Uncertainty = discomfort of the mind

I went to see a doctor today. I was only expecting a simple treatment. After all, the symptoms didn’t seem severe. It seemed like something that could be cured in a few days.

Then came the diagnosis as a shock. It was a condition I’ll have to live with forever. Something that can change my life as I have known it. Something that can potentially disrupt what I consider as my identity. Something that can make me humble.

It hasn’t been easy since then.

A part of me keeps reminding me of what Oscar Wilde once said: “If I may not write beautiful books, I may at least read beautiful books; and what joy can be greater?” Though this will be a life-altering change, I have great confidence that my happiness will remain intact.

Nevertheless, it’s all a haze right now. Things will become clearer and more certain in the coming weeks and months. For now, however, this uncertainty hasn’t been easy to endure.

Realising that I don’t like bonds all that much

I have been thinking about debt/bond investment since April 2023, right after the Government of India decided to tax gains on debt mutual funds at the slab rate. I have been looking at “debt-like” investments that are taxed less, but I am not fully convinced by any one solution.

A few days ago, I wrote to my financial advisor asking for advice. Here is a copy-paste of what I wrote to him:

Maybe I am overreacting to the recent taxation change. But I have been finding it hard to invest in mutual funds that only hold bonds. Here are the alternative options I have been thinking about:

1. Possibly the simplest: choose a fund like Edelweiss Multi Asset fund for debt allocation. This fund holds 50% arbitrage and 50% bonds. The bond portfolio looks high quality (AAA and SOV only) with about 2 to 3 years duration.
2. Instead of investing in Indian equity and bonds separately, invest in the Quantum Multi Asset Allocation fund. This fund holds 40% (actively chosen) Indian equity; 10 to 15% gold; and the rest in bonds. The reason I like this fund more than option #1 is that (a) this fund maintains a longer duration bond portfolio, (b) gives me gold exposure, and (c) this can simplify my portfolio by removing a separate fund for Indian equity. The caveats are (a) I don’t know if I’ll be happy to live with a smaller, active equity portfolio for Indian equity and (b) rebalancing between asset classes will be more difficult.
3. A fund that invests in up to 65% bonds and 30 to 35% gold (and maybe silver) will be a good replacement for the debt fund in my portfolio. But such a fund does not exist in India. Is there any such overseas ETF?

Maybe I am overthinking this and impatient for a solution to appear too quickly? What is your advice for me? :)

Writing this out gave me some clarity. Fairly soon after I wrote this email, I understood one thing: I invest in debt mutual funds without conviction. I understand equity, and I know why I have equity in my portfolio. But I invest in debt because I was told that a good portfolio should hold bonds along with equity.

Back when tax rules changed in 2023, tax for global equity—that is, non-Indian equity—also went up significantly. My advisor recommended that I avoid making fresh investments in global equity. But I stood firm and continued to invest in global equity. (Now the tax rules have changed again, and global equity is taxed more favourably.)

I chose to stick with global equity despite high taxes because I knew what I was getting from global equity. Can I say the same thing about bonds? Probably not. It appears that I only understand things like “reduced volatility” and “negative correlation with equity” superficially, and deep down I don’t like any asset other than equity. (I also like gold despite my decision to not invest in gold. I still haven’t added gold back to my portfolio, but my desire for gold hasn’t disappeared.)

I suppose I need to answer some basic questions about what I do and don’t like. I think I don’t even know what the correct mix of growth and stability for my portfolio is. More learning and introspection can only lead me to a solution—a portfolio that I am comfortable holding despite taxation changes that keep happening.

A fine line between acceptance and denial

I messed something up at work. This is a kind of mistake that I seem to keep repeating. It hasn’t been easy to forgive myself and move on. At one point, I started thinking if I should leave this job and move to a different team. “I am not anyway good at the skills needed for this role,” I thought, “so why not just find a different role?”

I have done this before—moving to a different role that aligns better with my existing skills. But in recent months, I have been thinking about the concept of “I”. In particular, the descriptions we give ourselves such as, “I am good at math,” “I am not very good with people,” etc. I have been trying to separate actions and behaviours from the person. Because of this, I almost immediately rejected my assumption/description that I was not great at my current job.

We change over time. I have gotten better at things that I was not very good at. I have started liking things that I used to dislike. It is only temporary that certain things are hard to do. I can get better if I tried. Understanding this has, thankfully, stopped the “I am bad at this” narrative in my own mind. However, now I am stuck at the next stop.

