I RESISTED the urge, but, like all grandfathers, I could only think of
these words to open my letter to you.
In the good old days...
Karz was bad. People looked down upon those who took loans. Parents
would not give their daughter's hand in marriage to a man with loans.
But of course, the times have changed now. Everyone I know has a loan.
The buzz word is EMI (equated monthly installment). Today, you can buy
everything on EMI - a house, a television, an i-Pod. In fact I know of
someone who just bought a fancy BMW 3 series on EMI, instead of buying a
cheaper car outright with cash. I mostly prefer to take public
transport, but then I am an old man with old thoughts!
Anyway, lately, I have been thinking a lot about the Lehman crisis.
Spending money that they didn't have and going beyond their means is one
of the main reasons for their situation today. In fact that is the cause
for the current economic crisis in the US.
Imagine having Rs 2 lakh in your bank account, no regular income, yet
buying a house worth Rs 65 lakh, in the hope of selling it for a higher
price. Even if the price of the house fell by just 5 per cent (that is
Rs 3 lakh), you will go bankrupt. This is what Lehman Brothers did; with
around USD 20 billion they went and bought assets worth over USD 600 billion.
Isn't it suicidal and simply foolish?
I am sure things would have been different, had I been the head of
Lehman brothers. But who wants an old conservative man like me to head a
complex financial institution.
But there are a few lessons I can teach those guys.
1. Live a balanced life and avoid going overboard with your spending.
2. Follow your elder's footsteps. In our days, we did not have a fancy
car. But we had a more financially stable life. We had proper savings and
investments, which helped us in difficult times. Even today, in my
retirement, I have saved enough for myself.
3. The culture of living beyond one's means simply leads to bankruptcy,
depression, stress and frustration in the end.
In that respect, there is one American who I really respect - Warren
Buffet. He has lived in the same ordinary house for over three decades,
drives his own medium sized car and leads an extremely regular 'middle
class' life. If that's all it takes for the richest person on earth to
be happy, why do all of us need to take extra stress just so that we can
get things which aren't even essential?
India still has a lot of growth ahead and the future holds immense
opportunities for us. Let us make the most of it and save and invest it
wisely instead of wasting our precious little on things we don't need.
these words to open my letter to you.
In the good old days...
Karz was bad. People looked down upon those who took loans. Parents
would not give their daughter's hand in marriage to a man with loans.
But of course, the times have changed now. Everyone I know has a loan.
The buzz word is EMI (equated monthly installment). Today, you can buy
everything on EMI - a house, a television, an i-Pod. In fact I know of
someone who just bought a fancy BMW 3 series on EMI, instead of buying a
cheaper car outright with cash. I mostly prefer to take public
transport, but then I am an old man with old thoughts!
Anyway, lately, I have been thinking a lot about the Lehman crisis.
Spending money that they didn't have and going beyond their means is one
of the main reasons for their situation today. In fact that is the cause
for the current economic crisis in the US.
Imagine having Rs 2 lakh in your bank account, no regular income, yet
buying a house worth Rs 65 lakh, in the hope of selling it for a higher
price. Even if the price of the house fell by just 5 per cent (that is
Rs 3 lakh), you will go bankrupt. This is what Lehman Brothers did; with
around USD 20 billion they went and bought assets worth over USD 600 billion.
Isn't it suicidal and simply foolish?
I am sure things would have been different, had I been the head of
Lehman brothers. But who wants an old conservative man like me to head a
complex financial institution.
But there are a few lessons I can teach those guys.
1. Live a balanced life and avoid going overboard with your spending.
2. Follow your elder's footsteps. In our days, we did not have a fancy
car. But we had a more financially stable life. We had proper savings and
investments, which helped us in difficult times. Even today, in my
retirement, I have saved enough for myself.
3. The culture of living beyond one's means simply leads to bankruptcy,
depression, stress and frustration in the end.
In that respect, there is one American who I really respect - Warren
Buffet. He has lived in the same ordinary house for over three decades,
drives his own medium sized car and leads an extremely regular 'middle
class' life. If that's all it takes for the richest person on earth to
be happy, why do all of us need to take extra stress just so that we can
get things which aren't even essential?
India still has a lot of growth ahead and the future holds immense
opportunities for us. Let us make the most of it and save and invest it
wisely instead of wasting our precious little on things we don't need.
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