Financial Thoughts

Yep, I know I don’t talk about finances here. Well, I haven’t really talked about anything much in the past year or so. It’s been a crazy year.

Lately, I have been reading books on investments, finance and entrepreneurship. So, I wanted to share a few things I learned:

1. Psychology
We tend to think about our investments solely in terms of numbers, probabilities and forecasts. However, people spend, earn and invest money based on their emotions. Learn to understand the psychology of money. Your need to invest might be different from your friend / colleague / relative. Understand your needs, your current financial status and invest accordingly.

2. The Money You Don’t Need
The amount you invest in stocks, mutual funds or even fixed deposits must be an amount which does not impact your lifestyle. That said, don’t invest after spending. Calculate well and invest before spending. That way, you can limit your extravagance as well.

3. Income Source
Create multiple income sources. If your job is the only source of income for you, you are closer to being broke than you know. To be financially independent, you need to create multiple sources of income to add to your finances, thereby unleashing yourself from financial dependency of a single paycheck.

4. Impact
If you dream of earning millions, you need to impact the lives of millions of people, either directly or indirectly. Successful businesses, books and music reach millions of people and impact them. Think beyond yourself and your desires.

5. Time
The primary motive for most people to chase financial freedom is freedom itself. So they can spend more time with their family, friends or hobbies. The goal is to create income sources which transcend the limits of time and add to your net worth even when you’re not working.

6. The Ups and Downs
People who make money during an economic recession don’t sell, they buy consistently. As the economy goes down, people tend to sell their equity, assets and increase their liabilities. Be on the other side of the line! Buy, lease out and lend.

7. Calculate
What are your current financial requirements? What kind of lifestyle do you wish to live in? What amount of money can grant you that lifestyle? Calculate the sums of money, considering inflation and you can create a stronger financial plan.

8. Expenses
Being wealthy and rich are two different things. Lots of people can buy a Mercedes C-class on a loan but it is not always the smarter financial decision. Know where you are spending your money. Create wealth, don’t chase an ‘ideal lifestyle’ before you can afford it.

I’ve indeed learned a lot in the last month, reading Psychology of Money by Morgan Housel and The Millionaire Fastlane by MJ DeMarco.

I’d love to know your thoughts on personal finance and investments!

2 Comments Add yours

  1. This is very insightful. It’s great to learn what you learn through books. Can’t wait to dig in, one by one. Thank you for sharing, Shreyas!❤

    Liked by 1 person

    1. Thank you, Samiksha!


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