The 3 most important things in life and investing
Tim Feriss after interviewing about 100 of the most succesful people ranging from a 5 Star general to billionaires (have to tell here that he is one of them himself ) has written that the common thread in all of them can be found in a passage written in a novel in 1922 about a monk in ancient India ! In the novel the monk named as Siddhartha is asked by a merchant how can Siddhartha give anything if he owns nothing, Siddhartha replies that he can give what he has which is his learning which is summed up as
I can think, I can wait and I can fast – these three things says Tim Feriss is what sets apart successful people. Let us how this can help us as investors.
- I can think – As investors we need to think for ourselves
While Spending : Every expense is just a click away and the temptation to waste money instead of saving it is very high. Advertisements used to be in ear panels in front pages, now advertisements are the front pages !, If you search online for a watch, every web page that you visit shows ad for the watch !. The attempts to lure us with zero down payments, buy-one-get-one, etc is high. So thinking for ourselves ensures we buy what we want and only what we want is important.
While investing : Many of us who take few days looking at Trip advisors ratings for a 2 day vacation stay blindly sign cheques for lakhs, only to find later that it is not a good investment and what is more can not be even sold for next 5 or 10 years !
Both the mistakes one of over spending with out saving and other of investing without knowing says that we don’t think for ourselves, if we did so our financial life could be at least more peaceful and a source of happiness.
2. I can wait – patience which literally pays in investing !
if the first is tough, the second is even more so, patience is not seen as a virtue in today’s world but in investing patience literally pays ( around 18% pa !! if we go by last 20 odd years of returns of equity MFs). Patience will be tested with every scary headline and the problems that the world faces. Markets as the proverb goes, climb a wall of worry. Patient investors invest and keep on investing, and are not distracted by the headlines of the day, week or month. They think in terms of years and even decades. Another mistake is waiting to invest, i have friends who seem to track markets regularly and ask such smart sounding questions like ‘ Is Trump victory good for our markets’ but have not till date invested much, so they wait for the ‘right’ time that never comes. So it is better to invest and then wait patiently than to wait patiently to invest !
3. I can fast – delaying gratification
I can fast – this is the toughest one, I do fast at times and it is not easy, going without food for 36 hours is tough but it is a system cleaner as we all know. Financially it can mean giving up something today for something better tomorrow. Delayed gratification as this is known is what separates the men from the boys. Just a Rs 2000 outing a week can set you back by Rs 104,000 a year or a cool Rs 520,000 in just 5 years, let us say we want to spend on outings but cut it by half, once every fortnight instead of weekly, and save 52000 a year, and invest the money saved in a equity fund which gave us 12%, after 15 years, this humble Rs. 52000 per year or Rs 142 per day saved would be worth a cool Rs 19,38,000 ! The humble 2000 bucks saved every fortnight is now grown big, thanks to delayed gratification. What is more the rest of time we spend the money will be looked forward to and can be spent guilt-free. Much like the feasting that comes after the fasting !
As the year draws close, these three things – I can think, I can wait and I can fast, could make better investors and better humans of us all. Happy Holidays.
PS : The link to the article mentioning the passage from Herman Hesse’s Siddhartha : http://www.businessinsider.in/After-interviewing-over-100-successful-people-Tim-Ferriss-says-a-passage-from-a-1922-novel-captures-the-approach-every-high-performer-takes/articleshow/55930832.cms