The Colour of Money 1.02
Today the following news made headlines ...
http://economictimes.indiatimes.com/markets/stocks/news/rakesh-jhunjhunwalas-portfolio-grows-5-5-times-in-seven-years-a-sneak-peek-into-his-top-bets/articleshow/53856002.cms
It was an interesting piece and soon after reading it I got a call from a senior master who I had initiated to MF investing in 2007-08. The times were very bad and everyone on the street were pessimistic. Subprime was a common lingo of the petrol pump attendant just like the word "devlauation" in 1991. In those times I somehow convinced the entire Indian officers to start investing in MFs.
So today this Capt.XXXX phoned me and said- " Rajeev Bhai what is this news about Jhunjhunwala and his portfolio going up by 5.5 times since 2009!"
I said , " Isn't that surprising and wonderful".
He retorted, " What wonderful? My portfolio has gone up by 4.75 times since I started investing. So how is his 5.5 times great by any measure".
I was shocked (guru gud hi rahe, chela chini ho gaye), but gained my composure and did some quick thinking, and asked " 4.75 times are you sure?"
He immediately said , "NO, Not 4.75times but...."
I smiled to myself Haha some miscalculation by the Captain. It's usual for them you see...
..." actually about 7 times but I can't put a figure to the enhanced value of my real estate which I sold my old one and bought much bigger area out of the proceeds and saved Capital Gains too...
I was about to die with envy... but then applauded him and suggested " You see you must have kept adding your salary to the investment every year and so it must have grown to this amount. We don't know maybe RJ (popular name for Rakesh Jhunjhunwala) just put the money and enjoyed while you were slogging out at sea."
The Mighty Captain was visibly hurt, his ego and pride deeply bruised.
He snorted , " And what makes you think I was not enjoying my work".
I tried to pacify , " No no it's not like that maybe I did not explain properly.."
He interjected " No you listen to me .You maybe knowing a bit about investing but let me tell you something deeper about MONEY."
Money is nothing but a token of the efforts that you may have or may not have put in to earn it.
You could have stolen the money, earned it by avoiding taxes, using your brain, manual power or the life skills that you learnt.At the end of it , it is just a token of your efforts, it is not the token of your status in life.
I meekly protested , " why not a token of your status. After all it is exactly what people judge you by. We know RJ because he made his wealth grow 5.5 times in just 7 years".
Now the Master and the commander changed his stance to more relaxed and sermonising one.
"Rajeeve listen. We all work either because of the need to work or because we enjoy it. We work every minute of the day even when we are on leave. When we are not working, we are either acquiring more skills or more resources for that work, or thinking about it or simply recharging our batteries to again start working. But we keep working all the time. The work simply expands for professionals to fill up their life.
The lucky one's like me and RJ ( now the Captain acquired a bonhomie with the great bull), enjoy what they do. While I kep enjoying my work and putting the investible surplus into my corpus , RJ kept simply thinking and shifting that money from one to another stock till his wealth multiplied.
His time was occupied always thinking about money but not creating it.
While my time was spent fulfilling that avenue of service where the money paid to me was created by producing something of fulfilling that gap of demand for those goods.
So at the end of the day RJ did add to his corpus or portfolio whatever you call, just like me. While I added the token of my labour , he added some small transactions but we both invested the same thing in our portfolio- TIME.
My mind was getting foggy, just as most of the investors do when I am lecturing. I think Captain sensed it..he said.. let me make it more clear to you.
You see, my skill was taking the ship at sea from point A to Point B.. and I knew everything that was involved with it. From 2007 when you lectured me on investing to till date I worked at my job and really enjoyed every bit of it. I spent quality time with my family for almost 6 months a year but 24 hours. I accompanied my children to school, my wife to market and went vacationing with my family and friends to distant places . I slept just like RJ , maybe better. Did all the things that he did, maybe I did more of enjoying than he did- but for fairness in my mind, I felt as the most satisfied person in the entire world.
I did not have any heartburns at seeing my wealth yo-yoing because I knew I was there for the long haul...really long haul.
"You are saying that I added to my portfolio, well how is that bad if at the end of the day it is going to grow. If my funds are surplus, they are surplus. Meaning- I cannot or will not spend them.
I simply listened to your theory of compounding , but looks like you forgot it.
By now I was getting all those feelings that come when one is listening to things which one actually tells other people.
But the Captain was in a mood and did not look as if he would stop anytime now.
But he did...
" So Rajeeve , while I was talking I did some calculations.. the land that I bought after selling my old one has actually doubled in 3 years. So that actually takes my Portfolio about 7.5 times in 9 years."
So now I will leave you with that because I know you will want to write an article on our conversation. You are such a good friend that one cannot trust you with secrets, so I am only leaving you with the figure of 7.5 times...bye for now." And he hung up on me.
I am turning all shades of green while writing this . I can tell you a lot of things, but one thing I will surely say what that Captain wanted me to tell you. Think less Invest more. It is the most and highly informed who make the least money. Compounding works on only one precept...TIME.
Why did I call this write up as The Colour of Money 1.02, well because I have written a few articles with that name earlier too. But this one is one of the colour of money.
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