How to Become Rich in India: With the passage of time, the New Generation is becoming more Financially Aware and Financially Literate than before and is also becoming aware that living a Mediocre Life even after working hard till old age. is not the right way to live. That is why the focus of the present generation is more in Early Retirement, Passive Income, and Financial Freedom.
That’s why people are growing more interested in investing in stocks and shares, but the problem that comes to most people is which stocks to pick because buying quality stocks at the cheapest rate is the real challenge of investing. |
The Falcon Method By David Solyomi
For which the author David Solyomi in his book The Falcon Method teaches us such an investment method that is based on the principle of Value Investing, Common Sense and Basic Discipline. Whose ultimate goal is to build a portfolio of such stocks so that you can generate your passive income along with returns.
Friends, actually Falcon is the name of a bird which specializes in hunting and this method also works like the same bird because Author David Solyomi decided it only after seeing a lot of financial struggles in his early age. It was that he would not get caught in this new trade, so he read many investment-related books and at the age of 24, he built and sold his first company.
Even after that, he built a company in many different fields and sold them. Due to which he got a lot of inside knowledge of the company, about which Normal Investor would never know. The knowledge which helped the author a lot to become a better investor and then he became financially free at the age of 33.
How to Become Rich in India
If you also want to do this and want to generate Passive Income for Long Term in Stock Investing, then definitely read this article till the end. Because in today’s article we are going to tell you How to Become Rich in India as well as the Summery of The Falcon Method Book in Hindi, so read it carefully –
1. The black Box :
Whenever you invest in someone, the author says that you should treat that company as a black box. Where there are two types of Pipes, some are Input Pipes, from which all the revenue scheme of the company is attached, from where the company gets money by selling its product or service, by taking a loan from the bank or in the form of equity shares, where public Buying shares of the company gives them money.
All the expenses of the company flow from the same Output Pipes. Cost of Maintaining the Company, Salary of Employee, Productions, Marketing Cost, etc. But the author says that you have to focus on one Output Pipe which is Profit because even after fully understanding the working of the company, you mean only only your profit which you can understand from these 3 Factors that how a company Utilizing your profits
3 Factors: How to Become Rich in India
A. Payment to Shareholders :
How strong is the Return Investment Ratio of the company so that you can determine how much ROI you can get from this company per share?
B. Share Buybacks :
Share Buybacks mean how much the company limits the publicly available shares by buying its own stocks and how much profit or loss does the company make by doing so.
C. Retained Earning :
This is the earnings that the company saves in the capital fund of the company for its future expenses.
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2. The Quality Criterion :
In The Falcon Method, the author says that you should invest in only those companies which have been established in the market for a very long time and are Industry Leaders. You have to choose some top company out of all the fields which are consistently producing high returns since last 20 years because Mediocre companies can give you high returns in short term.
If you want to generate passive income, then you should invest with long-term vision which can give you by generating income consistently. Author says that after seeing the long term history of the company, you get a very clear idea because in the period of 20 years at least a recession does come and if the company is growing by beating that one recession and maintaining its returns. So that company has the potential to generate passive income for you.
According to the Indian market, the list of such potential companies includes companies like Asian paints, TATA, MRF, and Reliance, that is, it is necessary for us to track the history of that company.
3. The Value Criterion :
Everyone wants that they get all the high-quality things at the least price but people do not do barging while buying stocks because they do not know what is the real value of that stock.
Billionaire Investor Warren Buffett says whether it is Stock Up or Market Down, I always like to buy Quality Merchandise cheap. Buying the stock at prime prices boosts your returns in the long term. But to know what is the actual price of this stock.
It is very important for you to know about the valuation of the company, to check which you can use some indicators like Price to Earning Ratio, Price to Cashflow, so that you can find out how much profit or loss that company is in. is | How is the company maintaining its cash flow and per stock what is the value of that company and according to the market how much is it chief
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Basically it means to say that when the market is down, you should buy the shares of your top selected company because at that time you assume that the Shares Prices are being sold in the stock market, so that you can sell the stocks to their actual price. You can buy at a discount less than that which gives a lot of benefit in your Future Returns.
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4. The Threshold Criterion :
You want that you can get maximum return for every rupee you invest, so while buying stock price, it is very important for you to calculate the free cash flow the company produces per share of stocks. That is, how much income does the company generate on its per share. Which is called FCF Yield.
Also, you should check that how many returns are received by the shareholders through Dividend and Buy Backs, which is called Shareholder Yield, as well as the dividend yield of that company. Meaning how much dividend can any stock give you in the future according to its today’s price.
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With these three criteria, you can find out that the stock in which you are going to invest your money is worth your money in actual. The author says that by using these three criteria, you should rank the selected company and see which company has the ability to give maximum returns to you and should invest in it.
5. Quantum Investing Model Vs The Falcon Investing Model :
Most people generally use Quantum Investing Model to invest their money in the market. In this model, an investor studies the company thoroughly, taking into account all these factors, its Business Model, Reputation, Growth, Profits, Dividends, and takes out the list of companies. in which he would like to invest his money.
Such people leave their money by investing for at least 1 year, after which they get very good returns and they invest by selling those stocks in another company or by diversifying their investments using the same model. And repeat this same process every year.
The author says that there is no harm in this method because it is based on Purely Data. Your Emotions do not affect your Investing. Feet In this method you focus on Purely Returns. Due to this people also invest in such companies about which they do not know anything and due to which many times investors have to bear heavy losses.
To avoid this mistake, the author has created The Falcon Method, which is a completely foolproof Highly Structured Investing Approach, which has the ability to build passive income in the long term. That is, in The Falcon Method, we recommend using the Author Buy and Hold Technique.
You have to build such a portfolio that you can hold it for the long term, that is, do not buy and sell quickly. In The Falcon Method, you never invest in any unknown company and do not sell shares by earning returns every year, but hold them for long term and build your passive income from dividend and compounding. Author tells about Buy and Hold in more detail in Next Point –
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6. Use a Buy and Hold Stock Portfolio :
To generate passive income from stock, you have to be very patient. Till your money does not touch the 8th Vendor of compounding, you have to hold your stocks because in the long term your money starts compounding at a very high rate. Where even if you are withdrawing a certain amount from your investment, the rest of your investment will continue to give you high returns due to compounding and you will generate a passive income stream.
That’s why you should never sell your stocks out of fear of loss by getting away from the market emotion because the chances of you losing in the long term are almost impossible. You should always hold your stocks and wait for compounding to show its magic.
7. When to Sell?
The aim of the Falcon Method is that you have to buy and hold stocks, but there are some rare cases where you need to sell your stocks, the author says that you should sell your holdings in 2 cases.
- When the stock becomes highly overvalued i.e. the price of the share becomes very high according to the actual worth of the company. This is a sign that a financial bubble is being created in the company. In this case you should sell your holding.
- In the second case, when the company reduces its Dividends, which ultimately affects your investment negatively, so that the method of using our Falcon Method becomes Violate. In this case we should sell our shares because when we had selected this company, we took our decision by calculating many factors related to its Dividends which cannot be valid after Dividends Cut because all our calculations are bad. If done, then in this case also you should sell your shares and apply Falcon Method again.
How to Become Rich in India: So friends, we hope that now you know How to Become Rich in India. You must have got complete information about The Falcon Method in Hindi. And you will also apply our methods in the future. By which you can earn good money and become rich.
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