Tag Archives: Circle Wealth Advisors

Thursday Trivia ~ 5 New Year Resolutions for Creating Wealth and Managing Finances

Resolution 1: Create a budget for life

When it comes to finances, life can be viewed as cash flowing in—and out. Saving and investing during your working years, if you stick with it, should lead to a rising net worth over time, enabling you to achieve many of life’s most important goals. Creating your own budget and net worth statement can help you build your road map and stay on track. Here are steps that can help:

  • Create a budget and pay yourself first. At a minimum, be sure to have a high-level budget with three things: how much you’re taking in after taxes, how much you’re spending, and how much you’re saving. If you’re not sure where your money is going, track your spending using a spreadsheet or an online budgeting tool for 30 days. Determine how much money you need to cover your fixed monthly expenses, such as your mortgage and other living expenses, and how much you’d like to put away for other goals. For retirement, our rule of thumb is to save 10–15% of pre-tax income, including any contribution from an employer, starting in your 20s. If you delay, the amount you may need to save goes up. Add 10% for every decade you delay saving for retirement. Once you commit to an amount, consider ways you can save automatically. Research shows that saving is easier when you “pay yourself first.” 
  • Calculate your personal net worth annually. It doesn’t have to be complicated. Make a list of your assets (what you own) and subtract your liabilities (what you owe). Subtract the liabilities from the assets to determine your net worth. Don’t panic if your net worth declines during tough market periods. What’s important is to see a general upward trend over your earning years. 
  • Project the cost of essential big-ticket items. If you have a big expense in the near term, like children education or house rennovation, allocate your savings and treat that money as spent. If you know that you’ll need the money within a few years, keep it in relatively liquid, relatively safe investments like short-term deposits or money market funds. If you choose to invest in a FD, make sure the term ends by the time you need the cash. If you have more than a few years, invest wisely, based on your time horizon.
  • Prepare for emergencies. We suggest creating an emergency fund with three to six months’ worth of essential living expenses, set aside in a savings account. The emergency fund can help you cover unexpected-but-necessary expenses without having to sell more volatile investments.

Resolution 2: Manage your debt

Debt as we have been saying can be seggragated into good loan or bad loan. For most people, some level of debt is a practical necessity, especially to purchase an expensive long-term asset, such as a home. However, problems arise when debt becomes the master, not the other way around. Here are 3 things that I want to discuss which one should resolve to manage debt.

  • Keep your total debt load manageable. Don’t confuse what you can borrow with what you should borrow. Keep the monthly costs of owning a home which includes principal, interest and insurance below 30% of your pre-tax income and your total monthly debt payments including credit cards and auto loans and below 35% of your pre-tax income.
  • Eliminate high-cost consumer debt. Try to pay off credit card debt and avoid borrowing to buy depreciating assets, such as cars and mobile phones. The cost of consumer debt adds up quickly if you carry a balance. Consider consolidating your debt in a low-rate loan or liquidating some of your assets to generate cash. You can also check with your bank if any to up is available on your home loan. Set a realistic budget and have a planned schedule to pay back your loans.
  • Keep a check on your credit score. CIBIL allows you to generate a free credit score report every year. You can search for free credit report and find the link for CIBIL’s website. Resolve to generate this report and keep a track of your score. Any outstanding credit card balance which is pending due to dispute will also show up here. Its important that you settle all these outstanding balances. Outstanding dues lead to detoriation of credit score which will impact your ability to borrow in future. 
  • One Time Settlement of outstanding dues. Once you have settled the disputes and repaid all outstanding, make sure to receive a no due confirmation from the lender.

Resolution 3: Optimize your portfolio

We all aim for getting better returns on our investment. But research shows timing of markets is difficult and can be counter-productive. Also this urge of making higher return forces you to keeping looking for new products and take bigger risk. So create a plan that will help you stay disciplined in all kinds of markets. Follow your plan and adjust it as needed. 

What are the ideas to help one stay focused on their goals.

