Avinash.tech(…)

Millennial , one of the most used terminology these days.

Millennial ,stands for a generation who reached young adulthood in the early part of 21st century. Millennial’s are extensively targeted through Ad campaigns on TV and Social media clickbait [ having a title or description that attracts the most traffic on internet, and I am assuming I did not have to explain that. Then again, not everyone is wasting their time on internet 😁 ].

Reaching the right set of audience is important and companies have found innovative ways to advertise their brands. That shiny new gadget to accomplish everything ; that one device, solving all our problems. The voice assistant , that can understand you better than your own family… How else will we understand the significance of these hi-tech gadgets.

As kids , our lives were miserable! Think about the void we had to fill due to the lack of fancy gadgets. We were forced to play outside , make new friends, climb trees to pluck mangoes ( not legal most of the time) , run around free , breath that fresh air when rain hit the ground… All this would be boring dull stuff, compared to current generations definition of fun. (I know, even sarcasm is alien to some of them 😛). All we need today is a wifi connection and a smartphone.

My 6gb ram , super amoled phone is better than yours 😁. Doesn’t matter if the phone is used only for selfies !

Unfortunately, I am part of Millennial generation too and the feeling of being wrongly diagnosed as one, has always haunted me 🙂 .

Why you ask?

For starters , I don’t have illusions of grandeur or shortsightedness to buy/acquire something for instant gratification. I wont skip episodes/seasons to watch the Finale of a TV series. I have plenty of patience and time. I infact , like the build up, the suspense, the drama and the unraveling of characters and storline.

Likewise, when it came to investment, very early in life, I was made aware that get rich quick schemes never work.Thanks to the amazing circle of family and exquisite investment skills of my grandad.

Patience is of utmost importance if you want to achieve financial freedom. Bitcoin anyone ? 😈 How many of your friends have lost big in order to get rich quick ?

A bad decision, very early in life, taken in haste , to make a quick buck or two, will keep us away from the very thing that would have made us rich. This bitter experience should have been a lesson learnt experience. Sadly , just the fear of it, makes us never look back and revisit it. I am not talking about bitcoin here 🤦.

Avoid bitcoin like the plague – Vanguard founder

Only if I had listened to him early.. I lost 0.1% of my total networth probably. That could have been saved too 😋

Could we have done something better to avoid all this pain ?

The fear of failing is very strong in Millennials.

Even positive feedbacks are taken at a personal level. We have been brought up to always win in life. That Sharma ji ka beta took 99% percentile kinda pressure is killing the younger generation. To avoid or reduce the suicide rates and further mess it all up, the competitive grading system in schools have been taken away. Now its just an A,B and mostly gets an A to avoid the humiliation. As soon as they finish their graduation, they are introduced to the real world full of sharks and cut throat competition. Do you think they will be able to handle the sudden onset of pressure. But don’t worry we millennials had good taste of cut throat competition.

Outdoor Sports was something that taught us how to lose gracefully… , Sports have been replaced with video games and if the game gets too hard , use cheat codes or google for an answer to beat the game. Everything is supposed to arrive on a platter, just google your problems and solve them. The greatest tragedy, is that investment is not something that can be sought out on google or allow one to apply cheat codes to be a successful investor 😦 .

It is hard to arrive at a sane conclusion or set of magical guidelines, when it comes to savings. The idea that one is capable of generating great returns in a short span from the stock market, is igniting the gambler instinct in us. Remember there is a famous saying “Easy come , easy Go”. Close to 95% of the lottery winners go bankrupt within a decade of them having got the winning money deposited in their account.

Enough said , here are a few set of rules, that can make your lives better ,when it comes to achieving financial freedom. Start early; slow and steady and you will get there for sure without skipping a beat. The idea is to enjoy life on your way to financial freedom and not burn out mid way , arrive at your financial freedom chest, barely alive , hyperventilating and tired of the journey.

Rule 1: How do I save well ?
Cash is the worst form of saving . Cash attracts tax on interest earned , inflation on the other hand slowly eats into it. Cash also makes us spendthrifts, buying things that lose their novelty the next day.

Yet another online Great Indian Super Duper Bumper Mega Sale just around the corner.

Keep aside enough cash, that will sail you through for 6 months or so, and invest the remaining. When we say invest , high risk does not mean high returns. When someone tells us, high risk, setup a translator in your mind that will convert the word risk ==loss.

“High risk , high returns” should be “High Loss, probably No returns”

Diversify your investment into key areas, lowering your risk of losing principal amount entirely. One of the asset class in our portfolio is surely destined to crash and burn in our lifetime. Hence make sure , not all eggs are in one basket. Stock tip that will grow 10X in next couple years, are definitely not to be looked at, as a way to diversify savings. The idea is to get rich with the help of compounding. When you lose savings as part of a wrong investment, money lost has ceased to be part of Compound Interest ( The 8th wonder of the world ).

“I was never in a hurry to be rich , I always knew I was destined to be”

– Warren Buffet

Be frugal in spending. I have seen people come to me asking for help with financial planning, wearing an Apple watch and flaunting the latest iPhone. They are in fact struggling to meet ends , but will make sure that the world watching them paints a rosy picture of their well being.

When I say Frugal, don’t try to cut down on things that will help build a healthy lifestyle. Buy a mango that may cost 200/- a piece or a membership to one of the best gym in town.

Frugality should be shown towards silly spends; upgrade to a shiny new gadget or that brand new car for which ads appear on TV from your favourite star who does not use the product. You really think Darun Vhawan drives a car by Hamindra? These ads have been designed to tempt the average spend thrifts into tricking themselves to buy things and generate artificial need. The superficial gratification that comes with such purchases, runs out soon. What happened to the brand new DSLR camera that we all bought 😛.

