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!!!

Burning bridges or keeping options

asset allocation, Financial Independence, Human Brain

I always have this dilemma, whether having options is the right thing or deciding on one path and dedicating all your energy and finances

There’s one theory attributed to Tariq ibn Zaiyad, who is said to have invaded the Iberian peninsula and ordered all the boats be burned after his troops landed.

The idea being if people don’t have an option left then they will concentrate all their energy in trying to figure out how to succeed within the constraints. In case people have an option they don’t put all their energy in solving the problems because they know they can go back to the other option.

The other way of l looking at it is that if we have too many options then we also end up being undecided and take no action.

A lot of investment gurus suggest that you should only focus on 10-15 stocks in your portfolio after you have identified the best stocks as per your risk profile. The idea is that it’s not possible to monitor more than 10-15 stocks. And the percentage of holding within these should be based on your conviction of growth so that you can get maximum returns. After that you should only focus on these for the long term and monitor them.

On the other hand you have people who say you should always have a safety net so that in case of a problem you know you can fall back

In the finance industry this is the concept behind ETFs and most MFs. so the returns are always averaged out to the market and there is a lower chance off loosing money. As Warren Buffet says the first rule of investing is Never lose Money and the second rule is never forget rule number one.

In my own operations I always have this argument with my peers when we are making the budget if we should only focus on one new initiative in a year and make it successful or should we have 2-3 simultaneously and see which moves. My opinion is that it’s very tough trying to ride multiple boats in parallel

Somewhere I think it may also have to do with bandwidth.

What’s your view. Would you rather go beyond the point of no return, choose only one option and make yourself a success or would you rather place bets on multiple things. I would love to heard your comments.

Till next time.

Carpe Diem!!!

Freedom of time

Affirmative action, compounding, Financial Independence, Habits

I have been crying hoarse over the last two-three years about getting financial freedom. How compounding can help you achieve your targets for financial freedom. I have also stressed the difference between financial freedom and becoming rich.

Financial issues are the biggest sources of tension in most people’s lives second only to health. If you are not sure of your financial situation, you cannot think of other things. The biggest lament of most people is “I don’t have the time”

However once you have a situation where you can be free from the pressures of finance, then you can start thinking of how you can make your life better.

Life becomes better when you are able to devote time with your family, go on family vacations, take time out to take care of your health . In all these things the common factor is Time.

While money can be replenished, time is one commodity which cannot be replenished. But when you are under pressures of finance, you don’t think in terms of the perishability of time and life happens and passes you by.

I still remember as if it was yesterday I was 35 and then suddenly I was past 45. Those were the most strenuous years of my life with respect to my financial situation and they just passed away with me trying to balance my accounts everyday.

If I had created my safety net the way I suggest to all the young folks through my writings, I would not have had to face those pressures. Once you have financial pressures your health also fails faster and its an avalanche effect.

So don’t worry even if you start small, let the magic of compounding of work for you so that you reach financial freedom faster, which help you get the freedom of time. Once you have the freedom of time there’s nothing which can stop you. The opportunities are endless.

Till next time then

Carpe Diem!!!

Evolution – the gradual development

Evolution, Financial Independence

Yesterday I was listening to the I Love Marketing podcast episode#387 (ilovemarketing.com) . If you are in any way connected to marketing, this is by far one of the best podcasts. Joe Polish and Dean Jackson give a ton of information absolutely free. Incidentally Dean Jackson also runs another podcast called More Cheese Less Whiskers and Joe has another one with Dan Sullivan called the 10X talk. All three highly recommended.

During the Q&A in this podcast while giving an answer, Joe spoke about how people first master a big pain and then when they are able to master one, they evolve and master another one and so on. So what starts as a specific issue to be mastered by an individual then becomes sharable with an audience. Then as the person becomes successful with one set of pain points he starts working on the other areas and improves there and then shares that. As per them most of the genuine personal development people actually have evolved this way.

Come to think of it, if you have been reading my blog, it has all been about the challenges I faced initially with my finances. As the years passed and I became more and more enthralled with the idea of compounding, I started sharing my life lessons on this blog. I have been a big proponent of starting small and letting the magic of compounding play its role. How even being able to carve out small amounts could help you get out of the financial mess towards financial freedom. I have shared the 100s of books I have read on the subject and even given out key ideas for everyone to work with

As I evolved from that level I started focusing on my abilities to read more and retain more, improve my health and other things.

Coincidentally I wrote in my blog a couple of weeks back, before I had heard this podcast, that my blog is going to now be talking about multiple things instead of just financial freedom/independence.

So I think I am on the right track in my own evolution and in sharing my journey with you folks.

Let me know your views.

Till next time….