Remember the time when you had a number of dreams? Every other day you would come up with a new idea which according to you would change the world. While some people call it “flight of fantasy” or “day dreaming” but for you, probably that was one of the most beautiful part of growing up. It may be not an exaggeration, if I said that these thoughts gave us “wings” and took us on the “flight of imagination”. And even today, when nostalgia knocks softly, you open the door to those memories. The twinkle in your eyes and the smile on your face whisper, “Ah! Those were the days!”
Similar to the growing up years, later too in life, every once in a while a new desire pops up in your creative mind. For a few moments this new idea serves an escape from the mundane, the daily grind. However, almost immediately we tell ourselves, we are now “grown-up” and “mature” and need to be “practical” – the flight gets stalled just as it is about to take off. You know that with your current constraints, you cannot chase this any further. The idea disappears in a jiffy.
There are a very few who are able to pursue their passion and bring their dreams to reality. Their stories become beacons, illuminating the path for others.
In solitude and quiet moments, most people see flashes of their dream life, but by then they have lost the courage to even acknowledge them as possible. Also after battling the myriad battles of life, most people have lost their capacity to take risk. Instead they prefer the comfort of the mundane. They laugh at their own dreams and call them wishful thinking.
Then as their own kids grow up their unfulfilled dreams get rekindled. They see a ray of hope. They unknowingly start considering their kids as the vehicle thru which they can achieve their own unfulfilled dreams. However it is better to return to sanity before it is too late. One must not impose their own dreams on the kids. It is better to allow the kids to explore their own interest and only ask clarifying questions to help them choose the right path for themselves.
So, did I pursue my dreams? Perhaps not all of them. But I’ve learned that dreams aren’t lost completely — they evolve. They weave themselves into the fabric of our lives, coloring our choices, our passions, and in someway creating our legacy. And sometimes, when the wind is just right, I catch a glimpse of those paper airplanes, soaring still, leaving trails of possibility in their wake.
I am a huge fan of Brian Tracy’s work on how to prepare yourself to be successful in life. He offers a lot of thought provoking questions and concepts which when applied for onself will surely result in transformation. I wanted to share some insights from what I have learned from Brian.
He talks about the 3 destructive traits that he calls “enemies of success“. By being aware of them we can avoid these traps in our own lives and can move faster towards our goals in life.
The first and the foremost is the Comfort Zone. It is like a slow poison. You become comfortable doing with what you are doing. You don’t realise that you are doing anything wrong but slowly you start slipping into the comfort zone. The daily routine is comforting. You know the drill like the back of your hand. You are able to navigate thru the daily hurdles with skill and you consider yourself successful. And all this while without realizing that you are getting deeper and deeper into the comfort zone. When you think about it you know that change is good and beneficial however you feel it is too much effort to move.
The next enemy is Learned Helplessness – where people think “i can’t do it”. This is the next stage of Comfort Zone. As you set your sight on new goals and decide to move in that direction, the inertia pulls you back giving you various reasons why you should not pursue the goal or why it can’t be done. To navigate the way out of comfort zone, you must break the inertia and move forward.
Now you come across the third and final enemy – Path of Least Resistance. So you have decided to move out of the comfort zone and you have also handled the inital resistance from your mind. Now you have started taking the steps towards your goal. Soon you realise that it is a long journey and requires a lot of hard work. When the first fatigue sets in, the goal starts to look distant and again your mind tries to look for short cuts. You may even think of changing your goal to something much more smaller and within easy reach. Bur remember nothing worthwhile can be achieved without hard work. Anything worthwhile requires a long period of hard work with many failures on the way. There is no shortcut for sustainable success.
So beware of these mental traps and do not lower your goal – instead increase your effort.
“The most important things in life are not things” – sometimes we get so obsessed with our material possessions that we forget to give importance to the people in our lives. At other times we are busy chasing other shiny objects and completely lose focus of the important things of life. The below story is a simple way to understand this and remember to prioritise the important things in life.
A professor stood before his philosophy class and had some items in front of him. When the class began, he wordlessly picked up a very large and empty jar and proceeded to fill it with golf balls. He then asked the students if the jar was full. They agreed that it was.
The professor then picked up a box of pebbles and poured them into the jar. He shook the jar lightly. The pebbles rolled into the open areas between the golf balls. He then asked the students again if the jar was full. They agreed it was. The professor next picked up a box of sand and poured it into the jar. Of course, the sand filled up everything else. He asked once more if the jar was full. The students responded with a unanimous ‘yes’. The professor then produced two large cups of coffee from under the table and poured the entire contents into the jar effectively filling the empty space between the sand.The students laughed.
