Investing

Run fast to reach late

~ premsagark ~ Leave a comment

I have started running recently.

It’s been 3 weeks now and makes me feel good.

In the last 2 weeks, I used to do 10 laps in the ground near my home in about 28 minutes usually, a distance of around 4.6Kms.

Yesterday, since I entered the 3rd week, I thought I will push myself a bit more. So I tried to run just a wee bit faster.

To my surprise, it took me longer than my usual sub-28 minutes.

It took 30 minutes.  I had slowed down during the latter part a bit.

That made me think.

  • Slow and steady may be boring. But is still a good strategy.
  • Fast growth is not the answer to building a good business / financial portfolio / lifestyle.
  • Focus on quality. Maintain priorities. Focus on goals, not on reaching fast.
  • Don’t sweep things under the carpet in your race to pace it out.
  • Think long term though few of them may be counter productive in the short term.

It is especially important that I keep these things in mind given my current situation. Gave up my job, too many experiments, lot of ideas, lack of execution knowledge, what-next situation, etc.

 

The economics of running a rental business (updated)

~ premsagark ~ 16 Comments

You might know already that I run Tapprs, an online photography & travel equipment rental place.

Thought I will share my view of the economics of running such a business, at least at a small scale such as it is now.  Tapprs is still in the validation phase, but the numbers shown here should be relevant even if scaled up. All numbers are actuals, except for revenue.

Disclaimer: I have no accounting background and there could be mistakes on my part. Please do point it out if you find any.

Initial funding:

Assume that the operations began on June 1.

As the sole owner, I put in Rs 1 lakh as equity capital. This is free money (don’t have to pay interest on it). And then I lend Rs 2lakh to the business from my pocket which I charge an interest of 12% annually (realistically, no one would lend to such a business without collateral and interest rates will be much higher).  That means Tapprs would have an interest payout of Rs 24000 every year on it until paid back.

Source of Funds

 Amount
Equity capital 100,000
Loan capital @ 12% 200,000
Total 300,000

Use of funds:

Tapprs needs to start. For which, I do these transactions on June 1.

Item Expense
Purchase of equipment 200,000
Domain 450
Total Initial Expense 200,450

 

So, at the end of the day, my balance sheet looks like

Continue reading →

After 3 months

~ premsagark ~ Leave a comment

It’s been 3 months since I quit my job.

And I can relate to a quote by Derek Sivers I read recently.

“Most people over-estimate what they can do in one year, and under-estimate what they can do in 10 years.”

To start with, I guess I had too many options to choose from and hence, had been facing a problem of plenty. Naturally, that meant dissipated attention.

Deciding what to do next is not easy and I have been behaving like a flip-flop. Here, here and here.. I have had different opinion. Initially, I thought I would do something related to my hobbies. Then, after some deliberation, decided against it and thought my interest in personal finance and analytics (my regular job) were worthier things to work on. If not my own startup on Analytics, perhaps a job in a startup, I felt.

Continue reading →

Tapprs rental as a business

~ premsagark ~ Leave a comment

‘Why do you want to get into equipment rentals?’

A financially savvy friend of mine asked me.

Few of you might know that I handle Tapprs as a hobby venture.

Equipment rental, esp dealing with equipment like photography gear is

  • a high risk business and equipment damages can hurt returns
  • is dependent on volumes and return per rental activity is small
  • is capital intensive (to make more money, you need to pump in more and buy more equipment)
  • break even period is about 75-100 days worth of rental which in calendar terms could work out to more than a year for a very successful rental shop and could take 3 years for those that aren’t as successful. In 3 years, the equipment could fall out of favor from the user crowd.

Continue reading →

Passive vs active income

~ premsagark ~ 1 Comment

I spent an hour or so today reading about Shree‘s pan India cycling trips. He’s a guy I admire a lot not just for his cycling.

It certainly made me think if I should give a shot at long duration bicycle touring.

Also, it only made me wonder if all this hullabaloo about starting my own business really fits my bill, given that I have much wider interests in cycling, travel, photography, birding, books, finance, coin collection, etc. I have always taken my hobbies seriously and I realize that I would have to scale down if I were to do anything on my own, even if its something very simple like running a book library.

