Roti, Kapda, Equity & Makaan

Now I am sure we all are quite clear about needs and desires.

If you have any doubt, then stop reading this post. Close your eyes and think.

What exactly are the things you need?

What exactly are the things you desire?

Can you live without the things you need?

Can you live without the things you desire?

An example might help here. You need food to survive. You cannot live without it. So food is your need. Now a new iPhone 6 is something that you want. You would be very happy to have it. But you won’t die if you don’t get it. It’s a desire. It’s a good-to-have thing. But not as necessary as one of your needs.

Now talking of needs, if you are only looking to fulfill your basic needs, then there is not much to look forward to in your life.

Earn. Spend (on food, clothing and shelter). Repeat.

That’s it.

It is as simple and as dull as that. A dull SIP in a proven Mutual Fund is very good for your wealth. But a dull life is not good. Mind you, by using the word ‘dull’, I am in no way trying to mean ‘Simple’ or ‘Frugal’.

As humans, we will always have desires that make life slightly more interesting than just Earning, Spending (on basic needs), Repeating.

And investing, if done intelligently, can help improve your lifestyle. Read a post I did on the same topic sometime back as to how investing can help upgrade your lifestyle and you will know.

I know I am sounding too gyan-giving to many people right now.

But believe me….I also know that there are many (or rather majority) who have trouble even managing their 3 basic needs, leave alone desires.

I know parents who have sacrificed all they ever accumulated on education of their children.

There is absolutely no denying the fact that if one is able to even fulfill all the basic needs, then he or she is successful in life. Money and wealth are secondary. Life is much more than just about accumulating money.

But honestly speaking, we cannot deny the existence of our desires and wants. Once again I say: Needs are not optional. But Desires are optional. But we all want to have something more from life. We all want to fulfill our desires, once we are done with our needs. If not all, then atleast the ones which are well justified. Isn’t it?

My apologies….I am once again going into my Monk-Mode 🙂

Side-Note: Pardon my blabbering in this post. But I had to share these thoughts with you all as I think it is quite important for those who still don’t realize it.

But now lets come back to reality…

With lifestyles becoming increasingly complex, it is becoming very tough for people to fulfill all their wishes.

Add to it the fact that most people have been financially groomed by their parents – who (atleast a majority of them) did not really understand the power of compounding and how inflation eats up your wealth. And out of those who did understand it, very few communicated it clearly to their children, i.e. our generation.

The combined effect of all this is that we now have a situation, where our generation only gets excited about making money when it seems easy to do it (Bull Markets).

And they shun away equity as soon as markets start to fall. And this is the biggest mistake, which anyone planning to become rich is making.

These people are somehow, able to get their market timings PERFECTLY wrong!

Now let me get this straight…

Once your basic needs are taken care off (and mind you it won’t be easy), only then can you think about taking care of your desires. Right?

But most of the times, the money you earn will almost never be sufficient to fund both your needs and desires. And that is where you need an asset class, where you can put your money and be almost 100% sure that it will beat inflation.

Yes. And as you have rightly guessed, this asset class is the 3^rd word in the title of this post. EQUITY.

And I have intentionally put it in the third place before the word ‘Housing’. To know why, you need to read an article I co-authored with Ajay – Comparison of Investing in Real Estate and Mutual Funds.

Equity should be considered as the basic need in current times, to fund a better future and life – And sooner you realize this, better it is for you.

I can share with you numerous examples about why equity is your best bet going forward. But it is upto you to be convinced about it….

Atleast for our generation, equity is the basic need now.

You need to invest in equity. And you need to do it now. I am not talking about the short term. And don’t take this as an indication that it is a good time to invest in markets due to recent 10% to 15% correction. What I mean to say is that if you are young and still haven’t done it, then you need to start investing in equities.

Take the mutual fund route to start it. Don’t wait to become an expert investor. Just start it.

Don’t wait to pay off your education loans or home loans completely. Keep paying back your loans and also invest simultaneously. It is tough. But if you think about it and can curb your desires a little bit in short term, you can do it.

Think about it.

……….

If you think this post can help convince those who are yet to be convinced, then please share it with them. I will be glad if this post reaches those who don’t visit Stable Investor regularly.