A Learning a Day

Lifehacker had a nice post on “why we should rethink the 8 hour workday.”

I particularly liked the takeaways.

• Manually increase the relevance of a task. Now, a lot of us still might struggle to find the focus, especially if no one set a deadline to it. Overriding your attention system and adding your own deadline, together with a reward, has shown some of the most significant improvements for task completion, according to researcher Keisuke Fukuda.
• Split your day into 90 min windows. Instead of looking at a 8 or 10-hour workday, split it down and say you’ve got four, five, or however many 90-minute windows. That way you’ll have just four or five tasks that you can get done every day much more easily.
• Plan your rest so you actually rest. “The fittest person is not the one who runs the fastest, but the one who has optimized their rest time,” says Tony Schwartz. A lot of the time, we’re so busy planning our workday that we forget about rest. Plan beforehand what you will do your rest. Here are some ideas: Nap, read, meditate, get a snack.
• Zero notifications. One of the best ideas I’ve ever had was to follow my colleague Joel’s advice on Zero Notifications. Having absolutely no counter on my phone or computer changing from 0 to 1 and always breaking my focus has been a huge help. If you haven’t tried this yet, try to turn off every digital element that could become an alert.

This week’s book learning is part 5 of a 5 part series on Personal Finance and Investing inspired by 3 books – The Investors Manifesto by William J Bernstein, I Will Teach You to Be Rich by Ramit Sethi, and The Millionaire Teacher by Andrew Hallam. (Part 1, 2, 3, 4)

For yourself
– Live like a millionaire. The average millionaire always buys a 2nd hand car as depreciation is maximum in year 1. Millionaires buy Japanese models as they have the best resale value.
They don’t spend on watches or fancy homes. They live in suburbs as it’s cheaper to own homes. If you’re ever in need of inspiration, read up on Warren Buffet

– Invest in plain vanilla index funds. They are a consistent 8/10. They will NEVER be a 10/10 but will never be a 1/10 either.
Index funds can be bought for cheap off Vanguard (if you live in the US, Canada, UK, or Australia). For Singapore residents, DBS Vickers provides index funds – they are slightly more expensive than Vanguard but work well as long as you invest more than $3,000 at a time

– Focus on the important stuff. Ignore minutiae like tax optimization until you earn in the millions

For your heirs
– The best gift to your heirs is not cold hard cash. Rather its the ability to save, spend wisely, and invest prudently
– Teach your kid to equate money to work from when they are young i.e. if they want $10 worth of stuff, are they willing to mop the floor at the supermarket for 2 hours?

Giving back and summing up
– Also, remember to give back a small portion of what you earn. Ramit Sethi did this by starting out a scholarship for young entrepreneurs. You can, too..
– Bill Bernstein sums it all up with sage advice – Live simply and save as much as you can for as long as you can.

Sketch by EB

I hope you found the series useful!

The right to moan works with opposite rules as compared to all other rights. While all other kinds of rights are given to us, the right to moan is taken away from us the moment we have access to water, food, electricity, and a basic level of physical security. It’s a tough life without these and my heart goes out to all those whose lives involve a daily fight of survival.

If you, like 3 billion or so others are on this side of the fence, you’ve lost your right to moan. I’m sorry. No moaning. That’s the way it works around here.

So, the next time you are about to moan, do the following –

1. Caveat your moan with “I am lucky to have an awesome life. I don’t have to fight for the basics but, that said, I do have my own set of challenges and these are to be kept in perspective as my life is..well.. awesome.”

2. Then say (to yourself) “I have lost the right to moan.”

3. And repeat “I have lost the right to moan.”

No moans = more happiness. And if we aren’t spending our lives being happy, what else are we doing here anyway?

Is it really that big a problem or is it just the biggest of the small problems you have now?

Is it the sort of problem you might have liked to have a year or two ago?

It’s easy to find yourself in a constant cycle of issues, problems, and unhappiness. So, if you aren’t smiling much for many days in a row, it’s probably time to get some perspective.

If you’re still feeling overwhelmed, here’s the question that helps me get perspective – Is there anyone out there who would LOVE to have the sort of problems you have?

The answer, almost always, is yes.

On Tuesday, 5th August 2009, I started a habit of sending a quote as soon as I woke up in the morning. My friends and I were just into my 4th year of university and thanks to the effects of the global economic crisis, our spirits weren’t incredibly upbeat about the prospect of hunting for full time jobs during the year. So, the idea here was to make sure we all started the day with a positive thought.