  • Focus first and foremost on your overall investment mix. After committing to a savings plan, how you invest is your next most important decision. Have a targeted asset allocation that you’re comfortable with, even in a down market. Make sure it’s in sync with your long-term goals, risk tolerance and time frame. The longer your time horizon is, the more time you’ll have to benefit from up or down markets. I cannot stress enough on this point. Its very simple but difficult to implement. Resolve that one should invest looking at the future goals. 
  • Diversify across and within asset classes. Diversification reduces risks and is a critical factor in helping you reach your goals. Mutual funds and exchange-traded funds (ETFs) are great ways to own a diversified basket of securities in just about any asset class.
  • Consider taxes. Invest in relatively tax-efficient investments, like debt mutual funds instead of Fixed Deposits. If you trade frequently, do consider that transaction cost and taxes do eat up into your investment returns. Various tax benefits are available on certain investments, but as pointed earlier invest with future goal in mind and not only for saving tax. 
  • Monitor and rebalance your portfolio as needed. Evaluate your portfolio’s performance at least once a year using the right benchmarks. Remember, the long-term progress that you make toward your goals is more important than short-term portfolio performance. As you approach a savings goal, such as the beginning of a child’s education or retirement, begin to reduce investment risk, if appropriate, so you don’t have to sell more volatile investments, such as stocks, when you need them.

Resolution 4: Prepare for the unexpected

Risk is a part of life, particularly in investments and finance. Your financial life can be upended by all kinds of surprises—an illness, job loss, disability, death, natural disasters. If you don’t have enough assets to self-insure against major risks, make a resolution to get your insurance needs covered. Insurance helps protect against unforeseen events that don’t happen often, but are expensive to manage yourself when they do. So let me lay out the guidelines that can help you prepare for life’s unexpected moments.

  • Protect against large medical expenses with health insurance. Select a health insurance policy that matches your needs in areas such as coverage, deductibles, co-payments and choice of medical providers. I think this is a no brainer and more and more people are aware about it and are ready to allocated money for covering this risk.  
  • Purchase life insurance if you have dependents or other obligations. If you have minor children or you have large liabilities, you need life insurance. Consider having a low-cost term life policy. These days policy is available to age of 80 or even 85 which is more than enough. Also make sure not to mix investment with insurance and go only for pure term cover. 
  • Protect your earning power with add on insurance covers. Generally these covers get ignored because of lack of awareness. 2 covers that one must look at is Personal accident or a disability cover and a critical illness cover. These covers come in handy when these particular risks play out help one retain his earnings in scenarios where one might get incapacitated. 
  • Protect your physical assets with property insurance. Check your homeowners and auto insurance policies to make sure your coverage and deductibles are still right for you. Review your homeowner’s policy to see what’s covered and what’s not. Talk to your agent about flood or fire insurance if either is a concern for your area. 

If you’re tech-savvy, consider storing inventories and important documents on a portable hard drive. It’s also a good idea to have copies of birth certificates, passports, wills, trust documents and insurance policies in a small, secure “evacuation box” the fireproof, waterproof kind you can lock is best, that you can grab in a hurry in case you have to evacuate immediately. Make sure your trusted loved ones know about this file as well, in case they need it.

Resolution 5: Protect your estate

An estate plan may seem like something only for the wealthy. But, there are simple steps everyone should take. Without proper nominations, a will and other basic steps, the fate of your assets or that of your children may be decided by the court. Taxes and fees can eat away at these assets, and delay the distribution of assets just when your heirs need them most. Here’s how to protect your estate—and your loved ones.

  • Review your nominations, especially in PF account, pension plans and life insurance. The nomination is your first line of defense, to make your wishes for assets known, and ensure that it gets transfered to whom you want, quickly. Keep information on nomination up-to-date to ensure the proceeds of life insurance policies and retirement accounts are consistent with your wishes, your will and other documents
  • Update or prepare your will. A will isn’t just about transferring assets. It can provide for your dependents’ support and care, and help you avoid the costs and delays associated with dying without one. Keep in mind that what’s written in a will is considered the ultimate wish and will override the nominations in various assets, so make sure all documents are consistent and reflect your desires. When writing a will, we recommend working with an experienced lawyer or estate planning attorney.
  • Coordinate joint holding with the rest of your estate plan. Designation of someone as a joint holder of your property or any other investments, can affect the ultimate disposition of your assets. Talk to a lawyer to make sure they reflect your wishes, and are consistent with will you are writing.
  • Consider creating a revocable family trust. This is especially important if your estate is large and complex, and you want to spell out how your assets should be used in detail. A family trust may not be needed for smaller estates where nominations, joint holding and a will can be sufficient. But talk with a qualified financial planner. 
  • Take care of important estate documents. Make sure a trusted and competent family member or close friend knows the location of your important estate documents.

