Confession Time: The last post on Antifragility did not get responses from readers which I expected it to get. To be more specific, the number of comments which the post got was ZERO. 🙁
Probably it was because the 10 Principles which I borrowed from Nassim Taleb’s amazing book Antifragilewere so simple, that readers took them for being a list of common-sense based rants and hence…not important enough. But I feel that it would be wrong to leave those principles as ‘obvious-common-sense-rants’ and forget them.
We need to understand that just because something is simple, does not mean that it is not important. Just like breathing. Its simple. You breathe in and you breathe out. But its important. If you don’t breathe, you die.
Just to ensure that readers understand the importance of those principles, I have decided to do a series of short posts, which will tell how to implement the simple but important principles in ones’ financial life.
So here it is…
Principle 1:
Stick to Simple Rules
- Do not take loans if possible. If need be, take it only for buying money generating assets and not liabilities.
- If you love your family, get yourself insured. It’s a small price you pay for their well being. And for heaven’s sake, buy Term Insurance Plans and not endowment, money-backs, etc.
- Keep Insurance and Investments as 2 separate things.
- Get health insurance for you and your family. Unforeseen health costs can wreck havoc in one’s life.
- If you are not comfortable with ups and downs of stocks, do not be in stock markets. Just because people around you are making money in stock markets does not mean that you also need to make money from stock markets.
- If you want to benefit from stock markets, but do not have the time to put in the required efforts, then please stick with investing in well diversified mutual funds. No need to buy individual stocks.
- If you want to buy individual stocks, stick with companies which operate in easy-to-understand business, have more-or-less predictable earnings atleast for next decade or so, are debt free (or have manageable levels of debts), generate good amounts of cash, are able to invest money at increasing rate of returns OR honestly return cash to shareholders by means of decent dividends. And most importantly are run by trustworthy & capable management.
Quick Note: I first intended to this Top 10 list in a single post. But then decided that breaking them into separate posts, would allow me to concentrate on each one of them a little more.
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Dev…I have been reading your writings for years, even before you started Stable Investor…when you wrote a personal blog. 🙂
This is my first comment here and reminds me of a quote – ‘A few strong instincts and a few plain rules suffice us.’ I think it makes sense if same is applied to our money matters as well. And this has been nicely brought out in this article…
though I dont find money to be a very big motivator, I am still glued to your writings which are not very financial in spirit…..and this is one of them 🙂
waiting for other 9 posts in the series
Hi Shruti
I am glad that there are people who have followed my writings since times before I started Stable Investor. 🙂
Thanks a lot… And hope to see more interaction from you in future articles 🙂
Nice post. Simplicity is complex 🙂
Not sure if you have read Taleb's “Fooled by Randomness”. He has made his fortune betting on black swan events. Pretty impressive reads, give a lot of non-financial wisdom as well. Would strongly recommend picking up that as well.
Nice blog that I came across by chance looking for Indian financial blogs. Really like that idea in your last post where you said about not making a mistake that kind of completely wipes you out. Waiting for the other 9 hacks.