Financial Literacy for all.

So what does being financially literate means, to know some basics about how, when and where to spend, save, share and invest your money.

Basically every person should be at least literate enough to manage his money well enough to full fill his current as well as future needs. Being financially literate helps in many ways to use and understand your spending and investment.

Financial literacy is a topic which is not been covered in any school or college. But the importance of it is totally equivalent to math and calculations that has been included in the school and college's syllabus from very beginning.  For being successful in life one should know to manage his money well.

In a survey conducted by Forbes it was seen that 90% of the business that have failed in resent times are due to financial mismatch and only 10% are the other reasons like product failures, management disputes, improper idea, etc. Imagine 90% of the businesses failing due to non other than financial mismatch this shows the importance of financial literacy in everyone's life and the topic that must be taught from the high school.

(1) Basics of financial literacy.

Talking about basics of financial literacy it includes:





4 Jar system of money skills.

INVEST (20% Investment)
SAVE (20% Savings)
SPEND (50% Spending)
SHARE (10 % Sharing)

Person with a fine knowledge about his income and spending. Can make his money skills better by following the basic mantra of three S and I.

And understand four decisions that has to be made considering investing, savings, spending's and sharing. A person who has mastered the mantra of (3S and I) has increased his chances by 50% of being successful in life. As this cycle of (3S and I) itself is 50% of basic financial literacy.

It is believed that a person should only spend 50% of his income and rest 50% can be considered for saving, investing and sharing, And it can be further classified into saving, sharing and investing as per the persons convenience.

This Jar system of money skills was first invented by Jewish and was known as Jewish 5 Jar system of money skill. The 5 jars were tithing, giving, saving, investing and spending. But later for ease of understanding and according to importance it was converted into 4 Jar system i.e investing, saving, spending, sharing. Some people also exclude investing and call it 3 Jar system.

(2) 4 Quadrant system by Robert Kiyosaki.

Robert Kiyosaki in his book Rich Dad vs Poor Dad, he has mentioned about 4 quadrants of cash-flow the 4 quadrants include employee and self employed at one side where as business owners and investors at the other side. He says that 90% of the world population fall into left side of the quadrant i.e 90% of the people in the world are employee or self employed but they contribute only 10% to the world's wealth where as towards the right side of the quadrant are the business owners and professional investors. And this are only 10% of the world's population but they contribute 90% to the world's wealth.

He defines left side being poor dad where as right side being rich dad. Now how to move from left side of the quadrants to right side for being rich dad to do so we have to understand how does income works and follow 4 Jar system of money skills.

(3) Types of income.




Active Income

Active income can be defined as money earned by performing any kind of work in terms of physical or it may be mental. If you work for a firm or organization and you get a salary, wages, bonus, commission, etc. they are termed as active income.

Passive Income

Passive income can be defined as an form of money earned by system that we have created and it creates wealth for us in terms of constant income. If we start a company, write blogs, earn royalties, Create MLM (Multi level marketing) chain or do affiliate marketing and we earn wealth or income through that it would be called as passive income.

"Find a way to earn money while you sleep or else you gonna end up working until you die"

Passive Income.

Portfolio Income

Where active income is acquired by exchanging time or money, portfolio income is made through capital gains. If we invest in stock market, mutual funds, shares or currency exchange the income earned through all of this is termed as portfolio income.

When we talk about best example for person with portfolio income we can not forget Warren Buffet he is one of the greatest investor of all time according to me. He started investing in stock market at the age of 13. Talking about his shares in top firms, below chart explains it all.

   

Peer pressure barrier to your dreams.

So if you have completed your 12th in science stream and if you would ask your parents or friends, what course or degree should you pursue? Most common answer from most of them would be go for engineering it has a good future, you will earn good six digit salary etc.

But is it true? According to current scenario in India I would rather say no!! it's not a great career to choose for, there are more than lakhs of engineers jobless in India. And the reason behind that is either they don't have proper technical knowledge or the job availability is less. Talking about less availability of jobs, that is due to less demand and high supply of engineers. In simple words if you would see more than 50% of students after their 12th go for engineering as their future that is either due to peer pressure or less idea about the options available and no proper guidance and counselling.

