Blog on Value Investing | Safal Niveshak

Markets Are a Mirror

A couple of announcements before I begin today’s post –

1. Two “Life-Changing” Books, One Exclusive Offer: I have been running a special offer on the combo of my first book The Sketchbook of Wisdom and the new one Boundless. Click here to order your set. Also, check out Boundless, which releases soon, and is available for pre-order.

2. Classroom Course in Value Investing: Admission is now open to the February 2025 batch of my most comprehensive classroom course in Value Investing, titled – Value Investing Blueprint. This residential course is scheduled to be held from 27th February to 2nd March 2025 at the campus of Pune-based FLAME University. The last date to apply is 15th January 2025. Click here to read more and apply if you are interested in joining this course. Since it’s a classroom course, seats are limited.

I recently received a call from a school friend, who, after much convincing had started investing his money through SIPs around two years back. He sounded panicky when we spoke.

“The markets are falling, Vishal!” he said.

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Letter to A Young Investor #7: The One Financial Step You Can’t Skip

A couple of announcements before I begin today’s post –

1. The Sketchbook of Wisdom – Special Offer Ends Today: I have been running a special offer on The Sketchbook of Wisdom, that ends today. Click here to order your copy. You can also club it with my upcoming book, Boundless, and claim an even special offer. Finally, check out Boundless, which releases soon, and is available for pre-order.

2. Classroom Course in Value Investing: Admission is now open to the February 2025 batch of my most comprehensive classroom course in Value Investing, titled – Value Investing Blueprint. This residential course is scheduled to be held from 27th February to 2nd March 2025 at the campus of Pune-based FLAME University. The last date to apply is 15th January 2025. Click here to read more and apply if you are interested in joining this course. Since it’s a classroom course, seats are limited.

I am writing this series of letters on the art of investing, addressed to a young investor, with the aim to provide timeless wisdom and practical advice that helped me when I was starting out. My goal is to help young investors navigate the complexities of the financial world, avoid misinformation, and harness the power of compounding by starting early with the right principles and actions. This series is part of a joint investor education initiative between Safal Niveshak and DSP Mutual Fund.

Dear Young Investor,

I hope you are doing well, and that the lessons we have covered so far have been helpful in guiding you through the early stages of your investing journey.

In my previous letter, I wrote about the idea of savings—the cornerstone of financial independence and the first step toward building wealth.

In today’s letter, before we get into the heart of the matter, I want to tell you a story about my friend. Let’s call him Sameer.

I have known Sameer since college. He was a bright young man, raised by his mother, and always had a plan for how his life would pan out over the next few years. He was one of the first from our MBA batch to land a job, one he had always wanted, and the kind that makes you feel like you’ve finally stepped into adulthood.

His salary was decent, his confidence was through the roof, and he had big dreams about the future. He started saving money every month from the very first paycheque he received and invested all of that in stocks. He was on the path of building wealth while many of us were still struggling to find real jobs—or so we thought.

Anyway, in the busy-ness of life, I lost touch with Sameer for a few months, and so was pleasantly surprised to get a call from him almost a year after he started his job. I was waiting to hear some good stories about his job and investments, but he started the call on a sombre note.

He mentioned how his life had taken a bad turn a couple of months back, when his mother had fallen seriously ill. The hospital bills had started piling up fast. If that wasn’t enough, he also had a car accident. He was lucky to escape unhurt, but his car was severely damaged and had to be taken to the garage for major repairs. Since this was an old car, Sameer did not have adequate insurance to cover the damage, and so had to pay out of his pocket.

As Sameer was telling me about his struggles, I asked him about his investments that would have helped him in these times. But he told me how the recent market crash had reduced the value of his stock investments by 30%, and that they were not enough to cover his mother’s medical bills and the car repairs. So, he had to borrow some money from his uncle.

This was my first brush with one of the most important legs of a sound personal financial plan: emergency funds—a financial safety net of readily accessible savings set aside to cover emergencies, like unexpected expenses or loss of income.

