A simple habit for your wealth creation journey

Tanmay Motiwala is a young doctor who began his investing journey in 2017. I was fascinated when I heard about his “small habit that created a big impact in investing.” So I reached out to him to learn more about his money journey.

What he referred to as the “small habit” was the simple, and extremely effective, act of journaling.

I never fail to be amazed at how this simple act is so incredibly effective simply because it makes you aware and critical of your spending patterns. It also matters when it comes to your goals. It makes you extremely mindful and gives you sharp clarity on what matters. It puts the focus back on your life, away from the players in the social media ecosystem.

Tanmay began by just putting down his thoughts. Whatever came to mind. He wrote them on the Good Notes app on his iPad. Why must I save? What am I saving for? What do I want to spend on this year? What is something that I want to do in the future?

He then began making note of his expenses. This can help you identify your worst habits, which may not be evident upfront. When you are living on a meagre salary, then the take-away bills and coffee shop hangouts pinch terribly. Writing down where money is spent presents you with facts and numbers.

Journaling in such a fashion helps an individual tackle the money problem from the positive angle (what am I saving for), and the negative (where are the wallet leakages). This awareness is something all of us could do with.

Once this becomes a routine, saving becomes a habit.

Tanmay shares five learnings:

#1. Always make notes when it comes to investing.

My writing habit is something that has worked for me, but I did not restrict it to just writing my goals and expenses.

I always write down my fundamental analysis when investing in a company. I also write down my investment thesis. Why am I buying it? At what price should I pick up the stock? What changed my mind (if I am selling)?

This is a real confidence booster when I am right. It also helps keep me grounded during a volatile market or when the earnings are not impressive in a quarter. It also throws up tremendous learnings. The mistakes I made earlier in my analysis. It is easier to spot if the company’s trajectory is deviating from what I perceived it to be.

I also write down my feelings and emotions during different phases of the market. No one is oblivious to the impact a roaring bull market or a very bearish market can have. Putting it down in words helps me face my own vulnerability and keeps me grounded. I recently put a reminder down in my diary to ignore the external noise and focus only on fundamentals and quality stocks.

#2. A combination of a hands-off and hands-on approach is a winner.

Once invested, I refused to check my portfolio or the market levels constantly. Here too, my tight schedule and packed days helped. At times, I was just too tired. But by letting my capital build up, I could see a corpus being created which further bolstered my enthusiasm.

However, a hands-off approach is not to be misunderstood. I am hands-off when it comes to reacting to the market, but very much hands-on when it comes to keeping track of my investments. I keep track of the growth of my portfolio, the stocks I have invested in. For example, I invested in IRCTC since its IPO, but sold a chunk of it when it was crazily overvalued and a decision was made to split revenues with the government. I am aware of certain metrics such as PE ratios and market cap/GDP ratio, and when they go down, I do increase my SIPs in index funds at such times. I revisit my fundamental analysis when needed. When it comes to companies that I want to invest in, or already have, I attend some of their earnings concalls.

I am also very aware of my asset allocation and every six months visit it to keep the 90% equity allocation.

#3. Look at what works in your favour.

After medical college, there is a period of training called the residency, where freshly minted physicians work under supervision. In other words, a resident doctor. Residency holds some of the busiest years of a physician’s career.

I had the option of bemoaning my lack of leisure, or I could work it around to my advantage.

I quickly realized that the tight schedule gave me an edge from a financial standpoint. This was the moment when I finally began to earn but had virtually no time to spend the money. So why not invest it?

There was another positive too. I had no student debt, neither did I have any credit card debt. Zero liabilities give one a superb head start.

#4. Experts aren’t created overnight.

I have tremendous respect for asset managers. It takes decades in the market to understand cycles, investing styles and businesses. I myself have studied years to obtain my degree. And, the learning never stops.

When starting out my investing journey, I knew I had much to learn. So I started off with mutual funds. I picked out a few equity funds and distributed my investments among them. I began with Rs 5,000/month invested via a systematic investment plan, or SIP.

I then began reading various books and sought to educate myself before venturing into direct stock picking.

#5. Active income should be the initial focus.

Yes, we would all love to be on the receiving end of passive income. But that comes much later. You need to build a corpus. And for that, you must save and invest. There is no other way.

Active income is the key in initial days. I kept investing from 2017 and all through the crash of 2020. As soon as I got an increment, I increased my SIP amounts. The first million takes its own sweet time. Then it picks up in momentum thanks to compounding. But to get to this stage, you just have to fuel the corpus by diligently saving and investing that amount.

The secret has always been writing.

Be it my goals. My expenses. My investment thesis for a stock. I write about my conviction and what worries me. It gives me a solid foundation upon which I can create wealth. Try it.

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