But that doesn't make engineering as a bad career option if you are really superior at it or rather have a capability to become superior and great in engineering or any career option then only go for it or else look inside to and see what you are good at.   

Recently I received a message on whatsapp about engineering or rather relate it with courses chosen due to peer pressure, take a look at it, 

*Dr  Sunil Jejit HR L&T*

Just because I am holding a senior position in HR with L&T , I have been getting many requests from my relatives, friends,  acquaintances, to help their sons or daughters ,who have freshly passed out from engineering college, to get  job in L&T. The number of requests are huge. So many fresh  engineers are unemployed, I could hardly helped only few of them to get job in L&T or in some other companies where I have contacts. I feel bad to say NO to many of the requests or for those whom I can't help. They get disappointed. I can understand. Parents invest their life time earned money just to see their sons or daughters getting degree in engineering. They think that jobs are easily available for engineers. After interviewing many of them , I can't even tell them  that your son or daughter do not even have minimum required technical knowledge. Getting first class or distinction has become so easy without having fundamental knowledge of engineering. It's high time for parents to stop running behind engineering degrees. 

USA produces around 1 lakh Engineers per year for a $ 16 Trillion Economy. 

India produces 15 lakhs Engineers for a $ 2 Trillion Economy. 

The earlier mass recruiting sector was Manufacturing. It used to recruit from the core branches like Electrical Mechanical, Civil etc. But, Manufacturing is relatively stagnant at 17% of the GDP. So the core branch placements have become very difficult.

The more recent mass recruiter was the IT sector. It grew from scratch to almost 5% of the GDP in a short time. IT Employed millions of engineers. 

Now, IT is also saturating. Only good, skilled IT Engineers are in demand. 

If you look at the sectoral composition of Indian economy, most of the sectors do not need engineers. Tourism is 10% of the GDP, does not require engineers. Financial sector, Trade, Hotels and Restaurants do not require engineers. Requirement of engineers in Health, education, Agriculture is also negligible. 

More than 50% of the GDP has no role for Engineers. Still most of Indian youth are becoming Engineers. The situation is not sustainable . 

Demand is low while supply is high. Over and above this, skill level of an average engineer is poor, almost its non-existent in many cases. If we leave aside the top 100–200 colleges, most fresh engineers have no idea of what they studied. Ask a fresh mechanical engineer, can she/he design a simple frame? 

Today the situation is that most engineers are working in a field that has no connection to what they have studied in the college. This is a waste of resources. 

Engineering degree does not come cheap. It costs about 10-15 lakhs. For poor parents, its a huge burden. When their son / daughter is not able to secure a job, they are devastated. 

For the nation, you can calculate the loss. Leave around 1 lakh engineers that NASSCOM says are employable. The rest 14 lakhs have each wasted 10 lakhs of fees. That totals to around $ 20 Billion. Almost equal to the Government’s spending on healthcare. Over this, there is loss of human capital. 

India need to re plan the whole engineering education system. Government need to  cut down on the number of colleges and improve the quality in the rest. 

Also students should explore other career options than everyone becoming Engineers. 

When it comes to education, a multitude of options are available today! From Aviation, to Hotel Management, Short Term Programs to big movie production courses , Data science, cyber security, Information Security, Cloud Technology Designing, Indian Armed Forces, Animation and VFX, Digital Marketing, Film Making, Technology Courses like SQL, PHP, Big Data, C, C++, etc. and much more! 

For a majority of courses like these, there are entrance exams too, such as the NATA, CEED, NID entrance, NIFT entrance, NDA entrance, MBA Entrance, Hotel Management entrance, CET, NEET and many more! Here, the right training goes a long way in getting your child admission to their dream institute! Do you know what are the top career Tracks of 2018 other than  engineering ?? See the following list.

