Aditi Mittal

Kirti Rathod


Pursuing Economics, and deep-diving to bring you A1 writings...


Riya Bhatia


> The law of diminishing marginal utility asserts that as you consume more of a product or service, the extra satisfaction gained from each additional unit decreases. Consequently, consumers may focus on products that offer greater utility and adjust their spending to maximize overall satisfaction.

**Imagine this scenario:** You've just moved into a new home and you're excitedly furnishing it from scratch. Today's task? Utensil and cutlery shopping. At first, you're eager, tossing items into your cart with abandon. But as the day wears on, you start to hesitate. Do you really need that fancy spatula? This is the law of diminishing marginal utility at work.

**So, what exactly is this law?** It's a concept introduced by economist Alfred Marshall that explains how as you acquire more of a product, the satisfaction you get from each additional unit decreases. In simpler terms, the more you have, the less you value each new item.

Let's break it down with a couple of examples:

##### Example 1:

You're packing for vacation and decide to buy some new clothes. At first, you're excited, grabbing shirts and shorts left and right. But once you have an outfit for each day, you become more selective. Each new purchase brings less joy than the last.

##### Example 2:

A company is hiring customer support agents. Initially, they're eager to fill positions and offer generous salaries. But as the team grows and productivity peaks, they become less willing to pay top dollar for each new hire.

Of course, there are exceptions to this rule:

- Hobbies like stamp collecting or painting can bring increasing satisfaction with each new addition.
- Addictive substances like alcohol or nicotine defy the law, as users often crave more with each use.
- Rare or limited-edition items, such as vintage watches or signed books, can maintain or even increase in value over time.

Understanding this law is crucial for both consumers and businesses:

- Consumers may seek alternatives once they've reached their limit with a product.
- As demand decreases with increased consumption, businesses may need to lower prices to keep customers interested.

Keep an eye on your spending habits to see the law of diminishing marginal utility in action. By observing how your purchasing behavior changes as you acquire more of a product, you can gain insight into this fundamental economic principle.


The law of diminishing marginal utility asserts that as you consume more of a product or service, the extra satisfaction gained from each additional unit decreases. Consequently, consumers may focus on products that offer greater utility and adjust their spending to maximize overall satisfaction.

The Happiness Equation: Exploring the Law of Diminishing Marginal Utility


> Regret often arises when we realize we've acted without proper planning. This sentiment is especially prevalent in investing, where outcomes are inherently uncertain. Investing is probabilistic, meaning there's never a 100% guarantee of any particular outcome.

In the realm of investments, there's a striking narrative of two undisclosed businesses, both prominent players in a thriving sector. One business experiences a decline in gross margin over a decade, while the other witnesses substantial growth. Despite the availability of both stocks for potential investment a decade ago, hindsight reveals a vastly different story. The emotions tied to these investment decisions often cloud our judgment, leading to a life filled with either regret or false superiority.

#### The Probabilistic Nature of Investing

Investing is inherently uncertain, driven by probabilities rather than certainties. We can never guarantee a profitable outcome. Consider a scenario where we anticipate profit in our portfolio over the next year. While we may expect success, the reality remains unpredictable. This uncertainty amplifies when investing for long-term goals like retirement or significant expenses.

#### What's Certain in Investing?

Amidst this uncertainty, certain outcomes remain predictable:

- Missing out on potential winners
- Holding onto underperforming investments
- Encountering emotional reactions tied to investment outcomes

Regret often ensues from missing out on lucrative opportunities or making poor investment choices. However, these emotions are influenced by hindsight bias, offering little control over actual outcomes.

#### Navigating the Complexity of Probability

Understanding probability in investing proves challenging due to the entanglement of joy and regret. However, having a well-thought-out plan can mitigate emotional distress. By envisioning ourselves as investors faced with choices a decade ago, we gain insight into the complexities of decision-making.

#### Crafting a Plan for Resilient Investing

To navigate this uncertainty, we must:

- Educate ourselves about investment fundamentals
- Anticipate potential business outcomes and market fluctuations
- Determine a reasonable expected return and allocate resources accordingly
- Remain steadfast in our investment strategy despite market fluctuations
- Regularly review and adjust our plan based on changing circumstances

A meticulously crafted plan serves as a guiding light amidst the uncertainties of investing, allowing us to allocate resources strategically and alleviate emotional turmoil.

