Smart money, dumb money

Personal finance guide

Former President Donald Trump with the Rich dad poor dad’s author Robert Kiyosaki, in their book release of Why we want you to be rich
Donald Trump with the Rich dad poor dad’s author Robert Kiyosaki, in their book release of Why we want you to be rich

It will cover how to grow your money through investing in assets and evaluating which stocks to buy for the long term.

If you have ever read any personal finance book, you might already have some background. So let’s take that further:

Smart money is the money that is invested in some assets (financial instruments working for you)

Dumb money is the one that is decreasing in value due to inflation.

Some definitions that should be repeated over time:

Assets are something that produces value and gives positive returns. Eg- Stocks, bonds, real estate, business, royalties, etc. You buy them and hold them for a long time — you get rich.

Liabilities are things that take away your money but give negative returns. Eg- Car, house, credit card bills, etc. Your goal should be to keep this minimum. Err, stop unnecessary spending.

Different asset classes with different risks:

Stocks — easiest to start.

You can start with Robinhood, TD Ameritrade, or any other broker.


Real estate —major capital requirement upfront although you can leverage bank’s money (mortgage) to buy more. The most lucrative source of income which provides the highest tax benefits. Most millionaires come from this.

Royalties — this requires time. Eg- creating songs that will pay you lifelong

Startups/Business — Minimum $100 requirement. You can register them, have ownership in them, and payout to yourself in the form of dividends or a salary. Though it could be an active income, it still could have huge upside potential.

Level 1 — Paying off your debts and getting your hands dirty with stocks (since they are the easiest to start)

Evaluating stocks to buy

Dividend-paying aristocrats are the best way to start! Eg. include McDonald's, Coca-Cola, among others.

This guide from NerdWallet will guide you in picking a stock. Investopedia and Nerdwallet are great places for beginners to know and learn about stocks and other investments.

The linked article will guide you through the process and you can greatly benefit from it.

Level 2 — Using other people’s money to invest

Real Estate leverages your returns

This could include taking a mortgage to buy a rental property or starting your own company with investors’ money (which could be risky, due to equity dilution).

After four decades of investing and working on your business, this could be yours ;-)

Find something important to do, then do it every day.

Keshav Sharma

Reality is just a hallucination, but a persistent one. Your whole body should be in pain, that's when the fun begins.