Budget 2019 – Snapshot for an Investor!

As a taxpayer, our interest in the budget is usually limited to the changes in the tax slab that we belong to. If there is any significant change on it, then we communicate it as a good or bad budget.

However, a budget is more than that.

There are other aspects in the economy that substantially impact our wealth creation which are covered under the budget. And as investors, we should prudently take an interest in understanding it’s impact. Of course, we will speak about tax reforms in this article too and we shall cover other aspects that will directly impact your wealth in the long term.

  1. Aadhar now interchangeable with PAN cards for Tax filing

Slowly, Government seems to be in the mood of saying a good bye to PAN cards. Why? Because they were easily made before. People used to make multiple PAN cards for tax evasion purposes. This had become a rampant exercise.

Mandating Aadhar number for filing of tax returns is a welcome move for tax collection.

  1. Aadhar card for NRIs

Earlier Non Resident Indians had to stay for 180 days in India in a year which would classify them as Resident Indian citizens. Only then their Aadhar card could be generated. However, this has now been done away with.

NRI can simply make their Aadhar card and no need to wait for 180 days.

  1. Tax collection increased by whopping 78% during last 5 years

After Piyush Goyal thanked all the tax payers in this year’s Interim Budget speech, so did Mrs. Nirmala Sitharaman. We are glad that finally someone understood a taxpayer’s effort in national development.

There has been an Increase in tax collection by 78% from ₹6.4 lakh crore in 2013-14 to ₹11.4 lakh crore in 2018-19.

This is good news as Governments start to collect more taxes, they are more comfortable to widen their tax base in the future. So good times to come!

  1. Increase in Minimum Public Shareholding of Listed Companies from 25% to 35%

It’s a good thing as more shares will be available in the market for investors to buy. Will also provide for more liquidity in the market. It will further boost investing in times to come.

  1. Social Stock Exchange for Voluntary and Social Organizations

It’s a boost to the social organizations to receive more funds for the amazing work they do. Also, they will become more transparent as the stock exchange has certain listing requirements that ask them to present their Revenue statement and Balance Sheets.

  1. Recapitalization of Public Sector Banks by Rs. 70,000/- crores during the year.

Public Sector Banks have been in the focus since 2013 now. After years of irresponsible lending, they had been asked to disclose their Non-Performing Assets with the structure provided by the RBI.

To make them healthy again, a slurry of measures have been taken. Insolvency and Bankruptcy Code has been opened up where banks can get into litigation with such NPAs. Upto Rs. 4 lakh crores have been recovered till date. 6 PSU Banks were put into Prompt Corrective Action framework where RBI basically asked them to clean up their act before lending again. Now these Banks have come out of that framework and healthy to lend again.

Also, there were mergers of bad PSU banks with good PSU banks. This has brought down to PSU bank number to 8 in total.

Flow of credit from these banks have been at 13.8% for the last year. Which is good but we need to increase it to around 18% before any visible impact can be seen.

  1. Door Step Banking and Online Loans

With the use of technology, loans will be disbursed quickly. Will benefit middle class the most.

  1. Housing Sector

Post IL&FS and DHFL crisis, RBI will now overlook the Housing sector. Earlier National Housing Board (NHB) had been entrusted with that responsibility.

  1. Affordable Housing

Enhanced interest deduction up to ₹3.5 lakh for purchase of an affordable house. This will give a breather to the middle class.

  1. Disinvestment

Disinvestment target for the year has been kept to Rs. 1 lakh 50 thousand crores.

Re-initiate sale of Air India. This is much needed before it drains out tax payers money.

Strategic sale in Central Public Sector Enterprises (CPSEs) in which Government holds 51% or more will see a strategic disinvestment on case by case basis.

More retail investors participation is encouraged by issuing CPSE ETFs in ELSS segment. ELSS is a tax saving option for investors. It will be seen how these CPSEs perform and create wealth for ELSS holders rather than simply being a tax saving option.

