Saturday, 15 July 2017

One Quality that Can Make You Rich

Most of us want to get rich. Yet most won’t. Though there are many factors that determine whether you become rich or poor, one factor stands out for its simplicity: simplicity itself.

Those who are simple have an edge over others when it comes to getting rich. To put simply, the least your requirements to stay satisfied, the simpler you are. Alas, simplicity is fast disappearing from the current consumption-oriented generation.

The urgency to acquire luxuries has corrupted many a youth. Many people live by credit. Many of us have the false feeling that we can’t be happy if don’t have something. From that expensive phone to that dream vacation, there are several avenues that make us feel inadequate. What’s more, even if a desire is satisfied, it is quickly replaced by another and the cycle repeats itself.

A lack of simplicity keeps most of us financially weak. With so many distractions, it’s hard to build wealth. Is there any solution? Yes, but adults will increasingly find it difficult to implement. Adults, because they are adults, come to believe that their lifestyle is a given and it can’t be altered. If you questioned their reckless lifestyle, they would go to any length to convince you that nothing much could be done. Their lifestyles own them; it’s not the other way round.

For those who still want to gain control over their lives, here is the first step: restore simplicity. Take someone else’s help if needed. Recognize what can be cut from your present lifestyle that will help you save more. Still better, save first and then spend. You will naturally have less remaining, which will force you to tone down your lifestyle.

Another solution: give huge importance to being simple and to saving. Once you shift your priorities to make simplicity your buzzword, you will be automatically inclined to save more.

Indeed, the most effective things are also the simplest.  

Saturday, 27 May 2017

How to Be Greedy in the Stock Market and Still Win

Recently while I was talking to a colleague about a promising stock, he told me the story of the greedy dog. Once upon a time a dog was passing through a narrow bridge over a stream. He had a bone in his mouth. As he looked down, he saw his own image in the water. But he felt that it was another dog with a bone in his mouth. In order to get the bone from the “other” dog, he started to bark. As soon as he opened his mouth, the bone fell out of his mouth and into the water. The dog regretted his foolishness.

With this story, my colleague wanted to give the message that one should be contented with what one has and should not be greedy. So he turned down the idea of buying the stock I was talking about.
There is a general and a specific lesson in this anecdote. The general lesson is to avoid analogies. Those who take help of analogies to explain their point are just twisting the facts to suit their own case. Just because the dog lost its bone doesn’t mean that you have to be satisfied with what you have. What the dog did is the dog’s problem, not yours. 

The specific lesson is regarding “greed” in the stock market. Many investors attribute their stock returns to luck. Others are content with small returns and consider waiting for higher returns as being greedy. The person whom I talked about earlier considered investing in the stock as being greedy. All in all, the idea of greed is highly misunderstood in the context of the stock market.

In the stock market, it’s perfectly okay to hold onto a good stock for long times in anticipation of higher returns. That’s not greed. Indeed, you find multibaggers only when you are invested in a company for long durations of time and refuse to sell your stock prematurely. Similarly, while luck does play a part in almost anything in life, it’s not just luck that makes you successful with stocks. You need to do much more than simply rely on luck to get successful in the stock market. Finally, exploring new ideas and opportunities is the basic requisite for progress. It has nothing to do with greed. All that the stock investor needs to be careful of is being optimistic without any basis. That’s greed.

Friday, 12 May 2017

Silly Things People Say about Money #2



When a person told me this, I first felt that she was kidding me: “I want to get into debt so that I can build a good credit history.” Later I realized that she was indeed serious. I got to hear a similar thing from a couple of more people. I was astonished at their idea of financial prudence.

The last decade has seen the rise of the financial-planning industry and its associated caprice. There is at least one company that rates you on your credit worthiness. Many people are eager to maintain a good credit score so that they can easily get into more debt. Recently a salesman asked me if I used a credit card and hence if I had a credit history. I don’t use a credit card.

Should you worry about your “credit history”? Absolutely, you should. But not because you need a good “credit score.” If you have borrowed money, you must honor your commitment and pay the money back. That goes without saying. What is even more important is that you cultivate good financial habits. Being financially strong is more important than worrying about credit history.

How do you become financially strong? By following the old, common-sense principles of money. Save more. Control your expenses like crazy. Avoid debt. Learn about business and investing. Invest more. Reinvest the profits. Keep repeating the process.

Sounds boring, isn’t it? The most effective things are also the simplest. There is nothing thrilling about them. Those who follow the traditional financial wisdom don’t have to worry about their credit history. They can buy anything anytime without getting into debt. Actually, they are the ideal customers for any business, given their financial might.

The only purpose your focus on credit profile serves is that it reminds you that you are focusing on just the wrong thing.

Friday, 21 April 2017

How to Get Successful at Almost Anything (Including Investing)




Everybody wants to get successful, yet so few succeed in this pursuit. The conventional way of thinking is to first define what success means to you. Whatever it means to you, you can’t get it till you persist. This sounds rather obvious, yet the underlying meaning is quite deep.

My observation suggests that many of us fail to achieve what we want to because we simply get bored or frustrated or hopeless. Many people don’t even start because they are intimidated at the outset.

Take investing for instance. Investing is not taught in school, so the onus falls on people to learn about it. The average adult is naturally a bad student and doesn’t want to learn about stuff. He/she looks for shortcuts and then takes bad decisions. Those who do start studying tend to lose interest after some time because nothing seems to be happening. At this point comes the barrage of data, research, expert views, opinions that point at the futility of what you are trying to attempt. Naturally, you lose track.

