Adventures – have a life – get experiences

While I keep talking about compounding and investing it does not mean that you should not have fun and live a life.

I am actually wanting you to invest so that you can enjoy your life. While some of my advice may make you wealthy in the long run, most of my advice is to help you live a life today.

A well lived life is about getting experiences. In my view the best experiences are gained when we travel to different parts of the world and see different cultures and eat different foods.

I got this trait from my father, who showed us so many countries when we were kids. The education and learning I got by travelling helped me become a more tolerant and considerate person. It also taught me on seeing different points of view, appreciate different food habits and enjoy in whatever surrounding I am.

When I became an adult, I decided that India itself is a very big country and I made it a point to see and show my family various parts of India first.

There is a treasure trove of history, food and culture all across India – whether you go to Rajasthan, Gujarat and Maharashtra in the west, to Bengal & Assam in the east, to the states of Karnataka, Tamil Nadu, Andhra Pradesh and Kerala in the south to Uttarakhand, Uttar Pradesh and Himachal Pradesh – there are snow clad mountains, to forts to human evolution – everything and no two states are alike. That’s the beauty of India. We have been to most of India, sometimes travelling the countryside by road and enjoying local fruits and foods and sights.

Then over the last 2 years I have been making it a point to first show my family all the countries I had seen as a kid and then cover my bucket lists.

So I have taken them to Canada, Switzerland and France. Some more countries remaining on the agenda include UK, Singapore, UAE and USA

I have shared earlier also that I have a huge bucket list – from seeing the northern lights and southern lights to seeing the giraffes in their natural habitat, to exploring the Mayan and Aztec civilizations and to see the Gold Coast.

This kind of extensive travel, often, is not easy on the pocket, specifically for an individual who is earning a salary in India. Especially when whatever you save becomes 70 times less when converted into the US Dollar or about 85 times less when compared to the Euro.

That’s where the concept of buckets comes in. Again this is not something I have invented. I use this concept to build my asset allocation. Some of the money is kept in cash equivalents for emergency purposes. This is usually not with me because I would end up spending it. Then I have a set of regular SIPs (Systematic Investment Plans) for mutual funds and stocks. These are my forced saving methods where the money goes out of my bank account on a pre-determined date and I cannot do anything about it. And then I have a bucket for my “bucket lists”.

Whenever I get some backlog of salary or allowances I put this amount into putting together my corpus to fund the initiation of my trips. If I can find a way to pay for the tickets and the visa costs then I plan my journeys. Usually planning a journey takes about 2-3 months. During this time and till I complete my journeys I save whatever I can to pay off the travel bills without taking credit card debt.

Inspite of all this I am short of some amount always, because we always end up spending more than our budget. That’s when I take some profits off the table from my investments. This is not a good strategy because I only tell you that the longer you keep the investment the better is the chance for compounding to do magic. But the value of the experiences which I can give my family have a much higher value so I do encash some of my investments to pay-off the expenses.

My advice to you also would be to always create a budget for gaining life’s experiences. Using those experiences you can tell stories to your friends relatives and grand children. That’s what will make your day and give you a richer life. Wealth can follow.

Carpe Diem!!!

Are you covered to live past 90 years

Financial Independence, Uncategorized

I had gone to Lucknow ( capital of the state of UP in India) last week for celebrating the Golden Anniversary of one of my in-laws. In their house they have a decent size lawn and also a lot of pots and trees in the garden.

While sitting in the garden, having my coffee I noticed an old man mowing the lawn with a manual lawn mower. Since you don’t get to see a manual lawn mower too often these days I got talking with my in-laws about it.

That’s when my in-laws mentioned that the gardener was in his 90s and peddled down on a bicycle about 17 km everyday to come to their house and do the gardening. He does gardening in about 5 lawns in the vicinity and spends an hour at each location. He earns about 5000-7000 INR every month- about USD 900 /annum.

