We all have long lists of books that we want to read but a very short list of books we actually readš¬. A few of us at Zerodha figured why not read a book as a group by setting small targets like 5-10 pages a day, make notes and see if we can push each other to read. Surprisingly, we managed to finish one book completely.
So we figured why not do this on Tradingqna so that other interested folks can also join in. The idea is to read one book together and discuss here.
So, for the first book, a lot of people on the team suggested MONEY WISE: Timeless Lessons on Building Wealth, written by Deepak Shenoy. The book came out recently, and itās Iāve lost track of the number of people whoāve recommended that I read it.
For those of you who donāt know, Deepak is the founder of Capitalmind and a market veteran of over 20+ years. Capitalmind is one of most popular finance blogs in India-one that I often visit to understand a lot of confusing thingsš Deepak also started a PMS by the same name a few years ago.
So pick up the book, start reading along with us and we can discuss and help each other IQ go up a couple of points at least. Keep updating your progress here and if you find something that relevant to related to the topics in the book, please do share here. At the end of the month, weāll try inviting Deepak to pick his brains either here or on a podcast or Clubhouse.
I never had a hobby of reading books but always wanted to inculcate this hobby. I hope this initiative will help me. This is going to be interesting. I am in
Just got done with the first three chapters, and its good going until now. Some takeaways :
The story the Author shared about his father is heartening and educational at the same time.
This dichotomy is seen at many places, but especially related to money and markets where the person may be doing absolutely well in one area of money, but doing equally questionable things in the other. Similar to how Authorās father was stuck in the cycle of paying back a heavy loan, yet still somehow managed to keep a habit of building a portfolio at one side.
Good for them the habit paid off handsomely at the end.
The Power of compounding.
Well, no matter how my times one brings up this topic, it still somehow manages to have the same impact. I am myself guilty of not using compounding where I could and have in hindsight may have lost for it. But as they say, the best time to plant a tree was 20 years back, the second best is today. So yeah, lets keep the reminders coming.
@Bhuvan it will be great if we could have a AMA/QnA with Mr. Deepak Shenoy at the tailend of this book. Looking forward
@ Others, where are you guys ? Do share anything you stumble on.
Itās always nice to hear experiences of people who been in stock markets. Gives you real insights into their thinking, the lessons they learnt and what made them successful in this journey.
In the beginning chapter, Deepak shares a really good story on savings habit of his father, how he despite making modest salary, managed to keep money aside to invest in shares and this despite paying-off loans he had took.
Quite a big takeaway actually, saving and investing is something a lot of people shy away from and donāt actually take seriously. Especially when weāre young, weāll actually spend substantial sum on things that arenāt at all important and not needed but will never save
Itās important to build this habit early on. Initially the returns we make might sound interesting, but this is a long game. Starting early gives ample time for your money to compound, which over years will become substantially big.
While we have heard this countless times, it is yet another takeaway. To diversify your investments. Not all the stocks you invest in grow big, infact most will be duds but over a long run some stocks that make big will make substantial difference.
Hope others have managed to start off as well. Will love to hear your takeaways.
One great point raised here is that focus of building wealth at least in the early years should be professional income/work income and not the markets. This is especially true for millenials who are being tunneled into thinking about marginal improvements on their investments or the lack of it, all while being advised by popular culture that their job is coming in the way of their entrepreneurship dreams and the only way to āmake itā is to quit their jobs right now and startup or do side hustles.
I personally believe not everybody is cut-out for this. Career income through your chosen profession,work,job is still one of the most reliable and time tested ways to generate good inflows. So maybe thinking about whether you are generating 1% more return is of less value in the early days than thinking whether you are working with 50% of your capabilities somewhere or 100%.
10 years of working fully engaged in a field you like or are acceptably good at can give way more returns than any other instrument will. But thatās just my personal opinion.
This quote from the book puts it way more concisely : āThe first crore you make will largely come from your income, from the work you doā
1 Crore although sounds a hefty amount, it isnāt the same 1 Cr as it was in say 2000 when most of us were growing up. Back then it would be enough to buy say a good house, a car, a vacation and something to spare.
Today with 1 Cr, especially in a city such as Mumbai where I live, youād be lucky if the flat you bought is more than 400 sq.ft in an average neighbourhood and over its 30 year old mortgage period, the loan amount youād pay for it, would be somewhere in the vicinity of 2.2 to 2.5 Cr depending on the interest rate. You basically need to hit that mark just to get by in Bombay, not even thrive. Iām sure the situation is not too different in other Metropolitan cities of India as well.
I donāt know claim to know the exact figure, but an average inflation of 5% in a rapidly developing country like India, means by the time you reach there , its value is already almost halved in another 15-20 years. So I am not sure, where the risk taking part to get to 1 Cr figure is required.
If the average millenial employee who works for a moderate sized company works long enough and is still to failing to meet it within their lifetimes, I would be a bit surprised than otherwise. And Urban India has these individuals in good nominal terms atleast if not representative of the population of India as a whole.
The book does have a section on whether the risk you are taking is commensurate with the returns you are trying to get, would like to know your thoughts on that bit.
Also āa bit of riskā is a very subjective term. One manās risk is another manās play as they say.
So unless you are willing to define what it is, it may become a moot point.
By āmany peopleā I was referring to around 99% of Indians who donāt fall under the tax bracket. By risk I was referring to a sum of money, the loss of which could have a significant impact on oneās life.
Risk is not always directly proportional to returns. I can buy a Rs.100 lottery and be a crorepati tomorrow. I could buy bit of crypto that shoots to moon tomorrow and make me a billionaire. My risk amount is very low in either case but my returns are very high. Returns are also a function of luck or the right place at the right time like thing.
The Psychology of Money book should be the next book to be read.
In short, This book tells why money is a piece of paper which does nothing but still people long for it giving up important aspects of life(Health, Time, Freedom) and Some of the perceptions people have on money.
Note: Author also talks about why ,when, how will the money be important.
Many people get into stock markets thinking of making quick bucks, but this is the hardest place to make money. As pointed out in the book. In initial days, the focus should be on generating income rather than returns. And before investing in volatile assets, park your initial savings in low risk assets to build safety net. Which will come handy in times of emergency, when the going is though. And then start allocating your savings to volatile assets like stocks.
Also, IMO, investing is easy part, the hardest one is to stay put, especially during the drawdowns, with constant flow of information and looking at daily P&L fluctuations, even the slightest drop sends people in panic, leading to prematurely exit their investments. Many of us also try to time the markets, waiting for the next big drop, only to see markets rise all the way up.
āYour emotions wonāt let you invest because the market is āhighā ā and yet, if you had waited for yet another bottom, it would simply not have come. Most of the money in the markets is made by having a position, not by standing outside the airplane wondering if itās a good time to get in.ā
Letās do itā¦
