5 golden pieces of advice that will give you a head start & make your life better
Every year, a large number of millennials and GenZ begin their professional careers and begin to earn a living. Academic courses teach the academic subject but not the prevalent reality of how to lead, drive, and build stress-free life. Many times, I felt that if I had known this beforehand, things would have gone much better. Anyway, I learned this along the way and thought it would be great to share. If I could time travel and meet my younger self, I would give him the following five golden pieces of advice. So you can trust me :-) and read on.
This is about the power of compounding.
Realise the difference in corpus built between two people.
Jack and Sam are good friends who began working at the age of 25. As soon as Jack began earning money, he decided it would be a good idea to begin investing. Jack saved 15,000 INR ($200) and began investing at the age of 25. Sam thought it was too early to start investing and decided to enjoy his life for the time being. He began investing the same amount of 15,000 INR ($200) at the age of 40. Assuming a 12 per cent CAGR (compounded annual growth rate), Jack built a corpus of 9,64,64,392 INR($1.2M) and Sam Built a corpus of 1,48,38,830 INR($195K). Recognize that the difference in years between the start of their investing journey is 15 years, but the difference in their final corpus is a staggering 8 crore INR ($1M+).
15 yrs difference in start — 8Crore INR — Difference. Not worth it. So start early..
“Save and Spend “, Not “Spend and Save”
This is from the world’s best investment expert “Warren Buffet”. It is a simple profound statement that opens an entirely new dimension about how to treat money. We usually spend and then save what is left. But Warren says it should be the other way around, first save and then spend which enables to make saving a habit.
Remember 50/30/20 rule.
50% of after-tax salary for needs(Rent, EMI, petrol, groceries, school fee etc)
30% of after-tax salary for wants(vacations, movies, dinners, gadgets etc)
20% of after-tax salary for savings & investments
Actually, it should be as read 20/30/50 rule i.e. save first and then take further action.
The second source of income
Diversifying your sources of income is a wise approach to safeguarding your finances. As you become older, you’ll realise that rejection, layoffs, and unforeseen bills are all part of life. It is critical that you feel financially secure. This sense of financial security will help you live a less stressful life. The best way to reach financial security is to diversify your income streams, such as through rental real estate, dividend equities, FDs, peer-to-peer lending, creating a youtube channel, creating a podcast, writing an ebook etc.
Continue to hunt for ideas that can provide a stable second source of income. This will usually begin slowly, but with constant work, these types of secondary earnings will become stable.
Most of the time, we look like the people we interact with on a regular basis. The longing relationship we have or the people we spend out with have a big influence on our cognitive process and behaviours. This can sometimes lead to biases and opinionated approaches that lack rationale, narrow mindedness. It is critical to surround yourself with productive individuals and develop acquaintances in order to open up and observe how the world is moving. Reading books authored by productive people is the simplest method to do this. Reading a book is nothing more than having a dialogue with the author and learning about his ideas. As a result, being friends with books is vital for understanding worldly perspectives. Keep reading books on different subjects. You might be startled to learn how turbulent successful people’s lives are, such as Steve Jobs and Elon Musk. Only by reading their histories and seeing how they viewed failure can you learn this. Steve Jobs was fired by his own board of directors, Elon Musk made four failed attempts before declaring bankruptcy, and eventually, both of them built world-class products.
Have a Hobby
Hobbies allow you to disconnect from the daily grind and find some mental space. Without them, you get tired of doing the same thing over and over. Pick a hobby that you enjoy, such as music, journaling, fishing, or sports. Your mind requires that shift, and once you provide it, it returns back with renewed energy, making the daily hustle seem like a breeze. Bring back any hobbies you’ve abandoned, and if you don’t have any, start one.
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