The positives from the interaction were that he was so healthy and fit even at 90. He was able to move large pots around even though I would never be able to lift those plots. I felt extremely happy to see a 90 year old, so healthy and independent. I did not get an opportunity to talk to him because I got caught up in some other engagements there.

However it got me thinking, would he want to do this activity if he had the financial freedom. Was he working because he had to earn his daily bread or what were his circumstances at home which pushed him to travel 365 days on a bicycle to earn such a meagre amount.

When I visited Canada in 2017 in one of the department store I saw ladies at the cash counters who in my opinion were more than 70 years working on the basic minimum wage only because they did not have any savings to last them their remaining life. Yesterday I met one of my old colleagues who is now settled in the USA and he mentioned that the official retirement age in the US is now 67.5 years. So as countries are ageing they are trying to increase the official working age. But for countries like India where the population is still very young, the increase in retirement age from 58-60 in most cases is still afar cry.

Globally the average age of the people is increasing with better nutrition and medical support. If Dr. Peter Diamandis is to be believed in the next decade the breakthroughs in science will help people live well over a hundred years. However the working life of an individual is only about 30-40 years while they will have to support themselves without an active income for the next 30 odd years.

Just with pure saving instruments its not feasible to beat inflation and grow your money. You need to be investing money on a regular basis from a very young age so that the you can get the benefits of compounding. If you will notice Warren Buffet’s dramatic growth in wealth has been after he crossed the age of 60 because the compounding equation is an exponential equation and as the number of years goes up the impact on your investment is dramatic. He started investing in his early teens, so close to 70 years of compounding has made one of the richest men on the planet. At around the same age our gardener is still trying to earn USD 900/- per annum because he did not make investments.

Compounding is such a simple equation that grade 7 students are taught in school mathematics. However our teachers are not able to show the implications of that equation because what is simple is not always easy to comprehend and most people inspite of knowing it don’t apply it ever.

I would strongly recommend everyone to read the book “The Compoound Effect” by Darren Hardy to see the benefits of compounding in all walks of life.

Use this simple equation to make your life easy for the long run and be secure to live well beyond 90 years.

Carpe Diem!!!

How women in India can change the destiny of the country – part 2

Financial Independence, Uncategorized

Continuing where I left last, when more women come into the workforce there is money in more hands.
First this money goes to ensuring that the basic necessities of life are taken care of.

The good thing about basic necessities however is that once they are taken care off, there is not too much more that needs to be done , so once you have had three meals you can’t have one more meal during the day.

Once people have more money than they need to take care of their basic necessities they do 2 things – one they try to save and two they like to move up in life by doing discretionary spending.
When discretionary spending starts to happen the GDP growth starts to multiply. In India from the time the per capita rose from $1000 to $1700 one major trend that is seen – last year the growth of Air Traffic has been faster than the growth in rail traffic. The per capita is expected to in the next 7-8 years hit $3000/-. That is considered the poverty line in countries like the US& Canada for a family of 5. But adding $1300 per capita into more than 1 billion people can mean such a huge uplift for India.
Just with the addition of $700 per capita (from $1000) even though the Indian economy does not seem to be doing very well, still you have most Metro airports and all the Planes and flights which I have taken recently completely full. Whether it is low cost Airlines like Indigo and Go air or full service Airlines like Air Vistara or Air India you don’t see empty seats. There is a waiting list for cars and 2 wheelers. People are wanting to move up in life. They have aspirations to be better than what their parents were.

So what does this have to do with financial freedom….

If more women come into the workforce they will add to the per capita income. Once they take care of the part of the burden of the basic necessities of the house, then they will end up spending on better education and health of their children and better quality products for themselves.

If you see trends like these and you invest in countries like India, which have a such a young demographic, you can be picking gems which can make you rich many times over. Invest through SIPs in mutual funds or invest in Emerging Market funds, but systematically go about investing in growth stories and the growth momentum can propel your finances into a different orbit…

Till next time

Keep identifying trends