Your financial portfolio and Japanese principles

Your financial portfolio and Japanese principles

Writing in Fortune, Sandeep Das leverages principles from Japanese culture to build an effective financial portfolio. Japanese culture is leveraged upon sustainability, longevity, humility, and quality—exactly what most working professionals crave for today.
Don’t be ashamed of wealth creation: Buddhism, one of the major religions in Japan, advocates that individuals need not be ashamed of or feel guilty about wealth creation. It is not morally inappropriate to try to create immense wealth. The only folly individuals should be careful about is not to be enslaved by that desire or to lead a life with the single-minded focus on wealth creation or excessive flaunting.

Imbibe financial minimalism: A derivative of the above principle is Japanese minimalism—or having things that are absolutely necessary and removing all forms of clutter from one’s life. A direct analogy to financial portfolio management involves avoiding having too many investments in each asset class. In case of investing in a debt asset class, one or two low-risk debt instruments should suffice rather than a dozen of them. Similarly, with equities, one or two mutual funds should suffice for domestic and international markets. This also applies to other financial habits, implying that having one or two credit cards and one or two bank accounts only.

Wabi-sabi, leading a perfectly imperfect life: The principle of wabi-sabi (wabi implying rustic simplicity and sabi implying taking pleasure in the imperfect) corresponds to accepting imperfections in life, making the most out of them, and moving on. Bad investments are commonplace for almost all individuals and it is essential to embrace these mistakes and move on. Rarely does anyone get all their investment decisions correct. It is detrimental to perennially live with a deep sense of financial regret. However, over a period, the proportion of risky investments (including equity) should be consciously brought down and relative safety of the portfolio should be consciously increased.

Avoiding karoshi, death caused by overwork: In financial parlance, it translates to being excessively obsessed on the financial returns leading to hourly portfolio tracking. It is highly advisable to avoid reading too many hot tips or opinion pieces and following the hyperactive journalists screaming all day on television promising you financial nirvana. Too much churn or regular tracking only adds to daily misery. It is suggested to track your portfolio once a year, at best, and avoid making too many transactions.

Follow your Ikigai: Ikigai translates to living your purpose every day is one of the biggest exports of Japanese culture. At the end of the day, pursuing money can rarely be someone’s Ikigai as it leads to a very shallow and meaningless life. Ideally, money should be treated as an effective enabler while the individual follows his Ikigai—an intersection of what someone is good at, what he enjoys, what the world is ready to pay for, and what the world needs, ruthlessly.

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