#### Embracing the Journey

Investment decisions are often fraught with uncertainties and emotions. Yet, by reminding ourselves of the rationale behind our choices, we can find solace in knowing that we acted with foresight and intention. After all, navigating the complexities of investing is a journey filled with valuable lessons and opportunities...


Regret often arises when we realize we've acted without proper planning. This sentiment is especially prevalent in investing, where outcomes are inherently uncertain. Investing is probabilistic, meaning there's never a 100% guarantee of any particular outcome.

Can you plan to invest without regret?


> The RBI has directed banks to grant cardholders the flexibility to alter their billing cycle multiple times. To maximize the interest-free period, it's crucial to be aware of your billing dates and settle all outstanding dues promptly.

In April 2022, the Reserve Bank of India (RBI) implemented regulations granting credit card users greater control over their finances. These regulations, effective from July of the same year, mandated banks to offer cardholders a one-time option to modify their credit card billing cycle. This initiative aimed to enhance flexibility and cater to individual cash flow needs.

#### Recent Amendments by RBI

On 7th March, RBI introduced amendments to these rules, further empowering card users. Now, banks must allow customers the flexibility to change their billing cycle more than once, providing greater customization and adaptability.

Additionally, RBI amended regulations concerning the minimum payment due. Previously, banks were required to disclose the remaining unpaid amount losing the benefit of the interest-free period. However, this clause has been removed in the recent amendment. Instead, banks are now mandated to caution users about the consequences of making only minimum payments, without specifying the exact amount attracting interest.

#### Understanding Credit Billing Cycles

Controlling the billing cycle offers numerous advantages for cardholders. A billing cycle spans the period between two consecutive statement dates, with the due date typically 10-15 days after the statement generation. By strategically setting the billing cycle, users can align the due date with their cash flow, optimizing the interest-free period.

#### Maximizing Benefits

By setting the statement date strategically, users can maximize the interest-free period. For example, aligning the statement date with a period of minimal expenditure can extend the interest-free period up to 45 days. Moreover, adjusting billing cycles becomes crucial for individuals managing multiple credit cards, streamlining due dates for easier management.

#### How to Make Changes

Cardholders can request changes to their billing cycle by contacting the card issuer through customer care channels. However, it's essential to clear outstanding dues and EMIs before making such requests to avoid any complications.

#### Understanding Minimum Payments

While minimum payments offer temporary relief from late payment penalties, they come with long-term consequences. Outstanding amounts attract interest, suspending the interest-free period for subsequent transactions. Experts advise clearing the full outstanding amount each month before the due date to avoid accumulating interest liabilities.

In essence, these regulatory amendments offer card users greater autonomy and control over their credit card management. By understanding and leveraging these changes, individuals can navigate their financial responsibilities more effectively, ensuring sound financial health in the long run.


The RBI has directed banks to grant cardholders the flexibility to alter their billing cycle multiple times. To maximize the interest-free period, it's crucial to be aware of your billing dates and settle all outstanding dues promptly.

Impact of RBI's credit card billing cycles regulation on you


> In life, the regret for missed opportunities often outweighs regrets for actions taken. However, in the realm of investment, regret cuts both ways. 

The psychological impact of losses far surpasses that of gains, leading to an unwarranted aversion to risk.

#### Understanding Regret Aversion

Investors, driven by fear of potential losses, often shy away from high-risk investments. This aversion, while justified, can derail portfolio objectives when disconnected from return expectations. Consider a high-risk investor with a long horizon aiming for aggressive returns. Succumbing to regret aversion, they may opt for safer assets, hindering portfolio growth.

#### Overcoming Bias: The Zen-like Challenge

Recognizing regret aversion is vital but challenging to overcome. Even seasoned professionals grapple with this bias. Fund managers, fearing reputational damage, may cling to losing investments, impeding portfolio recovery. This reluctance to accept mistakes amplifies losses, prolonging recovery periods.

