Have you even wondered that there are way too many things that you have to face day after day?
Too many responsibilities, too many questions, too many possessions, too much information, too many options for everything, too many stocks to choose from, too many other investments that too many financial advisors push you to buy.
If that’s the case with you, what you need to bring back peace to your life is…minimalism.
Minimalism is basically an extension of simplicity – not only do you take things from complex to simple, but you try to get rid of anything that is unnecessary.
Practicing minimalism has brought simplicity to my life, and I love it for the time it gives me to focus on the bigger, more important things – taking greater care of my health and family.
Right from travelling with less personal luggage, eating less, using less number of apps on my mobile and less software on my PC, or having less number of stocks and other investments in my portfolio, I’ve adopted minimalism as a way of living my life.
How ‘minimalism’ has changed my investing life
After I quit my job last year, and got a chance to take notice of my personal investment portfolio, I realized things were not as nice as I would’ve expected.
I’m not talking about the overall performance of my investments. They were good enough even after the 2008 crash.
But what I realized then was that I had some investments that were just sitting as lame ducks in my portfolio – not adding any significant value to it, but just sitting there.
Thankfully, I had been practicing minimalism in my personal life for some years, so I tried to adopt it in with my investments.
Here is how I went minimalist as an investor.
First, I counted and listed all the stocks plus equity funds I had in my portfolio.
Second, I sold off/redeemed half of those investments based on their past performance, riskiness, and future potential.
Third, I reinvested the redeemed cash in the first 50% of the portfolio that I aim to hold for the next many years…possibly 15-20 years.
As of now, this is how my investment portfolio looks like:
- 15 stocks
- 5 mutual funds (ongoing SIPs)
- Infrastructure bonds
Apart from this, I regularly save money in a couple of PPF accounts (one each for my daughter and son).
I have zero loan liabilities (after having repaid my car loan 3 years back, and home loan last year), and invest whatever I save every month in a few of these 15 stocks and 5 mutual fund schemes.
One more financial commitment I have is towards life insurance, via a couple of term insurance policies.
In all, I’m practicing minimalism as an investor, and I can already see the immense benefits – like focus and clarity – that it has brought to my financial life.
Now I don’t worry about finding the ‘next best stock’ or ‘next outperforming mutual fund’.
I have complete belief in whatever little I have in terms of these 15 stocks and 5 funds and, luckily for me, this approach hasn’t disappointed me so far.
Minimalism is the path, not the destination
“There is no path to peace. Peace is the path,” said Mahatma Gandhi.
In the same way, minimalism in investing isn’t the destination you want to reach…it’s the path that you must follow.
Of course, practicing minimalism isn’t as easy as my words above might suggest. You cannot become a minimalist overnight.
But I believe you can take a few simple steps to reach ‘there’.
These are the three steps that I’ve taken in the pursuit of minimalism in my investing life. I believe these can be of help to you as well…
- Stop buying unnecessary stocks, funds, and other financial instruments (including unnecessary insurance policies). Buy only what you understand, and something that will not cause permanent loss of your capital.
- Get rid of the ‘obviously bad’ stuff from your portfolio, even if you have to take a loss. Get rid of at least 40-50% of your worst investments.
- Let go, emotionally.
The road to minimalism won’t be simple. But believe me, you will see something amazing there…not at the end of the road, but as you walk along.