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Personal Finance

If you have to think about buying something then it means you cannot afford it! -- MJ DeMarco

4 pillars​

Protection​

Adequate life insurance (To ensure your dependants don't struggle in your absence), Health & accident insurance (To ensure the expenses don't cause a financial strain & portfolio drawdown). Emergency funds and possibly, a medical corpus.

Investments​

Asset allocation, risk management, goal-based planning.... The usual gospel

Taxation​

Minimizing the amount you pay to the taxman and the corresponding impact it has on your portfolio. Understanding the power of capital gains vs income tax

Administration​

This is arguably the most important, and the most overlooked, pillar. It encapsulates a wide variety of actions ranging from financial tracking to the formation of a continuity plan (To ensure your dependants can continue in the case of your demise). Central to these is ensuring that wills are made, the right nominations have been selected/updated, and the sharing of important documents.

Personal Finance - Mutual Funds - YouTube

Sequence Risk / Sequence of Returns​

Investment Risk​

Portfolio Rebalancing​

How to rebalance your portfolio? A guide - YouTube

Mindset​

I Read over 100 Wealth-Building Books to Learn These 5 Lessons - New Trader U

  1. Pay Yourself First, Not Last
  2. Real Wealth Is Invisible
  3. Index Funds Beat Almost Everything
  4. Your Money Mindset Determines Your Results
  5. Assets Work, Income Doesn’t Scale

5 Things the Middle Class Thinks Are Assets but Are Liabilities - New Trader U

  • Primary Residence Bought at the Edge of Affordability
  • New Cars Purchased with Loans
  • College Degrees with No ROI Analysis
  • Vacation Timeshare
  • Whole Life Insurance as an “Investment.”

Thinking about Money​

When I started my career, my salary was 10-12K/month, working with an NGO. I had to make A LOT of decisions to survive. This destroyed my peace of mind.

Surviving meant, making decisions like-

  • How to eat under 60Rs/meal?
  • What to do if my rent went up by 5%?
  • If I was running late for office: can I afford to take an Auto?

These decisions looked trivial. But, make a few bad decisions & I'd run out of money by month's end.

Every decision had to be carefully weighed. And, it added fatigue.

As my wealth grew, I ensured that I had to make fewer & fewer decisions.

Here is an example:-

  • I started following 0.01% of liquid net-worth rule.
  • Let's say my liquid net-worth is 1Cr.
  • 0.01% of 1Cr =1000Rs.

I don't need to think about spending 1000Rs (frequency= 2 times a day max). Overtime, I stopped looking at:-

  • How much I spend on coffee.
  • Restaurant menu prices.
  • How much I spend on Uber etc.

Realistically, I would not spend more than 10-15K/month on this

More money= fewer decisions= more peace. Repeat the loop.

Use money to buy peace. And, use your peace to make (fewer but) better strategic decisions that improve the quality of your life.

Others​

  • Folks, I’ve some big plans of my own this year that’s going to suck the money out of my wallet. So, I’ll have to ditch this trip to Goa (adulting sucks). But come and hang out with me at home before you all go, and we’ll have a blast?