I agree this is just a skill. I agree I can get better at my current role. But why should I get better? Why not just take up tasks that don’t require so much effort?

What is preventing me from putting in the effort to get better? Hard to tell for sure, but 2 things come to my mind:

1. Fear of failure. In the past, I have shied away from new things because (unconsciously) I was afraid to fail. If I never try something, I never fail at it, right?
2. It feels futile. The “I don’t need to do this to prove my adequacy” narrative.

While reason #2 may sound like acceptance, it is, in fact, denial. Earnest attempts to improve requires accepting that there is room for improvement. Thinking “I am fine as I am” is denial. If I truly thought I was fine, I wouldn’t be brooding over the mistake I made at work.

Such denials are a hindrance for growth. But the good news is, awareness is (almost) all we need for shaking off such denials.

Back to my roots

I grew up reading magazines at home. Political news commentary, children’s magazines, lifestyle magazines, science magazines, computer magazines, and whatnot.

Somehow the reading stopped once I moved out to live on my own. Now I am trying to go back to my roots.

One of the magazines in the picture is a brand new subscription; I have no idea how enjoyable and insightful it’s going to be. But I can’t know until I give it a try, can I?

My money management goal for 2022

Ever since I started tracking my expenses in 2019, one thing has been bothering me: I spend more than I earn through regular salary. I am not going broke, though. I have other irregular income too. My total income (salary + irregular) is more than my expenses, so I have some money left over for saving/investing.

This is likely irrational, but I want to spend less than my salary income. Every month I notice that the expenses are more than the salary income, and that stresses me out. As we all know, such a consistent stress is bad for the mind and also bad for the body. And I do notice the impact of this stress.

I don’t know what the solution is. Maybe I can recalibrate the expectations to live within the total income (instead of within the salary income). Maybe I need to come up with a novel way of accounting so that the spending looks healthy. (Reducing expenses is not really an option because I don’t want to downgrade the quality of life.)

I think this is a good money management goal for 2022. What good is money and wealth if you can’t be happy!

Rebalancing requires conviction

When I started investing 1½ years ago, I was looking forward to rebalancing my portfolio. One asset class would have done better than the other and I’d either be safeguarding the excessive profit or buying the dip, I thought. I expected this to be a thrilling and pleasant experience.

When I did have to rebalance my portfolio earlier this year, however, it was not as pleasant as I had thought. I found myself hesitating to sell equity to buy debt. “The interest rates are so low, should I really invest in debt now?” “Maybe I can keep the higher equity allocation for some more time and make the most of this bull run?” These were some of my thoughts.

Image credit: QuoteInspector.com, licensed under CC BY-ND 4.0

When I sit down and think about this hesitation, I am realising that:

• It’s easy to have conviction and discipline while discussing hypothetical scenarios. When it comes to actually following through with action, it can be hard.
• Unless the investor emotionally prepares themselves, rebalancing will likely be an equally difficult experience every time. Because, we’ll always be dumping recent well-performers in favour of recent ill-performers.

My next task is to think about the whys of rebalancing and emotionally prepare myself. It will also help to do some backtest to see the performance difference between portfolios with and without regular rebalancing. Quantifying the difference is an easy way to get the conviction I’d need.

Maybe the real takeaway is that I am rebalancing the portfolio only because they say it’s necessary, and not because I know it’s necessary. “Because they say” is seldom a convincing reason.

Stress is a response

I used to think that external factors caused stress in me. While that may not be entirely wrong, a more correct way to think about stress is that stress is a response.

Recently, I discovered that stress is my response to what happens externally. Stress doesn’t come from outside ready-made, but rather, I create the stress within me. Thinking this way puts me on the driver seat.

Various things happen beyond my control. Responding to many of them by getting stressed is unhealthy and unsustainable. Stress starts as a mental discomfort and quickly evolves into physical discomfort.

I have long believed that taking ownership of the problem is the first step towards finding a solution. I have spent a long time blaming my problems on stress, but I think the time has come to acknowledge that I have the power and responsibility to stop stress from entering my system.

Save for everything all the time: an ‘EMI life’

I started goal-based investing only last year. A full 15 years after I started working full-time. This is a late start for sure, but better late than never.

