Advantage small investors – SIPs

Affirmative action, asset allocation, compounding, Financial Independence, Habits, Uncategorized

This is a continuation on my rant for doing Systematic Investment Plans (SIPs)

A lot of times I hear my friends , especially female friends say this….. my father / brother / husband invested in a specific stock Rs100,000/- and the stock has never recovered back and he lost so much money, so I will never invest.

I have literally had to coax people to understand the fallacy of the argument. Losing massive money is an outcome of getting in the market without doing your home work. If you listen someone else and do your investment or you see the stock market going up and you throw a dart at any name and buy the shares then you are inviting trouble.

First and foremost if you don’t understand about the ways companies work, operate, don’t get into the market on your own. There are so many ETFs which you can buy or MFs you can get. This helps spread the risk over multiple stocks.

Second even within these always ensure you are buying regularly in small tranches. By using the SIP facility you get to average over time as well as cost so even the fall in prices is actually an advantage for you.

Unlike big investors who have to look for a big price advantage to invest their millions or billions, for the small investor this is an advantage. They can enter the market at any time because the SIP will take care of any gyrations that the stocks go through and will end up with a very large core inthe long run.

The key is that you are not investing lump-sum, you are investing small amounts and you are investing systematically and you are letting compounding play its role in the long run, then your returns will be similar to the overall market

In the LONG TERM, and this is a very important point, in the long term the stock markets have given compounded returns in double digits. If you can spare small amounts of money every month for an extended period of time, its mi days boggling to the corpus you can create. In my earlier posts I have given ready to use charts to help you compute.

However if your time horizon is short then its better to put money in debt instruments so you are sure about your returns. These returns are small single digits but they are guaranteed.

Take your first step, start an SIP and get financial independence.

Till next time.

Carpe Diem!!!

Relentless- Part III

compounding, Financial Independence, Habits, Marketing, Uncategorized

Even passive activities can be relentless

Last 2 posts I have been talking about being relentless with respect to Marketing and sales of various kinds

Today I will be talking about how I realised that the systematic investment plans or SIPS are a different kind of relentless activity.

I have mentioned multiple times that you should give a mandate to your your ETF or mutual fund to deduct the amount directly from your account and invest.

On one level this becomes a passive activity because you are no longer involving your brain to make a decision.

However we have also noted that being relentless is a habit which is needed if you want to succeed systematically rather than episodically.

So where’s the paradox.

If you have to become wealthy then you have to invest relentlessly on a regular basis. A systematic investment plan is also a regular, consistent activity a.k.a relentless. The only difference being that you don’t need to tax your brain. You are automating the process of being relentless for your investment.

To that extent it’s an ideal opportunity….you have outsourced your relentless activity to a system….and you can become wealthy on the way

Think about it…..small amounts of money invested relentlessly…taking advantage of the magic of compounding…can get you financial freedom.

Till next time,.

Carpe Diem!!!

Lazy man’s guide to growing rich

Affirmative action, compounding, Financial Independence, Human Brain

Outsourcing in a lot of contexts is looked down upon. However by outsourcing the routine tasks that you tax your brain with can help you improve your decision making capabilities.

In addition by ensuring that you don’t use your brain, you can actually grow wealthy

Today I am going to be talking about forcing functions which take action irrespective of of your intentions – which the brain can sabotage.

Once you have outsourced the mechanism to invest systematically by giving your mutual fund the authority to automatically deduct money on a given date from your bank account, your brain no longer has to take any decision and you can just relax

We already have so many decisions to make every day that if we load one more , about investing the money, then the brain will fall back to default mode to take the decision some other day. Which if you had not guessed, doesn’t come any day. And life happens. And it happens to all of us.

We then feel bad and think we are procastinators.

Instead just take one decision with the help of your financial advisor and let your investments get done automatically and you will see your wealth grow. First it will not be appreciable but the longer you keep it, the exponential power of compounding will make its presence felt. And literary you don’t have to think about it. It will work whether you are sleeping or traveling

You can utilize this power of outsourcing brain functions in other areas also. I have asked my bank to pay my telephone and gas bills. So now my brain does not have to bother about the bills, their due dates etc. My bank automatically monitors the service providers and makes the payments and informs me. Since it makes the payment only on the due date, that money earns interest, till the payment is made.

This gives me more time and energy to do more high value tasks while I can be lazy about reaching my financial freedom targets.

Till next time

Carpe Diem!!!

Good Karma

compounding, Habits, Human Brain

I had been to South Korea alone in the mid-90s. At that time I did not know Korean and when I landed at the airport in Seoul, there were hardly any signs in English. I had to go to a town about 40 miles away. There was only one person at the tourist information center who knew English.

When I showed her the address of the location, she walked me to the bus which would take me in that direction, informed the bus driver about me not knowing English and where he needed to drop me so that I could move forward to my destination. I had absolutely no clue what was transpiring between them but I just had the faith that I would be fine.

After about an hour’s journey, the driver after dropping all the passengers drove on the wrong side of the road to stop in front of a cab. Then he got down, spoke to the driver of the cab and transferred my luggage into the cab and the cab driver took me to the hotel. And none of these people knew English but I reached my hotel completely safe. I won’t meet those people again but I still remember this incident which happened more than 20 years back. I still hope and wish all of them well after so many years.

I have had many such experiences in my life, some which I have shared with you earlier also. The reason I share is that universe has a unique way of giving back when you do good for someone. My father used to say – give and the universe will give back to you multiple times over.

You can call it by many names – it could be called good karma or tithing or plain and simple charity also.

I have been talking about investing (not saving) a portion of your money even before the pay gets into your hands and then let the magic of compounding work for you.

A useful habit to get good karma, is to ensure you donate a certain portion of your income before you get the salary in your hand.

Donating money and seeing someone become happy because of your contribution has a major psychological impact. I get a very happy feeling for the next few days, it seems like the world is such a wonderful place to live in.

Especially with all the negativity around us, whether it is Covid or it is the political messes or the inability to get vaccination moving systematically in countries – by giving to charity you tend to feel the world is still a decent place.

One of the key things, if you follow my blog regularly – you would notice is that I lay a lot of stress on spreading positivity. The world has a lot of reason to feel negative. If with my personal experiences, where the world has been of so much help, I can make one person less depressed or one person get a reason to get a smile then it would have served the purpose of this post.

Till next time.

Carpe Diem!!!