Don’t be penny wise, pound foolish

Rule 2: Avoid Debt

Its way easy to get into debt these days. There are agents so desperate for commission and want you to get into the whirlpool of debt. Standing outside your workplace day in and day out, distributing pamphlets. One look at the pamphlets, and all your financial troubles seem to have an easy way out.

The best way to avoid debt, is to say goodbye to its messengers. Avoid using credit cards at any cost. The hidden charges and interest of 18% on late payment is not the way to achieve one’s financial freedom. Try to buy something with cash if possible, feel the pain that is created when money leaves hand.

Before thinking about debt as an option, reaffirm if the asset bought using loan can generate wealth on its own. If it cant, then its one of the worst form of investment decision one can take. Stay away from debt at all costs. Debt is like cladding oneself with gold chains , diamond rings and then willingly with a big grin walking down the ramp only to land into a boiling oil pan. The burn is felt only when we get into the pan and trust me it’s hard to get out of it.

Debt can be sometimes be good if it can buy an Asset that generates wealth on a long run ( called passive income ). Choosing/Finding such an asset can be a task not for the faint hearted. But do look out for the same.Real estate a couple of decades back, was one such investment opportunity that could have been acquired through Debt.

Rule 3 : Do the opposite of what everyone is doing

One of the sacred rules to investment, do exactly the opposite of what everyone is currently doing. If investing mindlessly into something that you don’t understand is the trend, stay put and never get carried away or jumping into it.

This is specially true for stock markets. Buy when everyone is selling , sell when everyone is rushing to buy. Most often people are influenced by the other person in the room making a quick buck or two and feels the urge to get in the get rich quick mania. Always remember, someone will always be richer than you. Do not make jealousy guide your soul into making rash decisions. A few such rash decisions can make one lose their life’s savings.

The same is valid for real estate boom too.Land and apartments prices are sky rocketing, thanks to some fools trying to bloat the price and there are another bunch of fools that are ready to buy them too. Everything has a cycle, what goes up, has to come down. Patiently wait for the right opportunity and then invest big.

Now there is Corona pendamic and everyone going crazy predicting dooms day. Do you see the opportunity here ?

Rule 4: Educate yourself on investment

What good is your skill , knowledge , academic accolades if you cant apply it to safeguard your money and invest it wisely. It will take time to understand the complicated world of investment, It has been deliberately made so. If it was laid down in front of you in simple to follow steps, why would we pay a hefty fee to so called Financial Advisers and Mutual Fund Houses.

They want us to believe that its hard, allow them to justify the hefty fee while making us believe that our hard earned money is in best of hands. The risk of investment to be borne by us, they will make sure that their pockets are filled in the process through commissions.

Its a very simple set of ideas :

1. Avoid people who make noise and don’t understand investing
2. Avoid people who have vested interest

Most people are gambling in the name of investing. You don’t have to hire out your thinking, just keep it simple and buy a diversified Index Fund , also read how to start investing in them.

Its always easy to deal with a guy whose IQ is 130 and believes its 120. The one with an IQ of 180, and believes it to be 200, are the one’s that will get themselves killed, and make sure they drag you with them.

Charlie Munger

Always believe, you are a know nothing investor, who cannot understand the market. Stop guessing the tides ( you can never predict if its a high followed by low or vice versa ) and stop concocting schemes to beat the market.

If dumb money acknowledges its limitations, it ceases to be dumb

Warren Buffet

Keep reading books, logically arrive at a winning formula of your own and keep course correcting based on the knowledge gained. be a voracious reader , getup smarter everyday from your bed. Someday you will acquire enough knowledge to steer away from all foolish scams and be a true wealth accumulator or an investment Guru ( who still believes, a market can never be predicted on a shorter run 😉 )

Rule 5: Never say, Money is not everything

I have had friends who tell me Money is not everything. They talk about passion , helping others is the goal in life. Money is for the greedy, life is better when you are not running behind money. Blah Blah.

I sometimes want to look straight into their eyes and announce to them ” you are broke , aren’t you ?” . Most people who talk this way are doing so to passify themselves of their financial state. Who said one has to run behind money ? Money should run behind us and for a fact ,this can be achieved using the right investment vehicle. Money should work for you ,even when you are asleep.

Steer away from people who talk such nonsense. They have absolutely no clue that money can outright help them help others . Heard of Bill gates and Warren Buffett donated around 100 billion for philanthropy? If you have the power and skill to accumulate wealth , why not do it and on the way create jobs, help others ,pay tax to boost your own countries economy. Idea of helping someone being broke does not work in the real world. So wake up!

One of my friend moved to US recently with her husband and started lecturing me on how everyone is thinking only about money these days. (This was when she found about my blog 🙂 ). Healthy argument lead to the conclusion of her being financially illiterate. The only question I put forth was “why move to US , if its not about money?”. She got offended and that’s the end of friendship. Try staying in US making peanuts as salary. Monthly Rent and daily expenses alone will make one feel poor.

American’s live on credit , India is getting westernized in this regard , sadly 😦 .

I am not saying people with financial security are absolutely happy. Its just one thing less to worry about. A study has show that most marriages go through strain due to financial mismanagement.

Seven out of 10 Americans would say that finances are one of their number one concerns. Only 1 in 10 seem “carefree” about their financial situation.

India being a developing country, the number would be more alarming !!

Such is the state of people around you when it comes to Financial literacy . Always strive to build a network of people who are smarter on both financial and intellectual levels. Choose a mentor; as soon as you find one with these 2 skills, don’t let them go. Learn what they are doing right and stick to it on a longer run. You will surely succeed !!

Hope this will help us all take smarter decisions and invest wisely !