MT30 | Being Rich Is Not The Same As Being Wealthy

Do you feel information overload in a world where every other person has their opinion on finances and investments? Are you also confused about which asset to buy given so many options? Meet Rajeev Prasad, an accidental investor who ended up diversifying his portfolio to include a lot of profit making assets and eventually creating wealth out of money.

Discussion Topics: Being Rich Is Not The Same As Being Wealthy

• Who is Rajeev Prasad?
• Rajeev as a single parent
• Rajeev does not believe in calculated risks
• Who did Rajeev start his investing journey
• Rajeev’s portfolio diversification
• Rajeev’s opinions on Real Estate
• What is the difference between rich and wealthy?
• What should you do when your salary increases?
• How does disciplined investments work
• How does socioeconomic surrounding impact your wealth

Transcript: Being Rich Is Not The Same As Being Wealthy

Amit: This show is about money and wealth creation. And we talk about so many ways of making money, bought retirement planning about stocks, bonds, gold, real estate, crypto, so many kinds of things. But have you ever stopped to wonder why you’re trying to make all of this money or even to build wealth? Is wealth really only about money? Or is there more to it? So today, we are talking to Rajiv Prasad, who has spent several decades investing in quite a few actually quite a variety of assets. And he has an interesting viewpoint about being rich versus being wealthy. But before we find out more, may I please request you to follow the show. We host a lot of diverse perspectives on money.
And I would hate for you to miss out on any one of them. So thank you so much for following us. So Rajeev, thank you so much for being with us here today. Before we begin, perhaps you could tell us a little bit about yourself, and maybe your background in money management or investing on your own account.

Rajeev Prasad: Thanks a lot for inviting me and letting me speak about myself. To quickly get on to what my background is, I initially started my career in an NGO and NGO stands for Non-Governmental Organization. And that was in two welfare schemes, etc. But very soon, I got fed up with the setup, the type of delivery they do for the welfare things. So I decided to move on to the corporate sector, instead of working for a profit-making organization. So and then from there, my journey started, I have my specialization in running it, eds, it enabled services companies. And basically, I have worked for American and British clients, and the bulk of my career has been devoted to these companies. So I really got exposed to their setups, how they operate the whole businesses from their hometown, or from their country, etc. And, my expertise to establish businesses from scratch, or midway, if there is a crisis, to restart. So that sort of expertise, I gradually developed. I am a single parent, my children are still studying, and down the cages, whatever you said, I have been investing cautiously. But in the beginning, it was so smooth at all. It’s a lot of learning. So there I am, in front of you completely at your disposal to know whatever you want to get from him.

Amit: Yeah, thanks a lot, Rajiv. I think that lays out the kind of background fairly well, and actually as a single parent, or a single earner for that matter, because many people are, only a single breadwinner in the family. It must be a lot of pressure, I think, not only to earn a living but also to save up enough for all of these, goals that you might have such as potentially college or maybe your kid’s wedding, yes, like that. Yeah. So so that’s a lot of different things to work towards as a CES.

Rajeev Prasad: I mean, the very start was not a single parent, but midway, I went into that home, the situation and circumstances added to this to offer so I had no choice. Yes, you have, you’re more cautious. You’re more planned. You’re more cautiously aggressive. It’s the time when you have to understand that you have to do a lot of tightrope walking.

Amit: Do a lot of types of actually, that’s a really interesting way of putting it I haven’t heard anybody else say that. But you’re absolutely right. Because you can’t be so sort of passive and risk-averse that you put all your money into things that aren’t really going to return a yield that will work for the long run. But you also can’t gamble it all okay?

The importance of discipline in managing your money

Rajeev Prasad: Because you have a line of divided line of divide a gamble is a risk again, not race, but its seriousness. And somehow I mean, I don’t believe in the theory of calculated risk. Okay, Excel sheet business is somehow I feel it’s just a constellation for your power thinking. We will arrive at so good Taylor, you put some maths there, and that’s what it is. So at some point in time, you have to decide what is your purpose in life. What values do you have, that you would like to follow? And then once these things are a bit clearer, and these completely depend on your socio-economic background, what background you’re coming from, what level of education you have, what level of financial situation you are going through? What kind of domestic issues are there the purpose and value? And another thing I strongly feel is discipline. I was not so disciplined, at least from the perspective of earning because the earning was not much. So, how do you I mean, still, I managed to always one thing I will always say, whatever you earn, you have to be disciplined enough, either inherited or you in a carpet to save at least 15-20% of whatever.