Sameer apparently had no emergency fund to fall back on, and so he had to sell all his investments at a loss. Plus, he had to borrow money.

Now, as he told his story, that wasn’t the worst part. The worst part was the helplessness he felt, knowing that all his careful plans had been undone by something as inevitable as an emergency.

I don’t tell you this to scare you. I tell you this because I’ve seen what happens when people, even smart, well-meaning ones, skip one of the most important steps in their financial lives: building an emergency fund.

Before you think about compounding wealth or finding the next great investment, you need to create a safety net. It’s not flashy or exciting, but it’s essential.

An emergency fund is like the foundation of a house. Without it, the whole structure can collapse the moment the ground shakes. Life is unpredictable, and that’s not pessimism—that’s reality. Cars break down. People fall ill. Jobs disappear. The question isn’t whether unexpected expenses will come your way, but whether you’ll be prepared when they do. An emergency fund gives you the power to handle these moments without derailing your financial future or losing sleep over how you’ll pay the next bill.

Now, how much should you save as an emergency fund? The answer depends on your circumstances, but a good rule of thumb is six to eight months’ worth of your essential expenses. So, if your monthly household expenses are around Rs 1 lakh, you can aim to have Rs 6-8 lakh in an emergency fund. Think of rent, groceries, school fees, and every other key expense you’d need to keep your life running, even if your income suddenly stopped.

If that sounds daunting, don’t worry. You don’t need to build it overnight. Start small. Save a month’s worth of expenses first, then build from there. The key is to start, even if it’s just a little.

Where should you keep this emergency fund? Somewhere safe and accessible, but not so easily accessible, like a regular savings account, where you might be tempted to dip into it for non-emergencies. In my view, bank fixed deposits and liquid funds that are offered by mutual fund companies are great options.

Resist the urge to invest this money in stocks or mutual funds—it’s not meant to grow, but protect.

The beauty of an emergency fund isn’t just practical. It’s psychological. It gives you peace of mind. You walk a little taller, knowing you’re ready if something unexpected happens. And you know what? That confidence, that peace, will make you a better investor. You’ll take well-thought-out risks because you know you have a cushion to fall back on. You’ll invest for the long term without the fear of needing to sell just because there’s an emergency.

My friend Sameer learned this lesson the hard way. But you don’t have to. You’re just starting out, and you have the chance to build your financial life on a solid foundation. Start small, but start today.

Calculate what your emergency fund should look like and take the first step toward building it. It might not feel as exciting as picking stocks or watching your investments grow, but I promise you, it will be one of the most important decisions you ever make.

I wish you all the best on this exciting journey.

Warm regards,
Vishal

Disclaimer: This article is published as part of a joint investor education initiative between Safal Niveshak and DSP Mutual Fund. All Mutual fund investors have to go through a one-time KYC (Know Your Customer) process. Investors should deal only with Registered Mutual Funds (‘RMF’). For more info on KYC, RMF & procedure to lodge/ redress any complaints, visit dspim.com/IEID. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Also Read:

The Art of Writing #1: Why Everyone Should Write

With this article, I am beginning a new series on the topic of writing well. As we start, it’s apt to first make a case for why you should write. In fact, my argument is that everyone should write.

You could argue that we all write hundreds of words every day — WhatsApp messages, Social Media updates, email replies, and sometimes long documents as part of our work. But the purpose of that kind of writing is often to merely inform.

The writing that I am talking about is something that’s intended to be part of a public discourse. Not just to pass on some facts and opinions but to persuade, convince, and debate in public. For this kind of writing has enormous benefits for the writer, even if no one ends up reading the output.

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If you are not a member, please consider joining the Mastermind Membership to access my most comprehensive value investing course, plus practical, time-tested ideas in investing, human behaviour, business analysis, and decision making, and get onto the path of becoming a better version of yourself.

