NIFTY50 beats DOWJONES in last decade : NIFTY comparison to DJIA 2004 to 2014

Nowadays the buzz word in equity investing seems to be diversification and globalization.  Every news channel that you see will be awash with pundits describing the benefits of diversification, and exposure to international equity as one such avenue.  But this is something I wanted to check out and figure for myself.  The best way would be to simply compare the performance of the Indian stock markets vs a major international stock index, and the obvious one that comes to mind is the US stock market.  So I set out to compare the performance of the NIFTY 50 as a proxy for the Indian stock markets, vs the DOW JONES Index, which is a proxy for the US stock markets.  This analysis is useful in 2 scenarios.  There are several NRI investors who struggle to decide whether to keep their investments in the US, or deploy them back home in India.  There are also India based investors wanting to get a piece of the US market action in the name of diversification.  Both these investors are looking for the same thing, which is the best returns on their investment Dollars or Rupees.  In this article I have attempted a simple comparison of the US and Indian stock markets, by contrasting the NIFTY vs the DOW.  The results certainly surprised me!  Why don't you take a look for yourself here.

To start with I picked the NIFTY and the DOW as representative of the respective countries stock market performance.  This is somewhat debatable, but we will use this for starters, and refine further later if needed. 

The next step was to dig up the historical data for these indices for several years into the recent past. Now remember that to do an accurate comparison we need to use the total returns index, and not the commonly reported index values for both indices.  I don't intend to describe the Total Returns Index concept here (maybe in a separate blog post), but you can read up about it in the link I have provided. Suffice it to say for now that the total returns index is the right way to do this comparison. Surprisingly it was not easy to find the historical values for the total returns indices.  The best I could do was go back about 11 years.  If you know of a data source which provides values going back about 30 years, please send it across my way, and I would be happy to extend this comparison.  For now we will just live with the 11 years data I have been able to find.  

In the table above, I have listed the starting value of the Index for each year, and the returns given by the index in that particular year.  For example in the first row for 2004, the DJIA started at 15811, and gave a total return of 5%, when compared to the NIFTY which started at 2177, and gave a return of 13% in that year.  Again please remember that these index values are total return values and not the regular index values commonly reported in the media.  The comparison will focus on 11 years from 2004 to 2014.  Obviously for 2015, I don't still have the complete year data.

This side by side comparison shows the NIFTY trumping the DJIA in 8 of the last 11 years, many times by a large margin.  Of course in the remaining 3 years, the DJIA seems to have pulverized the NIFTY in equal measure!  Cumulative across the 11 years, here are the numbers to focus on for the 2 representative indices.

The DJIA has zoomed by a large amount from 2004 to 2014, but the NIFTY has been simply outstanding in the same time period.  In percentage terms, the below figures clearly show the out performance of the NIFTY when compared to the DJIA.

 

The NIFTY has done more than twice as well as the DJIA in percentage terms over the last decade! Clearly the Indian investor will be much happier with his/her investments in the Indian stock market when compared to the US investor.  

However what we really need to compare is the performance of these 2 indices normalized to the same base currency, since there are also significant currency fluctuations that have occurred over the last decade.  In particular, the Indian Rupee has devalued spectacularly when compared to the US Dollar, which will eat away into the real gains made in the Indian index.  The below table includes the USD 2 INR conversion rate at the beginning of each calendar year

The percentage return in the last column indicates how much the USD has appreciated wrt the INR in that particular year.  For example in 2009, while the NIFTY gave 74% returns compared to 21% in the DJIA, the USD-INR barely moved and in fact is 0.96, which means the INR actually marginally strengthened in that particular year.  So all of the NIFTY out-performance for 2009 was real when compared to the DJIA.  Conversely in 2011, not only did the NIFTY under-perform the DOW -24% to 9% (overall 33% lower), but the INR also weakened by 19% when compared to the USD, which means overall roughly 33 + 19 = 52% under-performance!  2011, was clearly a bad year to be in the Indian stock market, further compounded by the fact that the DOW did really well!