Amit: Yeah, so, speaking of that, maybe it’s an see for most people, and nobody is born with the knowledge of how to manage their money. And everybody develops that over time, either early in life or later in life. But eventually, you have to figure out what to do with your money. So how is it that you got started on this process? Or how did you learn maybe initially how to go about it?

Rajeev Prasad: I joined an American law firm. And then I met my Celia. And he was a New York Stock Exchange trader. And he was kind of talking about what we do now in India, buying things from Amazon or buying things. They were doing it so many years back, you could buy his shirt. So I watched him very carefully. And then I saw that people also investing or doing so from there. And he told me that look, I am trained. So whatever I tell you, will be from a slightly better platform. So that’s how the journey started. And then, of course, I was always saving money. So at one visit to my bank, at that point in time, Standard Chartered was my principal savings account, right? I walked into the branch, and then this relationship manager came with me. And then he said, Okay, I have a cup of coffee. And then he opened my account. And he said, What is this? And said, what? He said, Sir, so much of money lying in your savings account? They’re the story started.

Amit: Okay, well, at least you have, you’re lucky you had a motivated relationship manager.

Rajeev Prasad: So out of suppose 10 lakhs was mine there. I said, okay, I’m fine with investing with one lakh of rupees. I watch it for some time, et cetera. So this is how the journey started.

The different types of investments he’s been into

Amit: Right, Okay, so that’s interesting. And what are all the just for context for everybody on this conversation? What are all the different kinds of things that over time, you’ve ended up either exploring or investing in?

Rajeev Prasad: I started with one or two stocks, but I was not in a position to handle so I kind of sold them off and then switch to mutual funds. So initially, my journey started with mutual funds. And it went on for a couple of years wearing, I out saw that all those mutual funds 60% at a later stage, I
realized, which was advised by these people was really not the money that I should have been putting, or betting on, they will rather completing the targets, right? Because the rate of return was really not so worth it. So it’s a mixed-match learning everybody you have their own learning, I have my own done, others will have their own level of money who are ready to risk and what age group? Right. The younger you are, you can take this risk.

Amit: Yeah. So and you have Okay, so it’s interesting. You started out with equity and then mutual funds. What about like, I don’t know, maybe property or gold or the other things that people normally 10?

Rajeev Prasad: Okay, I’ll tell you a very strange story I had gone through working in private firms, in between the job situation and at that point of time and my brother-in-law came in and said trajectories society coming up the apartment are you interested? I said yes. So, at this point of the situation what I did was whatever bulk of money I had 50% blocked in the property. So, that’s the property business started. But omit one thing we must realize in order See, that is why I said calculated risk is a bullshit story. Why? Because you are not calculating the appreciation of that property. In eight years, it becomes doubled in PPF or imbalance on a fixed deposit, the property is doing better than these other things. So, first, started with mutual funds equity, not I did not have the competence system mutual funds, then I invested in property where I had to also pay the EMI in a
a crisis situation, right?

Amit: Okay, so Rajeev, let’s move to, one of the topics of today’s conversation. So, the way it sounds, you started out but you were a strong saver. And then you had all this money parked in the bank, and then eventually started investing it in various places, to the point where you now have investment properties and actually just investment-oriented kind of objectives as well. So, no one would say that you’re in a conventional sense, you’d be called a rich person, or at least a very well-off affluent person.

Rajeev Prasad: No, I mean, Midway, right.

What’s the difference between a rich person and a poor person?

Amit: So, when you say, when we talked about this topic before recording, so you mentioned something about, how being rich is not the same as being wealthy? And like I was saying, conventionally speaking, one would consider you to be affluent, or as you said, halfway towards being rich, let’s say, but yeah, what do you define as likewise, rich or wealthy different they’re synonyms after all right? Or what’s the difference?

