I am going to give you 2 sporting examples. One of course is Cricket and the other is Running.

Rahul Dravid is not the most spectacular of batsmen. However he knew one thing – the total number of runs that he scored depended on the amount of time that he spent at the crease and the number of balls outside the off stump that he did not nibble. The balls outside the off stump was of course the cause of the downfall of most of the top batsmen in the world, especially the top order batsmen. So RD spent his time in building his stamina (5 hours of high concentrated batting is not really easy), concentration, knowing where is the off stump, and of course batting strokes. Nothing of this could have come easily nor could it have come without dedicated practice. He, of course, has a solid batting average in the 50s.

Running is another sport where you work for stamina, and you get speed. Working for stamina again means nothing great. It just means that you get up every single day and keep running. Simple, right? not everybody is able to do that. If you saw Bhag Milka Bhag you saw what effort went into building that speed. Sheer running. Day in and day out. Marathoners run for about 500 km a month. And I am talking of amateurs here. The professionals of course may be doing even more – hey they do nothing else! It also means that they lose no time walking or stopping for rest – the stamina build up ensures that even if you run slowly, your average speed is higher than people who run in fits and start.

Now what does this have to do with investing? A lot.

If you are a young, small investor, you will get rich in the long run. You need to be dedicated to your investing. No mistakes are permitted. No capital loss at all. Just a regular monthly investing in a good fund. If you are pulled across 3-5 funds and cannot decide do something simple. Invest in an index fund. No looking back. Sign up with a fund house that allows you to increase the amounts AUTOMATICALLY on a yearly basis. Most asset management companies allow you to do that. So say you are 24 years of age and can do a SIP of just Rs. 1500 per month. Sign up for that amount and increase it by Rs. 1000 every year. So by the time you are 34 years of age you will be investing Rs. 11,500 per month. What does this guarantee? Well it guarantees one thing – YOU WILL NOT MAKE A LOSS. Believe me, in the game called compounding, this is a very very important part of compounding.

So do the following:

  • Work on eliminating the subtractions, or reduce the subtractions to an insignificant level (no touching balls outside off stump)
  • Make sure all investments / risks do not disturb financial life / family / social life.
  • Maintain good health, and adequate health insurance -as appropriate
  • Deal with red flags as soon as they appear
  • Avoid chances that will leave a bitter taste for a longer period
  • Take up a sport but be careful
  • Be clean, especially if you are a government servant, NaMo is serious about bribery.

So get rich, not by additions, but by eliminating the subtraction.

 

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  1. Thanks Subra sir for this article, comparisons usually go straight into our minds. @Savithri Venkataramani : What if our country becomes like Greece due to some or other reason, we will not be able to take all our money in FD accounts. Past experiences and mild ray of hope for the future is all we need

  2. Be clean, especially if you are a government servant, NaMo is serious about bribery.

    — Cannot but laugh at this statement; how many officials have so far been punished for bribery/corruption? has anyone ever in the history of independent India heard of exemplary punishment for any babu due to these charges? forget babus, they are the policy makers/drafters, what about any politician, industrialist, policeman?

    The sole reason people go to Govt job is to be “unclean”.

  3. dear sir ,
    Now a days most of the AMCS are having SIP TOP UP facility .
    I think we should take long run means it should be a minimum of 10 years and above .
    Your article with comparisons were really helpful .

  4. Subra, you keep talking about compounding in equity but never explain how does it work for equity when return could be negative as well. What I mean is that return from 15 years of investment can be less than 10 years of investment in equity if the last few years produce negative returns.

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