It’s been a while since I wrote anything. My dear friend and coach pushed me to start writing again. Apparently he likes my writing.
It does make sense for me to send out these weekly newsletters because I realised that I have barely read anything since I stopped writing. The accountability of the newsletter made me read a lot of stuff. In the process of writing these letters, I was learning quite a bit as well. Another realisation was that if I am not writing about the psychology of money, I am not thinking about it. If I am not thinking about it, I am not implementing the lessons learnt in my life.
Make Your Future Self Thank You
The only use of money is that either you spend it or invest it. The money lying in your bank account is an investment too as it earns some interest for you. Every spending or investing decision we make with our money has a long term impact on our future finances. What gets spent is never going to come back. What gets invested will be returned either to your or your dependents. The kind of decisions we make with our money today directly impacts the quality of our lives a few decades later. Every money decision can be put on a scale of good to bad.
While we continue to take decisions about our money, we must strive towards the good end of the scale. You can either do that by doing a lot of learning and research, hiring an expert, or by just not being stupid (remember the quote from Charlie Munger - It's remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent).
I think before considering if one should learn themselves or hire an expert, one must understand how to avoid money decisions that could have catastrophic consequences (or of a little less magnitude). Let me list down a few decisions that one must avoid -
Having huge amounts blocked in real estate or illiquid insurance policies and then struggling for liquidity on a monthly basis. It’s alright to have low liquidity in early years of earning but as you go closer to your retirement, increase the liquidity in your portfolio.
Being extremely concentrated in single stock portfolios. This could hurt.
Dipping into your “long term investments” in less than a year. Once you have marked your money for long term, why bother? Plan carefully.
Thinking that you are not earning enough to work with a financial advisor.
Thinking that you are earning a lot that you do not need a financial advisor.
Depending on your parents wealth.
Delaying your insurance purchases to manage your cash flows better.
Wasting time on trading when you could spend that time on your job and get higher increments and promotions.
Day trading. Period.
I am sure you get the gist. I can go on and on. You need to take a deep look at your money habits to see what’s stopping you from protecting your future.
What Am I Reading?
Wanting - I have just started reading this (finished a fourth of it). I am sure this will help me look through a lot of my own biases and help me understand how my desires have shaped up in the past. I am looking forward to learning how to fully (or partly) control your own desires.
The Moral Calculations of a Billionaire - The rags to riches story of Lee Cooperman and what he plans to do with his money. The focus is more on how Cooperman lives a frugal lifestyle despite being a billionaire and owning a $5 million house.
F*ck You Money - How much is enough? Why it sucks to live from paycheck to paycheck and why it sucks to have a lot of money.
Saurabh Garg in an interesting conversation with Sheba Maini. Saurabh has an interesting story to tell. Over the years, Saurabh has invested in people rather than the stock markets. He hopes that apart from the payoff that would come in the form of money, these investments (relationships) pay off in his old age too. A very interesting conversation.
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