Rajeev Prasad: If for instance, on the persona, see, I am speaking to you from Delhi. Delhi is a flashpoint of cloud not like Bombay, which is a contrast, but Delhi is dominated by a staff of a population that believes in extravagance, which high lifestyle, has been understood very wrongly by many people. They think, driving an expensive car, living in a rented big house, buying branded clothes, and mobile phones is the average. The average, because they will take photographs of a very expensive restaurant, put it on Facebook, and wait for the likes to come of Commons to pump. Now, that persona is different than a wealthy person. A wealthy person need not necessarily go and show off that I am rich, please consider marriage, it becomes an aura. But with this mentality, the investment is more towards expenses. And when bare minimum, they’re safe, and that’s why they keep working. The difference between an asset and a liability is very thin. For example, for me, a car is a liability, because it depreciates but it gives ease of transportation and provides extensive ease of transportation. What about a laptop? Is it a liability or a capital asset? A laptop is an asset now comes to point can you manage with Lenovo? Oh, you have to buy Apple, right? Mac I will manage with Lenovo. The rich were the ones we’ll manage. We’ll go and buy the most expensive bath which he or she is currently using. So acid is something that has the capability. A well-established person will know about these things, but you’re talking about muscles to understand. Acid is something that can grow on its own. With the benefit of compounding having a gestation period, it will not start showing in the figure winning a couple of years. It goes. So, Systematic Investment is a good route for the service class, lower income, middle income, and even higher income. I have ventured into many areas, I went even for the Boolean part of it, I used to buy those small biscuits 50 grams you know why? Because I thought that I will use it when I have to buy ornaments from my daughter, right? Because the making charge will be saved, right? You just give that and you say, Okay, now you charge otherwise you pay twice making these kinds of calculations is their cash component, I feel I keep it on the Lean principles. Slightly more. And lean has a very simple, I mean, you have to eliminate all kinds of waste, or cash lying in your drawer is of no use. It just gives you an emotional and psychological feeling that Oh, I bought a lacquer. It’s probably lying there. So you should have said a pause. Say for example, if your monthly expenses are 20,000. Maybe you can print it out or within your drawer, not Milan. These kinds of things are very important for an investor to understand initially, right in the beginning itself, to minimize your waste. Waste means going to restaurants having a bottle of beer for 500 bucks, and then going to a Gucci, and then you’re buying Tommy, okay, fine, you want to show your status. But be careful about these kinds of instincts.

The difference between a millionaire and a rich person

Amit: Right, actually. So essentially, what you’re saying is that a rich person spends on expensive things or spends on expenses, whereas a wealthy person takes that money and puts it into something that will grow now, and that would be an asset.

Rajeev Prasad: I have done that. I’m not wealthy, but I have to and very important thing I met here, please try to understand anybody who is having a house or a big car is not a millionaire. Because that one 1 million in India is called to 10 lakhs of rupees. So if you have 20 lakhs, you can say I’m a millionaire. But internationally, it is not the case you have to have 1 million USD, there is a risk to the exchange rate at that point in time. For example, a millionaire in India, can we call a real millionaire if he has 1 million multiplied by seventh or a three rupees which is eight crores so that thinking has to be corrected. You’re not even rich now, please. That’s what the basic thing is.

Amit: Right? In fact, I remember when I started out investing, there was 15-20 years back maybe my start was with this book called Rich Dad, Poor Dad, which is a book I have read that people seem to have either read or been inspired by the rich dad, son and the professor some.

Rajeev Prasad: Yes, yeah, remember that.

Amit: And the whole point of that book is that you’re not rich, just because you have a large salary. You become rich by taking that salary and putting it into something that will generate money for you, which is your point as well.

Rajeev Prasad: Absolutely. See, these are the fundamental principles, you cannot change. It was thanks to that gentleman who wrote a book about it. But that was the hidden reality, which always existed, he only pinpointed something and gracefully. He wrote a book, which was further spread to the masses, right?

Amit: So you know, something, Rajiv, I think a lot of people sort of get the point. I feel like people fall into three categories.

1. One kind of person is well-educated about money and is also actively doing something about it.
2. The second kind of person understands but doesn’t do anything.
3. And the third kind of person doesn’t know.

Now, the problem is with the second category, which is the third, hopefully, if they know they will do one of the two things. But the second category I feel like a lot of people fall into this, this slot, which is either they find it too much to handle, oh my god, I have to learn so many things before I can even start, or they get stuck in very minute details, or, they’re constantly tracking their portfolio and spending way too much time on it. So in either case, I think these people tend to give up, like, oh, you know, too much work too much effort phase in my life also similar?

Rajeev Prasad: Yeah.

Amit: So that’s the point. And same for me, I’ve had a phase again, I think, for years, where I just did nothing, because it was like, other things are happening in life, and I’ve bought some property and my money is going towards that property. So I’m done. So, my question to you is, since you also face the same problem, somehow, what is the system that you evolved for keeping this investment process and no desire to invest? How we kept it going,