  1. The Big Infrastructure Push

Rs. 100 lakh crores to be invested in Infrastructure sector of India over the next 5 years. This doesn’t mean every company in this sector will start to generate returns immediately. An investor must remember that most of these companies are under huge debt obligations which needs to paid out first before creating profits for shareholders.

  1. Bond Markets

Retail investors will be encouraged to invest in Treasury Bills through stock exchanges. This is a welcome move!

Finance Ministry will work with RBI and SEBI to allow stock exchanges to use Triple A rated Bonds as collateral. This move will definitely add some liquidity with stressed housing finance companies. Flow of money will improve.

Bond and CDS Markets will be notified for an Infrastructure focus investments.

  1. Boost to Electric Vehicles

Rs. 1.5 lakhs of deduction provided on taking loans for electric vehicles.

  1. Change in Securities Transaction Tax in Options

Something to cheer for options market. Earlier, STT was levied on the Option price which used to make it costly.

Now, STT will be levied on the difference in Option Price and Strike Price. Will bring the cost down substantially for an option trader.

  1. Petrol and Diesel to get costly by Rs. 1 cess per liter

Hopefully, crude prices will come down in the future and this impact will not be felt.

  1. Hike in customs duty on Gold and Precious Metals from 10% to 12.5%
  2. Nominal excise duty on crude and tobacco products.
  3. Hike in surcharge of taxable income

Income from Rs. 2 crores to Rs. 5 crores – 3% effective tax hike

Income above Rs. 5 crores – 7% effective tax hike

  1. 2% TDS on cash withdrawal of more than Rs. 1 crores in a year.
  2. In case of Buy Back by listed companies, additional tax of 20% to be imposed. As is the case with unlisted companies currently.


It’s a decent budget with not much visible changes. Although the reforms carried out in the housing and banking sector will help the middle class of India in a big way. Not to mention the Infrastructure push by the Government which is need of the hour, this will give our next generation a great place to live in.

The overall budget proposals are good, how they will be implemented in the future is something every Indian citizen should keep an eye on.

– Jinay Savla

Disclaimer : The article has been prepared based on our first reading of the Budget 2019. A reader should not consider taking any action based on the same.

Thursday Trivia ~ ePAN Card

We live in an age where technology has become our second line of oxygen. It keeps us connected with the rest of the world all the time. It has changed everything around us and disrupted in more ways than we can imagine.

Remember the last time you had to worry about making that international call because charges were too high? Maybe not, because in recent times with almost free video calling service we have forgotten that it’s chargeable. At the same time, there is no need to wait for any global news to reach our ears, they are right on our palms. We are more in touch with people in our lives, we are more aware of what’s happening around us and the latest additions are ordering food and cab services while paying them right from our phones.

Similarly, Government of India has thought about issuing and storing some important documents such as Aadhar card and PAN Card for a person in digital format. This Thursday Trivia will focus on electronic PAN Card (ePAN Card).

For years PAN Card has been considered as the most important document. People go to great lengths to protect the card such as laminating it and keeping it in their lockers to remove when needed. Add to it the multiple xerox copies that our elders have taught us to keep in a file.

And why not! It’s a document that enables an Indian to be known as a taxpayer!

In our previous Thursday Triva DigiLocker – Let’s save more on cloud than paper!!, we have written about Governments initiative towards storing important documents online. Surely, ePAN will be safe when kept in a Digi Locker which can be accessed anytime.

So now let’s look at how to get your cool ePAN!

ePAN can be downloaded free of cost from NSDLand UTIITSLportal by all new applicants or applicants who have applied for a correction / modification in the PAN data within one month of the issuance of PAN.

An additional fee is charged by UTIITSL Rs. 8.26 (including taxes) for every download request. This payment can be done online and to download the ePAN whenever he needs it.

And this is how an ePAN will look like

So now you would be wondering, what about existing PAN Card holders? How do we get an e-copy of our PAN card?

Well, refer to our Digi Locker for the same. Here are the steps you will need to follow.