‘Now,’ said the professor as the laughter subsided, ‘I want you to recognize that this jar represents your life. The golf balls are the important things—your family, your children, your health, your friends and your favorite passions—and if everything else was lost and only they remained, your life would still be full. The pebbles are the other things that matter like your job, your house and your car. The sand is everything else—the small stuff. ‘If you put the sand into the jar first,’ he continued, ‘there is no room for the pebbles or the golf balls.
The same goes for life. If you spend all your time and energy on the small stuff you will never have room for the things that are important to you. Pay attention to the things that are critical to your happiness. Spend time with your children. Spend time with your parents. Visit with grandparents. Take your spouse out to dinner. Play another 18. There will always be time to clean the house and mow the lawn. Take care of the golf balls first—the things that really matter. Set your priorities. The rest is just sand.
One of the students raised her hand and inquired what the coffee represented. The professor smiled and said, ‘I’m glad you asked.’ The coffee just shows you that no matter how full your life may seem, there’s always room for a cup of coffee with a friend.
When an individual sets a sight on any goal, his thoughts eventually reach a point where the question staring him in the face is “How do I reach there?”. If the goal is really challenging and ambitious, the person tries to check if there is a roadmap to get there. He may seek advise from his manager(s), mentors or even trainers. In such scenarios it is usually beneficial to carry out a SWOT (Strengths, Weakness, Opportunities, Threats) analysis.
SWOT Analysis is a good starting point to understand where you are. It is like a the homing dot on GPS which can indicate your current position on the capability landscape. This you can use to chart a path to achieve your coveted goals. Using both your Goals as destination and SWOT analysts as your starting point, you can figure out the gap between where you are where you want to go. Knowing this gap is the first part to figuring our the roadmap to your goals.
People often underestimate the benefit of the SWOT analysis. Most often people glance at the strengths section, feel good about themselves momentarily and then move on to the other sections. After a quick glance through the Weakness, Opportunities and Threat sections, most often people conclude that the “weakness” section seems to be the only place where you can do something because both Opportunities and Threats are usually external and you may not be able to influence them.
So most people try and device strategies to improve on their Weakness. Also for a very long time we have been told to focus on improving our weak areas to be successful in life. Often in a corporate setup, when we request for or receive feedback the emphasis is more on the “areas of improvement” rather than what you are good at. However each of the 4 sections of SWOT analysis are important. Sometimes you may need help of a coach or mentor to help you understand how to apply these for your specific situation.
Playing to your Strengths Especially for the experienced folks, I want to draw your attention to your strengths. While you continue to put effort towards improving on your weak areas, you need to pay a greater attention to the strengths you already possess. By correctly recognizing your strengths and honing them you can improve your chances of success many fold. That is why you often hear the phrase, “play to your strengths”. However this phrase has become so cliched that no one ever takes time to understand what it really means and why is it so important.
“To play to your strengths” means – # Identify your top strengths (competencies that you are really good at) # Find out ways to leverage them for maximum growth # Also you may be able to uncover ways to use your strengths to over come your weakness
How do you find out what your strengths are ? Though you may know some of your strengths but a majority of the people only have a vague understanding of their overall strengths. Some people know they are very organized, while others may be good with getting things done. Some ace at relationships and others may be creative or problem solvers. Even though you may know one or two of your strengths you are still missing the 360 degree view of all your strengths, some of which may not be very obvious.
So how do we find out all our strengths? There are many tools available to help you carry out this evaluation in a more scientific manner such as MBTI (Myers-Briggs Type Indicator), DiSC, Gallup Strength Assessment etc. I have tried multiple such tests and while all have some merits but in my humble opinion the type of insights provided by Gallup Strength Finder Report are really unique and usable. This is a paid assessment. However it is not very expensive. You can consider this as an investment into you self-improvement journey. On the Gallup Site there are 2 versions – (1) Top 5 Clifton Strengths and (2) CliftonStrengths 34. My recommendation would be to take the CliftonStrengths 34 to get a detailed report of your 34 personality attributes in the order of dominance.
What do we do once we have the identified the strengths? First, spend some time to read and understand the report. # Underline the lines which resonate with you. # Identify habits or traits of your personality which correspond to these strengths. # Write down the opportunities where you can best utilize your strengths # Ask yourself – How can I use these strengths to achieve my goals?
