Arjun Badola

Saving begets investing

Whenever someone who is new to the stock market asks me for book recommendations to start with, I share the following list and tell them to follow the exact order:

  1. The Richest Man in Babylon by George Samuel Clason
  2. Rich Dad Poor Dad by Robert T. Kiyosaki
  3. Art of Stock Investing: Book on Indian Stock Market by Manikandan Ramalingam
  4. Learn to Earn by Peter Lynch
  5. One Upon Wall Street by Peter Lynch
  6. Common Stocks and Uncommon Profits by Philip A. Fisher
  7. The Intelligent Investor by Benjamin Graham (Chapter 8 & 20)
  8. Warren Buffett Partnership Letters (Notes)
  9. Letters To Shareholders of Berkshire Hathaway by Warren Buffett
  10. Masterclass With Super-Investors by Vishal Mital & Saurabh Basrar
  11. The Little Book That Builds Wealth by Pat Dorsey
  12. Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger by Charles T.Munger, Peter E. Kaufman (Editor)
  13. Of Long-term Value & Wealth Creation by Bharat Shah
  14. Expectations Investing: Reading Stock Prices for Better Returns by Michael J. Mauboussin
  15. Capital Returns by Edward Chancellor

The order matters only for the first four after that one can go as they will. But why do I mention following this specific order? Because they help in building a mindset which is crucial for one’s investing journey.

In investing raw material, itself is money and there are two ways to get money:

  1. Savings
  2. Income (Salary, Pocket Money, Other People’s Money, etc)

Most people focus on increasing the income which is good but not at the cost of ignoring the first option. Especially the people of my generation.

I got the idea of writing this article after having a conversation with my friend a few days back.

I was shocked by his mindset and unwillingness to change. Here is the background: He is a college student who “enjoys life” so there is constant demand for cash, as per his statement.

Now we all know where the pocket money of a college student who says they want to “enjoy life” and not save for later goes. It’s either going into the pockets of United Spirits or ITC.

His mindset is what would I do with the money when I am old. Now is the time to live your life at fullest, so spend whatever you have.

I wish life would have been so easy…

Well, I agree one should enjoy their college life, but the key word is “at fullest”. The problem here is, he is going beyond that.

After spending his money on the above two companies mentioned he decides to go for trips (Mahindra Holiday Homes, perhaps? xD). Even that is fine, IF YOU HAVE THE MONEY!

Borrowing money to fulfil your urges is certainly a recipe for trouble.

Savings are like HDFC Life’s motto: Sar Utha ke Jiyo (Please watch this video to understand what I mean:


The day you need something really important, and you don’t have savings, you would need to beg in front of someone else for that money and that would kill you from inside.

But he is not doing all bad, there is truth in his statement that he is “enjoying life”.

Prof. Sanjay Bakshi had given a talk on “What I Wish I Knew When I Was 17”. Sharing my notes on it: link.

In the talk professor shared two ways to increase your Principal i.e. capital/money.

This could be through staying frugal (Not being cheap). Shares his example of never buying shampoo or soaps as he was able to get them from hotels as he travels a lot.

Life is like a snowball, all you need is wet snow and a really long hill - Warren Buffett

Being young makes you stand at the top of the hill and there is a huge runway in front of you compared with a 50-year-old person.

Therefore, there is always a trade-off: You can either have fun today but work hard later in life or sacrifice today for an easier (or less effort) life, at least in terms of earning money.

I still remember a dialogue from the movie Singham which I had seen when I was in my 6 or 7th class.

The dialogue was: “meri zarooratein kam hai, iss liye mere zameer mein dum hai”

Please watch before continuing reading:


It simply means that when your needs are few, your conscience/standards are strong. That is, you don’t have to beg in front of people for money to fulfil your needs.

Same goes for an investor who invests independently, does not borrow money to invest, and has a long time horizon leading not requiring the money for a few years.

Compared with people who borrow to invest, they are already at a disadvantage in terms of psychological aspects. I would have to consider and worry about the uncontrollable factors that are the short-term variables.

If your company’s share price falls by 10% and you are on leverage the damages would just double.

First: the loss of capital (assuming your timeframe of one year and stock will not move during that period).

Second: 6-12% interest which is not a variable rather a constant hanging sword over your portfolio. Your returns would be lumpy, but interest would come at your door knocking every month/year to collect its valid share in your money.


My only purpose for writing this post is to tell those people on the other side who think that saving is just wasting your “childhood days”, “college times”, “Young Life”, etc. Let me tell you saving means not spending on things which do not really matter. The day you understand it, you will start following the motto, “Sar Utha ke Jiyo”.