Last year, I travelled without much ado in USA, Borneo and in India. This year, ever since I started thinking about starting on my own, there has been only one single trip to Goa. And much to my dismay, I haven’t blogged about my TFN trip in its entirety.. the last 4 days are still pending! Bad!! I’ve been spending almost all time on trying to figure out what start-up I want to get involved in.

I know these are initial days when the jigsaw is fully scattered. But I am yet to figure out a way to fit in the pieces.

While I would love to tell anyone that I run my own start-up or even a small business like a library, I am wondering if I will still enjoy my other hobbies the way I did in the last few years. This is a primary concern and has been holding me back from attempting anything serious.

At the same time, I am thinking more on the lines of passive income creation.

Those avenues that let you create an income stream wherein you don’t have to put in ‘time’ beyond a certain point so that you can enjoy life without interruption. No, am not talking about those 4 hour workweek stuff which sound short sighted to me. I am talking more about a lifestyle thing.

While my investment portfolio is the only passive income (or any form of income these days :-)), I am wondering if I should spend some time on other options too.

An active line of business needs some more serious thinking.

PS: The ticket to Sikkim remained as wait listed much to my dismay. So, I am now wondering if I should take a flight instead.. though that costs around 10k to Bagdogra. The other option is Uttakhand via Delhi. I haven’t decided yet.

The illusion of risk

~ premsagark ~ Leave a comment

Consider this widely discussed / over referenced scenario.

There is an explosion you are a witness to. Three men are injured.

They are lying injured on the ground. If they do not receive medical aid, all three will bleed to death.

Which of the following do you feel is the best rescue option?

  1. A rescue attempt in which one of the three men will be saved.
  2. A rescue in which there’s a one-third chance that all three men will be saved and a two-thirds chance that no one will be saved.

What was your answer? 1 or 2?

Continue reading →

Direction

~ premsagark ~ 1 Comment

Four more days before I add to the unemployed pool.

The last 3 weeks have been very good.

I’ve been spending time on figuring things out and am pretty pleased with what I’ve figured out. Very importantly, was able to realize that certain things weren’t for me. Also, been able to figure out few things that I certainly would want in life.

I would say, the map is almost 3/4th done. There are missing links, those can be figured out, by trial and error.

A few key updates

Continue reading →

The richest man in Babylon

~ premsagark ~ Leave a comment

I am reading the 1920s classic, “The richest man in Babylon“. I liked the book. It is full of simple wisdom that is so difficult to notice these days. I liked the simplicity of the book. I would recommend this book to anyone.

In fact, I think this book could have been the inspiration for books like “The wealthy barber” and “Rich dad poor dad”.

Here are excerpts from 2 of my favorite chapters.

Seven cures for a lean purse

Step 1: Start Thy Purse to Fattening.
For each ten coins you earn, spend only nine.

Step 2: Control Thy Expenditures
Budget your expenses that you may have coins to pay for your necessities, pay foryour enjoyments and gratify your worthwhile desires without spending more thannine-tenths of your earnings.

Step 3: Make Thy Gold Multiply
Put each coin to labor so that it may reproduce its kind.

Step 4: Guard Thy Treasures from Loss
Guard your treasures from loss by investing only where the principal is safe, where itmay be reclaimed if you desire so, and where you will not fail to collect a fair rental.

Step 5: Make of Thy Dwelling a Profitable Investment
Own your own home.

Step 6: Insure a Future Income
Provide in advance for the needs of your growing age and the needs of your family.

Step 7: Increase Thy Ability to Earn
Cultivate your own powers, study and become wiser, become more skillful, andrespect yourself.

The five laws of gold

1. The First Law of Gold
“Gold cometh gladly and in increasing quantity to any man who will put by not lessthan one-tenth of his earnings to create an estate for his future and that of his family.”

2. The Second Law of Gold
“Gold laboreth diligently and contentedly for the wise owner who finds for it profitableemployment, multiplying even as the flocks of the field.”

3. The Third Law of Gold
“Gold clingeth to the protection of the cautious owner who invests it under the adviceof men in its handling.”

4. The Fourth Law of Gold
“Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.”

5. The Fifth Law of Gold
“Gold flees the man who would force it to impossible earnings or who followeth thealluring advice of tricksters and schemers or who trusts it to this own inexperienceand romantic desires in investment.”