With some serious brain storming, you will start getting the answers. And once you know what you are good at, your self confidence will get an immediate boost. And the icing on the cake is that unlike working on your weaknesses you don’t have to go through a painful process of change. Your strengths are already inherent within you. All you need to do is to identify them and start using them consciously. And find ways to leverage them for achieving your goals.
Our lives have become so hectic and fast-paced that by the time we are done dealing with the routine stuff of life like family, job, kids, daily chores, social commitments it is almost time to hit the bed and we realize that one more day has passed by. The next morning it is the same grind all over again. In all this madness we all need some “ME” time daily. It is the time you spend talking with yourself, sifting thru your thoughts, looking back on the events of the day and planning for the future.
This is the time where you talk with yourself, debate about issues, fine tune your perception and sometimes make new resolutions. You sift and churn your thoughts and un-clutter your mind in the process. The “ME” time is important because it helps us to recalibrate our focus on the most important things and reconnect with ourselves. It is required to maintain sanity.
Swami Vivekanand once said, ” Talk to yourself once in a day otherwise you may miss meeting an Excellent person in this world.”
Sometimes people fail to recognize the importance of this time spent with the self. Most of the great stuff, your Eureka moments happen during this time. This is the time when your sub-conscious presents the solutions to the problems it has been working in the background. Your personal growth happens during this time.
Robin Sharma states that “The science behind the rewards of solitude are pretty phenomenal… making time to be alone actually shuts down the part of the brain responsible for self-criticism, firing up the part of your brain that contains your natural state of genius. “
Robin Sharma further states that when you spend time with self – whether it is during your morning walk or in the quite room of your home your brain waves slow down from beta to alpha. When this happens-amid solitude-the part of your brain responsible for self-criticism, mental chatter and constant worry shuts down. With your monkey mind on a little vacation, you enter the Flow State. Elite athletes know this as “the zone” and it’s the place where all great performance begins. It is in this state that you get your best ideas. Your creativity makes explosive gains. You begin to see around corners.
And guess what – this is your natural state that God has given to everyone. Available to you daily. Most people don’t know they have it. And not many create the conditions to experience it.
After having learned about “Goals Based Investing” and its benefits, today we are going to learn the simple steps to create a goals based portfolio. There are no pre-requisites to this exercise. All you need is willingness to explore this investment philosophy and evaluate the benefits vs your current approach and then decide for yourself. Obviously, you will have a few questions around this concept and we will address them as we proceed. If you still have queries, please feel free to post it in the comments, I will try to address them. The first possible question that may come to your mind may be “What about my existing investments? Do I have to start afresh?” You do not have to start afresh. Once you are clear about your financial goals, you should be able to align the existing investments to some of your goals. So let’s get started by first taking a look at the many benefits of this approach –
Goal based investing is an investment framework which helps you align your existing as well as new investments to your financial or life goals.
It helps you diversify your investments as it helps you understand the right type of investment for each goal.
It ensures that you are aligning your investments as per your priority
It helps you avoid impulsive financial decisions so that you do not have to regret later
Let’s get started.
Step 1 : List Your Financial Goals
Create a list of all your financial / life goals such as buying a house, kids education, dream vacation etc etc. Against each financial goal mention the approximate amount you think you will need and the time period in which you want to accomplish them.
In the first pass don’t be bothered of being too accurate with the years or the amount required, ballpark numbers will do to get started. However it is important to capture all the goals.
For instance you may need INR 20 lakhs as down payment for buying your own home in the next two years. Or you may need 1 Crore for your retirement after 30 years. Or you may need 5 lakhs for your vacation abroad or or 3 lakhs for the downpayment of your new car next year.
Financial
Goal
Amount Required
By When
Down payment for New House
20 Lakhs
May 2021
Retirement Corpus
1 Crore
Dec 2049
Singapore Family Vacation
5 Lakhs
Jun 2020
Down payment for New Car
3 Lakhs
Jan 2020
…
…
…
Step 2 : Prioritize Your Goals
Once you have created the list, take a close and thoughtful look at it. Decide which financial goals are the most important. And which ones are more important than the others. Start numbering them in the order of priority. It is natural to have conflicting goals and you may have to make some uncomfortable choices.
