Expense Covered by Passive Income (I Don't Touch My Salary)

You don't use a single penny of your household income for any expenses, right? You use something called passive income. Let's come down to today. What do you account for as a monthly expenditure? It would be somewhere between a lakh and one lakh fifty thousand and hundred percent being covered by passive income. Fantastic. My previous bosses told me that If you can order food liquor in a hotel or something without looking at the menu card in the price Then you have arrived like you are in the good life zone. So i'm in that zone now So sir, you mentioned about your dubai trip being completely funded by a passive income, right? How much was that trip which the passive income covered? What do you understand with the term passive income? What is passive income? Getting away from using your salary for your living expenses The idea was that I never wanted to work my entire life for money and the thought was always in my mind and I drew elaborate excels from beginning. So as my expenses were projected to increase I thought that i'll have to really do a lot of work to increase my income levels So that is where I thought look, how do I go about it? So what I did was I said, okay in today's context if you for example, if I put a fixed deposit of 50 000 rupees Then I would probably get a 200 or 300 rupee kind of cash flow from it approximately a month so that can Easily fund your say a netflix or a youtube subscription Maybe a very small example that is somewhere you want to start, right? So so that is where this started like you start putting some sort of money into certain Pockets I heard a million dollar term on some of your channels, which is like eight crore rupees approximately which will give you FD me dala four lakh rupees a month, which is safe for most people today Expense of two and a half like lakh maybe one and a half You can further reinvest to take care of other situations or just grow your coppers. So for example Someone may have made 10 crore rupees, but they have a very nice villa and they love living in it Maybe a jazzy car, which is 50 lakh, but then you Might be worth 10 crore rupees But your liquidity is just two or three crores, which will not give you enough cash flow to call it enough passive income to sustain So you'll have to continue working now the question comes to what is this expenditure? What is that number? Which is which you're basically not taking out of your income and it's all being covered through passive income Hyderabad typical fees would be four lakh five lakh rupees And that is a major source of expense for most parents today So if that is coming from active income that will take away at least on an average if you have two kids about 70 80 000 a month kind of Expense that gets out So that is one category taken care for me The home loan is being paid by the passive income Understood. So that also is not being paid by the salary I've taken enough insurance for me like health insurance life insurance If I something happens to me god forbid, I have a six crore insurance Which is good enough to cover my family's expenses till they stabilize And i've taken a good health cover. So I don't have to worry about that So most of us if we leave out the heads i'm talking about can easily live in about a lakh one and a half lakh Easily in a metro city also if you're living in your own house not paying for rental So we just had a like international vacation after I just went to dubai recently All that is funded by passive cash flow or my second income not the active income So that does not eat up my salary what that does is It gives me an immense power me and my spouse salary. I can invest into riskier instruments Those are you mentioned about your dubai trip being completely funded by a passive income, right? How much was that trip which the passive income covered? That was probably about six lakhs Approximately in expense six maybe a little slightly more Silly thing I have in my mind that Luxury, I don't want to fund from my salary. I want my salary to work for me in the background And give me money, which I'll spend on luxury. I don't want to find fund those luxuries by working 10 hours 12 hours 8 hours into 20 days 22 days. I don't want to do that I want to get out of that loop So that is where this dubai trip happened and I've already started working on next year's trip So i'm lining up investments now this next year Yeah, so just what is the budget gonna be and let me put some money Where the timing is kind of right to fund that Let's just talk about your life's journey. What's been your background mid 90s? so around that time I was doing a bachelor's from Hansraj college in delhi and I Said okay. Let's do something about life started with the manufacturing organization my with my dad And we started manufacturing some material for meter parts and all precision instruments So there was a point where we had to invest about 70 80 lakhs to buy certain machinery And we couldn't do that. We couldn't afford that so unfortunately had to take a hard decision close the Manufacturing startup went into a lot of fintechs. I worked with morgan stanley for a while Why I had strong as a consultant and then I spent most of my life in bfsi and startups So that gave me this unfair advantage where I got the hang of this cash flows thing how money works It seems to me at least i'm listening to you. It'll take some time to build this pass income so is it something which Is going to take time or is there a way to? Shorten that process or is it's a journey which you have to take it's not something That I would say I have achieved anything out of an year or two year or last three years are good for me This is a disciplined approach over maybe one and a half decades which has led to this if you started from zero No, ancestral money First carol is the most difficult most people take 10 15 20 years to reach the first carol in terms of saving like your investment portfolio of one cr After that the second carol would be probably 50 percent of that time and then it gets easier Once you reach four five cr. It is now up to you You would have i'm sure you would have heard of people who say I have five cr I'll double it in to 10 cr in three years 20 cr in