Warren Buffet and the 5 BHK home

Quick-quiz. Match the place of residence given below to the following men.

World's Richest Man — Carlos Slim

World's Second Richest man — Bill Gates

World's third richest man — Warren Buffet

World's fourth richest man — Bernard Arnault

Where do they stay?

1.      World's Largest House

2.      World's 2^nd largest house

3.      World's 3^rd largest house

4.      World's 4^th largest house

Answer: None of the answers given above matches the place of residence of the men given above. Isn't that so odd? The richest men not living in the biggest houses. Then, what is the use of having so much money?

The shocker: The 3^rd Richest man in the world stays in a five bedroom house brought in 1958 and that today is valued at around USD 700,000 (although this works out to Rs 3.5 crore if we take the current exchange rates, it is only around a crore in PPP terms). Today almost 10% of Indians would be having a house in excess of Rs 1 Crore.

So does that mean that Warren Buffet is a miser? With over $50 Billion in wealth, he still stays in a 53-year-old house that too with "just" five bedrooms. He surely must be bluffing about his wealth, because, we know for sure he is not bluffing about the house! Or is he? Well not at all. His known public wealth is 50 billion dollars and growing.

So why does the world's third richest man stay in such a small house?

No, Warren Buffet is not stingy or miserly by any means; not anyone who donates 30 Billion to charity can be one. Rather, he has mastered the art of creating wealth.

Wealth is not created just by investing, but, also by avoiding unnecessary expenses. It's not called stingy, rather, it's called Frugality. This frugality has helped him grow his wealth year on year.

His logic is simple: An extra ten rooms in the house is not going to create any major difference to him. However, the same money if invested rightly (of which he is a master) can be made to grow to probably ten times the same amount.

Yes, it is not easy for all of us to be like him. Others might say that he can "afford" to be frugal because he already has so much wealth and does not need to worry about anything else. True, but he has stayed the same way even when he was poor!

If Warren Buffett can do it on such a large scale, we can at least do it on a smaller scale. The secret lies in falling in love: In love with growing wealth. If you can fall in love with the happiness that one gets by seeing his wealth grow, you will automatically start repelling the evil twin: spending.

Initially it may be very difficult and you may not even be able to follow. But, once you get accustomed to it. You realize that the pain of sacrificing current consumption is much smaller as compared to the thrill of creating long term wealth. The 20,000 Rupees saved by going for a simple phone (rather than a gold studded one) can in the coming years grow into Rs 200000/- and give you the power to be a giver.

The fundamental is to make sure we give priority to the needs and minimize the wants. Happy frugality.

Courtsy-http://in.finance.yahoo.com/news/Warren-Buffet-5-BHK-home-bankbazaar-637166520.html

Vodafone pays more,Essar exits.

The Ruias and Vodafone Plc have finally buried the hatchet. The Ruias-owned Essar group today agreed to sell their entire 33 per cent stake in Vodafone Essar — India’s third-largest telecom player with a subscriber base of 137 million at the end of April — for a net consideration of $4.58 billion. The total cash outflow for Vodafone Plc will be $5.46 billion — which seems to suggest that the Ruias were able to arm twist the world’s largest mobile communications company by revenue into forking out more than the originally agreed sum of $5 billion. On Friday, the Ruias transferred their entire 22 per cent held through their overseas subsidiaries to Vodafone for $3.32 billion. This stake was transferred in two tranches: the first on June 1 and the second on Friday. Vodafone decided to hold back $0.88 billion as withholding tax on the transaction as it didn’t want to run foul of the government once again. The London-based telecom giant is battling a $2.5-billion withholding tax claim over its $11.08-billion deal in February 2007 to acquire a 67 per cent controlling stake from Hong Kong-based Hutchison Whampoa. The Supreme Court is scheduled to hear this case on July 19. “It was viewed as prudent to deduct and pay withholding tax on a without-prejudice basis and have the two Mauritius-based subsidiaries — Essar Communciations Ltd and Essar Com Ltd — claim a refund of such withholding tax after following due process,” the Essar group said in a statement later. On March 31, the Ruias had pressed the put option on the 22 per cent stake they held through the Mauritius subsidiaries. Vodafone had riposted by exercising a call option on the 11 per cent the Ruias held through Chennai-based ETHL Communications (ECHL). Under the terms of the agreement they had signed in March 2007 with the Ruias, Vodafone had to make the first payment within 60 days of the date on which the Ruias exercised their put option. As a result, the two sides were under some pressure to seal the deal today itself. Vodafone had applied to the Authority for Advanced Rulings (AAR) wanting to know whether it should withhold tax on the $5 billion payout to the Ruias under the terms of the original deal. With no sign of any ruling from the AAR, the two sides agreed that Vodafone should deduct the withholding tax of $0.88 billion (Rs 3,500 crore) and leave it to the Ruias to seek a refund from the government. No future claims Under the terms of the agreement reached today, ECHL will sell its 11 per cent holding in Vodafone Essar for $1.26 billion. The Ruias will receive the payment for this stake sale by February 15 next year. The transfer of these shares will be completed after obtaining all the necessary approvals. Vodafone said the two sides had agreed to terminate all outstanding claims between them. They also renounced all future claims on each other. The two Ruia firms — Essar Communciations (Mauritius) Ltd (ECML) and ECHL — will give up their board seats in Vodafone Essar. The stake buyout will see Vodafone’s shareholding cross the 74 per cent ceiling on foreign direct investment in telecom. Vodafone intends to sell a 1.35 per cent to an Indian investor in order to comply with India’s investment rules. In the past, it has sought the help of Analjit Singh of the Max group and Asim Ghosh, former chief executive officer of Hutchison Essar, to hold the excess stake on its behalf. Agreements signed with Singh and Ghosh had incorporated call options that would allow Vodafone to buy back the stake at a later date. The stake sale marks the end of a four-year partnership between Vodafone and the Essar group in India. As per Essar group chairman Shashi Ruia, “We were one of the early entrants in the telecom space in 1995 and have enjoyed an extremely successful relationship with Vodafon.” Stake valuation Vodafone and the Ruias squabbled last year when the Ruias wanted to seek an independent valuation of their 33 per cent stake in Vodafone Essar. The Ruias decided on a reverse merger between Essar Telecommunications Holdings Pvt Ltd – the parent of ETHL Communications Ltd – with another group company, India Securities. Since India Securities was a listed entity, the idea was to secure a proxy valuation of the Essar stake in Vodafone Essar. Vodafone challenged the reverse merger in court but lost. The Ruias believed that the valuation of Vodafone Essar had gone up substantially after the telecom company won 3G spectrum licences in nine circles after bidding Rs 11,617.86 crore. The Ruias were able to force Vodafone to fork out $5.46 billion to seal the deal. It will be interesting to see whether they can persuade the government to refund the $0.88 billion that Vodafone has retained as withholding tax.

Bank raise base rate

ICICI Bank, the country’s largest private lender, and two other banks raised their base rates, or the minimum lending rate, by up to 75 basis points. 

The revision will make corporate and consumer loans, including home and auto, expensive for new borrowers. The other two private lenders to increase the base rate are Kotak Mahindra Bank and Dhanlaxmi Bank.