1. Animation, VFX and Multimedia

2. Fashion Design, Event Management and Interior decoration.

3. Aeronautical and Aviation

4.  Film making, Script Writing and Acting.

5. Engineering computer, IT, cloud and data science.

6. Networking, information security.

7. Beauty, Modelling and Cosmetology

8. Fitness, dietitian and nutritionist

9. Foreign languages.

10. Music and Dance.

So, plesse share this with your relatives/friends/12th pass students and help them in planning their education and career appropriately rather than madly running after engineering admissions !!!

The problem is as a student or a small child they are not clear with the idea what they are good at. And according to current trend some people would also say " make your hobby or passion as your career " but according to me that isn't a right choice because I have seen many peoples hobby or passion towards cricket or singing or riding bikes etc. but that doesn't mean you are good at it either mentally or physically and it will help you achieve all the success of life. There are many counselling available at very cheap cost now a days, they will guide you through the process of choosing a career and you will have an idea what you are good at and what you should do.

Do what you are bad at you will become better and Do what you are good at you will become great.

There is a small story about Ratan Tata and his dad Naval Tata,

Once Ratan Tata went to his dad after completing his MBA degree from Harvar Business School and said " Dad what should I do now in my career? " and his dad replied " become a shoe repairer " After hearing that he was in shock he said " i have not done my MBA degree to become a shoe repairer " then his dad said " Become a shoe repairer but be the best shoe repairer in the world "

So you can be what ever you want but be the best in the world.

Read also: https://knowledgebounty.blogspot.com/2018/06/ipl-indian-premier-league.html

                  

                  https://knowledgebounty.blogspot.com/2018/06/base-of-successful-startup-business.html

                  

                  https://knowledgebounty.blogspot.com/2018/06/monopoly-market.html

IPL ( Indian Premier League )

Recently 11^th edition of IPL ended. Ever thought how does the IPL became the largest cricket league in the world. Lets understand the market of IPL.

IPL (Indian Premier League) is the largest cricket league worldwide. And its growth rate is increasing constantly. But before this all started and IPL was found. There was a league called ICL that is Indian Cricket League (ICL) which was found in the year 2007. And at its initial stage it got funding from Zee Entertainment Enterprises. But the ICL was not recognised by Board of Control for Cricket in India (BCCI) and it was neither recognised by International Cricket Council (ICC) so BCCI was not happy with ICL as there committee members started joining ICL. So to compete with ICL BCCI decided to increase its prize money for its domestic tournaments. And that was just not enough from BCCI to oppose ICL but BCCI also decided to put a life time ban on players joining ICL which was a huge decision and also ICL failed to attract audience. That was due to less marketing and player not joining the league due to the fear of life ban from BCCI. And due to that ICL not stayed in the Indian market for long and soon shut down.

Then came Lalit Modi with his idea of IPL that was some what inspired by ICL. And he proposed his thoughts in front of BCCI and got approved in 2007. The first tournament was held in the year 2008. With eight teams participating and a double round robin league stage games and knockout for semi-finals to reach finals. Each team had to host home match and play away games with rest of the teams.

Due to the big cricketing names associating with IPL and the top performing players from almost every cricket playing nation involved in the IPL and great marketing strategies from BCCI gave a huge start to IPL towards becoming a worlds largest cricket league. And due to its popularity in the whole world the amount of money involved the business kept on increasing day by day. And now in 2018 from when it all started in 2007 it has reached an great extent in terms of money making and business through IPL.


The total brand value of IPL when it started in 2008 was aprox 2.8 billion US$, And now in 2018 it has an huge increase in the numbers with total 5.3 billion US$.

So lets see where does the all money associated with the IPL come from. Lets understand the business model of Indian Premier League(IPL)

BCCI's Earnings

Media Rights: Media Rights are the rights for broadcasting certain show on television,
So in 2008 the media rights for broadcasting the IPL live on the television was bought by Sony Entertainment Networks for next 10 years that is 2008 to 2017 for 82 Billion US$ which has to be paid to BCCI for live broadcasting. And now in 2018 the media rights are owed by Star India for next 5 years i.e 2018 to 2022 for 160 Billion US$, That means Star India has to pay 32 Billion US$ per year for next 5 years to BCCI for live broadcasting of IPL.


