put your money in a bank which offers an interest rate at more than the inflation rate.
3. Interest earning is a kind of passive earning, which is very important if you want to be rich.
This post is brought to you in partnership with Muktinath Bikas Bank as part of our mission of spreading financial literacy among our readers. You can visit their website to learn more about their services and products. https://www.muktinathbank.com.np/
Financial Literacy: Inflation, the rat that eats your money
This article is brought to you in partnership with Muktinath Bikas Bank as part of our mission of spreading financial literacy among our readers.
You must have heard many times people saying “10 years back, the price of momo per plate used to be 50 rupees and now its 100,” “back then rice used to cost 50 rupees per kg and now it costs 100 rupees.” In simple terms, they call it price rise (mahangi) and in economic terms, it’s called inflation.
What is inflation
Inflation is the decline of purchasing power of a given currency over time. Like for example, if you could buy a packet of milk at 30 rupees but if it now costs 50 rupees, what actually has happened is a decline in purchasing power of the currency because of which, what you could buy at 30 rupees, to buy the same thing now you need 50 rupees.
In economic terms, it’s not the price that has risen up but the purchasing power of the currency has decreased.
What causes inflation
Answer is complex, because well! economics is complex. Since this post is to give a simple guide over inflation, let’s keep it simple. There are various factors that can drive prices or inflation in an economy but typically speaking, inflation results from an increase in production costs or an increase in demand for products and services.
Production cost: Let’s say the government hiked the taxes, employees demanded a raise in salary, the farmer association raised the price of wheat, and all that increased the production cost of bread by 10%. That rise in production cost will rise the cost of bread. The bread that you could get at 20 rupees will now become 22.
Increase in demand: Because of lockdown, everyone is hoarding rice. Rice is in high demand. In free markets, the traders will raise the price of rice. Now, the rice that you could get at 50 rupees per kg will cost you 60 rupees.
That way, what you could buy at X amount, now you need to pay Y amount to get the same thing. That’s inflation.
What inflation should mean to you
It should mean everything to you. Imagine you have 1 lakh in your account in 2021. In one year, the market inflated by 50%, meaning your 1 lakh has become 50 thousand. Of course, in 2022, you will still see one lakh in your account, but its actual value only equals to 50 thousands that of 2021.
Currency itself means nothing. The value of your currency is determined by its purchasing power. If in 2000 you could buy a packet of milk at 10 rupees rupees and the very same milk if costs 50 rupees now in 2021, technically speaking, the value of your money is eroded by times 5. That means, in 2000, if you had kept 50 thousands in your secret vault at home, in 2021, when you take that money out, that money would be worth only 10 thousands.
See, inflation eats your money!!
That is why inflation is the biggest concern of every government and economist. Generally, moderate inflation is considered good for economics and is aimed to be kept at around 2-3% by central bank or federal bank.
How to save your money from eating up by inflation
Simple answer, grow your money at a higher rate than the inflation rate. Keeping it under the mattress will only eat all your money in the long run.
There are two ways of growing your money:
- Give it to a bank.
Investing means putting your money into business. Say, if you have invested 100 rupees and it earns you 200 rupees, your money has grown by 100% which by adjusting with inflation rate of 5%, it has still grown by around 95%.
However, investment is subject to market risk. 100 rupees invested may also become Rs. 10 if business fails. That’s why wise financial advice is – never invest all your money and instead put some over saving accounts that you would earn interests.
There are different types of saving accounts out there offered by banks ranging interest rate from 2% to 7% depending on type of saving accounts. This is where you should be careful.
Since now you understand inflation, imagine this – you keep your money in bank that offers you 2% interest, whereas inflation rate is 4%. In this case, even by keeping your money in bank, your money is still being eaten up by inflation.
Never keep your money in banks that offer less interest rate than inflation rate!
Many people’s confusion and the solution
Many people, especially youth, are not interested to locking their money in bank in fixed deposit because they may not be able to use or pull their money when they want before the maturity. Instead, they want it to be in a floating state. That way, they have their money in bank and still have the freedom to pull or use it anytime they want.
Problem with the most of such saving account is that they offer very little interest of 2-3%, but since now you know, it is always wise to find a bank that offers interest rate higher than the inflation rate, Muktinath Bikas Bank has come up with the solution to your dilemma through saving account “Muktinath Sambridhi Bachat Khata.” Unlike a fixed deposit account, you can draw your money at anytime you want yet you will be earning interest at 5.01%, which is higher than the predicted inflation rate for the year 2021. Another interesting and impressive feature of this saving account is that you earn interest on a monthly basis, unlike standard practice in the market of quarterly payment.