I jotted down a total of 19 financial goals and made a plan for how much I’ll invest towards each goal. I was feeling proud about this for a while, but soon realised that this plan resulted in a bad liquidity crunch for me. I pretty much invested everything I was earning and I didn’t have much money left for even semi-essential day-to-day expenses. I tweaked the plan to improve the cash flow, but I was still falling short. Then I realised that big ticket short-term expenses were the biggest shock to the system, and I started saving for some of these expenses.

While I saved for some expenses, others were simply forgotten. I was saving for my 2 children’s school fees, but I had failed to save for the medical expenses for the birth of my 3rd child. Nor was I saving for the school admission fee for my 3rd child. My calculations show that I need to step up my savings significantly to meet these school expenses. I realised that the plans that I was so proud of were severely incomplete.

Saving for children’s school expenses significantly increased the amount of money I had to keep aside every month, but I was still able to remain afloat. Today I was thinking about our old car and it dawned on me that we’ll need to replace this car in a few years. I need to start yet another monthly saving to fund the car purchase when the time comes! 😟

Thinking more, I realised that I should be saving for everything all the time! When should I start saving for a new car? As soon as I have paid off the current car loan. When should I start saving for my child’s 2022-23 school fees? As soon as I have paid the 2021-22 school fees. Sort of like having to pay half a dozen EMIs indefinitely. If I don’t to do that, I am going to be unprepared when these big ticket expenses do inevitably come.

•••

One of the simplest but very effective ideas for behaviour change is to start small. Just do one thing right, or change a tiny part of your day for the better. As time goes by, that change will spill over to other parts of your day and your life improves beyond the initial change that you made.

I am seeing such a change in the way I manage money. What started as a plan that covers my crucial long-term financial goals has spilled over to more and more of my less crucial but still important goals/expenses.

The revelation about having to buy a car in a few years came today. I have entered the goal into Kuvera without a plan for where the money will come from. This is definitely overwhelming and I am frustrated that expenses are piling up. At the same time, a part of me understands that uncovering such holes in my plan is a good thing. The more holes I uncover, the more holes I can plug. The more holes I plug, the fewer financial shocks our family will have to endure.

Like they say, the more you sweat in peace, the less you bleed in war. I intend to win the ‘personal finance’ war without bleeding (much).

Travel jitters

In 2010, I visited Leh, Ladahk and saw the Himalayas for the first time¹ in my life. Planning for the trip was a lot of work, but I was so excited it didn’t feel like work. After I had returned, a friend of mine commented that it takes courage to wish a wish and make it happen. Back then I thought no one needs courage for something trivial like travelling.

I have been travelling fairly frequently for over 8 years now. Even now, every trip is a bit daunting. I sometimes even consider cancelling the trip. But every single time, the trip ends up being a great experience, irrespective of whether we have already been to the place several times, or if it’s a totally new place.²

Next week we are off to Salt Lake City for Thanksgiving. As usual I feel a little uncomfortable about the trip. It’s going to be cold in Utah; it might even snow. For the first time we are taking a train which provides food; I am not sure how good the food will be. Like every trip ever, the cost seems to run a bit more than what I’d like. I am a little nervous although deep down I know the trip will be a fulfilling experience in the end.

Maybe that friend of mine was right all along. Even simple things like travel takes courage.

¹ and the only time so far, although I want to go there again some day.
² I am often inflexible when friends ask me to reschedule my trips so they can come along. My usual response is “I’ll go alone this time; let’s make a new plan for all of us together.” Often we don’t make a new plan because they often can’t find the right time to travel. It’s always easy to say No, but finding reasons to say Yes makes our days a bit brighter.

My first fall off a bicycle in years

I take Stevens Creek Trail while cycling to work. Taking the trail is safer and easier than riding on the roads because motorcycles and cars are not allowed on the trail. But there’s one part where the trail is significantly less safe: when getting off of it near Google office. The trail is elevated and is about 10 feet above the ground around it. To get off the trail, I have to climb down this steep, irregular descent.

Usually this is fine; I am used to rough trails like this from my childhood. But today was different. I waited about 15 seconds at the top yielding to another cyclist on the ground. By this time, there was another cyclist behind me, waiting for me to move. I became nervous about blocking someone else’s way. As soon as the cyclist on the ground was out of my way, I hurried down the descent and ended up falling off.