In fact over the 11 years from 2004 to 2014, the INR devalued from 45.66 to 63.16, a loss of nearly 40%, which the NIFTY would have to recover to be comparable to the DOW performance.  So assuming a $10,000 USD investment in the DJIA, would result in $10,000 x 2.25 = $22,500 in 2014 at the end of 11 years, which would be $22,500 x 63.16 = Rs 14,21,100 in INR.  The same $10,000 USD if invested in 2004 in the NIFTY, would be $10,000 x 45.66 = Rs 4,56,600 invested, growing 5.01 times to Rs 4,56,600 x 5.01 = Rs 22,87,566.  So even after taking the INR devaluation into account, the NIFTY in real terms has out performed the DJIA by a factor of 1.61X (Rs 22,87,566 vs Rs 14,21,100)

61% is a thumping beating that the NIFTY has handed out to the DJIA in 11 years.  Massive by any stretch of imagination.  Now of course the Indian stock markets saw a mega-bull run from 2003 to 2007 some of which has been captured in the comparison duration in this post.  Like I said earlier, I would be happy to extend the analysis if you can point me to additional data for the NIFTY and DJIA.  

For the last decade though, the conclusion is crystal clear, the NIFTY is the clear winner by a large margin.  If you are an India based investor, you need'nt have worried too much about diversification atleast in the last decade.  Your own home market did wonders racing up by 5.01 times in 11 years when compared to 2.25 times for the DOW.  The relative out-performance including currency fluctuations was still a handsome 61%.  If you were an NRI investor in the US, you missed out the last decade if you were not heavily invested in India.  The NRI investor has several avenues to participate in the India story, either through direct investments in the Indian stock market (though recent FATCA rules make this somewhat difficult) or through US based MFs and ETFs that track the emerging market story in India.  The key question is, did you see this trend coming up, and did you take full advantage of it.  If not, you missed a golden opportunity here.  

With the new Modi wave, I will wager there is another golden decade of out-performance coming your way for the NIFTY when compared to the DOW.  Are you going to join in and participate this time around?  

Finally, I want to point out that though I have used the NIFTY and DOW as respective proxies for the corresponding stock markets, in reality investors rarely park all their money in index tracking instruments.  Typically investments are either in MFs or in direct equity.  In a following post, I will try to bring out that additional difference between the 2 markets.  If there are any different metrics you'd like to see in the comparison, please let me know,  As always do let me know if you agree with the logic of the analysis presented here, and if you find any data inaccuracies, please do point it out, so I can fix my math and conclusions as needed. 

Am I Earning Enough

Being a salaried employee, the bulk of my dreams of an early retirement are funded by what my corporate employer chooses to pay me every year.  My fortunes are inextricably linked to my salary.  I have tried over the years to build a secondary stream of passive income, but progress has been slow on this front.  So I figured I should take a minute to get a handle on my salary progressing over my working career. It took me a while to dig up the data, since this is something I have never really separately tracked. I have always focused on my networth, and my savings rate, but never really looked at how much my income is, and more importantly, how it has been increasing/decreasing over the years.

In India we annually get the Form 16 document from our employers, which captures the total salary earned and the various components of the salary.  So I simply collected all my Form16's over the years and captured the Total Salary as reported by my employer to the IRS, per assessment year. This is the cleanest way to capture total income, since it includes all components of my salary.  Typically in India, salary packages can get quite complicated to enable tax savings, so we need a simple metric that all of us salaried folks can identify with.  This of course is my pre-tax income as reported to IRS, and my take home is actually much smaller since the government takes a huge tax bite out of it.  This approach is similar to using the total wages from the W2 form, if you are based in the US.  

Now I did refer to passive income stream earlier, something that I have been trying to build (rather unsuccessfully) over the past decade.  Ideally to get a good handle on your overall income, you need to add all sources of passive income cash flow to the salary income.  In my case, since the passive income stream is very small, I have ignored it for this analysis.  If you have a meaningful passive income stream, or you are self employed, then you can simply pick the total income number you fill in to your ITR form every year.  In my case, the total salary in my Form16, is pretty much my entire income that goes into my ITR total income line.  Remember that my financial investments currently do not generate regular annual cash flow, since I am in the accumulation phase of my career, wherein I am primarily focused on capital growth, not regular predictable cash flows.

With that background. let us look at a graphical representation of my total income over the years.

You can look at the raw numbers in the graph above.  I started earning a meaningful salary in India in AY2005-2006.  For the first 2 years, I had some special circumstances in my working career that impacted my salary, which swung wildly from low to high.  So I picked AY2007-2008 as my baseline (the brown bar in the picture above) to reference all future income.  As you can see my income has been steadily increasing over the years, though in some years there are declines as well!  I was also quite surprised to see the declines, and it took some data reviews to figure out that the variable component of my paycheck tends to swing around based on the performance of my employer, the state of the economy etc.  

