Friday, July 31 2020
Source/Contribution by : NJ Publications

Most of us, if not all, are in a journey from scarcity or deprivation towards financial well-being and ultimately financial freedom. A big part of financial freedom, to me, is having your heart and your mind free from the worries for the needs & necessities in life. Most, like me, may have traveled many years in search of this elusive freedom but are yet to reach a point where anyone of us can jump and say, “Hurray! I have made it!!”. Worse still, we do not know for sure if we would say that line even once in our lifetime. This uncertainty was disturbing. What is the point then in slogging for decades in our work if we could not be financially free? What was that I was doing wrong? Was I on the wrong path? The questions where simple but profound and had to be answered. But sooner than later, the realisation was thankfully clear to me.

We have all perhaps, spent too much criticizing all factors external for what we do not have today. Whether it be business, salary, markets, friends, family, our advisors and so on. Rarely do we realise that it is only our decisions and actions in our past that has led us to what we are and what we have today. That's the only true fact. It is our own experience, our own mistakes and the lessons from our past hold that now hold the key for our future. Understanding these lessons, some from our own and some from other's lives, can help us take control of our journey towards financial freedom. So let us pause for a moment and recall our own important lessons of life. Here are a few lessons that I could recall,


Time is the most important resource that we have in our hands. One could always make and loose money and again make some money but time once gone cannot be bought back. To know, that we have only limited productive years of our lives remaining before us, is humbling.

Worse, what's the point of financial freedom at an age when you are too old to do anything exciting? The lesson was that we had to make the most of whatever time we have and we have spend and plan time as our most valuable resource. The time we have now is more precious than it was at any time in past or will be in future.


Ajay, a friend, had a decent job with good salary. But even after years of working, had no wealth created. It turned out that he had three loans – home, personal and vehicle loans that he was repaying apart from the fat credit card bills that hit his salary account regularly. It was clear, Ajay was not investing in his future but was still paying for his past. Ajay still continues to toil in his old job when he could have done so much more! Apart from the financial hit, being in debt often makes us feel suffocating, discouraging and makes us avoid taking any risk in our lives. And that perhaps costs a lot lot more. The lesson learnt was to avoid getting into debt and spending only on what we needed rather than what we desired or wanted. Even if debt could not be avoided, it was better to reduce to the maximum extent possible, especially when it came to depreciating assets.


Long back I remember hearing the stories of wealth creation by investing in equities over 15-20 years in time. I also distinctly remember reading about SIP and mutual funds and the power of compounding over long time. Today, when I look at the returns for the past 10-15 years given by some equity mutual fund schemes, I often think of the great wealth that I had missed creating all this time. It is amusing that neither me nor my bank balance remember where I saved or spent the money that I had during all these years. The one regret I now have is that I should have invested more and more to the extent I could have in equities and had the patience to hold the investments all this time. I could very easily have been an example of wealth creation myself. The lesson learnt, and the hard reality is that, the power of compounding in equities is true and it is only me that stopped it becoming a reality in my own life.


Vijay, another friend, I remember invited me to join a plantation scheme of some company in north India. But Vijay was not alone and I often got to hear of many other schemes to invest into and get high returns. Some networking schemes promised to make me millionaire faster than any else could. Mind you, these schemes were very popular and some are even today. While I was fortunate to have not invested heavily into these schemes, my friend Vijay and a distant relative did loose a lot. Last heard, a panwala in my locality who had recently closed shop; was running a chit fund and he disappeared overnight with over s2.5 crores! The lesson that I fortunately learnt very early in my life, at a small price, was that promises of quick money making schemes are seldom true. It is always better to trust and invest in legal and governed financial products, even if the promise is not too high rather than to invest in dreams and unsolicited avenues. What puzzles me more now is why people like Vijay and that distant relative had so easily trusted these schemes while shying away from equities all the while?


Looking at the past, I also realise that I have procrastinated many decisions and never took control at the right time I should have. The reasons that I can find and justify today are only of lethargy, indecisiveness and the general lack of a vision or a goal in future as a compelling force to take timely action. Fear, lack of knowledge or resources or operational issues turns out to be the least important reasons today even though they might have resulted into many decisions being not taken. On procrastination, I find that many decisions that I chose to procrastinate, even for few days, ended up being extended into months and some were even never taken. Lack of vision or financial goals in life is another big reason why most of us find ourselves still looking for answers to fund those goals. The lessons learnt are many here but they all boil down to one thing. We need to take control of things NOW else everything else will take control of us, day by day, each day.


Life is the best teacher if we want to learn, be it financial matters or otherwise. Peeking into my past experiences has only made me realise this and made me more humble. Today, when I look back, I believe it was not the right decisions or the intelligent ones that I made but the wrong ones and those decisions that I did not make which are more responsible for my present. The timeless principles of investing – start early, save regularly and save in right asset class instantly come to my time. They sound very grounded and appear golden today; somewhat matching the shade of hair colour on my forehead. Perhaps, had I trully believed in them long before I started colouring my hair, I could have afforded my own hair stylist today.

- An Experienced Investor.

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