Thank you very much!!

Today morning I had to go to Koramangala for some personal work. I met Mr. Ram Mohan and came out of his house. My bike was parked over a cement slab on the pavement and I was having difficulty in getting it down on the road. Just then a woman came begging for some alms. She should be close to 50 and was looking like any other beggar that we see in India. Since I had already started moving my bike down the slab, it was difficult for me to get to my purse. But I usually try my best to give something to them. So I took my bike on to the slab again, parked it and then took a 5 rupee coin and placed it on her hand. I quicky turned to get my bike but what I heard stopped me.

The woman said ‘Thank you’. I was pretty shocked. It is quite rare that someone begging would know english here in India. Still its bangalore and may be she has been to places around and learnt to say ‘thank you’. I was still looking at her in total amazement. May be she thought that I didn’t understand her. She smiled and repeated, ‘Thank you very much’.

Now that was just too much. What was more surprising is the fact that she pronouned the words perfectly and there was that proper stress where it had to be. In fact many Indians would have been proud of that. She moved on but even as I took my bike and rode away I couldn’t take my eyes of her. I am not going to experience anything like this again. I am sure about that. May be she is a literate. May be just may be she was rich once… You never know !!

Hope for the best. Prepare for the worst

Thanks to Srini. Your comment got me in mood again to write on Personal Finance after quite some time.

‘Hope for the best’ – we all do it, almost without any effort. When we buy a stock, we expect it to sky rocket out of everybody’s expectation. When we plan to get a car we expect the prices to fall down and freebies added by the sellers. No one needs to tell us that. We will always hope for the very best to happen to us whatever be the case.

There is nothing wrong with that attitude, after all positive thinking can help your mind and will create an energy within you to work all the more harder towards your financial goal. No one expect the share price to fall down when they had bought it. Part of it has to do with the ego of doing things correctly. That is where the danger lies. We try to be correct rather than being reasonable. We just can’t stand to see our friends smiling at us for having to sell our shares at a loss after all the knowledgeable lectures we gave them during the lunch about how to make a killing in the stock market.

So while everyone is happy when things goes as planned, there is absolute chaos when things break loose like what happened today to sensex after it lost 1112 points in a single trading session. ‘Prepare for the worst’ is the key. Many feel that when you prepare for the worst like taking a life insurance you actually are negative in your thoughts and you invite bad luck. But contrary to the belief, you are brilliant and are prepared to accept the fact that life can be unpredictable. The same goes with financial planning. Prepare yourself for the worst situation that might arise. For example when you buy shares of a company, never ever forget to put a stop loss order in place however confident you are about your selection. Likewise when you put all your money in one area whatever it might be, just give a thought as to what might happen if that loses terribly. So diversify.

What preparing for the worst does is to keep you alive financially when the worst happens to the financial world. You will live to tell the tale. It is like having a working parachute in place before sky diving. Like having safety boats in a ship. Even a Titanic might sink. You never know.

So be prepared and when the worst strikes, you will be able to take it else you will be one among the many slaughtered on the way. Another aspect is to keep the preparation as automated as possible without you having to intervene. This is because you might not have enough time to react and also because your blood might just freeze and you will not make any move but just watch panic stricken.

Have stop losses, diversify, nominate, take insurance (life, vehicle, home, loan, medical) as per and to the extent you need. Above all, what matters is that you make money, not that your lunch friends call you a stock market wizard.