AY2014-2015 was particularly nasty with a 11% drop in my overall income (primarily coming from a poor variable component that year)  I expect folks who earn a larger percentage of their salary through variable components like commissions, sales target based increments, hourly wages etc, will see a much larger variation in their annual income profiles.  Self employed businessmen and professionals should see a graph that is likely all over the place, since their business related incomes will not be stable year on year.  

Year-on-year, I have also marked the annual increment/decrement for the AY, when compared to the previous AY.  If you think of yourself as a small business, that generates annual cash flows, then this chart above is the YoY performance of your company.  So, here is my honest assessment of how my "company" (basically my annual salary) has done over the years.  If you start with my AY2007-08 baseline of 100, it has taken me about 5years to double my annual income.  KVP will double your investment in 8years 4months, so clearly I have done better than that.  However that is just a basic expectation since KVP is an extremely safe investment, and you basically have zero risk, and zero work, and your investment doubles.  I have certainly taken on more risk in my working career, and I feel I put in more work every year, so ideally I SHOULD do better than a KVP, right!

This last decade has been a high inflationary period in India (in general India being a developing country has inflation rates, which results in artificial wage increases.  A US based employee will be shocked to see such growth in annual wages) with CPI inflation peaking at ~15% in 2009.  During this same five year period CPI inflation has been at 2007 = 5.51%, 2008 = 9.70%, 2009 = 14.97%, 2010 = 9.47%, 2011 = 6.49%.  As you can see inflation takes a bite of 55% from my 5year overall salary increase of 100%.  So the real growth in my salary has been 45% over the 5years, which amounts to 7.7% real annual growth rate.  This is certainly not bad, but not spectacular either.  If you consider average inflation at 9% and GDP growth at 5% per year, would it be fair to expect your company to grow at 14% per year over the last few years?  A 14% CAGR amounts to 192% growth (almost double) in 5years, and I have been sort of keeping pace with that.  

We will have to see how things work out in the next 5 year period.  In summary I would say that in comparison to low inflation economies in developed countries, the salary increment that I have seen in my case in India is stupendous.  However if you factor in high inflation in India (or the plunging Indian Rupee in the international context) then your increments reduce significantly in terms of real purchasing value.  Also the increasing incomes make a clear case for increasing savings, and increasing investments every year.  You MUST increase your investments every year in proportion to your salary increments at a minimum!

Have you done a similar analysis for your self?  If you have been disciplined in keeping your Form 16's and ITR's filed away, it takes just a few minutes to put this data together.  It gives you a wonderful perspective of the changes in your annual income, and can guide you on how much you should be saving and investing yearly.

When is the Best Time to Buy Foreign Currency

Being Smart Essential – Buy Foreign Currency

Bob Atkinson of TravelSupermarket advises that one could save a tenner for every £100 one tends to spend abroad, by being smart. He states a traveller should `plan what one is going to do and how they are going to spend overseas though not any plastic. Look for credit and debit card which are designed for usage overseas.

The market-leading deals like the Halifax Clarity credit card and Norwich & Peterborough debit card, have no hidden currency loading fees or transaction fees. If one tends to spent for instance 600 euros on one of these cards they tend to actually spend about £470 based on the prevailing rates.

On comparing it to the worst option which is to rock up at an airport and actually buy euros without pre-ordering, they endup spending about £515 on the present day’s rate at some place like Heathrow’. He further adds `that’s a difference of around 10% which means it’s effectively like throwing away £10 for every £100 spent on holiday’.While purchasing holiday cash, most of the people leave it till the last moment and tend to completely ignore it at times till they arrive at the airport.

Commodity loaded with Poor Exchange Rate/High Transaction Fees

Several travellers generally pay more than the going rate for their holiday cash hence some advance planning could help them in avoiding poor exchange rates or exorbitant transaction fees. Most of them tend to leave this job at the last minute resulting in paying extra pounds or more.

Just as one would check for the best deals on hotels and flights, they should also do the same when it comes to purchasing foreign currency which is a commodity that is often loaded with poor exchange rate combined with high transaction fees. Individuals should avoid buying the holiday cash at the airport since it is the most expensive place to purchase the spending money and the rates are extremely bad since the providers have a captive audience.

