5 books that might change your mind – 2018 edition

Here are 5 books I read this year that might change how you see the world –

1. Nonviolent Communication by Marshall Rosenberg (my review/notes, Amazon): Putting this book into practice will be my most important theme in 2019. Since the last 7 weeks, it has already made an impact on how I think about communication (and hopefully communicate). It is a “beginner’s guide to communication” of sorts as Marshall Rosenberg explains how communication should be done – with a focus on observation instead of evaluations and by taking the time to articulate feelings and needs. A game changer.

2. Great at Work by Morten Hansen (my review/notes, Amazon): Over the years, I’ve come to realize that the books that resonate the most are those that I read because they are “just in time” instead of “just in case” (H/T Naval Ravikant for that articulation. I was at a place where I was mulling my themes for approaching work better in 2019 and this book resonated deeply. The first principle of the book is “Do less, then obsess” – it is what I need to learn in 2019. I wish I had the opportunity to read this book when I started my first job.

3. The Art of Learning by Josh Waitzkin (my review/notes, Amazon): Josh Waitzkin shares his journey becoming a chess and martial arts champion while articulating his learning philosophy. As someone who obsesses about learning, there were many notes in the book that touched chords deep within. Profound in pars, inspirational in parts, and thoughtful throughout.

4. This is Marketing by Seth Godin (my review/notes, Amazon): Seth’s blog is my favorite blog. Every day, Seth shows up and talks about marketing in a way that is applicable to our businesses, our work, and our life. He explains that we are all marketers because marketing is about driving change in the people we seek to serve. And, doing it well involves showing up, earning trust, and creating tension. In many ways, this book reads like a conversation with Seth on his approach to thinking about marketing. And, in many ways, the experience was very meta – the brand he has created as a result of showing up everyday on his resonates deeply with me. So, I expected the book to make me rethink how I think about marketing at work and in life in 2019 – and it did.

5. Skin in the Game by Nassim Taleb (my review/notes, Amazon): I think of Nassim Taleb as a brilliant jerk. In being who he is, he challenges (provokes?) you to think deeper about ideas you take for granted, pokes holes in research you thought was bulletproof, and brings together ideas from history, psychology, and probability together with impressive skill. You may disagree with him a bunch. But, that’s almost why you have to read his work.

H/T also to When by Dan Pink (my review/notes, Amazon) , The Power of Moments by Chip and Dan Heath (my review/notes, Amazon),

More book resources:

Behaviors in permanent shortage

In practically every organization around the world, there is a permanent shortage of 3 behaviors – great attitude, constructive dialog, and consistent follow up. We are yet to find a CEO or talent leader who claims to have enough of these.

As we think about how we can level up in the next year, it is worth pondering how we might incorporate these behaviors into our day-to-day. Specifically, the questions we might ask would be –

What would it take for me to show up with a world class attitude every day? It might be some combination of enough sleep, healthy body, good relationships, etc.

What would it take for me to master constructive dialog? It might be mastering “Nonviolent Communication.”

What would it take for me to follow up consistently? It might mean designing a better productivity system or the presence of a daily commitment that gives us confidence in our ability to follow up.

The path to standing out may never be clearer.

Investing – To Robo or not to Robo

As you can probably tell from yesterday’s list of personal finance lessons for 2018, I/we don’t use robo advisers like Betterment or Wealthfront.

A debate I’m hoping to settle before the end of the year is whether or not to experiment with robo advisers in 2019. Most of what I/we invest in is low cost index funds on Vanguard. As the key benefit touted by the robo advisers is “tax loss harvesting,” I’m not clear yet as to whether this is worth the 0.25% management fee.

So, this is a question for you – have you had experiences with robo advisers? If so, I’d be curious to hear about your experiences. Please just hit reply if you are receiving this email or write to rohan at rohanrajiv dot com. I’d really appreciate it.

9 Personal Finance Lessons from 2018

My notes to self from 2018 with a focus on everything that happens after the paycheck comes in –

Overall

1. Make sure your expense growth is much slower than your income growth. I shared my expense tracking sheet earlier this year. A new addition to that sheet was a sheet with “yearly math.” This sheet splits income into expenses, taxes, and savings. It is a really simple view and it helps keep focus on an important high level relationship -> grow your income faster – ideally much faster – than your expenses.

