When people buy expensive things (by their own standards) they justify to the world (more importantly themselves) saying ‘It is an investment’.

Please do not say that. That Rs. 5400/- shirt, the Rs. 7999/- leather shoe, the golf membership, Golf kit – maybe they are useful and you need it, but stop calling them investments. Investments pay dividends. Expenses do not.

Wait a minute, I am not saying that a Gym membership will not improve health. I am not saying that playing Golf with rich and influential people will not improve your business – like hell it will. But it is not a financial investment. It is a brilliantly well thought out expense meant to get business. Yes we all do it.

However when you buy a big car and say ‘when my parents come to Mumbai and my brother also comes..we need a big car to go to the airport’. Actually on that day you can hire a big car. What you need now for yourself and your wife to go from Panvel to Lonavala for a drive is a Nano. That is the car for which your budget fuel allows you to buy!

Look at every expense or investment – and see whether you can afford it. There are just too many people reading this blog who are just NOT READY for equity investing. Such people have no business investing in equities. It is too expensive for them.

Whether it is eating, running, exercising, or investing – it should be towards a goal. If you have to reduce body weight, reducing sugar, carbs, salt, HAS to be a priority. EATING SUGAR IS EXPENSIVE.

So if you are focused about what you are doing, think hard before you incur any expense or make an investment. For e.g. if I am on the road and feeling thirsty, I do not shop for water. I hunt (and find at least in Mumbai) for a coconut water vendor or a sugarcane juice vendor – I do feel that the plastic in the water bottle is TOO EXPENSIVE.

So remember an investment is one which pays you a return. So an expensive car or house (yes, you can afford it and you have 1000% right to enjoy it) are nice things -BUT THEY ARE NOT investments. They may increase your business, but they will not pay a cash dividend. An investment that does not pay dividend or give growth is called NPA.

NPA is a euphemism for bad debt. In my head an investment that does not pay returns is NOT AN ASSET AT ALL – why call it NPA?

Beats me.