Discipline is very important

Rajeev Prasad: Gradually, I enhanced my percentage of savings, as the salaries grow, you have a tendency to waste more. What I did was, I started putting in the mutual funds because I knew I will not be touching this money. So that’s the kind of practice and discipline I adopted and kept on saying whatever 1000 to 10,000-time passes, your compensation enhances, and then you can allocate. So that was one mutual fund. For me, it was very same back, gradually, I entered into the equity side. And equity was something which is, you don’t really know. It’s not very technical. Now, it is very easy. Because you have so many portals, you have so much information, so much information on the computer. But there are multi-baggers. One thing I would like to convey here, while you are getting into the mode of investment, please ignore media as much as possible. Don’t go by CNN, don’t go by NDTV don’t go by the popups that you read receive multipower please try to learn something very simple how a line becomes an exam and you will learn what is the choice. And then you have to drop down one day 30 days, six months one, hardly go through it and see, and whatever matrices you will have selected for yourself because there is no benchmark for it. And you will see whether it is PE whether it is debt to equity, or whether it is just simply the if you don’t MRP and just see the chart, it will go whoa. And then don’t need to unnecessarily go and discuss with people the have the courage to take the risk for 500 rupees and see what happened. And if watching the chart, you will learn after 2345 mistakes, and you will understand. So that’s how I learn. Of course, I keep reading. I keep reading all the time. I mean, you have to put in efforts, disciplined efforts. That’s why discipline is very important. Very important.

Amit: So actually, let me pick up on that point. You mentioned discipline actually a few times throughout this conversation. So tell me more about that what do you mean by discipline? Is it the discipline of timing like you will only do things every month? Or is it the discipline of a philosophy or investing approach? Or is it a discipline to, make sure that you save money by not spending too much? What exactly do you mean it’s a mix of all there is nothing called one standard formula,
there is no mass that can define the discipline.

Rajeev Prasad: I mean discipline is basically related correlated to your action. And there comes in between decisions and this is a discipline that will teach you how to take almost the correct decision or wrong decision if you’re not disciplined. So decision making comes through a regulated discipline life where you remember there was a very famous thing we all used to hear which nobody bought us now. Be healthy where Early and wise, right? See, these are very three huge terms le rally. And one. Why is knowledge decision action? Well, he is assessment in hell, these people? What if you pay for your god to pop up? So I would rather say these things disciplined should be interpreted in a customized way for yourself how I think to remain healthy, how I can I become wealthy? And then how should I remain wise? That’s it.

Amit: Right. And I think maybe this is kind of leading nicely into the next point, which is we’ve talked about, you know, asset building and becoming rather becoming rich. And then we’ve talked about wealth as being the ability to take all that excess money and put it into something that will actually generate money for you.

Rajeev Prasad: Yeah, I mean, invest capital into a compounding, right instrument.

Amit: Right. So that is wealth building. And more than that, I think you’re talking about maybe a more holistic life and that’s where the whole why are you doing this thing comes in. So, when you talk about healthy, wealthy, and wise wealthy is one component, which enables hopefully, the other two things. So, tell me more about you know, your thinking on you know, on in that area, like I know, before this conversation, we talked about purpose and goals, and you know, these things that elicit action, yeah. Yeah. So, how, how do you relate these to the concept of wealth?

How do you relate these concepts to wealth?

Rajeev Prasad: See, first of all, you will see what we do are we also have an impact on the socio-economic surrounding we are living in a rich person I met whom he copies a minimum millionaire who copies a billionaire. The biggest answer to the question is who the billionaire’s copy is, I have the answer the monarchies okay. They copy the monarchies they might have mansions in Dubai, the yachts, but at the same time, see their wealth-making is very strong. If Mr. X was delivering books, houses on his bike or on his car, whatever, but he didn’t remain, he was not only kind of exclusively doing book distribution, then He multiplied into various products.

So this copying business should start, you should know where you are, and where you want to be. That is strategy. Embedded strategy. See, for every company when you create a map, you have a mission, what is a strategy, where you are, and where you want to be. And what you have to do in between, is the strategic startup. So in that, that is the purpose. The purpose, then the discipline, and the action, and then the execution.

So you have to choose whether you want to be rich, whether you want to be wealthy, what is your lifetime target, how you can keep your family happy, and how you can make your kid’s education safe. So holistic, I would say is something which is not making you two, three all the time. We are not scared of taking risks, that’s very important. This is not an elephant, and on the other side is actually an elephant, it will never bother you. It will just pass. If you stand part, don’t be afraid of risk. And don’t over-calculate risk.

Let’s take a risk. If you’re taking a risk in your profession. You also have to take risks for your capital. And that is so once you have these kinds of attitudes inculcated within yourself in your persona and your personality, you are a holistic person. If you’re doing business, your bloody sole motive is not to evade taxes. And being an Indian, you think you are smart or you are an idiot because you don’t know how to evade taxes. Now, that’s not a good thing.

