The Beginning...

The first question that would spring to mind when looking at the title of this blog is "Why Investing?" and the second would be "Why Accidental?" On the latter all I would ask of you is a rhetorical question: Isn't there something in life that you stumbled across and liked so much that it went on to become an important part of your life? And folks, the world is bigger than romantic interests! Of the former I would say that we all need to be passionate about "something". As they say not all of us may be qualified to be doctors,  lawyers or accountants but all of us need to be investors - qualified or not!

Through this blog I would like to trace my journey as a part-time investor which began around the time I started my first job in 2003 and continues with an investment portfolio spread across the Indian and the US markets. This journey led me to seeking knowledge from books and other writings of some of the world's greatest investors including (in no particular order):

• Graham Guruji (Benjamin Graham - founder of Value Investing philosophy)
• Fisher Guruji (Philip Fisher - founder of Growth Investing philosophy)
• Buffet Guruji (Warren Buffet - needs no introduction - his philosophy is 85% Graham and 15% Fisher in his own words!)
• Lynch Guruji (Peter Lynch - legendary Fund Manager of the Fidelity Magellan Fund)

I will discuss the philosophies of each of these legendary investors in a separate post. Some of the more enlightened folks among you may find some of this to be simplistic but trust you me - simplicity in the financial markets tends to be quite helpful in more ways than one.

In today's post, I would like to rewind back to 2003, when I began my career. I used to stay with my parents in Mumbai at the time and my father was still employed. When I received my first salary in my bank account, my father took me aside and gave me some clear and unequivocal advice - more like a command actually,

"This money you have earned is not for your spending.  Take whatever you need for your day-to-day expenses (within reasonable limits naturally) from your parents. All this money you have earned is going to be invested in equity mutual funds in your name. Any major discretionary expenses  are to be financed through the gains on these investments." 

So there you have it - I was saving 100% of my post-tax income and investing it for my future. I did not realize its importance at the time and perhaps resented it to a minor degree but since this advice coming from a person whose selflessness is legendary in our family circles and whom I respect immensely to this day, I just went along.

The important life-long lessons I have learnt from this are: 

1. The importance of saving money: Of course, saving 100% of my money was never going to be a long-term sustainable thing once I started working abroad, which was around 15 months into my career. As a bachelor, I had a target of 50% while as a married man that I am now, my target is 33%.   Each of us must assess our personal situation such as number of dependants, lifestyle choices, etc. when setting these targets. The key is to set a target and stick to it. Lower the target only when circumstances around you change and not by giving in to temptation.
2. The importance of investing: The traditional investing avenues for most Indians are real estate, gold and fixed deposits. While equities remain too risky for most of us, I will try to bring out arguments in subsequent posts why this is not necessarily the case. I do not deny the importance of any of these asset classes and a healthy asset allocation strategy, however, the equity markets have on a long term basis consistently beaten the returns on these asset classes. What's more, quite a few equity mutual funds in India have consistently beaten their benchmark indices such as the BSE Sensex and the NSE Nifty.
3. Financing major discretionary expenses through investing gains: I have always financed discretionary expenses such as holidays, jewellery (yes folks - you can live without jewellery, hard as that may seem!), electronic gadgets, cars, etc. through my investing profits. I do not necessarily sell any investments to make the purchase but will always check whether my profits cover the expense or not. Taking a loan to finance consumption is absolute sacrilege to me. I just cannot get myself to do it! 

So I have described the "accident" that got me into the saving and investing habit. How to achieve it is, as I have said before, a function of personal circumstances and lifestyle choices. Stay tuned for more in the coming days as time permits. Please leave any comments / suggestions that you have have.

This one is to you Pappa - for your sound advice and selfless gesture all those years ago that got me started on this journey.