  1. Go to https://digilocker.gov.in/public…
  2. Sign up using your Aadhaar number / for Non-Aadhar holders, you can sign in using your mobile number.
  3. If you don’t have an account then just Sign Up!
  4. Click on Issued Documents on the left hand side of the page
  5. There is a message which shows a link on ‘Pull documents‘. Click on that
  6. In partner’s name, select ‘income tax department, Govt of India’ from the dropdown and in document type select ‘PAN verification record’
  7. After this enter your Name, Date of Birth, PAN No., Gender.
  8. Now, click on ‘Get Document’.
  9. Your PAN data will be fetched. After this your pan card will be downloaded in the digilocker and will be available under issued documents list. You can view the document by clicking “View the Document” and download a soft copy of it from there.

And this is how your existing PAN Card will look like

– Jinay Savla

Thursday Trivia ~ Senior Citizens Savings Scheme


‘Dad has received a few lakhs from his company, must be his Provident Fund, Gratuity, etc. It’s his hard earned money, where should we invest?’ Manish asked Jay while sipping a coffee.

‘No clue. Fixed Deposit (FD) maybe’ Jay said while putting his coffee down.

‘FD is great but doesn’t offer a good rate of interest.’ Manish replied.

‘Yeah. One of my friend was also talking about Senior Citizens Savings Scheme (SCSS)’ Jay said while he picked up the bowl of potato finger chips.

‘SCSS sounds good.’ Manish replied.

‘At this age, he will also look for some regular income coming in his bank from his investments. Do you remember the last time, we offered him to buy new spectacles?’ Jay was relishing his coffee and potato finger chips.

‘Yes, I can never forget that day. He said that he can still take care of himself and our children too. He is a self-made man and we need to respect his freedom.’ Manish said while recalling that incident. He almost had tears of respect for his Dad in his eyes.

‘Maximum of Rs. 15 Lakhs can be deposited in this account. Dad has received Rs. 14.50 lakhs, so we are well within the deposit limit to opt for this scheme.’ Jay was searching about the Senior Citizens Savings Scheme.

‘Great. Shall we open this with a Bank or Post Office?’ Manish enquired.

‘Bank! They have better service and will take good care of Dad when he visits there. Post office usually has long queues which are never ending. And Dad being Dad, he will himself go and do all this work. So for him Bank will be the best option.’ Jay was looking at his bowl of potato finger chips which Manish was about to complete.

‘Okay. So as I can see SCSS can be opened in any bank. Dad will go for a Nationalised Bank because he has a lot of faith in them. The irony! Let me write down what’s required.’ Manish said.

Documents for opening a Senior Citizen Savings Scheme Account

  1. Form A has to be filled.
  2. Identity proof – PAN card /Passport. (Self-Attested)
  3. Address proof – Light Bill / Telephone bill / Aadhar card. (Self-Attested)
  4. Age Proof Document is required – Passport, Senior Citizen Card, Birth certificate, Voter ID.
  5. 2 Passport size photographs.

Rate of Interest– 8.60% p.a. payable on Quarterly basis

Tenure– 5 years with an option to extend it for further 3 years. (Only 1 extension is allowed by filling Form B)

Premature Withdrawal

  1. 1 year lock-in period and no withdrawals allowed.
  2. Withdrawals after 1 year but before 2 years, Penalty of 1.5%
  3. Withdrawals after 2 years, penalty charges are a percent of the amount withdrawn.

‘What about Tax? Dad is more concerned about Income Tax then who will World Cup this year’ Jay said.

‘Yes, although the interest income is taxable but a deduction of Rs. 50,000 is available under Section 80TTB for Senior Citizens. Dad can also avoid TDS by filling Form 15H as his total income will be below taxable limits.’ Manish said.

‘So Dad’s interest income would be Rs. 1,24,700 from which Rs. 50,000 can be deducted under the section. He will be very happy looking at that’ Jay said.

‘Also, investments in SCSS is tax deductible under section 80C. So if Dad doesn’t want to invest at one go, then he will also be able to take advantage’ Manish said.

‘Yes. Let’s leave that decision to him. Right now, regular income would be more of his concern’ Jay smiled as he finished his coffee.

‘So let’s go through the list of Forms now. We should be prepared if he asks us questions on them’ Manish mocked Jay while finishing his last potato finger chip.

Form A – To open a SCSS Account

Form B – Extension of SCSS Account tenure for further 3 years

Form C – Nomination

Form E – Closure of SCSS Account at Maturity

Form F –Premature Closure or Death of Depositor / SCSS Account holder, then Nominee to carry out the process of Closure of Account

‘Okay! Time well spent. Dad will be really happy to see that we did our homework before speaking with him’ Jay said.

