After studying what is investing? The delaying meals concept is rather useful to explain the whole phenomenon. How does compounding works? What if I don’t eat? Can we overeat? All sorts of questions going to clear after reading this.
All we know is that for daily requirements we spend money, buying food. What if I saved one-fourth portion out of my bread left and rather than eating today I will save for the future. What if it is perishable food? One solution might be giving it to others who need food. After some time when that needy person wants to give back that food, we share with some delicious desserts as extra. I will again share with others the dessert and gain extra delicacies. It is compounding.
What if didn’t eat? To survive it is a must to spend on necessities. One can draw limits on it, its consumption, and its saving. Generally, in the market, the formula used is (100-age). i.e. If you are 20 years old so (100-20) 80% of spending you can save and invest. Earlier you start much more compounding you will enjoy in the future.
Over-eating? It applies to consuming all the food on a given day without saving. Nothing bad in it. The principle works until you work when you stop the working consumption will stop. Also, you lose compounding opportunities.
Conclusively one condition gives hope if you save today meal and invest, it will give more meals in future. Another condition says don’t expect from future enjoy fully today. Both conditions are on extreme of each other you have to just balance that line. This balance line must ensure today’s consumption joy with fulfilling future security.
Where we are leading?
Consumption Mindset ---> Production Mindset
In a survey of 90% of students from India in their dreams, goals set are based on consumption mindset. Do you want to try in which category you fall just think upon your success definition? The new entrepreneurship environment, startups, unicorns now changing the mindset from consumer towards the producer.
Investment and cash approach!!
A dollar today is more expensive than a dollar tomorrow! If you know the basics of economics you know that as more cash is printed more value of cash decreases. That’s why there is always a risk to holding our assets in terms of cash. Cash is just exchanging medium not a value holding asset. The same applies to other precious metals like gold and silver. Even though we Indians believe it as value holding assets. Printing cash inflates the market and prices increases so you can’t buy yesterdays soda can For same price today. So soda can remains same but the cash required to buy increases. Over all value of cash decreases that’s why a dollar today is more expensive than a dollar tomorrow. In case of gold if supply from mines increased then ultimately to balance supply demand curve price falls and that’s why it is risky to hold assets in terms of exchanging mediums.
For now, the conclusion is that holding assets in cash is the worst idea. From my perspective, one should delay meals up to fasting capacity and increase your fasting capacity over time. I firmly believe in compounding. Disciplined fasting eliminates risk and it has a premium of health.
Keep Reading ! Keep Investing!!
Active Analytical Thinker, Currently working on financial literacy.
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