When you're starting out, a business can be all-consuming and personal finance can seem like a bit of a luxury when even the tiniest share of profit that's aimed for your piggy bank manages to find its way back into the business. As an independent business owner for almost 6 years now, I still have a hard time justifying the time and money I commit to 'running my business' versus 'saving for retirement'.
Last year, I wrote about how I automate my work-life; only to realize that a part of managing your life might involve managing a bit of your hard-earned money as well.
Like me, if you're just about/over 30 years old and have managed to save up a wee bit of money — investing it in the right financial instruments would be the next step.
For someone who returned to India in early 2009 (when the economic recession was at its peak) as a fresh college grad with an Engineering degree looking to start his own venture with absolutely no professional connections, the going was tough. I dabbled in one of the greatest interests I had nurtured since my days from high school — building 'state of the art' computers for professional gamers in India. The margins were huge.
I did that till Alienware (a subsidiary of Dell) consumed the market I was serving, leaving me with a dwindling base of customers. Scaling the business to a competitive level would have required substantial industrial automation, which simply could not be done without an infusion of large capital. The kind of capital that no lender (in their right mind) would commit to a "fresher".
It was exactly what I needed to start thinking of my next venture, BUZZVALVE — one that I continue to work on.
Between me and my ex-business partner (who continues to be among my best friends today), making money was fairly hard in the early days. Saving any was out of the question. There were times when I wanted to throw in the towel and go back to the job hunt. But, good jobs were fairly hard to come by back then. The ones that did look promising from afar were not so from up-close.
Since the economy was in shambles, companies were risk-averse and had little patience in interviewing a “fresher” with delusions of grandeur. Rightly so. The only course of action was to move forward with running the business, even during times when I did not know how to.
Now that I look back, I see this as a bit of a blessing in disguise. I couldn't be happier doing what I do today and with what I have learned along the way. I have to give credit where it's due - I would not have been able to figure it out had it not been for my small (yet, superhuman) team of early employees and interns, my mentors, my family, and my close friends.
When I started out, I knew nothing about personal finance. Maybe just enough to open a Savings Account with the local bank. Quite honestly, I did not care much for it either. And since I was in business for myself with a highly unsteady income, I did not have the luxury of having an employer sponsor a Provident Fund for me.
It's important to note that everything you do for your business costs time and money. If you're running a services business like me, your time IS money. Nothing comes free. Whether it's a small change in strategy, launching a new product, pivoting your business model, reaching out to more prospects, retaining your existing customers, working out of a new office, or innovating newer ways of service delivery — everything costs real money! Since the whole point of being in business is to keep moving and evolving in an effort to be better, it's easy to find yourself in a position where you're constantly putting your profits back into the business. That's a great thing to do, except you need to have a clear system of separating that from your income.
For me, the imperative to save & invest a part of my income was stronger than ever.
Admittedly, I did not know much about venture capital, venture debt, or other forms of external funding back then. My naive, yet pig-headed purism led me to believe that the only money one should accept is that of their customers', in return for the services that one renders. I'm still driven by the same principle, six years since.
Fast forward to today, and I know a little more about investing now than I did back then. There's still a lot left to learn.
Time and time over, I had heard the people closest to me saying: “You have to spend money to make money” — only to realize a few years later that what they really meant was: “You have to spend wisely, save consistently, and invest judiciously to make money”. Because I believe this statement wholeheartedly, I continue to save & invest more than I spend.
It should come as no surprise that amateur investors toying with a sea of financial instruments in the public market, like myself, have dreaded the idea of having to research, select, and/or re-balance their portfolio. Perhaps because we're risk-averse, inexperienced, and simply tend to fear the unknown. I believe that the kind of sublime confidence we're looking for comes only with knowledge and a long-standing record of desirable results with your portfolio.
In truth, having a small portfolio can be an exciting way to build both wealth and knowledge, and learning the best way to manage and track your investments can make the process easier, productive and profitable. There are nearly as many ways to manage your investments as there are investment options. Understandably, it can be hard to know where to start.
If you were to ask my younger self, I would have said that a good way to get started would be with a Systematic Investment Plan (SIP) into Mutual Funds. Diversification, safety, and good returns are just some of the benefits you get with mutual funds. Scripbox does a great job by pre-selecting some good funds for you to invest in and manages all the heavy-lifting that come with rebalancing your portfolio. Everything with them is solely driven by data and algorithms, eliminating any scope of human bias.
An important point here is to be disciplined about your investing process and to hold a long-term view about your expectations. It's equally important to start as early as possible. That way, you'll have more opportunities to experiment with and grow your capital. I started my investing journey in my late 20's; all thanks to my father. I wish I could have started even earlier, but unfortunately, I was neither motivated nor did I have any savings before then.
Finally, have a clear sense of what works best for you and your working style so that you may choose an approach that you can commit to, and stay on top of, for the life of your portfolio.
About the author:
Rohan Chandrashekhar is the Founder of BUZZVALVE — a boutique content production firm serving ambitious brands and small businesses. He brings over 6 years of failure & success working within the virtual economy as an independent business owner. Rohan is also a Scripbox community member.