A recent conversation with my grand dad left me amazed at the foresightedness of the coveted business community of Marwaris. This Indian ethnic group originates in the Marwar region and is widely known for their sense of enterprise and enormous risk appetite. What he shared in form of a quick format life plan, which I henceforth call the '5 income rule'. It's intriguing how adept this famous business community is in charting a holistic income plan while a lot of the current population gets entangled in developing a well rounded work portfolio. After all, it's a compelling fact that a quarter of the Indian names in the Forbes billionaires list are from the Marwari community.
Verbatim from my guru grandfather's mouth, one should, as quickly as possible, and in this order, build the following five incomes in life:
Income 1: High volume-low margin, but not requiring daily intervention
The first income that needs to be sorted is the passive business income and the longest time must be tended to getting this peg correct. Its ideally a business that requires time to set up and scale, but post a threshold, becomes self maintaining and does not require daily intervention. A good example is a distributorship or manufacturing plant with established off-nodes.
Income 2: Rental/property appreciation income
The money from the first type of income must quickly be invested into real estate that generates both monthly funds as well as security for old age by lieu of property appreciation.
Income 3: A daily work you love, which earns enough to just sustain itself
This is the most critical of the five incomes, for your mental and physical health hinges on this. It's intertwined with a passion or hobby that brings you joy but does not make prudent sense financially. It could be social entrepreneurship stemming from a desire of change-making or authoring books or baking and selling cakes; the idea is to plug the heart after quickly securing the first type of income.
Income 4: Social income
Next in priority queue is the social income. Once daily monetary needs have been met and some funds have been stashed away for future security, its time to build a social income by forming relationships through volunteering, socializing or networking. This is an extremely precious income and holds the person in good stead in difficult times.
Income 5: Affiliate income
The last type of income in the essential five is the affiliate income. Once the above four are sorted, money should be invested in affiliate businesses of friends or family for equity, much like unorganized venture capitalism. This is a classic Marwari technique of helping the community grow while securing equity positions in others' sweat projects.
With these five incomes established, your coffers, network, and positive influence won't just be profound, but always accruing. Where is your own wealth-building in this sequence?
More can be read about the famous business community and their business styles in the book "The Marwaris - From Jagat Seth to the Birlas; Author: Thomas A. Timberg (Publisher: Allen Lane)