This is why persistence is so crucial. In the world, what is commonplace is mediocrity, not excellence. This means the information that readily comes to you is mediocre at best. Such information originates from those who themselves are average humans. Paying attention to it only makes you lose persistence. Time flies. You fail to succeed, but you also get to hear about those who have succeeded just because they kept going.

All you need to do to succeed at almost anything is don’t discard it. Losses, frustration, boredom, despair are a part of the journey. If you simply hang on, over time the way will manifest itself. That’s how you become the master. Mastery is nothing more than clinging onto the path irrespective of what happens.

Beware especially of statistics. They always suggest that you are more likely to fail than succeed. Getting mired in data is perhaps the easiest way to not succeed. 

Friday, 14 April 2017

The Idea No Entrepreneur Can Afford to Ignore

Experts have already started writing the obituary of Indian e-commerce companies like Flipkart and Snapdeal. They say that these companies have survived so far due to the access to venture capital. These companies don’t make profits and burn their capital at an alarming rate. They also tend to undercut competition by selling stuff at less than what it actually costs. This has led to the closure of many brick-and-mortar stores. 

The early signs of the demise of these companies are also visible. With diminishing valuations and increasing retrenchments, e-commerce companies are in news for all bad reasons. Yet these companies, in my view, won’t just survive; they are also going to become even more crucial with time.


How? Because these companies are all about the new way of doing business. I remember the times when I had to go to multiple stores to find the book I wanted. Let alone having the book, most shopkeepers had no idea of it. Then I came across Flipkart, which had started off lately and sold books. I also came across Infibeam, Rediff books and Bookadda. Soon, getting a book wasn’t so painful. E-commerce solved my problem. Now if it led to the closure of bookstores, I don’t find anything bad in it because bookstores weren’t fulfilling consumer needs. They had become complacent and stopped evolving. They eventually met their destiny.


It’s not about just books. E-commerce has changed our lives meaningfully, and many of us can’t imagine a life without it. That’s the true power of any business idea—how deeply ingrained it can get in consumers’ lives. Look at what Ola and Uber are doing to transport. I have recently figured out that travelling by Ola could actually be cheaper than public transport—and more comfortable also. So why not? The lesson for the entrepreneur is not to underestimate e-commerce. By all means, every entrepreneur should embrace it.


It’s true that the e-commerce industry is going through certain hiccups. But that’s normal. Any new idea limps before it takes off. With time, as e-commerce matures, it will make everyone’s lives much better, easier, more comfortable and convenient, including the lives of those who are currently writing its obituary.


Saturday, 25 March 2017

Silly Things People Say about Money #1

Money is an interesting subject. Whether you like this subject or you hate it, you will inevitably be affected by it. What makes the subject of money interesting is the wide variety of views people have on it. Many of these views are not just amusing but also outright silly.

Consider this view for instance: many people like to lock-in their money or go for an auto-debit facility because they think they lack discipline. Since you can’t access the money that has been locked in, you become “disciplined.” Since money will be auto-debited from your bank account periodically, you won’t be able to squander it. 

The problem with the above-mentioned line of thinking is that in both the cases, you compromise on an important element of the investment process: control. In your urge to become disciplined, you actually lose access to your own money or allow others to take money out of your bank account. What sense does it make?

Investing is best done when you have control on the flows. You decide when you should invest. You decide when you should sell your investment. Of course, this requires a certain degree of sophistication, and you must develop that as an investor. If you don’t, you only let othersinvestment companies, the government, the bank, etc.assume the control. They may not have your best interest in mind.
There are absolutely no short cuts to the success in investing. You must follow its principles to get successful. Being disciplined is an important principle. But being disciplined about wrong things won’t do you any good in the long term. 

Saturday, 18 February 2017

Why the “Technologically Backward” Will Be Rich

Big leaps in technology have resulted in many of us feeling inadequate if we aren’t an active user of it. But the technologically backward have an inherent edge over the technologically advanced: they will become rich.

How? Just by not chasing the latest fad, you can save tons of money. You can then invest this money and become rich. The technologically up-to-date must keep spending to satisfy their false sense of being savvy, thus killing their financial prospects in turn.

This doesn’t mean that you have to turn yourself away from technology. Technology has made our lives easier and by all means you should embrace it. But you shouldn’t chase it. Every day something gets developed. Just because something is out there doesn’t mean you have to use it. Neither do you need to be among the first users of a technology. Wait for a technology to become popular and see if it fulfills your need. If it doesn’t, you are most welcome to shun it.

I know a person who wanted to buy a new phone. She wants her phone to have “everything,” to be the “latest.” When you want “everything,” you have to pay for everything, which pushes up the cost. And you are never going to use many features for which you have paid. What sense does it make to pay for something you are never going to use?

With technology, my personal policy is that it should be “progressively need-based.” This means buy what you need currently, with some enhancements. For instance, if your current requirement is 8 gigabytes of storage, you may go for 16 gigabytes. But not 32 or 64 or 128 gigabytes. The more storage capacity you want, the more you must pay. And you may never use that much storage ever.

While the technologically savvy may appear cool at first sight, it’s the technologically backward who will have the last laugh.