This is partly true, partly hypothetical. One young girl – aged 31 years – married and the mother of 2 children came to meet me regarding her portfolio.

She wanted to get 15% return on her equities. Permanently, year on year. I then had to explain that 15% average is possible, but there is something called standard deviation. She had a decent kitty, but she was willing to put only about 25% in equities. So then, I had to talk to her about asset allocation. I realized that every meeting becomes a lecture on “investing basics”. I guess I need to charge people like the way I charge companies for talking about investing. I then penned down this.

Many people want to become rich or wealthy, however, most of them think that this is possible – only by winning a lottery, or ‘beating’ the market in every transaction! Try telling them something different, and they look at you like you are from Mars or Venus. I realized that people are not on earth! Many of them also believe that to have a good standard of living well in the future, you need to sacrifice a lot when they are young, or wealth has to be inherited. I either have to reach them through a book, blog or videos to tell them that small changes in life have a long term compounding effect on their life. Like say giving up sugar, maida, etc. can and does have an amazing impact on diabetes. Or doing exercises regularly. Maybe just 120 minutes a week.

Personal finance is about being able to make a decent estimate of all future earnings, and of all future expenses (including events), and understanding the impact of the choices that we make. I do believe that what determines your wealth is your attitude towards money. In fact attitude is 90%, asset choices is 10%. To be wealthy, you have to think wealthy. That is what distinguishes an Ajay Piramal, Uday Kotak, Deepak Parekh, ….from the others. You need not be wealthy to become wealthy. MS Dhoni launched from a small town called Ranchi, not from NYC or London.

Learning personal finance has several advantages, for sure. You will understand that the only way to spend more in a given year is to dip into your past savings/ investments. You will have to understand the power of compounding showing you how to grow your wealth. You have no choice but to understand asset allocation, average returns, standard deviation, patience in equity investing, how large cap and mid cap shares behave. How it can take the market 10 years to go from one peak to another. How in 2018 you will read articles saying “if you had invested in PPF in 2008 it would be worth more than your investment in 2018 THAN EQUITIES”. You should know that such articles create far more damage to the new investor than be a learning for their future behavior. Ha, porn did you say? well yes. Knowing what to read is just as important. Knowing what shit to avoid is as important as knowing what to read.

No, I did not say it is easy. However, the rewards are huge and almost unimaginable. Its like sowing a mango seed. Do you know how many mangoes are hidden in one seed? That is the power of compounding.