So why does broadcasters pay so much for the media rights? Because they also charge the money to promote the brands in between the over breaks. The charges of the ads broadcast for a second in between the over breaks are so high that we can't even imagine it might cost us millions of dollars.

Title Sponsor: Title sponsor is the main sponsor for the IPL which is advertised with the name of the IPL. The title sponsorship rights from the year 2008 to 2012 was brought by DLF for aprox 0.4 Billion US$ per year. So till 2012 IPL was called DLF IPL.
After that title sponsorship for year 2013 to 2015 was brought by Pepsi for aprox 0.7 Billion US$ per year.
And then came the big game changer Vivo which brought the title sponsorship rights for the year 2016 to 2022 for aprox 5.34 Billion US$ per year. So now it is called Vivo IPL.
So till 2022 BCCI will be getting 5.34 Billion US$ from Vivo per year. And from that amount the 40% will be given to the participating 8 teams regardless of its loosing and winning. So each team will be getting approximately 2 Billion US$ per year.

Team Revenue: BCCI also earns from the team revenue as teams have to pay 20% from their revenue to BCCI.

Now you might be thinking if teams make so much money without winning does winning even matters? Yes it does because winning grabs the attraction of the audience and winning team is in the lime light for long period of time. That means advertisement for long period of time. And with consistent performance every year, team will also attract big sponsors. As they will create big fan base and viewer base which will provide more marketing for the sponsors.   

Team Earnings

Sponsorship: Now each team has got there own title sponsor whose name is there right in front of the teams jersey. And then other small sponsors on shoulders, back, etc. So the most amount of money earned by the team is by there sponsors. Either they get sponsors or they promote there own brand like for example JIO.

Local Earning: Teams also earns locally from there home stadiums. For example stadiums get local sponsors on the ground. Then they earn form selling tickets, food, merchandise , etc. 

Rewards: Then teams also earn from the winning prize amount of IPL. But minimum 50% of the amount won has to be given to the players and rest will go to the owners. Owners can also take a decision on paying more than 50% it totally depend on the franchises. So for example in this years IPL the amount for the final winners was 0.2 billion US$, from which minimum 0.1 US$ has to be given to the players.
Runner ups also gets aprox 0.12 Billion US$.  

Now lets talk about the expenses of the teams

Player Buying: So the first and the foremost money is spent on the buying of the players, Each team is allotted 80 Crore Rs for buying the players.

BCCI Payment: Each team has to pay 20% of the team revenue to the BCCI.

Other Expenses: The huge amount of spending is done on the stay of the players, traveling cost, support staff cost and other miscellaneous expenses.

Spot Fixing is the other source of income associated with the IPL, which i don't think it is probably need to be explaned. 

But expenses are not high as compared to the revenue generated through the IPL each and every team earn something from the IPL regardless of loosing and winning the matches. Any how if team looses and get a loss of some crores it does't matters to the owners much as IPL has got big viewer base and has become such a huge advertising and marketing opportunity for the brands and owners itself. So for example if Mumbai looses and Ambani has loss of few crore it will not matter him much as he has promoted his brand JIO on such a large platform which will benefit him in the long run in the business. 

And now IPL is no more just a cricket game it has become an business and money earning opportunity for each and everyone associated with it. And every person connected with IPL is earning money in one way or the other and all are the winners.

But talking about losers then we the viewers are the biggest losers, Because after watching IPL for almost 5 hours we are not receiving a single penny instead we are wasting our precious time which we could have utilized in some creative work and working towards our own life goals.