This is my first fall in California. I’m a bit embarrassed because I know how to take this descent correctly. Should be more careful in the future. :)

Cycling to work

I started cycling to work sometime in 2014. July 2014, I think. The commute is approximately 10km (about 6 miles) one way. After the initial enthusiasm faded away, riding 10km was not really easy. By the time I arrive at work, I’d be short on breath. I’d run to the pantry (micro-kitchen as we call it) and grab anything that looks edible.

There have been times when I wanted to give up cycling altogether. Sitting inside the car is so comfortable, after all. But somehow I kept it going. One or two days every week, I was cycling to work.

A year later, I continue to cycle to work once or twice a week. It’ll be nice to cycle more often, but I am happy with how far I have come. When I arrived at work today after cycling for 10km, I wasn’t even thirsty. I didn’t want snacks, nor did I want coffee. I just put my bag down and started to work. I know things will improve further as time goes by, but I am satisfied with the progress so far.

When I feel grim at work

... I fix a bug or two, and that usually makes me happier.

A review of the year 2014

I am not much of a believer in “new years”. It’s just an arbitrary point in time which happens to be a round number (01/01). But, I like the fact you can think of this round number as a new beginning. Counting your blessings is a good thing, they say. I’m going to start this year by reminiscing on 2014 a bit.

If 2013 was when we bought a new car for our family, 2014 was the year when a car became my primary means of transportation. When I had to buy a car, the first thing I wanted was a BMW X3. Though I changed my mind later on after finding out the cost, I ended up getting an X3. Turns out, used cars are considerably cheaper. :-)

Getting this X3 was one of the good decisions of 2014

Before getting the X3, and for a while after getting it, I thought the X3 looked really nice. In a few months, I learned that irrespective of what car you have, you’d think of some other car to be nicer/better. I still wish I had gotten a Jeep Cherokee even though I know deep down that the Cherokee won’t be as refined as the X3, and the X3 is a better match for my needs.

By around the same time, I upgraded from Canon PowerShot S5, which had been my camera for about 6 years. I upgraded to Sony Nex-6 and got two prime lenses, thanks to guidance by +Karthik Nagaraj. I am so pleased with the quality of the images I took 3 to 5 times more pictures this year than the past 5 years. After a few years, I took pictures that I myself liked.

When I moved from Sydney, the most important goal I had in mind was to travel more. I started living outside India with the desire to travel, but I hadn’t travelled much when I was in Sydney. I wanted to change that with the move to California. Armed with my new Nex-6 and the X3, I travelled to a lot more places than I had originally planned.

2014 was my “year of broke” after having lived wealthy for several years. Often in 2014, I had much less money than I needed. It was all due to bad planning from my part, which made it easy to fix the issue. I can say I have a good hold on my monthly expenses now. 2015 might actually get better monetarily. Good times are ahead.

This was the year I bought my first non-Nexus Android phone. This was the year my much loved Toshiba Z830 laptop felt inadequate. It’s underpowered for running things like Android Studio. Has a 1366×768 screen, which is not pleasant to look at anymore. Sadly though, I just haven’t found a laptop in the market that’s worth upgrading to. Hopefully System76 will introduce a successor to their Galago Pro with a 4k display.

Here’s to a great 2015!

Skipping lines is for jerks

It’s been raining this week, so I have been driving to work since yesterday. Driving to work means I need to take the Shoreline Boulevard exit from 101N freeway. Turning right after the exit takes you to Google offices, while turning left takes you away from Google. Naturally, there’s a very long line on the right turn lanes while left turn lanes are almost empty.

When coming to work this morning, I thought I would turn left from the exit and then take a U turn after so I don’t have to wait on Shoreline exit. I had passed about half of the line on right-hand side lanes when I spotted a gap in the line. I squeezed in and started waiting in there. That’s when I realised I was being a jerk. Everyone in the line has joined at the end and moved forward slowly. Jumping the line and joining in the middle is impolite. We won’t do that where people stand on the line — they’ll give us a dirty look and quite possibly ask us to join the line from the end. But because they cannot do anything when everyone is sitting inside a car, it doesn’t suddenly become okay to not follow etiquette.

I felt bad enough to leave the right turn lane and go with my original plan. I took a left, took a U turn, and got to work. Maybe it took me a bit longer, but I don’t feel like a jerk. That’s a good thing.

Things that surprise(d) me

Certain things surprised me when I found them out for the first time.