For example goals like your kids education or saving for your own retirement are non-negotiable. While there may be others which are essential for financial security like having an emergency fund equivalent to at least 6-9 months of your current monthly income. And then there are those discretionary ones like buying a new car or vacation abroad which you can prioritise depending on your flow of income.
Step 3 : Decide on the Investible Surplus
Now you know WHAT your financial goals are. Let’s look at HOW to achieve them. Based on your current income and expense, think about an amount that you are willing to put aside each month towards these goals. This is the amount you have surplus after meeting your daily/weekly/monthly expenses. Do include the amount you are currently investing in SIPs or RDs. Let’s write it down as we are going to be using this in our next steps. In the first pass write down a number that you are comfortable with. In subsequent reviews you can revise this number depending on the availability of funds.
Step 4 : Map the Investible Surplus to the Goals
Let’s assume you have committed to invest INR 50k every month. This amount needs to be divided among the various goals depending on their priority and time horizon. So first you have to calculate the monthly investment required to achieve each goal.
Financial
Goal
Amount Required
By When
Months
Monthly Investment Required for Goal
Down payment
for New House
20 Lakhs
May 2021
24
83333
Retirement
Corpus
1 Crore
Dec 2049
368
27174
Singapore
Family Vacation
5 Lakhs
Jun 2020
14
35714
Down payment
for New Car
3 Lakhs
Jan 2020
8
37500
…
…
…
…
…
Once you do this exercise it is quite possible that the investible surplus you have decided may not be enough to fund all your goals adequately. This means you will have to review your goals once again. By review I mean, you may have to either revise the amount required or the timeline of the goal or increase the monthly investment. Based on your priorities you may have to go through a few iterations to arrive at an acceptable balance.
Step 5 : Understand Your Risk Appetite
At this stage you are equipped with the knowledge of which goals are you chasing and how much you are willing to invest towards each of them. Now we need to decide WHERE are we going to invest this amount. For this we first need to evaluate your risk appetite for the short, medium and long term.
Simply put, risk appetite means how much money are you willing to lose on an investment. It can vary for different individuals based on their current financial situation, age and confidence level. Also there is no good or bad or one size fits all approach. Each person’s situation is unique. Look at the table below and calibrate your own risk appetite.
Sometimes your risk appetite may vary according to the time period. You may be willing to take higher risk in the short term and invest in stocks/equity directly where you feel more confident of being able to absorb the downside (if any). However you may want to stick to safer investment options for your long term goals or vice versa.
Step 6 : Decide the Investment Type for Each Goal
There are a plethora of Investment Options available now-a-days but to keep this discussion meaningful I will restrict the discussion to the few tried and tested ones viz. Mutual Funds, ELSS, Stocks, NPS, PPF, NSC etc. One you understand your risk appetite and depending on the amount you have for investment you could try investing into Bitcoin, F & O, Commodities, Real Estate, Art and what not.
To start with, take a look at your existing investments and map them to some of your goals. For example if you have recently started a PPF account, you could map it to partially fund a goal which has a time horizon of 15 or more years. Similarly, you could map the corpus of your PF and the amount invested in NPS to your retirement goal and so on.
Now look at the goals that need to be funded. Depending on the time horizon, risk appetite and amount required you could invest in MF, Equity, ELSS or a Debt/Liquid fund. After deciding on the type of investment, note down the monthly amount you are committing to invest towards that goal. If you are investing in Mutual Funds, then SIP is the best way to fund your goals on a month-on-month basis without having to go thru the hassle of manual intervention.
Obviously, managing your wealth is not a one time activity. To ensure that your money continues to earn and grow, you will have to periodically review your portfolio and tweak it if required to meet the changing needs, disposable income and other factors. You may have to do a couple of iterations of your Goal Based Portfolio to make sure that you have reviewed it thoroughly and are ready to implement it. Feel free to share your comments and/or questions and I will try to answer them.
If you haven’t read the first part of this post “What Do We Want From Life?” I would recommend you go through it first before reading this post any further.
Finding what you want from life is a very personal journey which will require a lot of honesty and a little bit of courage to accept yourself the way you really are and the involvement of your heart and mind – all at the same time. Once you pose the question (What do I want from my life?) to yourself with the serious intent of finding the answer, your mind (both conscious and sub-conscious) will get engaged.
Our mind is a big storehouse of all our desires, emotions, things that our parents, friends, family members, teachers etc may have told us over the years. All these hidden emotions below the surface keep playing with our mind when we want to take any decision. And you will notice that at time we experience a lot of chatter in the mind pulling us into different directions. That is because of lack of clarity of what we want.