Investing Lesson for 2025: Unmask Your True Self

David Whyte, the noted Anglo-Irish poet, said this in a 2019 interview with Krista Tippett* –

One of the interesting qualities of being human is, by the look of it, we’re the only part of creation that can actually refuse to be ourselves. As far as I can see, there’s no other part of the world that can do that. The cloud is the cloud; the mountain is the mountain; the tree is the tree; the hawk is the hawk. The kingfisher doesn’t wake up one day and say, “You know, God, I’m absolutely fed up to the back teeth of this whole kingfisher trip. Can I have a day as a crow? You know, hang out with my mates, glide down for a bit of carrion now and again? That’s the life for — ” No, the kingfisher is just the kingfisher.

And one of the healing things about the natural world to human beings is that it’s just itself. But we, as human beings, are really quite extraordinary in that we can actually refuse to be ourselves. We can get afraid of the way we are. We can temporarily put a mask over our face and pretend to be somebody else or something else. And the interesting thing is then we can take it another step of virtuosity and forget that we were pretending to be someone else and become the person we were on the surface at least, who we were just pretending to be in the first place.

This is a great lesson to take as we dip our toes into a new year.

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The Art of Learning #1: It Takes a Village to Raise a Child

My daughters go to a Montessori school. One of the most unusual things about the Montessori method is their emphasis on having a mixed-age environment. So, unlike a conventional school where children of the same age are grouped together in a class, the Montessori method groups children from adjacent grades together. The idea is to make children of different ages interact and learn from each other through play and participation.

In a Montessori, a 2^nd grade child has the company of children from 1^st grade as well as 3^rd grade in her class. So she not only learns from the 3^rd grader but also teaches a 1^st grader. And a big part of this learning-teaching involves the subtle element of learning through observation.

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A Life Review

How we seek to spend our time may depend on how much time we perceive ourselves to have.

― Atul Gawande, Being Mortal

Earlier this month, on my birthday, I announced the publication of my second book, Boundless. I received a lot of congratulatory messages, but a few people also asked about the two other books I’d announced previously—The Worldly Wisdom of Charlie Munger and Shut Up and Wait. Neither has made it to bookshelves yet.

I knew this question was coming. Honestly, I’ve been asking myself the same thing. Why start a new project when there’s unfinished work on the table?

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The Psychology of Investing #6: Beware the Silent Killer

The Internet is brimming with resources that proclaim, “nearly everything you believed about investing is incorrect.” However, there are far fewer that aim to help you become a better investor by revealing that “much of what you think you know about yourself is inaccurate.” In this series of posts on the psychology of investing, I will take you through the journey of the biggest psychological flaws we suffer from that causes us to make dumb mistakes in investing. This series is part of a joint investor education initiative between Safal Niveshak and DSP Mutual Fund.

Not a year passes without the sobering news of a distant relative or acquaintance losing their life in a road accident. This reminder flashes before me every time I start my car. And so, I pause to say a silent prayer for a safe journey even for a short trip to the neighborhood.

My wife, however, carries an even deeper fear of road mishaps, especially when it comes to two-wheelers. A few years ago, after considerable persuasion, she reluctantly “allowed” me to fulfil a long-held dream: owning a Royal Enfield motorcycle. That day felt like a personal milestone. Yet, the joy was short-lived. Just three months later, she “forced” me to sell it off after two of our neighbours were seriously injured in motorcycle accidents.

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Everything is Waiting for You

I recently came across this beautiful poem from David Whyte—Everything is Waiting for You—that feels like a love letter to life itself.

It’s underlying idea is about finding magic in the things we often overlook—the objects, people, and places that quietly wait for us to notice them.

Here’s the poem:

Everything is Waiting for You by David Whyte

Your great mistake is to act the drama
as if you were alone. As if life
were a progressive and cunning crime
with no witness to the tiny hidden
transgressions. To feel abandoned is to deny
the intimacy of your surroundings. Surely,
even you, at times, have felt the grand array;
the swelling presence, and the chorus, crowding
out your solo voice. You must note
the way the soap dish enables you,
or the window latch grants you freedom.
Alertness is the hidden discipline of familiarity.
The stairs are your mentor of things
to come, the doors have always been there
to frighten you and invite you,
and the tiny speaker in the phone
is your dream-ladder to divinity.