‘Yeah, we never used to do our homework anyways and he would get so upset’ Manish replied.

Jay and Manish got up and hugged their Dad. Their smiles were big and eyes were with filled with pride.

– Jinay Savla

Thursday Trivia ~ Investment Biases that blind Legitimate Business vis a vis Shell Company!


Apple iPhones have become a rage among youngsters. It’s not just about features anymore, it has become a status symbol. Youngsters hardly use 5% of the features available on iPhone which are more to do with camera, photo editing, social media and personal communication.

Let’s be honest – iPhones are expensive. They have far more uses than the ones listed above. Yet youngsters rush to buy it when Apple announces the launch of its new phone. Some stand for hours before the store opens to get their hands on the very first shipment of phones, trading their old iPhones for a new one by paying a few thousands extra.

But if you ask a youngster – why have you bought this iPhone X? The typical reply would be, ‘because my friend bought it too’ or ‘I want to look cool in my group and impress that particular person’ or the most typical answer will be ‘dude, it’s an iPhone!’

The funny part is that even investors go through such biases.

  1. Herd Mentality

When a lot of people in your circle buy an iPhone, it ticks of herd mentality in your brain. The reasons may never be good enough.

Same is the case with investors. Investment returns are always a projection of the future. Hence, investors are largely attracted to Entrepreneurs who in a very polished manner speak about the growth of the company. Future earnings potential of a business create a herd mentality in investors. They overlook the current scenario for a very rosy future.

Due to this bias, an investor doesn’t do his/her homework before buying a business and ends up disappointed. That’s why Stock Tips is the most dangerous addiction to have.

  1. Fear Of Missing Out (FOMO)

‘Dude, it’s an iPhone!’, is a classic case of FOMO. Youngsters feel that they will be out of trend if they don’t upgrade their phone to an iPhone. Infact, a lot of students even perform well at their exams so that their parents can gift them an iPhone. Nice incentives there!

Investors read about Entrepreneurs mostly through newspapers or magazines. Their celebrity status, large bungalows, fast cars and beautiful yachts dazzle them. The question that comes to their mind is, ‘he must have a very good business because he is living our dreams.’ Seeing this, they simply start to buy the shares such businesses without doing their initial analysis.

Such fairy tales never have a good ending. Investors often lose money in such scenarios without knowing what really happened.

The question now is – how should an investor can avoid such biases in future?

To be very honest, it’s extremely difficult.

  • Investors are often subject to various behavioural biases that come in the way of making a decision.
  • Not just biases, but sometimes a few overnight regulatory changes also make an ongoing business to shut down.
  • Or sometimes the rules of the game is disrupted by a new-comer.

Although what an investor can control is the way he/she perceives an entrepreneur and his business. But there is a very thin line between a fraudster and a legitimate businessperson. In this article, we will look at two billionaires – One is the well-known Elon Musk and second is lesser known Jho Low.


Elon Musk – Legitimate Business

Known for his stylish electric cars and Mars inhabitation plans, he is admired all over the world. He is the perfect rags to riches story of an American dream. Tesla is a name to reckon with in the world of automotive industry. If it’s electric, it has to be Tesla. In a few years, he has disrupted payments industry through PayPal, Auto industry through Tesla and Space industry through SpaceX.

Jho Low – Shell Company

A Chinese-Malaysian financier from the bustling island of Penang, Low Taek Jho – more famously known as Jho Low – is portrayed by Malaysian and US investigators as one of the masterminds of the 1MDB scam. Despite never holding a formal position with the fund, he is alleged to have played a crucial role in its activities. And it was his savvy networking and shrewd business sense that allowed him to thrive.


  1. Extremely larger than life business plans

‘Everything that glitters is not Gold’ – we have been listening to this pearl of wisdom right from the time we started understanding the World. Yet often, we are dazzled by that glitter. We love plans that are larger than life, may it be business or personal life.

Elon Musk talking about going to Mars in a few years dazzles us. We worship him for dreaming the impossible. In a similar fashion, Jho Low talked about transforming Malasiya, he attracted offshore investments to develop Iskander to the tune of $ 1 billion from Saudi Arabia. At a time Malasiya was not considered an attractive investment destination, it’s the larger than life business plans of Mr. Low made him a force to reckon with.