Read also: https://knowledgebounty.blogspot.com/2018/06/base-of-successful-startup-business.html

https://knowledgebounty.blogspot.com/2018/06/monopoly-market.html

Monopoly market

This is a basic term related to market type in business. This term consists of two words lets break them into single and understand. So before monopoly lets see what is market, Market consists of buyers and sellers and when both of them meet at an certain place to sell or buy products or a service it is called market, or a place where companies meet to crack a certain deal it is called market. Market itself is an very large field to understand, it consists of various other terms in the market like offline market, online market (which is the fastest growing market now a days), competitors, different market situations (perfect competition, imperfect competition and monopoly), start-ups, etc.

Offline market is local market place like a certain place which is situated on a ground bases, where there are shops and sellers. The customers visit to the place to buy the product and services. Whereas online market is an virtual market it is also called as e-commerce this is the fastest growing market as the audience have got less time to visit on a place and buy stuff. Online market has given there customers ease of buying product and services from home with no much efforts. The best example for offline market are local grocery stores and flipkart provides us the best example for e-commerce market. But due high competition from e-commerce market some of the offline sellers are also taking there business virtually. For example Dmart has got its offline market but due to high competition and demand from customers it has now come up with its own e-commerce website.

Now lets see what is monopoly, so monopoly is formed by adding up two Greek words, monos meaning alone or a single and polein meaning to sell. So monopoly market is a market situation where there is only single seller or supplier of a certain product, commodity or a service. Which is a drawback for the customers as they have certainly got no options and are forced to buy their service or product. But completely opposite to that the seller enjoys his monopolistic position in the market and can raise the price as per his will due to no competition and no other buying option for the buyers. Monopoly market is a profit maximizer as seller has got power of pricing high. Monopoly market has got high entry barriers opposite of the perfect competition market where seller can freely enter or exit the market.

Monopoly market are of different types:

• Absolute Monopoly : It is also known as pure monopoly situation, Where the seller enjoys complete monopoly situation in the market with no competition, The sellers holds the complete supply chain. In this market there is not even a remote substitute to the product. Pure monopoly situation very tough to happen in todays world. It almost never happens.
• Imperfect Monopoly : It this market situation the sellers holds the full supply chain of the product with no close substitute but it may have a remote substitute.
• Legal Monopoly : It is a type of monopoly where there is only one seller in the market due to some legal barrier or government interference.

The best real life example of monopolistic market situation is Indian Railways as there is no other competition to Indian Railways and also there is no interference of private companies due to legal government barrier. But certainly it has got remote substitute of other transportation system like bus, airplanes, and personal transportation so it can not be called pure monopoly situation. But it can be counted as monopolistic situation as it has got no close substitute and competition.

Read also: https://knowledgebounty.blogspot.com/2018/06/base-of-successful-startup-business.html

Base of a successful startup

First thought that would have come is, what is start-up? So when we a start any new business the initial stage until it reaches certain level of growth and attains some position in the market it is called start-up business.

To be a successful business in the market the business should earn profit. Some would think this is a good point to note down, wait! That is not even a point because obviously the main aim or goal of a business is to maximize the profit and minimize the losses. And business doesn’t become successful by just earning maximum profit. Business is called successful when it is able to earn valuable customers by providing good quality product and services. Which helps the company to survive in the market for a long period of time. Loyal customers help the company to be consistent in the market with good growth rate and great profit. And that builds the successful business.

And to become a successful start-up in the market the first and the foremost point should be, to come up with some unique idea that isn’t there in the existing market. Either it is worldwide market or your local market. For example if your local area lacks with a petrol station the idea of building a petrol station would work for your area and similarly it goes with worldwide business.

The great author and a co-founder of PayPal Peter Thiel wrote a must read book on start-ups which was launched in 2014. In that book there was a line that going 0 to X would not make your business unique, to be one of your kind you need to go 0 to 1. The meaning of that was explained by him with the use of graph, that is on a graph he denoted X axis as other companies and if we go from 0 to X axis that is if we copy other companies exactly as they work then let it be n number of day or years we copy and work we would not succeed, And he denoted Y axis as an unique road and said that if we move 0 to 1 that is even one step we would get success because our idea is out of the box and unique.

So the first step and the base of a successful business is to bring what people and customers need. And move 0 to 1(zero to one).