Financial advice to younger self - Illustrations from OldBookIllustrations.com

Financial advice to younger self

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Let's talk about the most important thing first. I am not financially successful. Not even close to the consensus definition/metric. And that's why I am addressing these to myself. What if, I had to do my youth all over again, this is a list of things I would have loved to know back then. We all are different but here's a hoping that you would find something applicable.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

If you're continuing to read it, read it with a bowl of salt.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Continue optimizing for the lowest recurring cost of living (e.g., living in shared apartments with “good enough” people and privacy).

Financial advice to younger self - Illustrations from OldBookIllustrations.com

You’ll know when it is time to be on your own but now is not the time.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Get an additional health insurance. No, the one that came with the company isn't enough. And no it's not simply throwing away money every year if you don't end up claiming it.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Next, build a corpus of at least 6 months' expense and keep that in your savings account. Try maintaining it.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

For god's sake, start investing. It seems complex at first but it's not really.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Pick couple of Index Funds with low incurring costs and invest routinely like your life depends on it. Don't put too much effort into finding "the best" fund because there is little to no correlation between investment effort and investment results.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

There might be a lot of other funds that seem to have done wonders in the past but past performance is no guarantee of future results.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

You might see that investing in Index Funds is not exciting at first. And that's exactly the point. Stay away from “all that excites or affrights us,” as Seneca says.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Have patience (a lot!!) and let compounding do its magic. Always remember: Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn't … pays it.

At the time of writing this, Warren Buffett’s net worth is $101 billion. Of that, $84.2 billion was accumulated after his 50th birthday. $81.5 billion came after he qualified for Social Security, in his mid-60s.

You don't know enough about stock picking. You just "feel" like you know enough.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Don't buy cryptocurrency... yet. Because you don't understand it either. It will feel like you're missing the bull-ride and in comparison with other peers you will feel like an old uncle who is apprehensive of new tech.

But... sometimes it's just easier to avoid stupidity instead of aiming for excellence.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Manage your money in a way that helps you sleep at night. It is different from saying you should earn the highest returns. Generating and maintaining wealth require different strategies.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Sometimes the market will go down and you have every right to freak out because you are losing your hard-earned money. But consider that as a price to pay to be in the market.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Explanations of why the market is going down will always be grim and extremely negative. But, pessimism just sounds smart and more plausible than optimism because we are humans and we have asymmetric aversion to loss.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Progress happens too slowly to notice but setbacks happen too quickly to ignore.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Don't sell just because the market is going down. The first rule of compounding is to never interrupt it unnecessarily.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Don't time the market either. Time in the market is more important than timing the market. Drop of few points will not make you significantly richer if you're in here for the long term.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

You're in it for the long term, right? i.e., At least 5-10 years? What?! I can't believe you are already planning to "book" your profits. Don't sell anything unless you absolutely need the money. I repeat, don't sell anything unless you absolutely need the money.

Time is the most powerful force in investing.

Financial advice to younger self - Illustrations from OldBookIllustrations.com

Don't think twice about splurging on things that you value. i.e., self development courses, coffee equipments. Actually even better, don't think of them as splurging but as "investments."

And finally, no one is impressed with your possessions as much as you are.

Now go save. You don't need a reason to do that.
(And know what's enough.)

Illustrations from OldBookIllustrations.com · Typeset in Newsreader · Inspired from Robin Rendle's Newsletter · Multiple nsights from The Psychology of Money