six year and so on They're very sure about because they have understood the way money works the way compounding works What are your modes of passive income like what? Do you invest in that generates this passive income? So first i'll tell you like what are my favorite instruments what I use and there could be more uh one is the abused word fd Uh, and and these instruments change from time like for example, the interest rate cycle is high right now The yield bond yields are high fd rates are high So I would have a bit of more of my kind of money into bonds and all If the interest rate cycle changes like it was about what three and a half four percent few years back So I would not put money in fds at that time. I would want to create fds right now Which would probably give a sustained return for some time four months back. Most of my money was on the equity side But then with the markets kind of changing and the uncertainty I see in the turbulence I see ahead This is my theory I moved a lot of that into liquid cash and bonds in the last about four five months A lot of my bonds are with wind wealth. The idea is that Uh, it gives me around nine and up to ten percent kind of yield It will give me approximately inflation adjusted thing Inflation by the way is a kind of misunderstood term inflation when people say it is seven eight percent that is on consumption That is not on income That's something which people don't understand If someone is earning four lakh and spending one lakh then that seven percent is hitting that one lakh not that three lakh, right? So so so inflation hits consumption My favorite also is dividend yield stocks a lot of them like there's a lot of navratna and manavrutna companies So for dividend yield if you bought them at the right time Maybe in a year back would have been around ten percent twelve percent easily, right? So it is taxable at your tax rate, but still it gives you a decent cash flow. I invest in pre-ipos So pre-ipos also give dividend which a lot of people don't know So like national stock exchange is in pre-ipo stage right now and that gives a decent uh dividend so so today i'm a Some of my portfolio would be in say gold bonds. My Elder daughter has her own corpus. Uh, that's again something which most people don't do i'll give you a very important input here When your kid turns 18 She can have her own portfolio. Yeah and her tax id. Absolutely Why would anyone keep the money meant for that kid in your account and pay 33 tax on that? So her money for education is in our account. She sees money getting debited from account credit to our account. She sees Dividends coming into our account. She sees the value of passive income So that part her education part plus funding part is taken care with her portfolio At zero tax. She's not in that bracket. So that's again a good saving for me as an individual So now let's talk about a little bit about your real estate as well You've talked about how you are not, you know Really counting real estate as something which is going to give you a lot of passive income doubling your money in about seven eight years Any index fund will also do it right in real estate if someone bought it say about I bought a flat in pune I was stuck with it for eight years. I bought an aspirin good size flat at that time. It was two crs So I bought it when I was in pune and I never got to live in it. I moved to hyderabad In hyderabad, I bought my own apartment and then I was paying two emis So the pune one and this one and I was literally screwed for some time like what would it do? I was expecting the pune one to sell but the builder was going through a tough time real estate entire thing went Through a bad time for about five six years, maybe yeah, and like pune I talked about I probably solved that probably just at the price. I bought it after I account for right Indexations and inflation and the principal either interest I paid to the bank So I probably just broke even after blocking my money for seven eight years and while all that was happening I was paying the email. I was blacking blocking my cash flow. I could not invest in the market Those are the good years of the bull run like india had that true. I could not No, no, no regrets But this is what investment into real estate after leveraging does do you to your cash flow? I mean to someone like me a 30 year old today If you have to get advice in terms of how to build a solid financial future What would sort of that advice be my favorite the thing is if someone comes to me say manish You have a lot of knowledge help me Start get started. I say buy rich dad poor dad No one has come back Most people would not even read a book They would slog for a very high-end company for 20 years working 200 hours a month or maybe more They would do that. They'll get fat bonuses, but they'll not invest into themselves by reading a single book Don't be in a rush Like don't think that I have lost certain years if you're starting in say 30 or mid 30s A lot of people have this panic of catching up especially with the peer pressure Don't get in that loop That is the first thing money making money is easy and boring The problem comes when you want to make quick money That is not going to happen No one has done that even rakesh junjunwala Could not do that like in his bull days, whatever we see on television if that happened Then maybe he made a good money in a quick time, but again No one even in that part the biggest bulls they have made money constantly over years not in one year two year kind It's not something like you can achieve the goal suddenly at 35 Uh, like I mentioned that you have to understand your philosophy about money first money is the transactional thing You do transactions with that. What are you gonna do with your wealth? But don't take 80 percent of it to your grave. Don't plan to take that Spend the money Earn what you need and start enjoying they give my daughter his idea If I am able to take it forward even if it fails, it's okay If she wants to try I'll give her the backing I could not take my startup forward because We could not afford 85 lakh rupees for machinery at that time I don't want that to happen this time if my daughters or my wife for that matter They have an idea they want to try it out