Life

How NOT to Teach Your Children about Money (A Personal Experiment)

“Kavya, what is money?” I asked my twelve-year old daughter recently, as she was deeply engrossed in a book.

Her answer stumped me, simply because I was not expecting it and in the way she said it.

She said, “Papa, money is something that, if we don’t waste, can get us bigger and better things in the future.”

“Wow!” I told her. “You deserve a hug for this.”

How Kavya defined money may not be its perfect definition, but it effectively contains almost the entire essence of how we must handle it (money).

It contains the importance of saving money by spending less money now, and letting the power of compounding grow that money so that we can maintain our purchasing power (and still have more money) in the future.

One Idea That Could Change Your Life (and How You Invest)

“Good morning, Sir,” I called out to a man walking just ahead of me during my morning walk yesterday. Like me, he was a regular at the walking track and we often crossed each other exchanging smiles and wishes. I had heard good things about him from others, and so I thought of engaging him in an interaction.

“How are you doing today?” I asked him.

“Great, as always!” he replied with a smile of a ten-year old. He, by the way, looked ninety years of age but healthy enough to be walking at quick pace.

“I have been observing you for the past many days,” I said, “And you always wear a nice smile on your face and look so healthy. It seems you are living a great life.”

“Yeah, it’s always been wonderful,” he replied, “No regrets at all.”

“That’s wonderful!” I said, “But you’ve been lucky,” I murmured, which he could hear, “Else life is so full of adversities and regrets.”

“Yeah, that’s true,” he replied. “It’s adversity all the way, but that’s what life is supposed to be, isn’t it?”

“Maybe, but then that’s not a life you seem to have lived, right?” I asked. “I can see that you are happy and healthy at ninety years of age, and I know that you are financially free. In other words, you seem to have everything that is missing for most of us going through mid-life.”

The 38th Lesson

On a warm Sunday morning in early-April this year, I got up with some pain in the little finger of my left hand. It was a small bump. It wasn’t there when I slept the previous night, so it seemed to have appeared out of nowhere.

“You may have hurt your finger while sleeping,” said my wife.

“But there’s no sign of a cut or bleeding!” I told her. “What could be this?”

“It happens sometimes,” she tried to soothe my nerves.

Anyways, a week passed, and then two, and that bump got slightly bigger. It was a bit painful earlier, then more, and then the pain gradually reduced. But the redness and the bump remained.

Over the next two months, I saw around five different doctors, and all asked me to wait and watch and do nothing. I thought none of these doctors knew anything about this bump because each one had named it differently. And that is when I did something I now realize was one of the biggest mistakes I’ve ever made in my life.

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5 Ways to Create Luck in Investing and Life

A wise man once said, “I am a great believer in luck. The harder I work, luckier I get.”

Believers in this saying usually belong to the meritocratic school of thought. They claim, “If you’re good, you don’t need luck.”

If you’re successful it’s a natural human tendency to assume the credit for your success. After all, you must have worked hard for it and you surely deserve it. But when I think of my life, I have seen and met many individuals for whom, in spite of working extremely hard, success remained elusive.

Goes with saying that I have also met those who achieved great heights with relatively much lesser effort. These are the people who manage to attract much more than their fair share of luck. Usually, we look down on such people with some envy and disdain. It’s assumed that any success founded on an element of luck is inherently undeserving.

Do you know someone who always manages to find himself in the right place at the right time? Before you label him as lucky, ask yourself – do you think his luck is out of pure randomness? Perhaps he has a knack for arriving at the right place and at the right time.

Common sense tells us that luck can’t be controlled and it’s all about chance and probability. But what if someone told you that there was a way to control luck? Not in an esoteric way but in a rational way? If you feel like scoffing at such an idea, I would urge you to have an open mind. Just for the sake of curiosity.

100 Ideas on Living with Courage, Wisdom, and Peace (Special E-Book)

Being human means you’re going to experience a range of emotions throughout your life. They could be positive emotions like love, kindness, compassion or they could be negative ones like fear, frustration, and envy.

To get the maximum out of our short lives, we need to ensure that our days are filled with more positive feelings than the negative ones.