• I used to enjoy being miserable. Only wanting to not be miserable was sufficient to start being happy.
• It takes effort to relax. By default we’re stressed both physically and mentally. (It takes awareness, to be precise. But for many, awareness requires effort.)
• Often, not yielding to peer pressure and following your instinct is the right thing to do. But it takes courage to follow your instincts especially your belief contradicts popular beliefs.
• Accepting misery is a path to joy.
• Even after so much change, I still haven’t accepted myself just as what I am.
• I have become, or I am doing, everything I used to hate in the past. Yet, it’s not all that bad.

The US tax system and me

What is my “default” reaction when things don’t go the way I want them to? Anger. I get angry that things are messed up. This pretty much ruined my happiness in Hyderabad. I hated Hyderabad pretty much every day; I am not sure what good came of that hatred.

Now that I have just moved to California, I am angry again. Both in India and Australia, you don’t have to choose how much tax you want to pay. Your employer deducts the right amount of taxes from your salary and you get exactly what you should get. But in the US, I need to decide how many “deductions” I “claim”, how much extra tax I want to pay, etc. There is a long form to work out all these numbers.

Impatient and irritable, like my usual self, I don’t want to think about money. Even today, I haven’t learned about or made an informed choice on these numbers. I am not even sure if I am underpaying or overpaying my taxes. One thing I know for sure is that taxes are more taxing here than in any other country I have lived in.

Every once in a while, I hate this country for doing taxes differently, especially when I feel like I am paying way too much in taxes. Unlike in Hyderabad, however, here I am a bit more conscious of my hatred. Also, moving to California was a choice I made; not something imposed on me. Maybe I should relent and get familiar with this tax system. That would end this hatred for ever.

Sleep deprivation + driving = not good

While driving, I made two stupid mistakes this morning within a few hours. I have been sleep deprived for a few days now, and I think that has elevated my response time. It’s scary when this happens. I need to sleep well this week.

Fear of Unknown

If there’s one thing that’s consistently keeping me from reaching my goals, it’s this: Fear of Unknown.

Buying my first car

New SUVs, used SUVs, new cheap petrol sedans, moderately expensive hybrid sedans, almost new used cars, super-old used cars... there are tons of options for someone looking to buy a car. For the past few days, I have been thinking a lot about what I should get. You could even say I was overthinking it.

I have had an eye on the new Jeep Cherokee ever since I came across it. It’s feature-packed at an affordable cost. Doesn’t look boxy like a conventional Jeep. 9-speed automatic transmission sounds excitingly crazy. But there is a bunch of reasons why the Cherokee may not be a good choice. It’s not at all fuel-efficient. (I’m comparing it with Honda Civics and Toyota Priuses, mind you.) The cost of the car is high. It’s unclear what the resale value would be when I sell it off in a few years. It’s unclear if I need an SUV or a 4x4 at all! I somehow couldn’t bring myself to buy a Civic, although I wish the Jeep had some of the fancy features the Civic has.

Having slept over the pros and cons of the cars for over a week, today I feel like I have made up my mind. I think I’ll get the Jeep. I have never gone off-roading. I don’t know how to use a 4-wheel drive vehicle. Now is a good time for me to learn to use a 4-wheel drive and have some fun driving on less travelled roads. I think I’ll take this opportunity even if it means it’s going to cost some money. I’m sure the new roads and the learning experience will all be worth it.

Distracted

Buying a car is a tiring exercise. Especially when you don’t have the money to get the car you want. These days, irrespective of what I do I am unconsciously thinking about which specific car I’d buy, how I’d manage to pay for it, if I am getting the right car for me, am I getting a good deal, and so on. Naturally, this makes me distracted and I am not doing things particularly well.

This morning on my way to work, a car behind me bumped into another car when switching lanes. Maybe that driver was distracted too, thinking about something.

Right now, I just wish I could finish this car business and get on with life. I have been in similar situations before. I’d be trying hard to choose the best possible option and I’d exhaust myself in the process. Eventually, it’ll all be too much to think about and I’d go with something my heart wants without listening to the brain too much. Not once have I regretted such a decision. But it seems like somehow this ‘burning-yourself-out-thinking-through-the-possibilities’ is an essential before switching to the ‘just-pick-something-and-move-on’ mindset.

PS: I don’t really like the way I have written this post. I am sure I can articulate better if I tried. I’m just going to blame it on the car distraction and click the Publish button.