Choose a scalable profession to become a 'Crore'pathi ( Karod pathi)*

If you have been wondering " Why I am not getting rich as fast I should?" or " What is left with me after slogging for hours @ business / office ?" or " What is stopping me from getting stinking rich?" ( What should I do to become a crorepathi or billionaire/millionaire) , here is probably a dimension which can answer your question at least partly.

Taleb ( NNT) in his book ' Black Swan' talks about scalable career.Taleb narrates that "one of his fellow Wharton classmates explained to Taleb that in looking for a career, make sure that it is "scalable"".

What he meant by this is to look for a profession where you are not paid by the hour and therefore are not subject to the limitations of the amount of your labour. This definitely is an interesting point of discussion.

Say, a doctor is paid by an hour. His physical presence and an "one on one" attention to a patient is required to earn money. This is not the case in case of an actor or an author. Their output ( movie or book) can be easily scaled up multi fold which can make them earn money.

In other words, A scalable career or business is one that can grow at an extremely rapid pace, with roughly a base input from the people working on the business. For example, for each user a software or a web site not be recreated . Once a software ( or an app) is created , it is scalable.

Not that, if you are not in scalable business you cant get rich. It takes a long time and there is a limitation of non-scalability!

Here comes the catch

"A scalable profession is good only if you are successful; they are more competitive, produce monstrous inequalities, and are far more random with huge disparities between efforts and rewards -- a few can take a large share of the pie, leaving others out entirely at no fault of their own."

An average person can be successful in a non-scalable career. But only few ( lucky!) can be successful in a scalable business or career.

So, if you have an option and requisite guts, choose a scalable career to become rich.

* article originally published in ideasmoney.

Start investing early to use the ' power of compounding'

Article originally published in ideasmoney

"Compounding interest is the greatest mathematical discovery of all time". Albert Einstein

There is a story about an Emperor of China who was so excited about the game of chess that he offered the inventor of the game one wish. The inventor replied that he wanted one grain of rice on the First Square of the chessboard, two grains on the second square, four on the third and so on through the 64th square. The unwitting emperor agreed to the modest request. But two to the 64th power is 18 million trillion grains of rice - more than enough to cover the entire surface of the earth. The Emperor, realizing that he had been duped, had the inventor of the game beheaded.

So what should we do to take advantage of the power of compounding? 1. Plan our future needs and investments in advance to take advantage of compounding. 2. Let the power of compounding work by never withdrawing from the investment. 3. Start as early as possible to give “compound interest “ enough time to work. See an example to understand the need for starting early and make the POWER OF COMPOUNDING work for you. A and B want to retire at the age of 60 years. To take care of his post-retirement requirements, A invests a total amount of Rs. 35 lakhs towards his retirement corpus. On the other hand, B invests a total of Rs 50 lakh towards his retirement. Despite investing less, A accumulates Rs 298 lakh, compared to B's accumulation of Rs 216 lakh. This was possible because, A had TIME in his favour. He began investing a sum of Rs 1 lakh p.a. earlier, at the age of 25 years, up to the age of 60. B, to compensate for lost time, saved twice the amount invested by A i.e. Rs. 2 lakhs every year from the age of 35, till the age of 59 years. But he couldn’t match up with A because he did not use the power of compounding for long.

So, start investing early and use the power of compounding . This will ensure you earning a crore faster!!

On the roads...in Bangalore