How beginners beat experts in the personal finance game
I have a friend who works in Bollywood. He is an assistant director and has worked in many popular movies. If luck stays by his side, he might become a director one day and join the likes of Anurag Kashyap and Mani Ratnam.
He’s a good friend and a great movie connoisseur, but I hate talking about movies with him.
Whenever I ask him for movie recommendations, he gives me five names with Terms and Conditions.
“This movie is good but the plot is a little 3&%*@(&^@(&”
“This one is also decent but #(#((#( (!))@##()!_ !*@(@”
“Ahhh, the classic. It’s a must-watch, just keep in mind that the second half is #&^^@&…..”
The bullshit train never stops. He eats and breathes movies but can't understand that I am a simple man who wants to spend 3 hours watching a good story. Just give me a damn name.
Ketan Parekh was born into an upper-middle-class family that ran a well-known, well-respected trading firm. At some point in the 1980s, he became a Chartered Accountant and started his career in the stock market.
The Parekh name, the family business, the education —- all screamed FINANCE, FINANCE, FINANCE.
Parekh was sentenced to jail in 2014 because of multiple accounts of financial fraud. All the financial prowess and the man still couldn’t understand the simple concept that no money is worth wearing the white suit with black stripes.
We all have at least one example in our lives where someone knows too much about an industry but is yet — in a manner — unsuccessful in the same industry. They miss the forest for the trees. They miss crucial fundamentals for unimportant minutiae.
People who are new in the financial world have an unfair advantage — it’s hard for them to miss the forest for the trees. They might not know why EBITDA is a bullshit metric used by shady CEOs, but they do understand simple money concepts like:
- There is no end to competing with your neighbors.
- Money earned through legal means gives freedom. Money earned through illegal means gives a headache.
- Earn a lot. Spend some. Donate some. Save the rest.
Don’t feel any lesser if you don’t understand financial jargon. It might even be a good thing for you.