Insight into Money Management
Everyone says invest in share market and hold for long term it will surely give you a good profit. If we see Reliance stock it has given nearly 200% return in last 5 years and approximately 3000% in 10 years. But in first four years it gave almost no return when other peer group companies were giving good Returns. In 2007 and 2008 they had huge dip and again from 2009 to 2016 they did nothing so do you have patience inside to pay the price? can you give that price to market? If there is a dip of 10% then people will say goodbye to the market so suppose you had taken the shares in 2006 when it fall would you have that much of risk appetite to hold it, that’s the price we have to pay to the market for patience.
People will spend money in random things for example they will have a coffee of 500 rupees, will order pizza 10 times in a week, will take big subscription of Netflix and Prime but on the same they will not be able to put Rs.2000 a month in share market neither they can invest in themselves because it’s better that you invest in yourself.
We are never satisfied, nothing is enough for us. There is a fire or curiosity in us to be successful that often forces as to compare us to our friends, influencers that I must have better car and house than my neighbours, better salary than friends. Being competitive is not bad it’s good but when that competition changes into comparison then it pushes you in a jealousy pit. when a men with scooter see his neighbour’s car, he thinks he is so rich and that car guy sees someone’s Mercedes in his colony of any businessman he thinks man.. what a life, then Mercedes guy think of bill gates and elon musk and watching them they become jealous. Getting jealous from other success instead of that get inspire because there will always be people who will be happier and richer than you no matter how big you become you have to understand that we should not compare or financial stand point with someone else financial stand because everyone’s risk appetite and capacity is different.
There is a difference between wealthy and rich people. Wealthy person will have 25 sources of income, will invest in 25 places and diversify but if you will compare yourself with them, you may not manage 25 at this point of time. you should have 4 or 3 sources only. It is better to play a long game with a positive mindset than to see others faults.
In USA, every year nearly average person put 30000 $ in lottery because many of them think that the financial success happens only because of luck, they don’t value hard work or consistency, in our country also many people have this mindset. We look at the people who earned as either by being corrupt or doing scam is also because we don’t think of things as logically, we think it as psychologically. we generally take all the decisions of finance psychologically rather than logically which is wrong. So, one thing we have to understand that true wealth is that which you can’t see. You must be thinking by looking at Ambani seeing his Antilia, wow, his life is set everything is good with him but do you ever think how hard he must have walked to reach that level, do you ever think how difficult it is to run such a big empire, and how much billions, how much debt is there, how much is the pressure of employees, how much is the pressure of goodwill where we are not even able to manage Rs.50000 in house. It’s very important that you have to understand efforts before understanding richness and wealth. For example, we see people’s car on Instagram we think this guy is so wealthy, no, you don’t know his loan of lakhs. Those who show off wealth they get poor soon too.
Real wealthy are those who have freedom, who is not accountable to anyone or not answerable, who has freedom to work anytime or have time to spend with family, that is basically financial freedom that if today you decide not to work for 3 months, then also my life will go on like it was going on. Financial freedom is when you decide to do five trips every year let it be 8 to 9 days you do it.
Few key pointers
- Protecting your wealth is more important than creating wealth many people become rich but then they also end up losing all of it very soon. Money should be used to achieve freedom more than a good job, a big house, luxury car.
- wealth should be used to buy time
- The actual wealth is not a seen but what we do not see
- Nothing is free in the world – social media handles are free but in reality, there asking for your time and data instead of money therefore everything has a price we should know what that price is and then decide whether we want to pay it or not.
- For investment the real price of investing is to deal with various emotional and mental states like fear, doubt, uncertainty, greed and regret. According to Morgan Housel, instead of being afraid of market volatility we need to think of it as a fee that one needs to pay to become a good investor
- Being rich is not equal to being wealthy. You will always equate being rich as what things that people have and show off .
- While some of us may think we are financial wizards, what we need to remember is very simple yet key soft skills, behaviours and actions that have made millionaires out of average guys and paupers out of millionaires.
- Financial success is not a hard science. It’s a soft skill, where how you behave is more important than what you know. I call this soft skill the psychology of money
The major source of conflict while investing is with yourself. Investing is more than just buying and selling stocks; it is also about balancing greed and satisfaction. You can chase cash after cash, but for how long? It is never a good idea to put your possessions at risk for things you do not need.
A wise man once said “Planning is important, but the most important part of every plan is to plan on the plan not going according to plan.”
Vipul Kottawar , SYMMS