Investing - Chapter 2

In the previous chapter you read about Ram. A young, bright professional who got into financial trouble in his late 30's. On the other hand his childhood friend Ashwin prospered financially in late 30's. Ashwin and Ram were neighbors and had similar childhood. Lets look at Ashwin's life.

At 18 yrs of age, Ashwin joined college. He enrolled in maths major as he did not have enough grades to qualify for professional course. He worked part time in a pizza parlor. What struck him was that the owner of the shop had been a school drop out, but had 10 pizza shops in the city and drove in Benz. He realized quickly that to become financially free he will have to think differently.

At 21, he became a school teacher with a monthly salary of Rs. 5,000. He knew well that it was not enough to support him or raise a family. As a child he learnt a few important lessons from his Parents. First, to live within means. Second, to work hard and take calculated risks.

At 23, he earns his Masters degree while teaching. He also starts giving tuition in his small room. Only two students joined. His monthly salary was Rs 7,500. Income from tuition was very negligible. At 25, he manages to attract 10 students, and move to a bigger home where he could live and teach.

At 27, his tuition has attracted 80 students. He has employed physics and chemistry teachers to have a bigger tuition center. He works at the school for free and school lets him to take tuition without charging him rent. His monthly earnings exceeds Rs 100,000.

At 28, he gets married to Anita, a teacher in the same school. Both were seeing each other for 4 yrs, but decided to wait until Ashwin could get hold of his business. After marriage, Ashwin makes a big shift. He employs a bright young maths teacher to replace him from full time teaching. He works on improving his educational business. With all his earned money and a bank loan of Rs 3000,000 (30 lacs) he buys a small piece of land nearby. Builds a coaching center with 10 rooms to house upto 200 students.

At 30, he becomes dad. He quits the school and moves the tuition center to the new building. He employs 10 permanent staff. The monthly income per student is Rs 300. His income-expense is given below.

At 35, he repays all his debt. He has a small but beautiful home with two kids. He manages his business and teaches only for his satisfaction. His income is increasing every year. He does a lot of charity and educates 10 poor kids for free. He believes that very soon he will build school, colleges and universities in multiple cities.

This is when Ram and Ashwin meet at a hotel. Interesting conversation follows. Ram is very much surprised about Ashwin's growth. Ram initially thinks Ashwin was just purely lucky. Ashwin is deeply concerned about his friend. They sit down and decide to talk.

Lets wait for the next blog to learn more about their discussion and what happens to Ram.