This festival of lights (Deepavali) we decided to drive from Bangalore to Mangalore. It was a long drive, especially considering the hilly terrain and the frequent sections of bad roads. Overall, I must say it was quite smooth, but certain aspects of this long drive struck a strong resemblance to the world of investments. As I drove along, several thoughts came through on how this entire journey had lot of similarities with how we should go about doing our investments, and some learnings for the investment journey.
Prepare well for the journey: There is no excuse for the lack of preparation before a long drive. Engine, wheels, spare Tyre, fuel, etc. needs to be checked well. Essentials like food, water, tissues, etc. need to be prepared accordingly. Decision has to be made on the route to be taken, based on the current status of the roads. Likewise, before embarking on an investment journey, we need to prepare well. Learning about available investments, reading books & articles, watching videos, learning from experienced friends and family, and then deciding on the financial goal to achieve and the route to be chartered. Having said that, there could still be unforeseen circumstances like traffic jams on narrow roads, or flat Tyres. But we always need to prepare for the best and hope for the worst.
Start time decides the arrival time: Starting early always has a benefit, you don’t end up in rush-hour traffic jam, road is more peaceful, and the drive is very pleasant. Starting late will delay the arrival time accordingly. Likewise, investing young results in more compounding over the years, and you “arrive” early in terms of financial freedom. As they say better late than never, so starting late is still ok as long we continue the investment journey, it’s just that we might arrive later in life.
Everyone is playing their own game: This is probably the most important learning. While I drive a very basic 800cc Suzuki Alto K10 car, I am sped past easily by powerful cars. The Toyota Innova’s, the MG Hectors, the Tata Safaris, and the likes. At the moment, I realized that everyone is playing their own game. I cannot ape their driving behavior, because I simply don’t have that much horsepower. Likewise, in an investment journey, we frequently see people doing big ticket investments. We must understand they are in a different league, powerful finances, and we simply cannot copy. There were some drivers with powerful cars going slow, whom I was able to overtake. And some less powered cars who would push the throttle to the max. Here again, there was a unique risk appetite game that was being played. Some vehicles joining in between, some leaving the highway in between, different starting points, different destinations, some in Autorickshaws, some in trucks. Everyone playing their own game.
Calculated Risks are often required: The hilly terrain is treacherous, the national highways can sometimes be tricky with slow moving traffic on both lanes, occasional villagers crossing with their moped and smaller vehicles. Drive is risky, but we should be aware when to take calculated risks. It’s our life at stake here. The investment world is loaded with risky endeavors, more care has to be given at every moment. But then, with fair amount of study and confidence in the self, one should approach it with certain degree of risk appetite. Without this, we will be stuck following others for as long as it takes.
There are highs and lows during the journey: The roads winding along the western ghats are notorious. Add to that the incomplete patchy work before and after the ghats, there is not a moment to take our eyes off the road. Patches of good roads followed by gravelled bumpy roads. One needs to always be alert, watchful. There are times when markets crash, times when markets rise, one should always be watchful and make well advised investments at every moment. Life is a marathon, not a sprint. We could blow our tyres or damage the car if go full throttle on the bad roads, we must remember we are in the long drive. Likewise, just because the road is wonderful, we cannot go full throttle, there could be bumps ahead, or unanticipated distraction.
Pay the service providers happily: The national highways are typically managed by private-public enterprises who extract toll from the users. Given the smooth ride that their well-maintained roads provide, I personally don’t feel bad to pay the toll. There are highway restaurants providing good food, fuel stations, etc. We can happily pay for these services. Investment can be done with smart advisors, portfolio managers, wealth management companies, etc. Platforms such as Zerodha and Groww have mobilized a lot of money into equity recently. I subscribed to Economic times & Moneycontrol and get good services. I am sure we don’t mind paying some “toll” to make use of these services, to aid us in our financial journey.
Enjoy the journey: Well, to be honest, I don’t generally enjoy driving. But then, the western ghats are picturesque, the landscape around the highways is also stunning at times. So, it’s important to enjoy the journey. The investment journey is long & patience reigns supreme. Along this journey, we understand a lot about economic situations, different country & industry dynamics, unique challenges and opportunities, etc . It’s much more fun when we invest after some basic understanding of the instrument.
I wish everyone a very happy Deepavali, may this festival of lights bring joy, happiness and prosperity to one and all. Drive well, invest better.
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Keep it simple, stupid. 