The main issue is `time’ and one should be wise in thinking about currency much in advance prior to leaving for the holiday. The first step to be taken is to look at the exchange rates which would help in maximising how much local currency one would get from the exchange.

Euro, the single currency, till recently has maintained its strength and customers are recommended to purchase their euros when the pound could make gains against the single currency. In the meantime, sterling has performed more positively against the single currency and holidaymakers need not rush and buy euros now.

Knowledge on Value of Currencies

On the contrary, if one is heading out to the United States, one could be wise in purchasing dollars sooner instead of later since at the moment the pound tends to perform well against the dollar though the same is not expected to last. Gaining knowledge on the value of currencies one could be looking to purchase, could save them of money in the long run.

The only way to know if one is getting the best exchange rate is to be knowledgeable on what the currency rate is. Prior to the trip, one needs to check on currency converter to have an idea of what exchange rate to expect. If undertaking a prolonged trip, check on the rate periodically to remain updated of any major changes.

According to Alistair Cotton, corporate dealer at currenciesdirect.com states that `now is a very good time to be buying US dollars. We are still on multi-year highs and businesses and people travelling abroad this year should be taking advantage at these levels’.

Fastest/Simplest Method - Online

Lucy Lillicrap of AFEX comments `current levels provide an excellent opportunity to buy the dollar at rates rarely seen since before the financial crisis’. Jeremy Cook, chief economist at worldfirst.com on the other hand states that he `thinks that the US dollar will progress through the year as one of the best performing currencies in the G10 space as the economy continues to rebound.

The Federal Reserve is much like the Bank of England, trying to remain vague on when interest rate rises will come but a stronger economy, fuelled by strong domestic industry and receding fiscal drag will increase the pressure on Federal Reserve chair Janet Yellen to normalise policy sooner rather than later’.

According to Josh Ferry Woodard of TorFX, he states that `in the light of Fed chair Janet Yellen’s suggestion earlier that the interest rates could be raised in the USA by April next year, it is possible that the US dollar is the one currency that the pound may struggle to stay afloat against.

For this reason, it is a very good time to buy US dollars; the pound-to-dollar exchange rate may not reach levels this high for a long time’. The fastest and the simplest method to buy currency is online, on the internet where it would be easy to compare rates and one could also get a much better deal.

Does Your World Look the Same from Your Windshield as Your Rearview Mirror?

Vitaly Katsenelson has some of the most cogent thoughts on investing and financial behavior currently available.  I was reviewing a piece I had saved that he wrote in Institutional Investor in early 2012 about the runup the previous year in cyclical stocks such as heavy equipment makers Caterpiller and John Deere.  He noted that with companies like this, because a large portion of their costs are fixed, profit margins go up disproportionately when sales are up (as they have been recently).  And conversely when sales drop (as they must at some point) profit margins drop disproportionately because those fixed costs once again remain the largely the same.

His comments are specific to cyclical stocks, but the concept applies to most investments: 

Today investing in deeply cyclical stocks is not unlike a game of musical chairs. If you own these stocks, you are coining money while the music is playing. We know what will happen when the music stops: These stocks will plummet.

Of course, it’s difficult to know when the music will stop — tomorrow, six months from now or in two years. Bubbles don’t follow the timetables established by their prognosticators, even when their collapse is being predicted. If you think you possess perfect pitch and will hear the music stop and be able to grab a chair before everyone else, don’t kid yourself. The dot-com investors of the ’90s thought they could, and very few of them got to sit down gracefully.

I think those last two sentences describe one of most important lessons an investor can ever learn:  the siren song of beating the market always looks good through the windshield but rarely looks good in the rearview mirror.

What do you think?

Winning financial formula for everyone

 


Image by askmen



Every one is designed to win, wants to win and end up being a winner. Financial problems have simple solutions but that doesn’t mean it is an easy battle. Living your life should be exciting but sometimes you got knock down. With the right amount of knowledge, skills, and attitude you will be back on track.

1.   Get a financial coach

In a generation that is full of information it is easy to get distracted. You badly need insights from someone who can understand and willing to work with you in order  to improve your behavior so you can reach your goals. The end goal of a coach is to simply improve  the clients performance in making sound financial decision. The client will be held accountable for the results of their financial health.   Whenever you watch  Weight watchers and Biggest Loser, those  reality shows have been successful because  of a lot of grind in the  process and change in mental state of the contestants. After the coaching sessions  you are expected to win long term not just for a couple of weeks because the coach was able to empower you with knowledge and equip you will great tools in making your dreams come true.