The perfect solution for those who don’t want to lock their money in fixed deposit yet want to earn interest more than the inflation rate.
Hope, this article helped you to get the clear understanding of what is inflation, how it affects you and your money and how to safeguard your money from being eaten up by inflation. Also, hope you liked the solution offered by Muktinath Bikas Bank. You can apply for theMuktinath Sambridhi Bachat Khata by CLICK HERE.
Entrepreneurship, Money, and Common Nepalese
“The fear of being different prevents most people from seeking new ways to solve their problems”
I don’t know from where to start because sometimes I really need to take a delicate approach when I have to explain something to some of my Nepalese fellas. You know they are just so sweet and innocent, the way they think and perceive is mostly emotional, and above all, with all that years of brainwashing on absurd ideas and concepts and political philosophies, it’s really hard to explain certain things to my people, especially when it comes to business and money and things like that. Anyway, let me try to explain this.
Someone posted this in a start-up group expressing dissatisfaction for our attempt of monetizing the context. I could hear similar allegation on the comment section of the post as well.
Let’s start from this.
What is money? It’s a medium of exchange. You want a shoes, shoemaker wants rice. Money works as a medium to exchange. Is there anything evil there? No.
That’s exchange of trade for need.
You want a gem, gem dealer wants ticket to Goa to chill. Money works as a medium to exchange. Is there anything evil there? No.
That’s exchange of trade for luxury.
You want to build a road in your village, you pay the dozer guy for the work and the money received will be used for his need or luxury by the dozer guy. Again, money is a medium of exchange here. Is there anything evil there? No.
That’s exchange of trade for societal cause.
Money is nothing but a medium of exchange and it’s the most popular medium of exchange because everyone accepts it. Money itself is neither evil nor divine. A money received by a prostitute may be donated to temple or in paying school fee for her children. Also, money received by the most reputed man in town may go to a thief to buy a knife.
Basically, money is nothing but a medium of exchange. However, some people in Nepal has considered money as something special, something rare, something big and something like …I don’t know what to say, a God, maybe? They have this idea that you should exchange only certain things for money and not for everything …definitely not for societal or political thing.
Like for example, if someone is making road for all, don’t ask for money..just work for free. If someone is trying to raise voice for all, don’t ask for money, do it for free.
Now, in reality, it does not work that way, because everything is exchange in this world and money is invented as a solution to ease the exchange.
Today, humans have everything from nano robot to rocket because of the concept of money. Money itself has no meaning. It’s we humans who have agreed to give a meaning to it to self-motivate and let the exchange to go beyond daily needs. As a result, we have this world full of devices and gadgets and technologies, books and toys and cutters.
That’s what money does. It motivates people to think beyond and produce stuffs, which otherwise would not be produced. It motivates people to be creative, innovative, so that they could make something that others would buy, and the money in return could be used to buy foods for home, or pay bills and fees for kids or go for a vacation with loved one.
Coming back to badge
If I have to distribute that badge for free, I need to get it printed for free, which means printer guy has to get his ink for free. The chain goes on. If not, someone has to fund the project and I distribute it for free.
This country is f* because of that very same idea of “better get funded than monetize, when it’s for societal or political cause.”
Dull boring posters everywhere, whenever it comes to political or societal activities. Dull, boring people everywhere, when it comes to political or societal movements. Because we think it’s so f*cking wrong to exchange anything for money when it comes to political or societal thing. Guess what? Only dull and boring people with their talent-less works and activities.
So dear cute little innocent Nepalese fellas, there is nothing wrong in selling badges or t’s or even dance party tickets for social causes. Yes, the other side will collect some money, so what?? What do you think the money will be used for? It will be reinvested on people and market to get more creative and innovative that would inspire many others, filling market with more talented and creative activists.
In the end, society gets social message in more creative, innovative and effective way. Team gets better motivation and energy to carry on. Market gets more money flowing in. No one dies taking money. It all will be in the economy. But, new products, new scope is added on.
Take the money out of the equation and see what will be there. No money in economy. Boring and dull products distributed for free, thus no value, nothing. No scope, no motivation.
Which one is better?
So, go sell something for Nirmala, for Kalapani, for climate change, for whatever you are deeply moved by. There is a name for it, and it’s called social entrepreneurship. That’s better because you don’t need to beg around for funding, and it’s sustainable way of carrying on. It’s hard for socialist and communist to understand that. You don’t be the kind.
Just remember this: We collectively have been so poor for so long – from generations to generations – because we never understood the concept and idea behind money. How will you make something, that you have not understood in first place?