At the outset, the mind will start giving you many options of what you want from life. These options may be based on what others may have told you or expect from you. So how to find out if the options that your mind is throwing at you are the real answers? There may be different ways to ascertain that but the one that works for most is writing down the answer and then writing down the “Why?” – the reasons why you want it? Just keep writing all the big and small reasons that come to your mind till you have emptied all your thoughts about this answer.
Repeat this process with the other answers that come to your mind. This may not happen in one sitting. The time taken will vary from one person to another depending on your desire, the fire in your belly to really uncover the answer. But the key is to remain persistent and determined to take it to conclusion. And I assure you it will be worth the effort. And remember the journey is as important as the destination as that is where the transformation is actually happening.
Review the answers you have written and the reasons – some of them will start resonating with you while you will be able to discard the others. It is ok to filter out more than one answer to “what you want from life” as you may want to express yourself, your talents in multiple fields. For example, on one hand you may want to be successful in your career and on the other hand you may want to do something meaningful for the under-privileged. On one side you may strive to be the best parent and at the same time you may want to give wings to your own creative pursuits. I have come across many talented people who are achievers in more than one field in life.
Eventually by this process of looking at the various desires and options and reviewing them by being true to your own self, you will arrive at the answers in a few iterations.
Here is something really worth pondering over. The honest answer to this one question can change the direction of your life, can create a new meaning and may even give you an entirely new perspective towards life, goals, happiness and finding satisfaction. Ask yourself,
“What do I want from my life?”
While some may say Success, Wealth, Fame, Love, Happiness – answering this for oneself requires a little more thought and a peek at one’s innermost desires. The key think to remember is that you need not share the answer with anyone else – is to for your own sake that you must answer this question.
It is certainly not an easy one to answer and at the first attempt you may be tempted to say “I don’t know”. While that is perfectly normal, don’t stop there. Be persistent. Find the answer or create one for yourself.
The question remains relevant no matter at what stage in life you are at. You may be a student, working professional, artist, entrepreneur or housewife – think about what you want from life. A lot of times not knowing what we want, is the source of unhappiness and restlessness, as we perpetually keep looking for a better job, more wealth, bigger house etc. That is what is called the rat race.
Once you are able to arrive at the answer to this question, you will no longer be in the blind rat race. You will go after your goals, your passion with a sense of purpose and a new kind of enthusiasm. It will give a new clarity to your thoughts and actions. You will feel transformed. A version 2.0 of yourself. A lot of your old dilemmas and debates that occupied your mind so far will automatically disappear. Your interactions with people will become better. All of this because of the clarity of thought you now have. So go ahead and spend some time in solitude.
Do yourself a favour – find the answer to what you really want from life. After all it is just one life that you have. Make it count.
“Goal Based Investing” though a relatively new concept in the world of investing, is catching the fancy of many investors due to its various benefits. (And we are going to learn about them soon.) Once you learn more about this concept it seems more like common sense. (But common sense is quite uncommon) – so let’s learn a little bit more about this investing concept.
As the name says, in Goal based investing, you invest in specific goals such as your kids education, a vacation in Europe or saving for the dream house rather than generic investment and focusing on generating the highest possible return or beating the market. To start with you are required to list out your financial goals that you want to achieve. And then design an investment strategy that enables you to accomplish these goals in the best possible manner.
Most traditional investment frameworks start with assessing your risk taking ability – Conservative, Moderate or Aggressive. Then they use various indexes to show whether you will be able to beat the market but it does not specify whether you will be able to reach your financial goals.
Advantages of Goal based investing –
Greater commitment of the investor as he is saving towards his own goals and he is able to track his progress
Reduces chances of impulsive decision making due to sudden market fluctuations or availability of spare funds
Investor can relate to the entire process as it directly relates to a set of tangible goals
Encourages a disciplined way of investing – whenever the person has some spare funds he is more likely to channel it to his current goals rather than get carried away by the sales pitch of some financial advisor
Helps have peace of mind w.r.t investing as he watches his investments grow
Also I have seen most investors struggle with the question of “When to book profits on investments?” In the absence of defined goals, it becomes very difficult to stay invested during market volatility or get carried away due to greed during a bull run. However when you are following a goal based investing approach, the process takes care of this dilemma. You book profit when a goal is attained. Period.