I have seen people the whole energy. Poor energy is wasted in evading taxes, don’t shoot into how can I talk to my uncle, I talk to my ERP technology and what is it and at some point in time, you will find that you have noticed this coming in a very important point you cannot keep your money in one place, you have to diversify, you have to have a portfolio, you have to have a reallocation, learn about these things, Google is there being an omen of the digital world, go ahead, ask him to play google. You know, so, it has to, I mean, there is no clear-cut definition of what is holistic life view. But there are five elements like love, money, sex, authority, and belief.

So, naturally, love is the thing that has more inclination toward the creation of holistic life. Love is a very universal thing. It’s not only a man and a woman, it is very, very empathetic, and then how much money you are wasting on sex, authority. Belief is relative, you are giving a longer and you think, the holistic at the same time, you’re taking a bag of cash and bribing the officer. So that’s not one instance. In my opinion, I may be wrong.

The framework of wealth creation

Amit: The world might say that this guy’s trying to be you your framework, that you outlined earlier, which is you start with values, then you move to purpose. And then you develop a strategy around that, then you have the discipline to stick to that strategy. Yeah, taking actions, you know that that strategy is dictating this is a really good way of looking at it. Because, interestingly, I was talking to somebody yesterday, who’s a business owner, and she was telling me about how they have this vision for the business and why they sometimes choose not to do certain kinds of work or take on certain clients, or pursue certain business opportunities. Yeah, because it doesn’t fit within their vision.

So effectively, what you’re saying is the same thing, which is, as individuals, we should have a vision for our life, or that vision may change over time, but at least at any point, you should know where you’re trying to go. And then you should orient your wealth creation towards fulfilling that vision. And therefore you should you would know, which things to pursue and which things not to, because, one of the things that I find a lot of people do is, if you ask them, like, what are you saving for? Or what are you investing for, and they will basically say something, no, no lines of wealth maximization, like I’m trying to maximize how much money I have.

But, there is no end to that you can maximize still the as you said, a millionaire can become a billionaire, and so on. So there is no one is finite, no one is finite, right? And because there is no end to that, I feel like these people will never achieve that goal, because there’s always going to be somebody richer or other with more money than them. So well said. So therefore, you know, your framework is a good one for people to start with, like, normally on MoneyTok, we talk about the money part, which really typically starts with goals. So, what you’d call strategy and then downwards. But if you don’t have the upwards bid, which is why are you doing this? What’s the purpose? What are your own values? Then maybe you cannot even define a set of goals. So you lost your last?

Rajeev Prasad: Yeah, sometimes you are chasing a country to land worth of cars, sometimes you are buying a Mac, and sometimes you are just going for a vacation got lost. You don’t know. Because the same money invested in property can really make you higher than rich, that is, well then you can
become wealthy. That’s what I feel.

Amit: Right? So So Rajiv, thank you so much. I think this whole framework, values purpose, strategy discipline, and to action. This is a really good way for many people to evaluate their own wealth journey. Let’s put it that way. And I think this is a really good takeaway for folks on this call or others on this in conversation. And Rajiv, it shows like you’ve spent a long time investing your money and trying to figure out your life and clearly it shows because it’s a really neat way of putting it together, packaging it into You know, into like a set of five action plans.

So, really appreciate your time being here today. And thank you so much for that really refreshing take on wealth. So, I feel like many people talk about how to make money and build wealth in lots of detail. But very, very few people talk about why one should want to do this whole wealth creation whitewashed one, why should one be on this journey at all? And your discussion? It’s important. Yeah. No, and really, I think your discussion on purpose, and, aligning with that, and also therefore enjoying life, healthy, wealthy, wise, kind of thing. I think that really struck a chord with me, and I’m sure it will resonate with a lot of our listeners as well. So thank you again, Rajiv, so much for being here with us today.

Rajeev Prasad: Oh, you’re most welcome. Amen. It was fantastic. And it was a very nice discussion. I believe that some people will appreciate it. But it is very easy to learn the nitty gritties from an Excel sheet for X, Y, and Z goals. But if you don’t know when that goal is finished what you want, you have to have a bigger vision, and then go through these things step by step, buying assets, aligning them in a portfolio, and then reallocating part of the Investment Board. So thanks a lot. And it was a beautiful thing that I suddenly had to stop and discuss with you. I really enjoyed it.

Amit: Yeah, thanks a lot. And for those listening to them please do remember to follow our show and do rate us five stars if you like this episode. We will Rajiv and I met with MoneyTok. See you next time.

Rajeev Prasad: Yeah, all the best.

Our Guest: Rajeev Prasad

Our guest, Rajeev Prasad, is a senior management professional with the exhaustive capabilities of a “Business Head” in establishing robust businesses with hands-on business strategy, analysis, intelligence, continuity, compliance, operations, R&D, and quality production deliverables.