Education – The process of receiving or giving systematic instruction, either at a school or university.

Parents in the UAE (Dubai & Abu Dhabi) are going on a borrowing spree (Personal Loans) to fund their kids education; costing over USD $10,000 – 20,000 a year. That makes the place most expensive behind Australia & the US (in education).

Is this essential spending? Or a necessary spending” or a Want Spending?

Value # (is not equal to) what one pays. Stocks, Bonds, Home or Education – all the same.

An interesting fact which Dr. Duvvuri Subba Rao mentions in his book, 'Who moved my Interest Rate' - The only RBI Governor who calibrated the Interest Rates for 23 times (Raising the rates 13 times & reducing them 10 times) during his tenure, between 2008 - 13.

Having appointed as the RBI Governor, just a week into the peak of the 2008 Global Financial Crisis, he mentions that, 'Unprecedented Times required Unprecedented Actions'.

I would have been happy to keep a track of every analyst's estimate on the interest rate movement during his tenure. It would have been a factual eye opener on, how bad can their 'calls' go.

And imagine what if, an Investor 'Churned / Re-balanced' his portfolio 23 times during the same period of 5 years 😳, reacting to every move by the Governor. The result - An "Absolute Portfolio Disaster".

He signs off a chapter saying, 'I hope no other Governor faces such a challenging time'. It was not in his hands, he had to (pro)react to the Global world.

Thankfully, an Investor 'Need Not' react to the Domestic & Global scenarios as many times as he ever had to.

And Unprecedented Times require Unprecedented Actions from an Investor, too. Yes 🙂, but in the form of BUYING & not SELLING.

The above table is the ‘current value (2014) of USD $1000 of Berkshire stock purchased in a given year’ (Source – Business Insider). I tried to go on a fact finding mission from the table & here are the results…

$1000 invested in 1964 with Warren Buffet is now (2014) valued at $11.64 Million. That is 50 years of compounding at 21.6% CAGR vs 9.9% on the S&P 500.

The tonnes of money was made between the holding period years 30 - 50 😀. That is what compounding is. It will not deliver anything in 3, 5 & 10 years or more. Berkshire never paid out any Dividends. Everything it delivered was 'Growth'. The stock lost more than 50% of its value 3 times in the 50 year period. And countless times between 25 - 30% or more. Imagine someone selling it off, every time it fell 😂.

The best CAGR returns were made by investors who gave him money during 1964 & 1975 & still holding onto him.(20.15% - 23.29%). The worst time to invest would have been between 1997 & 2006. An investor would have earned a single digit CAGR, until 2014. The in-between year investors (1975 - 1997) earned anywhere between a lower double digit to a higher double digit (10.13% - 19.81%).

2004 - 14, he delivered 9.7% vs 5.8% for the S&P 500....He still outperformed 😀. The average American inflation for this 50 year period was 3.98%.

So, the next time; a neighbor, a colleague, a friend, a fund manager, a banker, a wealth manager, a financial adviser or one's cook - claim to have delivered a CAGR of 20% ........then, one would have discovered the 'Next Warren Buffet' 🙂

This is what is CAGR (Compounded Annual Growth Rate). A 'stealth total return' and the only return that an investor ever needs to bother about. The world's best investor makes 21.6% CAGR for 50 years. Can we do better ???

Core of Education - 3 R s of an early learning phase...

Reading, Writing & Arithmetic

&

Core of Investing - 3 P s of an investor...

Philosophy (asset allocation), Patience & Persistence

Govt. outstanding borrowing to the GDP of a country. The only 2 countries coming down on this parameter are Germany & India (marked in yellow). And India’s current figure is almost at an all time historical low. Note – This is only Govt Debt. The debt what Corporates & Individuals owe is a different matter (Source – Trading Economics)

Summer Olympics – started in 1896 @ Athens, Greece. The games did not take place in 1916, 1940 & 1944 due to the World Wars. All time medals tally is led by the USA – 2520 medals (gold, silver & bronze), from 27 Olympics it participated. India has 28 medals from 24 Olympics. That works out to 93.33 medals per Olympics for the USA & 1.16 medals for India.

No wonder, the USA has the largest Equity Market Capitalization with the best ‘Compounding Medals’ (Russia / USSR, comes next with 1584 medals) & we are the best investors into Fixed Deposits, Gold, NSCs, KVPs etc…

India has eroded its Purchasing Power, whereas the US has created an unbreachable Compounding Effect of Medals.

Invest Wise. 
Invest Right. 
Invest for Compounding.

If medals are to be won at Tokyo Olympics (2020), works should have started during Beijing Olympics (2008).

If, ‘Adequate Cash Flows’ are to be won during ‘Retirement’, work should have started during the first 5 years of working life. 

Aim for a Consistent, Sustainable & a Peaceful Retirement.

The person who takes a medicine, must recover twice. Once from the disease & once from the medicine - Dr. William Osler (MD).

An investor who saves 'only' in a 'fixed return' option must recover twice. Once from the 'Purchasing Power' & once from the 'Taxes Paid' on the returns 🙂.

Well, a patient can recover from a medicine & a disease, but, a fixed return investor can never recover from either getting his purchasing power back or taxes paid 😟

Thankfully, Investors need not wait for 70 years to earn one's 'Individual Returns'. It will be a phenomenal compounding gold mine.

(Pusarla Venkata Sindhu, wins the 1st individual silver medal, after India's  Independence).

Olympics 2016 ⛳ - The Chief Medical Officer of the Indian Olympic Contingent is a 'Radiologist' 😳. His backup is also a 'Radiologist' (Reason - son & relation of Indian Olympic Association members). The universal medication recommended to any athlete is a pain killer; so much so that one of them is now nick named 'Mr. Combiflam' 😀

It's like anyone walking into a financial institution or meeting an independent financial adviser; and the recommended medication is a universal 'Money Back or an alike, Insurance Plan' 😱

Specialist Sports Doctors are needed, for the athletes. Specialist 'Money Back' schemes are avoided, for a long term Money Life.