#### Embracing Quantitative Investment Management

Quantitative management offers a solution to human biases. By framing investment philosophies into rules-based strategies, it mitigates regret aversion. Back-tests assess strategy efficacy, providing historical performance insights. Once implemented, these strategies operate autonomously, immune to emotional biases.

#### The Benefits of Quantitative Approach

- **Behavioral Bias Mitigation**: Quantitative strategies eliminate human interference, bypassing regret aversion and other biases.
- **Objective Decision-making**: Free from emotional influence, these strategies navigate market fluctuations objectively.
- **Consistent Performance**: By adhering to predefined rules, quantitative approaches deliver reliable returns aligned with investment philosophies.

#### Beyond Regret Aversion: Tackling Behavioral Biases

Regret aversion is just one of many biases investors face. Familiarity bias, for instance, limits potential returns by confining investment choices. Quantitative investment addresses these biases, offering a broader investment universe and maximizing returns.

While regret aversion poses a formidable challenge, quantitative management provides a robust solution. By harnessing data-driven strategies, investors can navigate market uncertainties with clarity and confidence.

Keep Going!!!

In life, the regret for missed opportunities often outweighs regrets for actions taken. However, in the realm of investment, regret cuts both ways.

Navigating Regret Aversion in Investment: The Case for Quantitative Management


> 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.

The Bucket Strategy: A Tailored Approach to Investing


> People who want to invest and read a few articles or hear popular sayings linked to Warren Buffett may think they can copy his investing achievements. They might even base their investment plans on these sayings. However, Buffett's yearly letter explains that while investing is straightforward, it's not always easy.

Despite Warren Buffett's immense wealth, he led a simple and frugal lifestyle, making him relatable to many ordinary investors. However, this relatability can be misleading.

Many aspiring investors, inspired by Buffett's simplicity and success, attempt to mimic his investment approach based on snippets they've read or heard about him. Unfortunately, these individuals often fall short of replicating his achievements. One reason for this could be the lack of understanding the full context behind Buffett's statements.

There is a tendency to selectively focus on catchy phrases attributed to Buffett while overlooking the complete message he intended to convey. This incomplete knowledge can lead to misguided investment decisions.

In Berkshire Hathaway's 2023 annual letter released on February 24, 2024, Buffett and Charlie Munger addressed some common misconceptions, shedding light on the importance of grasping the full context of their advice for successful investing.

##### Misconception 1

Some people believe that you only need to make a few big financial decisions to retire rich. But is that really true? According to this year’s annual shareholder letter, it's not that simple. While making a couple of good decisions can be rewarding, it's equally important to avoid serious mistakes. These mistakes can have a big impact on your finances, leading to permanent losses. They include things like trying to time the market, not diversifying your investments, and choosing poor stocks.

There are also many dangers in the investment world, such as insider trading, fraudulent schemes, and misleading information. If you can navigate through these challenges safely, then making a few big decisions right can help you retire rich.

##### Misconception 2

You may have heard the phrase "It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price." But does this mean that investing in average companies is pointless? Not necessarily. Warren Buffett himself has said that investing in fair companies can work, especially when done on a smaller scale.

Buffett operates on a much larger scale than most of us can imagine, with billions of dollars at his disposal. So while it's good to look for wonderful companies, it's also okay to invest in fair companies at a good price, especially for retail investors like us.

##### Misconception 3

Some people think that investing is as simple as finding good companies with honest management, buying their shares, and holding onto them. But according to Buffett, investing is simple but not easy. It's hard to predict which businesses will succeed in the long run, and luck plays a role too.

Buffett himself has made many decisions over the years, some of which have been very successful. But he acknowledges that luck has played a part in his success. So next time you hear a catchy investing phrase, remember that investing is hard work and requires careful consideration. Don't rely on incomplete information or misconceptions when making investment decisions.


Discover the truth behind Warren Buffett's investing success. Unveil the misconception of catchphrases in investing strategies. Buffett's wisdom emphasizes simplicity, not ease. Delve into his annual letter insights and debunk myths surrounding his methods. Ideal for aspiring investors seeking clarity and actionable advice.