Expenses

2. Keep your expenses low by consciously tracking them. This isn’t a new lesson as much as it is an ongoing commitment. I’ve come across many tools that aim to simplify expense tracking but I’ve stuck to my simple google spreadsheet for 8 years now and it has worked great. The act of adding one expense at a time has inspired a level of consciousness that I’d otherwise have missed out on.

3. Spending on experiences has very high RoI. Again, an ongoing commitment.

Savings

4. A high yield savings account is a no brainer. A high yield savings account can yield up to 2% at the moment – far better than the 0% on normal savings accounts even after you factor in taxes. The “downside” in these accounts is the absence of physical banking facilities – so, no downside if you’re comfortable with dealing with your money digitally. :)

Investments

5. Individual stock picking is really hard – if you do it, do it with less than 5% of your net worth. I tried experimenting with it this year – and mostly failed. The second half of the year has been rough on stocks. In many ways, I’m glad for the lessons I learnt this year as I will, hopefully, exhibit better judgment in future years.

One accompanying learning here is to use “limit orders” if you still decide to indulge. If you decide to buy, use target prices to capture the upside/limit your downside. I wish I’d learnt this lesson earlier!

6. Tax loss harvesting. If your picks went sideways, tax loss harvesting might help. :)

7. Manage vests/employee stock purchase plans like cash. There are stories of the employee who held Coca Cola stock/GE stock/Johnson & Johnson stock for decades and watched it multiply 100 fold. For every such story, there are cautionary tales that we don’t hear about where large portions of paychecks disappeared due to market movements. Andy Rachleff has a great post on the Wealthfront blog on the case for treating any equity pay as cash. Like a good poker move, it doesn’t always look right in the short term but it is the right move for the longer term.

8. It can all go to zero. If you put any money into crypto this year, you know what I’m talking about. See above note on tax loss harvesting.

9. Anchor around principles. I’ve come to believe that all investment advice boils down to 3 principles – diversify, be consistent and disciplined, and do your research and pick a strategy that works for you. The Ivy Portfolio and Simple Wealth, Inevitable Wealth were two interesting adds to my personal finance book reading list this year.

Dollars or love per square foot

There are many of us who dream of homes with plenty of space. We dream of space to keep all our “stuff,” to host our friends, to have our family sleep over, and to work on projects we care about. As we think of owning or renting these homes, the metric to optimize for would be dollars per square foot.

As time passes, however, I realize that dollars per square foot matters far lesser than another more important metric – love per square foot. What are the decisions we might make if we maximized for love per square foot?

For instance, we might buy a home in a place we’d love to spend our time even if it limits our career opportunities. Or, we might buy a slightly smaller home so we spend lesser personal time fretting about our finances. Or, of course, we might rent instead of buy because we’re happier with the prospect of having options. And so on.

We’ve all been to homes where we feel an abundance of love. Some are large and some are small. Regardless, homes where there is more love than space are a special sight. Maybe the love per square foot will be a metric we’ll think about as we make that next decision?

Anger vs. tact

In my attempts to figure out the best strategy to motivate my now two year old to work with me, I’ve learnt that anger and tact have opposite effects.

The use of anger looks promising for a short while and then its effectiveness plummets.

Tact, on the other hand, is the gift that keeps on giving. The more you use it, the more you get comfortable with it, and the better you become at deploying it. Thanks to that in-built learning loop, its effectiveness grows over time.

I’ve written plenty about my growing awareness of my natural impulse to fight fire with fire. The turning point, for me, was reading “Non Violent Communication” by Marshall Rosenberg ~6 weeks back. I’ve since noticed a much higher level of awareness of these impulses and been having a much greater appreciation of the importance of diffusing proverbial fire with water with tact.

I’m grateful I came across his work this year and I’m hopeful for a tactful 2019.

Mistakes and good judgment

December marks the beginning of reflection season in our home. And, as I reflect on the mistakes I made over the course of the year, I expect to find myself repeatedly going back to the quote – “Success comes from good judgment. Good judgment comes from experience. Experience comes from bad judgment.” 

There are many ways to account for mistakes – the normal place to start is by marking them in red ink in the “loss” category. But, this quote never fails to reminds me to think of failures in the investment category for the future.

The only mistakes and failures that deserve to be counted as losses are those that we repeated. The rest are investments that will pay themselves forward many times over in the form of good judgment if we invest in learning from them.

So, here’s to that.