Aug

2020

The Pleasure of Walking Tall

Link, Sunday Morning

Oneidiot

31153

All, Investor Behaviour, General

18 Aug 2020

Reading Time: 5 mins

The following excerpt is a quote from a First Federal Savings advertisement from the early 1960s. This is one of the finest print advertisements I have seen in a long time on money that has a powerful social message (Oh God, I believe humans have stopped making such advertisements).

This is a newspaper advertisement from 1963 from First Federal Savings in
St. Petersburg, FL in the St. Petersburg Times.

One of my advisor colleagues shared it a few days back, and I was utterly overwhelmed with the deep meaning of the message. I knew it then that I need to create an impactful write-up around this piece and it should reach to as many people as possible. The timing couldn’t be better.

So here I am. But first, let’s reread the advertisement. At least 3 times.

The Pleasure of Walking Tall

Your savings, believe it or not, affect the way you stand, the way you walk, the tone of your voice. In short, your physical well-being and confidence.

A man without savings is always running. He must. He must take the first job offered, or nearly so. He sits nervously on life’s chairs because any small emergency throws him into the hands of others.

Without savings, a man must be too grateful. Gratitude is a fine thing in its place. But a constant state of gratitude is a horrible place in which to live.

A man with savings can walk tall. He may appraise opportunities in a relaxed way, have time for judicious estimates and not be rushed by economic necessity.

A man with savings can afford to resign from his job, if his principles so dictate. And for this reason, he’ll never need to do so. A man who can afford to quit is much more useful to his company, and therefore more promotable. He can afford to give his company the benefits of his most candid judgements.

A man always concerned about necessities, such as food and rent, can’t afford to think in long-range career terms. He must dart to the most immediate opportunity for ready cash. Without savings, he will spend a lifetime of darting, dodging.

A man with savings can afford the wonderful privilege of being generous in family or neighborhood emergencies. He can take a level stare into the eyes of any man . . . friend, stranger or enemy. It shapes his personality and character.

The ability to save has nothing to do with the size of income. Many high-income people, who spend it all, are on a treadmill, darting through life like minnows.

The dean of American bankers, J. P. Morgan, once advised a young broker, “Take waste out of your spending; you’ll drive haste out of your life.”

Will Rogers put it this way, “I’d rather have the company of a janitor, living on what he earned last year . . . than an actor spending what he’ll earn next year.”

If you don’t need money for college, a home or retirement, then save for self-confidence. The state of your savings does have a lot to do with how tall you walk.

End

I am sure you must be mesmerised too.

As an advisor who has met thousands of individual investors over the last 16 years, it is easy to spot a person who is very confident backed by his / her high savings. And vice-versa too. People with meagre savings coupled with a loan burden are the most vulnerable as Covid-19 has proved. A few of our investors who had very high savings and have lost jobs are the least worried because they know they have a good corpus to back them up. They are now spending quality time with family which could not have been earlier possible and are also learning stuff to keep them relevant and occupied. And there are few unfortunates who lost their jobs and has very slim savings to back them up in these tough times resulting in their stress levels going up 10x.

I remember when I first started my serious savings in the form of a Rs 10,000 SIP in Aug 2010, I didn’t realise the power of savings. But today, whatever little wealth I have created is all because of a disciplined regime of increasing my savings year after year. I continue to bump up my savings every year come what may. At present, my family’s SIP is Rs 8,70,000 per month, and hopefully, by March 2021, it should cross the Rs 10,00,000 SIP mark. And, I will not stop until I chase my dream of touching the coveted Rs 100 crore mark by age 50 and become One Idiot. And that reminds me, whenever I talk about the One Idiot goal, the first question people ask me is where I am investing my money and what is the expected return and very few people ask how much I am saving in the first place. Always remember how much you save & how long you save for is in your control, returns are not. So we should control what is controllable and leave the returns to markets.

When I look at many of my MBA friends (I did my MBA in 2004) they are easily earning in the range of Rs 30 Lakhs to Rs 1 crore p.a., but sadly the savings has not kept pace with their earnings while the expenses surely have. This can be attributed to the below phenomenon. They have all been victim of the normal approach of savings while the short movie One Idiot made sure I take the smart approach. This doesn’t mean I don’t spend. I do enjoy all the leisures of life after making sure that my saving for the month has happened. By doing this, I don’t feel guilty at all, mainly when I am on a shopping spree on Amazon.

Morgan Housel, one of the finest bloggers on the topic of money once said “The first idea – simple but easy to overlook – is that building wealth has little to do with your income and lots to do with your savings rate”.

And he further said “The worst irony in investing is that people have no savings when compounding is in their favour and a way higher savings rate when it’s not”

Today, I can connect with every word of his remarkable statement. And hence, I would strongly recommend you to follow his blog at www.collaborativefund.com/blog. Maybe your perspective on savings and investing will transform too.

This pandemic has highlighted even more the importance of planned savings. Most investors do not have an emergency fund (6-12 months of monthly expenses). People want to plan for their children’s education or a house purchase but will not think about contingency fund. In fact, this should be the first goal of any saver/investor. A sound emergency fund will help them precisely in these difficult times, so they don’t have to pull out from long term investments, especially when markets are also not supporting their cause.

In the Ad, Will Rogers put it this way, “I’d rather have the company of a janitor, living on what he earned last year…than an actor spending what he’ll earn next year.” Today, we are seeing many small-time TV celebrities are dying by suicide as they are not able to get work and has no meaningful savings to support them. In good times, they didn’t give much importance to savings as maintaining their flashy lifestyle seemed more critical. Even the King of Good times Vijay Mallya learnt this valuable lesson the hard way.

I have personally seen most people who have taken a housing or any other loan are comfortable working in the same company even if they are not enjoying it (mostly due to a terrible boss) simply because they have an EMI burden on their head and not a good savings plan to bail them out. As mentioned in the print advertisement, a person with high savings will always be confident about his/her work and will never become victim to office politics and indeed not a “Yes” man to his/her boss.

The importance of savings also takes centerstage today because we have to remember we have a finite period to earn money and this pandemic has proved that overnight business models can change and there is nothing called job guarantee. One of our doctor clients had to work overtime in a reputed hospital with a 20% salary cut. (Never heard doctors taking pay cuts and that too in a pandemic when they are required the most). As a result, they had to curtail/stop their SIPs, and we know that once there is a break in something, it’s challenging to build the momentum again.

Maybe this advertisement can push us to build our savings all over again if we have not done so already.

P.S – Pls read the advertisement one final time so that it stays permanently into your mainframe. Or even better if you can take a printout and frame it next to your desktop to serve as a constant reminder.

And I am very hopeful someday you’ll also experience “The Pleasure of Walking Tall”.

The Pleasure of Walking Tall

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