No matter how rich, healthy and happy you are, the pangs of depression or feeling low will hit you sometime. That’s when you may need some doses of inspiration to lift your spirit and take you out from the dump.

Now, what’s an inspiration?

When Long-Term Thinking is a Terrible Idea

During my evening walk yesterday, I was with a 75-year old gentleman who seemed fitter than I am, walked faster than me, had a wider smile than I can ever manage, and talked much more than I do in a few days.

During the ninety minutes we walked together, we talked about our lives, careers, and investing.

“What do you do for a living, young man?” he asked me.

“I am a blogger and an investor,” I replied.

“What kind of an investor are you?” he asked back.

“Well, a long term investor in the stock market,” I said.

“Long term? Great! Even I have been a long term investor all my life,” he told me. “Long term investing makes a lot of sense.”

“Yeah it does,” I said. “Having a long-term thinking is always good.”

“Well, not always, son!” he replied.

“Why do you say so?” I asked.

The 37th Lesson

On this very day last year, I had shared with you 36 lessons from 36 years of my life. Today, I complete 37 years in the present state of being, and thus wish to share with you the 37th lesson I have learned in the year gone by – one of the most powerful lessons that I believe has the ability to turn me into a better person and a better investor going forward.

That lesson is of mindfulness, or a state of active, open attention on the present.

When you are mindful, you observe your thoughts and feelings from a distance, without judging them good or bad. Instead of letting your life pass you by, mindfulness means living in the moment and awakening to experience.

“Oh, that’s same as meditation, right?” you might wonder like I did when I came across this practice some time back. Well, meditation is a tool to help you learn to be mindful.

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Why Good People Do Bad Things: A Conversation With My Daughter

Volkswagen, the world’s third largest in terms of vehicle sales, recently admitted to cheating on emissions data for 11 million of its diesel engine cars sold between 2009 and 2015.

As I was explaining the scandal to my daughter, the first question she asked was – “Why do they do such wrong things, Papa? Aren’t they already rich?”

“Good question Kavya,” I said. “It’s especially good to know that you understand what they did i.e., cheat their customers, was wrong.”

“But they are good people, right Papa?” she asked.

“Yes the people who created the scandal must have come from good families,” I replied, “…and must have been good with their family and friends.”

“So why good people do bad things?” she asked again, this time combining all her questions into one.

“Let me tell you a story, Kavya,” I said, “…story of a young girl named Barbie.”

“Wow, Barbie is my favorite doll,” she exclaimed with a smile.

“Yeah, but for the time being, let’s forget that she is a doll and let’s focus on the story.”

5 Things I Learned from Elon Musk on Life, Business and Investing

Here’s a simple question someone asked on Quora – Will I become a billionaire if I am determined to be one and put in the necessary work required?

Here’s how a lady answered this –

No.

One of the many qualities that separate self-made billionaires from the rest of us is their ability to ask the right questions.

This is not the right question.

(Which is not to say it’s a bad question. It just won’t get that deep part of your mind working to help you — mulling things over when you think you’re thinking about something else — sending up flares of insight.)

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My Most Powerful Tool for Thinking and Decision Making

Note: This is an updated version of the article that was part of the May 2015 issue of our premium newsletter, Value Investing Almanack.

When historian Charles Weiner looked over a pile of Richard Feynman’s notebooks, he called them a wonderful ‘record of his day-to-day work’.

“No, no!”, Feynman objected strongly. [1]

“They aren’t a record of my thinking process. They are my thinking process. I actually did the work on the paper.”

“Well,” Weiner said, “The work was done in your head, but the record of it is still here.”

“No, it’s not a record, not really. It’s working. You have to work on paper and this is the paper. Okay?”, Feynman explained.

Richard Feynman, who won the Nobel prize for Physics, understood that writing his equations and ideas on paper was crucial to his thought.

Let me ask you this – how many times it has happened that, after reading a book, you thought you understood the idea but found it difficult to explain it to others? The idea seemed pretty clear in your head but the moment you had to verbalise it you discovered that either you didn’t have a proper grasp on the idea at the first place or you were unable to explain it in a logical coherent way to a third person.