  1. Self-Promotion

Today’s start-up business culture demands Rockstar CEOs. They need to look smart, be outspoken and dress perfectly well.

If one carefully assesses the lifestyles of Mr. Musk and Mr. Low, they are closely connected to Hollywood. Infact they date actresses and marry them too. This gives them a celebrity status in public life. They enjoy it.

  1. Doesn’t play by the rule book

Right from our childhood, we are taught to obey the rules. For example, we are taught to stop at the red light on the road. But when a Ferrari or Lamborghini breaks the red light and zooms past us, we are dazzled. We talk about it for months recounting that episode every single day.

After disrupting the payments industry, Elon Musk set his sights on rockets and electric vehicles with no prior experience of the industry. As a result, he skipped many rules, made a lot of mistakes, apologised publicly and yet in the end when he won – he is worshipped by millions.

Jho Low never had a real experience of running an off shore investment fund. In classic financial term it’s ‘Sovereign Wealth Fund’, something every investment manager aspires to when they have experience. At 27, he saw $ 1 billion entering his 1MDB fund for development of Malasiya which never quite happened. $ 700 million was transferred to an offshore Swis account which he spent lavishly attracting Hollywood celebrities and even backed ‘The Wolf of Wall Street’, an iconic movie played by Leonardo DiCaprio.

  1. Loved / Hated by Media

‘Any publicity is good publicity’, a term we get used to while we are reaching in the middle stages of our career. If it’s good publicity then we get the limelight and if its bad we still get the limelight and a chance to explain.

Mr. Musk and Mr. Low are continuously loved and hated by the media. Mr. Low who is absconding from Malasiya will see a lion’s share of hatred by the media. For Mr. Musk, there are two parties and both are fighting each other as to he is a good/bad businessman.

Absolute Difference

Actual Business with Cash Flows

Tesla cars are being used around the world. Rocket of SpaceX carry satellites or payloads for International Space Station. The companies are genuinely earning money. Infact Mr. Musk is known for his 80-100 hour work weeks due to which these businesses have gained immense success in a short time.

On the contrary, 1MDB of Mr. Low never had any real business. Iskander project never really got off and later on the entity was used for mobilising funds for then Malasiayn Prime Minister Najib Razak. It was a shell company. Funds raised by 1 MDB were transferred to various off-shore accounts and the money was used for various purposes which were never listed in the Profit & Loss statement or Balance Sheet of the company.


Now let’s look at some domestic scams that happened right under our noses. Yet it was difficult to detect them.

Curious Case of GainBitcoin and HomeTrade

In 2016-2017, Bitcoins gained significant attention as its value rose several times. Almost everyone was talking about it. If money was to be invested somewhere then crypto-currency was the place and Bitcoin topped it. Even dinner conversations at restaurants were around its superior returns. Classic FOMO one can say!

To take advantage of this behaviour, GainBitcoin offered to pay 10% monthly returns through a scheme of GB21. And guess what, around 8,000 people fell into this trap. Well the losses are in few hundred crores but it was FOMO working. No investor ever asked, 10% a month – how can any business achieve that?

Home Trade gave life a new definition with its slogan – life means more. A star studded advertising campaign with Hritik Roshan, Sachin Tendulkar and Shah Rukh Khan without any product to sell. Duping even banks with Rs. 400 crores and absconding from India, the CEO Sanjay Agarwal spent close to Rs. 20 crores on the launch of the company. Such a larger than life showbiz created a herd mentality amongst its stakeholders. Only leading to a start of an eventual downfall.

Investors are often dazzled by quick returns on their portfolio. Entrepreneurs often feed stories to media about their businesses which are doing well in domestic as well as international circuit. Most investors that don’t know how to read Annual Reports of the companies fall into the trap of news from various media houses. They fail to recognise a legitimate business or a shell company.

It’s also equally important to acknowledge that markets eventually handsomely reward investors of genuine businesses. And if you are an investor that is unable to differentiate between a legitimate business and a shell company, then it’s always safe to invest with a capable fund manager who is an expert at it.

– Jinay Savla