5 Learnings from Investment - I

It's a series I am starting, to share five things I am learning on investment.

I feel these can be applied everywhere in life. and everyone should know about them.

So here it goes...

Power of Compounding:

It's the 8th wonder of the world, according to Einstein. It works everywhere from Health, Wealth, Relationship and Knowledge. I just have to be consistent. The results, in the long run, will be exponential. I found this really good example to showcase the power of compounding:

Purpose to be less dumb every day:

It fascinates me how Charlie Munger and Warren Buffer still gives a lot of their time of the day to learning new things and finding their blind spots or removing their ignorance.

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” - Charlie Munger

It is difficult. As our knowledge grows, so does ignorance. I have realized that it is a mountain with no top, it is a lifelong process of everyday learning and realizing things. There is never going to be a point where I will say that I know enough. The moment I say I know enough is the moment I start becoming more and more ignorant.

The world is driven by envy than greed:

How envy can ruin my life if I don't have an awareness of it. Envy is a very powerful drive, which can destroy peace. Many people have lost wealth, relationships and health just because of envy and jealousy. The skill to learn is to set my limit, understand and decide what is enough for me, no matter what others are up to. Otherwise, it's a bottomless pit, there is no end to desires. After learning this I have made my monthly budget of expense and I am tracking it and making sure I don't cross it.

Being Prepared:

Not for opportunities but for anything and everything. To make sure that no disaster can sink me. Many people lose their savings, jobs and businesses in the 2020 Pandemic, one of the examples is, CEC. Last April, CEC, the parent company of Chuck E. Cheese, was prepping for an IPO. Instead, at the end of June, they entered bankruptcy protection. Because they were not prepared for something like this. Having a margin of safety is very important. So that one is prepared for everything. In every area of life, whether it's my business or doing something which can endanger my life or health, one has to be prepared for the unknown.

In best case scenario I will be right 50% of the time:

If I do 100 things, the best-case scenario is I will be right 50 times. I read in the context of investment but I can see this in my life everywhere. When I am coming up with a new business idea or trying out something new, there is a high chance of me failing. And it is okay. "I've made lots of mistakes. I'm going to make more. It's the name of the game." says Warren Buffet. Even if one or two things work out then it will cover everything else. But for that, I have to be prepared to be wrong in another 98 things.

Credits: Vallabh Bhansali, Warren Buffet, Naval Ravikant, Vishal Khandelwal and Morgan Housel.