Aditi Mittal

Kirti Rathod


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Riya Bhatia


> In the absence of a remedy, investing fueled by envy becomes hazardous. It urges individuals to chase after high-risk, high-reward opportunities, akin to chasing a mirage in the desert, hoping to find an oasis that doesn't exist.

Before delving into a cautionary tale of how countless individuals were lured by the promise of consistent 2% monthly returns only to face devastating losses, let's ponder upon a timeless wisdom shared by Charlie Munger:

"The world is not driven by greed. It's driven by envy."

This thought is pivotal in understanding the irrational decisions investors make in their pursuit of outshining others in terms of wealth. Coupled with another insightful quote - "Return of capital is more important than return on capital" - we can navigate the treacherous waters of envy-fueled investments.

Envy, unchecked, leads to perilous ventures. It tempts individuals to chase unrealistic returns, often resulting in significant wealth erosion. Moreover, envy blinds one to rational asset allocation strategies, leaving them vulnerable to financial ruin.

Let's dissect what a purported 2% monthly return entails. Annually, it compounds to a staggering 26.8%, far surpassing the returns of reputable mutual funds like Parag Parikh Flexicap Fund and HDFC Flexicap. Yet, beyond its implausibility lies a fundamental flaw - the monthly payout, regardless of market fluctuations.

Now, you may wonder how such a scheme ensnared so many. Enter the alleged "scam."

A charismatic trader, boasting "risk-free returns" in commodities trading, enticed investors with monthly profit distributions and a guarantee on principal funds. These assurances, coupled with a track record of delivering promised returns, became a magnet for capital inflow.

Initially, the trader likely operated a Ponzi scheme, using fresh investments to sustain payouts. However, like all such schemes, it inevitably collapsed, leaving investors in despair.

Compare this to Bernie Madoff's infamous Ponzi scheme, albeit on a smaller scale and sans the façade of legitimacy. Despite warning signs, blinded by promised returns, investors neglected due diligence, leading to substantial losses.

Accountability rests with each individual. Yet, to shield oneself from such schemes:

1. **Trust but Verify**: Skepticism towards overly lucrative propositions is prudent. If it sounds too good to be true, it probably is.

2. **Stay Aligned**: Adhere to a well-structured asset allocation plan, ensuring resilience against market volatility.

3. **Exercise Caution**: If tempted by star traders, allocate only discretionary funds, safeguarding your family's financial security.

In investing, simplicity reigns supreme. Embrace a mindful approach, guided by the wisdom of Munger's words. By prioritizing capital preservation over lofty returns, one can navigate the investment landscape with prudence and foresight.

Remember, the journey of investing may be arduous, but by sidestepping the allure of envy-driven ventures, it promises lasting rewards. Here's to sensible investing and a prosperous financial future.


In the absence of a remedy, investing fueled by envy becomes hazardous. It urges individuals to chase after high-risk, high-reward opportunities, akin to chasing a mirage in the desert, hoping to find an oasis that doesn't exist.

The Tale of Envy-Driven Financial Misadventures


> Investing isn't a one-size-fits-all endeavor.

One increasingly popular method is the bucket strategy, which divides investments into distinct categories or "buckets" based on different factors. Each bucket corresponds to a specific financial goal and timeframe, tailored to individual circumstances, risk tolerance, and objectives. Here's a breakdown of three common buckets:

#### Safety Bucket:

This bucket serves as an emergency fund or cash reserve, housing liquid or easily accessible assets. It's earmarked for unforeseen expenses or short-term financial goals. Typically, investors choose safe options like liquid/short-term funds or term deposits to ensure stability and liquidity. Ideally, 6-18 months of cash flow should be reserved in this bucket.

#### Medium-Term Bucket:

Designed for medium-term financial goals spanning 3-7 years, such as purchasing a home or funding education. Investments in this bucket encompass a mix of assets like stocks, bonds, ETFs, AIFs, PMSs, and mutual funds. The aim is to balance growth with market volatility, aligning with typical market cycles to prevent asset liquidation during short-term fluctuations.

#### Long-Term Bucket:

This bucket focuses on retirement planning, with investments spanning over seven years. It allows for higher risk tolerance, featuring assets like diversified stock portfolios, long-term bonds, real estate, PMSs, and AIFs. While offering potential for higher returns, these assets may also exhibit volatility or illiquidity, necessitating careful planning of the time horizon.

Bucketing not only aids in cash flow management but also enhances risk-adjusted returns. There are two primary approaches to bucketing: time-based and asset-based. Time-based bucketing aligns risk and liquidity with predefined goals, while asset-based bucketing diversifies across asset classes to manage risk and liquidity.

#### Benefits of the Bucket Strategy:

1. **Goal-Oriented Approach:** Aligns investments with financial objectives, guiding asset allocation and strategies for each bucket.
2. **Risk Management:** Segregates investments based on risk tolerance, safeguarding short-term needs while pursuing growth in long-term buckets. Diversification minimizes correlation, protecting against downside risks.
3. **Psychological Comfort:** Provides reassurance during market volatility, ensuring short-term needs are covered, and allowing investors to navigate downturns with confidence.

The bucket strategy offers a structured, goal-oriented approach to investment management. It empowers investors to manage risk, liquidity, and long-term growth effectively. Regular review and rebalancing are essential to adapt to evolving financial circumstances and market conditions, while avoiding biases towards specific assets or sectors. Ultimately, it empowers investors to take control of their portfolios and pursue their financial goals with confidence.


One increasingly popular method is the bucket strategy, which divides investments into distinct categories or "buckets" based on different factors. Each bucket corresponds to a specific financial goal and timeframe, tailored to individual circumstances, risk tolerance, and objectives.

Showing posts from money category

The Tale of Envy-Driven Financial Misadventures

The Bucket Strategy: A Tailored Approach to Investing