Getting better in increments

Have you read the book Delivering Happiness by Tony Hsieh? Its a book about Zappos and how they went on to become such a great company.

The book has a lot of interesting stories about the journey and its a nice book to know the challenges they surmounted. Somewhere in the book, there’s a very small note which stuck to me for than 10 -12 years when I first read the book.

Tony says, if you were to improve yourself by just one percent everyday, one year later you would be better than the year before by 365%. This is pure compounding.

Its a simple equation, that’s why its stuck so well even after so many years. Its profound, like E=mc^2.

Is it easy. No way.

Inspite of knowing this equation have I been able to improve myself by 365% every year. Not at all.

Knowing is something, doing it is completely different.

Life passes in seconds everyday. The amount of time we waste in managing urgent things from the boss or customers eat up the seconds and before long, one more day ends.

This is the same story with our finances. Someday we think we will start our journey of financial independence…..then life passes and before we know it we are at a stage where we have spent our lives just paying off our loans.

Take your first steps get started today. Every journey has to start with the first step.

Till next time then.

Carpe Diem!!!

Bedrock

Financial Independence, meaning, Sales

I have used this term a lot of times. My understanding of the term was that it meant a fundamental principle. So for sales in B2B, especially in the technology domain, you need to be making calls on the customer. If you don’t make calls on prospects, you can’t get sales. Investing is the bedrock for financial independence.

However the actual meaning of bedrock is that it is solid rock lying below loose soil.

Why is this important.

It seems a bedrock can give out the history and evolution of that place. So as per National Geographic – the southern part of the state of Indiana in the United Sates has exposed bedrock while the northern part of the state of Indian has metres of soil below which the bedrocks exist. What that means is that it gives the geologists the ability to determine till what point did the glaciers exist in the Ice Age. So when it became warmer, the glaciers started melting and the water started interacting with the rock below and cause the rocks to break over hundreds of thousands of years to create soil. On the other hand since there is no soil and the bedrocks are directly exposed, the glaciers did not extend till the southern part of the state.

When space crafts land on places like Mars or on our moon, they actually collect these kind of samples to see and determine the age, the chemical reactions that the rock/soil have undergone and then determine if there was water , life etc on that celestial land.

I couldn’t imagine that the word which was part of my everyday vocabulary had such a major geological meaning behind it. The whole space program of many countries and now private parties is to find if other planets have life or can be inhabited. For anything to be inhabited, there should be an ability for life to exist. Life exists if there’s water among other things. Studying the bedrock you can estimate if water ever existed and if so how long back.

Till next time then.

Carpe Diem!!!

Asset Allocation – concentration within an asset class

Abundance, compounding, Financial Independence

Today I am writing on financial advice after quite a long time. I have written multiple times earlier also about how asset allocation is important to buffer you against shocks in one asset class. Especially when you look at it, when you are in a debt instrument like a Fixed Deposit or Term Deposit with a bank then the amount promised (or interest rate promised) is almost guaranteed.

On the other hand prices of stocks and commodities keep going in cycles and real estate also moves in cycles. As they move in cycles they also have a tendency to go down multiple tens of percentages during down markets. On the other hand they also spike up multiple tens of percentages and can over many years give a massive inflation adjusted return.

But keeping your portfolio balanced between different types of assets is critical because being concentrated in one asset class can totally destroy your wealth.

Today however I will talk about why it’s important to concentrate your allocation within an asset class.

As Garrett Gunderson says, being diversified means lack of knowledge / conviction. If you are not confident of the items within an asset class on which you are confident of growth then its better to invest in ETFs or mutual funds for that asset class. These are designed to generally be diversified so that the individual risk is avoided an average return can be delivered. These are however also at risk of market fluctuation.

On the other hand if you see when the news reports talk about a market being at a high or low, they always talk of a certain “bucket” of stocks. Which means it is the average of all the stocks in that bucket.The Nifty or Sensex or the S&P 500 are all examples of buckets in different markets . These buckets are also called index.

As in any average there are things which are way above the average number as well as way below. If you have invested in the stocks which are way above the average, then you can make returns which could even be more than 10 times the index over a period of time.

However the amount your portfolio can grow is determined by the quantity of these “peaking” stocks that you have in your portfolio. If these are only say 1% of your portfolio then even the growth of the 1% by leaps and bounds will not be helpful if the remaining 99% is not growing. If you want to get compounding to work for you, to help you create abundance, then the stocks that you have should be the ones that have the ability to grow faster

I learnt this lesson when I was reading the Motilal Oswal Wealth Creation studies and its a critical aspect for your investing, of you are doing it on your own. If you don’t have the conviction or heart to do this kind of work to build your portfolio then its better that you focus on mutual funds and / or ETFs.

Till next time then.

Carpe Diem!!!

Three Hundred Posts

Affirmative action, Financial Independence, Habits, Marketing

I didn’t realise it but yesterday was my 300th post. What an achievement. For someone who didn’t know what to write and was always wondering why will anyone read my posts, to today watching this number made me so happy.

This journey started about 4 years back and I took my domain name around this time. Then I took the WordPress subscription to link my website to my domain.

Initially even putting up one post was an ordeal. As a matter of fact when I hit the 25 mark, I actual had a celebration post. To write my first hundred posts took me almost 3 years painful years because each time I would sit down to write on a weekend, I would think I did not have enough data and so I would go in search of data and the post would not get written.

Last year because of the lockdown due to the Covid pandemic, I got some amount of time at home and I started listening to various podcasts, one among which was I Love Marketing which is run by Joe Polish And Dean Jackson. Joe keeps talking about 2 things which I have taken to heart.

One is that – Its better to be prolific than perfect and

Two – You learn a little by hearing / reading / watching, you learn a lot more by practicing and you love the most by teaching it to others.

I have always had this penchant for wanting to share my knowledge but I didn’t think it would be of value to others so I never bothered. Then I cam across the video series on YouTube by Gary Vaynerchuk where he would put out a video everyday on wine tasting and the kind of wines he was tasting. These were short videos.

That got me on this journey to take affirmative action, to share from my practical experiences in marketing and in finance and then whatever I was reading in terms of improving our performance and health. All my articles after that have been keeping one principle in mind, you should get bite sized information in a quick read while you are standing in the line to take your coffee.

Thank you for being active readers of my blog. I hope I am able to give you even more value in the future. This writing everyday has now be one a habit and I don’t let a writer’s block come in my way. I just put down my thoughts as they flow.

Till then

Carpe Diem!!!