2.   Manage your cash flow or budget

If you do this everyday or every week am sure you will win long term. By monitoring your behavior and making some action plans after you see the evaluation of your spending pattern it will help you to move forward. Many people are stuck and don’t know what to do with the money they earn, they thought saving some portions of it is the end of the story. What they don’t get is they also NEED to manage the expenses. When you let the expenses overtake your earnings sooner or later you will be in slavery mode (Debt). But if you let that money be in its proper place you are in a good hands. Treat your money like a soldier, if you will place all of them in a war against your old habits (enemy) you will lose a lot of them.

  

3.   Get an Insurance that suits your needs

Many people still don’t see the value of insurance. In a country that most of the people are hardworking but have a poor financial literacy program it is really sad that they can’t see this as a goldmine. You need to get an insurance to secure the needs of the people that you love. If you don’t have a love one then don’t get it. Every body is going to die and you need to prepare for it. I recommend  you to think long  term and know your value. If you are worth 10 million today then get a 10 million or more coverage. Don’t just get one, ask from your insurance agents the things that you need to know or else they might not open up.

4.   Write your will

Imagine  that you have an establish career, your cash flow is good,  you got an insurance and thriving investment together with a happy family but what will happen if you leave the Earth without a will?

If you don’t have a written will and you have so much assets that you have when you die, a complete stranger will decide how to split the  estate  under your name and your love ones like your children will suffer because of that. You are the one to blame if you will mismanage it. Talk to Registered Financial Planners for more info about this.

5.   Revisit your career plan

Planning still the best way to prepare for the worst. Every year should be an exciting year. When mediocrity strikes you then you are setting yourself for less. . Domino effect will happen and you will end up unproductive. Your employer won’t think twice to kick you once your performance drop to the lowest level. Business is business and it will be better to let go of you.

The advantage having a career plan is you got a road map on how to climb up that mountain of road blocks ahead of you. Career choice starts within you not from your boss. You need to write down your skills set that will match to the next job that you have. Pray for divine intervention everyday because it will be a tough decision. You  either might resign and look for the job that you really want or stay within the same company but look for a higher position. Changing your career will also have an effect with your cash flow so you need to think and weigh in things for you to grow.

6.   Have a business.  

Being an entrepreneur needs a lot of commitment. But if you are dedicated to grow more with mistakes and not regrets having a business is a gateway to your success. Grinding and pounding to your next sale will help you get out from living from paycheck to paycheck. Everyone is not cut to be an entrepreneur but you need to think like one. You have crazy abilities. Know yourself and grow it.

I noticed that all billionaires are businessmen who started from ground zero. With your effort, passion multiply it with a really good attitude will help you go on a long way.

7.   Build your  retirement  plan

Study shows that more people once they retire from work are expecting a lot from Social security but according to the statistics, GSIS and SSS cannot sustain the lifestyle that you want. Now, if you want to live comfortably try to make a better choice. Build it brick by brick thru putting your extra funds  in a good pool fund or put it in a stock market with a combination of peso cost averaging multiply it with discipline your money will grow exponentially.  

Our economy is growing plus the pooled funds are doing really well. If you start with 5000 and every month you keep putting the same amount. Historically the equity funds can give minimum of 12% annually. When you do this for the next 30 years you will accumulate 8,258,577.94 regardless of the currency. With the compounding effect PLUS with time and value of money this will roll over and I think you can already live with a retirement in a decent way.

Image from Dave Ramsey Website Financial Calculator

David Isaiah Angway is a Financial Evangelist

Not Losing Money is Battle Half-Won

I have never lose money in stock market. Maybe because my transactions are small and only a handful. However, I tend to believe as long as we are cautious yet courageous at the right time, we are on the right track to the winning formula.



You can imagine winning in the opposite direction. By eliminating the losing portion, what is the direction you can go? Stay stagnant or profit, of course.

If you take this topic to another level, we will need to account average 3% inflation to stay stagnant. This means, If you start with $100, you will need to have $103 to break even for the next year. This compounded year after year. So, not doing anything to avoid losses is also not an option to most of us.

