Actual Question:
How did/does Rakesh Jhunjhunwala generate regular
cashflows to meet his monthly bills? What I understand is that as a value
investor his money is generally locked up for years at an end in investments.
What am I missing here?
Edit: What I mean to say is in the beginning of his investor
days, how did he manage it?
I am fully aware that he will be holding cash in his bank account which will be replenished periodically by dividends, and also that all his money is not held in the form of capital market investments.
I am fully aware that he will be holding cash in his bank account which will be replenished periodically by dividends, and also that all his money is not held in the form of capital market investments.
Answer:
Dear
Friend!
Thanks
for the highly valuable and thought provoking question!
I
really do not know the affairs of Rakesh Jhunjhunwala so I cannot talk about
him but in general I will answer your question.
Every
individual generally has two types of income:
Secondly, it is not entirely correct that a value investor’s
money is completely locked-up for long term. Value investors earn significant
amounts of passive incomes by way of dividends and interest every year. Value
investors do not like to spend the passive income for their survival and would
like to re-invest it for generating further passive income. However, if they do
not have a separate active income, naturally they can spend from this passive
income.
In light
of the above there are two possibilities as follows:
- Meets his monthly bills out of the active income he has
- Spends a small portion out of the passive income generated from investments.
Thank
you,
Anand
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