For the first few months, I used to send my friends an SMS and then I gradually began posting these on this blog. Over time, this evolved into a free daily email service that community members could subscribe to and is now even available as a once-a-week email on Fridays for those who do not wish to receive an email every day. I also post them on my short form blog – www.alearningaday.me.

Sending these quotes is typically the first thing I do on a weekday. It helps me start the day with a smile and also makes sure I have a byte sized learning as soon as I’m up. I hope to make my quote repository available someday soon so you can use them to find quotes you want as well.

Aside from the many wonderful quotes I’ve gathered over the past 4 years, I’ve learnt 2 very valuable lessons.

First, I’ve learnt to appreciate more quotes than I used to by looking for the spirit of the quote. I’ve learnt to take them with a pinch of salt. Taking them literally always leads to the sort of debates that follows contradictory sayings like “many hands make light work” and “too many cooks spoil the broth.” Neither is wrong – what’s most important is to think of the spirit of the quote and apply context.

Second, I’ve learnt that life is more fun when you view it with a belief in abundance. A year or so into sending these quotes, I began worrying about running out of great quotes. So, I began saving up – every time I came across a good quote, I’d stash it away for the future. Such miserly behavior was ridiculous and took away all the fun. The switch thankfully flipped a few months later and suddenly, quotes became fun again! 1000 quotes down, I’m sure the best is yet to come..

For all those of you who’ve supported these quotes by liking them, sharing them, and subscribing to them – you’ve played a big part in helping me learn. Thank you for that.

Set up: To ensure our discussions have a proper basis and requisite depth, I’ve put together a basic spreadsheet with financials of Acme Co. Please download the spreadsheet here – I will use a shared Dropbox folder for this series – if you prefer to have access to the whole folder instead of downloading a spreadsheet every time I update it, do send me an email and I’ll share.

I’ll now point out the basic bits of set up that I do every time I get hold of a set of financials for analysis with the “why.” While this is a very very simple version of financials, this will do for the purposes of our discussion. Also, there is no right and wrong here – I’m putting together a list of things that work for me and I look forward to hearing from you on what works for you in the comments.

7 set up habits I have found useful.

1. Set up a control sheet. As you will have noticed, we have a very basic control sheet set up but the importance of this sheet will become apparent as the analysis gets bigger/more complicated. For now, we use it to simply set “named ranges” for currency conversions.

The benefit of the control sheet will become obvious when you have to change conversion rates mid way through the analysis to reflect a new market rate/internal finance rate. If you go to Formulas -> Name Manager, you will see the named range set up.

2. Clean up the base sheet. The base analysis sheet is one you will lose a LOT. So, clean it up by making sure the columns and basic numbers make sense. Depending on the size of the data you receive, this clean up can take many hours and can even extend to a few days. This involves cross checking with the finance team to make sure the totals make sense.

Make sure you do basic checks e.g. are there any rows with negative sales? If so, why? This can be done by running a simple sort or filter.

3. Differentiate important columns with colors. I prefer using a background color for key pieces of data (numbers in this case). I also use a bright yellow highlighter for columns I have added and orange for existing columns.

4. Remove any formulae you added after the number checks. In this case, I’ve left some of the formulae in the rows for discussion e.g. Net Sales = Sales after Discount – Rebate. As a general rule, it’s best if you replace the numbers by copying the entire column, pasting with values once you know the numbers make sense.

5. REALLY understand the way the numbers work. Every company/business unit uses different terms and methods of calculation. Make sure you really understand the assumptions behind the numbers. As a rule, NEVER make any assumptions about the workings of financial numbers. Do a basic clean up and then sit with a finance person who understands them to make sure you have the same basis of understanding.

6. Remove outliers for the purpose of your analysis and document methodology. Most excel sheets are primarily used to make useful charts for management. You will have a few outliers in the data every once in a while

I’ve used very simple discounts, rebates, and cost calculations here but this will not be the case in real financial sheets. There will always be outliers that need to be cleaned out. Make sure you document these in the “Control” sheet as the underlying assumptions behind your analysis.

7. Keep the spreadsheet clean and avoid version control. A spreadsheet is like your work desk – the more organized and orderly it is, the easier it is to work with. As you add tabs for analysis, continue to keep them clean. I typically remove gridlines (View->uncheck gridlines) and add in borders around my data to make sure it’s easy to focus. This is a personal preference.

Also, name your spreadsheet well so you avoid version control. Notice the naming convention – “130703 AcmeCo Financials – ALAD Rockstar Analyst Series v1r.” Having the date (2013, 07, 03), the version (1), and the initials of the person who made the last edits (r) ensures you have no trouble identifying versions.

