The Money Plant

Hey guys!

Punit here,

Whenever we go to our parents for money, we often get this one reply, “Money does not grow on trees.” And we argue that “Money is made of paper, and paper comes from trees.” Well, that’s true but still, we do not win the argument. Money is not a fruit that you can climb on a tree and pluck one. Theoretically, Money is defined as “A commodity accepted by general consent as a medium of economic exchange.” I know reading it for the first time was a bouncer for you. Let me explain money, in simpler language, money is nothing but the means of paying for something or buying something. How does money work? If you want to buy a bar of chocolate. You go to the shop and ask the shopkeeper to give you the Kitkat costing 10 INR. He grabs the chocolate and gives it to you and asks for money. You give him a note of 10 USD. Even if it is worth more than 10 INR currently but still the shopkeeper will not accept it, because it is not a legal tender of India, which means it cannot be used to buy goods or services in India. How is money made? In simple words, there is a special printer that prints money on special paper. It is owned by the government, and no one else has a right to print it, BUT YOU CAN GROW IT YOURSELF JUST LIKE A PLANT and it is absolutely legal. WHAT??... HOW??... Growing money is just like growing a plant. Just like how you sow a seed, water it, take care of it and one day it becomes a huge tree, and you enjoy its fruits, flowers, shadow, etc. forever similarly you invest your money, keep an eye on it, take care of it, and most importantly do not chop it at an early stage and let it grow, surely one day just like a tree it will take care of you. Most people make a mistake when the money has grown enough, they withdrew everything. When you feel hungry you pluck the fruit, but you do not cut the whole tree, right? Similarly, you should withdraw some amount of your investment that is needed, and the remaining investment will fill the gap by growing within a year. For Example, Your expense is 10 lakhs, and your investment grows at 10% CAGR. That means if you have 1 Crore of total investment you can withdraw 10 lakhs after 1 year and keep withdrawing it every year without affecting the principle.

Let's understand the analogy of the Money plant in comparison with a normal plant:-

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