Put down the weight of your aloneness and ease into the
conversation. The kettle is singing
even as it pours you a drink, the cooking pots
have left their arrogant aloofness and
seen the good in you at last. All the birds
and creatures of the world are unutterably
themselves. Everything is waiting for you.

Most of us, most of the time, are in such a rush to live—always looking ahead or at some distant goal—that we forget the beauty right in front of us. David reminds us that the kettle, the door, and even your chair that provides you comfort while you’re reading your favourite book (and yes, your book, too!), aren’t just things, but companions. Even when we rarely notice, they’ve always been there, steady and reliable, giving more than we acknowledge.

Whyte also points out that life has a rhythm, like a dance or a conversation. We’re not meant to go through it alone. The “things” around us are waiting to connect with us. They remind us that even in solitude, we’re not truly alone.

Look at the door you close behind you when you leave the house. It isn’t just wood, but a threshold that helps you step into the world. And the shoes you wear? They aren’t just leather or the fabric they’re made up of, but the ones that carry you to places. These simple things are part of your life’s story, and they’re quietly supporting you.

Treat David’s poem as a call to wake up and see the sacred in the mundane. Everything around you—the doorknob, the floor under your feet, the sky above—is rooting for you. It’s waiting for you to be present, to notice, to embrace the simple wonder of being alive.

So, as David advises, “Put down the weight of your aloneness and ease into the conversation.” You owe it to everything that’s waiting for you.

On the Company We Keep

I’ve come to realise over time that the company we keep quietly shapes us in ways we don’t always notice. It’s not just about who we’re surrounded by—people—but also what we let into our minds and lives—books, thoughts, even habits.

Till a few years back, I used to think having more people around meant being more connected. But as I look back, some of my most peaceful and contented moments have been spent with just my wife and kids, a good friend, my dog, or a book that felt like it was written just for me.

The best thing about the right company is that it doesn’t shout for attention but sits quietly beside you, reminding you of who you are and who you could be.

Of course, like I mentioned above, it’s not just about people, but also the thoughts we entertain, and the stories we tell ourselves. They’re company, too. And, to be honest, not all of them are good for us.

Some thoughts leave us feeling restless and uneasy, like we’re swimming upstream. Then there are some—the good ones—that ground us and remind us of what really matters.

Writing Boundless made me realise how much this idea has shaped my own life. I have been shaped by the friends who stuck around when things weren’t perfect, the books that changed the way I see the world, and even the quiet moments when I chose to sit with myself instead of distracting my mind with noise.

Seneca said it best: “People are frugal in guarding their personal property; but as soon as it comes to squandering time, they are most wasteful of the one thing in which it is right to be stingy.”

Our time is limited, and the company we keep is how we spend it. And that not only fills our hours, but more importantly shapes who we are.

So, I think it’s worth pausing now and then to ask ourselves, “Is this company helping me guard my time wisely? Is it making me a better version of myself?”

If not, what’s the point?

Slowing Down

There’s a certain charm in taking life slowly, a charm that too many of us overlook in our rush to get somewhere—or perhaps nowhere at all.

I’ve always believed that some of the best things in life happen when we stop hurrying and start noticing.

Like a walk at dawn, the scent of wet earth after rain, or the way a butterfly flies around a bush. None of these moments demand anything from us, except that we slow down and pause.

Now, slowing down doesn’t mean doing nothing. It means doing one thing at a time, with all your heart. When you drink your tea, feel its warmth, its taste, its comfort. When you sit by a window, listen to the wind, the birds, or even that drill machine used in repair work in another house nearby.

A good life isn’t waiting for you at the end of the road. It’s available to be lived now, and all along the way, in the little things you might miss if you’re in a hurry.

In Boundless, I’ve reflected on how slowing down isn’t about laziness or inefficiency, but about depth, and about letting life catch up with you instead of running ahead of it.

Maybe, it’s in these quiet pauses that we truly live.

After all, what’s the point of rushing through life, if you miss the beauty of living?