Ok, you must be thinking this is common sense. Sometime, we have to agree that common sense is not common, especially in many people. Everyone is unique. So how to prevent losing money in investments? I think to some extent, this boils down to our research and the profiles of companies that we have to target. For example, if it is a well profitable companies for decades, with government support, monopolise market, high demands, cheap supply, the price is below value and not at historical high, you are not that far off. If you are not convinced with the investment, don't take uncalculated risk. This is not a competition against anyone else, what matter is you end more than you start with.

Remember, profit by not losing.

Cheers
Frugal Daddy

Financial issues while you're 20's

Image from pop sugar

Every generation got a problem and a struggle. When you are young it gives you the ability  to make necessary changes but when you let your issues stay as it is and get out of control it will surely haunt you and derail your dreams.  There are numerous ways how to resolve it but identifying the problem will help us be in a really good position.

1. Brand obsession

Buying branded items are good but buying the same brand all over and over again whenever they release new products is totally outrageous. You are burning a hole in your pocket. Sooner or later you will have a bigger problem if you will continue this.  Being trendy is good but being financially savvy will be better. Practicality will keep you safe from trouble.

2. You want to get rich not be rich

Are you a pretender or a contender? Can you survive once you got an emergency? While you are young don’t just focus on your outside appearance, invest within yourself too. Many young adults keep on hopping in different industry looking for a higher pay so they can finance their lifestyle but they can’t sustain it in a long term. Invest in yourself, study another course. You need to simply change your thinking in being rich. A genuine rich person will never be insecure with their neighbors new phone, new car, new house. A rich person knows exactly their REAL value.

 3. Short term vision

If you got problem with your eyes it is really hard for you to move because you might get hurt. When your vision lacks clarity you are surely in trouble. You got a little problem if you have a game plan. How do you see your finances 5 years from now?  If you know exactly where you’re going then you will be in good shape. If not, then I recommend to think about that, before you construct your house and lay down the cornerstone you need to go back to the drawing board, have a blue print and put those ideas in paper. Try to read it everyday so it will sink in your system. Your vision might change over time but it will be better compare to not having one.

4. Go with the flow

One of the problem being young is the lack of experience and that is equals to shortage of wisdom. You are too busy following the norms and the culture without too much analyzing the effect of it  on the long run. When you follow every ones advice you will be lost. You need a game plan.  Don’t let other people’s lifestyle dictate your spending pattern. Don't be shy to tell them that's not on my budget because they don't care when you are broke.

5. Credit card sucker

 Every month you can’t stop using it. Even in simple items you need to swipe your card. In a culture that debt is normal and having no debt is considered a freak you need to wake up.  Let me tell you that most people who spend using credit card has issue with acceptance and security. According to http://www.psychologistanywhereanytime.com/

With the ever increasing access to credit cards, the number of people with a shopping and spending addiction is astounding.  While the exact number is not known, It is estimated that there are over 14-15,000,000 shopaholics in the U.S. and that the U.S. credit card debt is greater than six hundred billion dollars.

I have a very simple solution to that credit card spending. Throw your card and only buy using cash.

6. Too much reward for yourself

You have a serious problem when you try this kind of life style; travel everywhere, party anywhere, sky is the limit when it comes to spending. I just want to remind you that you are not a rock star or celebrity, but even celebrities go broke sometimes when they cannot sustain this lifestyle with low earnings over bigger expenses. Rewarding yourself is a great way to give you some boost but if when you strike the balance with reward and wisdom you will hit the jackpot with great repeatability.

7. No financial heroes

Having no inspiration is a suicide. Try to look for an inspiration or a hero. Someone who will help you to achieve your dreams financially like your friend who are successful and books that’s very timely to your situation. Remember that you can’t do it all. Even superman got kryptonite that sucks his power sometime. So when everyone around you spends higher than they earn you badly need to be the hero in that generation.

8. You hate the idea of saving

There are people who don’t have any idea why savings is good. For them, saving money is more on depriving yourself with something that you really want now. Yes, they are somehow correct but they should focus more on WHY we need to have savings compare to  focusing on HOW they should save. If you got no savings you cannot afford the future. All billionaires understand the value of having a really good buffer (Savings). They can easily move whenever they need and want to.

9. Voucher fanatics

I love the idea of vouchers with a really big discount but according to studies it will increase your spending habits. When you love buying things that you want you normally go overboard with your real budget because you think you can save more. The problem with the idea is you think that the promo won’t happen again. With the fear and greed that you got it will increase your chance to have a financial disaster.    

David Isaiah Angway is a Financial Evangelist