In a recent lecture
on 'Mind your Money' that I attended, the speaker asked how much money was
required to be happy. The answers were varied, from a few lakh rupees, people
also wanted 100 crores to be happy. When asked how they arrived at that number,
the answers were very vague, something like buying villas to seeing the world
to responses that it looked big enough.
One of the best
responses I have heard is that 'it depends on what you want to do with all the
money?'. If you want to start a charity hospital that brings you happiness,
then that is what is required. If you want to stay healthy, then you know what
that takes. So the question is 'what is your life's purpose?'. Financially
free is the one who does not have to work to achieve his life's goal. An
investor recently said, an average Indian can lead a luxurious life with Rs 10
Lakh a year assuming he is living in his house. With a 3% tax free dividend income from
equity, it would mean a corpus of Rs 3 crores to be financially free and
wealthy. what I like about these thoughts is that it helps you put a method
into the madness. The goals and hence the amount of money required varies based
on the upbringing, peer group, culture etc. But the core is to investigate what
is your life's purpose.
Many investors are
scared today to invest as they feel the markets have shot up and may not move
further to offer any meaningful return. When the markets were lower, they were
waiting for correction to invest. When there were corrections they were worried
about the sudden movement and wanted to wait for markets to stabilize. When the
market stabilized, they were not sure which way it would move now. The point is
we will know where the markets were only in hindsight.
The investor's job
is to keep investing systematically in stocks of sound companies that can
deliver healthy growth in the long-term with superior cash flows, high ROE
& ROCE, honest and competent management having MOS.The institutions
involved in the stock market make the business speculative, but the investor
must be very aware and guard himself against emotion and develop lifetime of
patience. As an example, Sun pharma after its IPO in 1994 did not offer
investors any return for almost 5 years. But when its prices started moving,
the returns were abundant. Rs.1000 invested in the IPO in 1994, has
grown to over Rs. 314,000. Its run by a very competent management.
On a lighter note,
happiness and money have little in relationship. Money is like the size of your
shoe. It can’t be too big or too small, or it may hurt.