---

Series introduction

I gave some really good consulting advice to a friend a couple of days ago on why it’s important to ask for help. He had had some challenges with an issue he was facing that a few of us were happy to help him with. And we did.

“So hard to ask for help.” – he said.

“Yeah. It’s funny how we often forget that we actually strengthen relationships when we allow people to help.”  – I said playing Master Yoda for a moment.

A day later, I found myself completely overwhelmed. I felt like I had been sitting with a block on my head until a wiser friend pointed out I had been really jumpy for the past 3 days. The root cause of the problem? I wasn’t asking for help!

And so I did – I buzzed friends late in the night last night and did some old school problem finding and problem solving.  I feel much better today. I learnt 3 things –

1. It IS very hard to ask for help. I recognize some people actually find it very easy to ask for help – too easy some might say – but for those who find it hard, it is indeed very hard. And close framily DO love to be of help wherever possible. It’s a real win-win if done right.

2. It is one thing giving great consulting advice. It’s quite something else applying it to yourself. The rules always seem different.. they aren’t. Problems are less obvious when we are too close to them.

3. Life has this way of coming around a full circle. It’s a great opportunity to laugh when that happens! I laughed out loud when I realized this last night and I have a big grin on my face as I type this post out. Very few things are as amusing as our failures to walk our talk.. :-)

Oh, and one more thing, it really helps to have people close to you who point out to you when you are behaving stressed. That was the trigger for the self reflection and it was a very useful one.

It’s very easy to be caught up in the hard grind that is the “day-to-day.” It’s also easy to stop noticing the absurdity of an answer like “Okaaayyyy” to the “How is life?” question simply because that seems to be the default answer.

Just okay? We live in a world where we have more conveniences and sources of joy than we can ever imagine. We can live many thousand miles apart from near and dear one and still reach them with the click of a button. Poverty is lower than it has ever been and is decreasing quickly.

Sure, you have a misfortune or two but difficulties make the journey interesting. And you can’t be the hero of your own story without overcoming tough challenges anyway. Even the challenges we face are perfectly engineered – never insurmountable and always require us to stretch just a little bit extra and open our minds so we can become equal to the challenge. Isn’t that amazing?

Every bit of this life is perfect. Let’s not let all the noise about the world’s imperfections change our mind about that. That’s just a sign that the news companies are doing a “perfect” sales job…

When someone asks you “how is life” today, try saying “Perfect!” At any rate, it’ll make you smile and feel better and that wouldn’t be so bad now, would it?

This week’s learning is part 4 of a 5 part series on Personal Finance and Investing inspired by 3 books – The Investors Manifesto by William J Bernstein, I Will Teach You to Be Rich by Ramit Sethi, and The Millionaire Teacher by Andrew Hallam. (Part 1, 2, 3)

The only known reliable long term investment strategy is investing in index funds.

What are index funds? Index funds are computer managed funds that are a representation of the whole market. If you own the index of the whole stock market for example and Apple’s value is 3% of the stock market, 3% of your index will contain Apple’s stocks.

The assumption behind indexes is that while individual stocks may go up and down, the whole market will grow in the long term (for the US stock market in the last century, growth has averaged around 8% per year and for the US bond market, this number is around 4-5% (subtract 2-3% inflation for real return))

How do you set up a portfolio? Your portfolio needs to have a collection of stock and bond indexes. Stocks are the source of long term growth but are volatile. Bonds have slower growth but will help you sleep peacefully at night.

– Your bond allocation % should be around your age (the older you are, the less risk you take)
– Keep your portfolio split VERY simple. Reduce overhead – aim to rebalance only once every few months

How do you keep investing and balance your portfolio?

– Make investing a purely mathematical exercise – decide your allocation and stick to it
– Imagine you have 30% bond, 70% stock allocation and your your stock allocation has gone up to 80% of the total in the past month/year – invest your money in bonds to bring the ratio back to 30-70
– Don’t worry about the markets. Just keep buying low and sell when you need to

Sketch by EB

Derek Sivers, founder of CDBaby.com has followed Bernstein’s methods ever since he sold his company for $22 million. Derek’s advice is as follows – Think very very long term i.e. 20-40 years. Your labor and active businesses are the only way to get rich. Investing is so you will have enough when you retire.

Bill Bernstein’s Book recommendations –

– Psychology – Your money and your brain by Jason S
– Business – Common sense on Mutual funds by Jack Bogle

Next week, we round all of this up with the final learning of the series.