INVESTING 101 Master the money basics and make winning decisions over the next 50+ years of your investing journey by Vipin Khandelwal

INVESTING 101 Master the money basics and make winning decisions over the next 50+ years of your investing journey by Vipin Khandelwal

Lesson #1
10 Money Basics you 
should never forget

Money basics are not just about numbers or calculations but about 
behaviour too.
There are several of them. Here is a quick overview of 10 such 
basics. Useful to refresh even if you know them.
#1 Never let your money be idle
What if I say that I would pay you a rupee after 1 year instead of 
today? I bet you will not be okay with it.
Why? Because there is a potential return on money that you can 
earn, such as interest. You can take the rupee today and earn that 
interest for 1 year. Hence a rupee today is clearly preferable.
Based on the concept of ‘time value of money‘, a rupee is more 
valuable today than it would be 1 year from now.
Not letting your money work and leaving it idle is bad for your 
financial future. Put it to work. By the way, money lying in your 
savings account is as good as idle.
#2 Inflation is a hidden tax
A related concept to Time Value is Inflation. Inflation is the rate at 
which prices increase. So, if you bought vegetables at Rs. 100 per 
kg 1 year ago and the same set of vegetables now cost Rs. 110 per 
kg, then the price has gone up by Rs. 10 per kg or 10%.
You see inflation is sort of a hidden tax that eats into your money 
and reducing its value. Let’s take the same example as above. If 
your income increases by Rs. 15 to Rs. 115 and the price by Rs. 10 
to Rs. 110, then after paying for the extra prices, you are left with 
just Rs. 5 (Rs. 15 – Rs. 10). That is the real increase in your wealth, 
net of inflation.
#3 Use the Power of Compounding

INVESTING 101 Master the money basics and make winning decisions over the next 50+ years of your investing journey by Vipin Khandelwal