MT27 | Prasenjit Dasgupta On How I Built Wealth Despite A Late Start

Can you live a happy, financially secure life, even if you start investing only in your 30s? Or if you start so late, do you need to boost your returns with day trading derivatives or crypto? Not really. Today we talk with Prasenjit Dasgupta, who shares with us his journey to financial wealth and freedom despite just starting in his 30s.

Discussion Topics: Prasenjit Dasgupta on How I Built Wealth Despite a Late Start

• Starting his journey with Fixed Deposits
• Buying residential and investment property
• Maxing out his retirement account
• Purchasing company stock
• Nearly losing everything on options trading
• Investing in goals vs chasing a ‘number’
• Lessons from his financial journey

Transcript: Prasenjit Dasgupta on How I Built Wealth Despite a Late Start

Hi, everyone, welcome to another episode of MoneyTok, where we help make personal finance and investing simple and accessible through both my own experience. I’ve been doing this for about 20 years now. This show is about money and wealth creation. And we talk about so many ways of making money, bought retirement planning about stocks, bonds, gold, real estate, crypto, and so many kinds of things.

Amit Ray: Today, we are chatting with Prasenjit Dasgupta, who’s the Chief Financial Officer of Digital.ai. And he’s going to share with us his journey building wealth, and all of his learnings on the way, but Prasenjit Dasgupta, just before we start, let me just ask you this, you say you’re a normal investor, but you’re actually a CFO. So surely as a finance person, you must have knowledge or access maybe which regular white-collar professionals such as myself don’t have. So did your finance background actually help you on your journey at all?

Prasenjit Dasgupta: Hey, Amit, thanks, and love to be on your podcast. Thanks very much for having me. As far as being involved in finance and having more access none of that’s really true because it’s a statistical fact that 80% of professional money managers are the people who are paid very, very well to invest they fare worse than any investor could have if they had just bought the market and get investing in the market and achieve market returns. So even as a finance guy, I’m interested in this stuff but I have no more access than anybody else. And it’s borne out that even the people who have access don’t necessarily manage to do it any better off than the vast majority of other market participants.

Amit Ray: Right. Actually, that’s a really interesting point Prasenjit, the fact that even professional money managers often struggle to beat the market.

Prasenjit Dasgupta: Even more Amit, because, unlike professional money managers, individual investors have two major advantages. The first one is, you’re on your schedule, right? So you’re not on any quarterly schedule, or any yearly schedule, or even five years schedule, that money manager has to be on this sort of quote-unquote, prove their worth, and make money for their investors, otherwise, they will churn out of it, you’re in it for yourself, you’re in it for your family, and whatever causes you’d like to support.

But this is if you’re investing in your 30s and given average lifespans are in the 70s and 80s, you’ve got 50 years of investing ahead of you and hopefully 20 to 25 to 30 years of that is going to be with income, right? So you’ve got a lot of money and a lot of time and time is on your side, which is not the case on a money manager’s side. So you have that. The second thing you do is even if you want to dabble in sort of individual equities and stuff, I think your universe is much more than the typical money managers because they manage such insane amounts of money that their returns are always going to be challenged because they have to hit some really, really big shots to actually make it work while you don’t because you’re investing for yourself.

Amit Ray: This is really good. Actually, the first point is something I mentioned in an earlier episode of MoneyTok, which is that you have time that a professional money manager doesn’t. I mean, you take how much time you want, you can invest and forget about it, whereas they have to actively manage because as you said, otherwise, people will pull out money if they’re not hitting their target returns. So they have to work within a box. And you certainly are not restricted by any such thing.

Prasenjit Dasgupta: Exactly.

Amit Ray: So Prasenjit, tell us more about your money management or investing journey. As you said, you started a little bit late. How did you start and what did you do?

Prasenjit Dasgupta: I graduated from Amcal in 2000 and started working immediately after that. My first job was with the Boston Consulting Group in Germany in Munich, and I wasn’t personally sure whether I would stay abroad permanently or move back to India at some stage. And so I kind of did what the traditional Indian, growing up for 50 years had done, I put all that money into fixed deposits, I was single and didn’t have a lot of expenses.

So now I was able to save a fair bit, but I put that all into a classic like 8, 9% yielding Indian Forex, you know, and honestly, providentially, that turned out to be okay, because if you remember 2001 2002, those were not great years for the stock market with the dot com crash. So it turned out okay, but even if you had started investing in the markets at that time, and just kept on investing, you’d probably have done better. But it’s really when I moved to the US that I had to start investing. Now, I first started off with basically zeroing out all our savings, because we wanted to buy a house. And we had to basically pretty much put down everything.

But I had to do it because I mean, that was the only way I could for my down payment. But again, I bought a house in the middle of that recession. So that was not a bad investment either. But that’s really where my journey started. And the first couple of few years were really sort of plain vanilla in the sense that, you know, in the US, you have what they call a 401K, which is basically a retirement account. Earlier it was about 16,000, now it’s about $20,000 a year, and Microsoft matches 50% of that. So if you’re sort of a double-income household working in one of these companies, lots of companies have similar structures.

So you’re looking at between 2020 and what Microsoft contributes as well, about 60k a year that you’re putting away for 30, 40 years out. So I think that was my first step towards a regular sort of retirement income plan. There was a lot of stuff Microsoft offered in terms of actually putting a percentage of your salary in what they call employees from the stock purchase plan. So you could put up to 15% of your income into Microsoft stock, and you could buy it at a 10% discount. So I use that as kind of an auto-save mechanism for some time. So in 2012 and 2013, I got into Options trading and this is because I read about it someplace and it was mostly plain vanilla stuff like trading ports. Now what that means is, if you feel that you would like to own Microsoft, but Microsoft stock is at 150 and you feel that that’s too expensive, but if I got down to 100 bucks, I’ll buy it.

So essentially what you will do is sell put options, which basically you commit to buying Microsoft stock at 100 bucks. If it reaches below that price, in return, the buyer of that option pays you a premium for telling him or her the right to do so. So basically the simple thing is, if Microsoft stays above 100 bucks, you collect that premium, and that’s yours. If it goes below 100 bucks, you’re obliged to buy the stock. In 2018 and 2019, I left Microsoft after almost 14 years, I joined Motorola. So again smaller, but still a large company. And I already had the bulk of our savings invested in stocks, it had been 10 years of a bull market. And frankly, I was kind of seeing the frothiness in some areas, particularly in tech, where I actually had quite a bit invested. So I thought I should diversify a little bit. And so I started investing a little bit in non-liquid assets, mostly residential and multifamily real estate. I also did an IPO equity.

Amit Ray: The asset classes that we’ve invested in actually seem to have followed some sort of a continuum, they went from more traditional to more exotic over time. So you started with bank deposits and pension plans and employee stock options, which are pretty normal, like, people do it. And then you moved into Options trading, multifamily real estate, and also unlisted equity investments, all of which are more complex, less liquid, and so on as well. So, why do you think your portfolio evolved in that sort of fashion?

Prasenjit Dasgupta: Frankly, I would say and the jury’s still out on how these will be successful or more or less successful than the more traditional piece of my portfolio, I would say, I think the options trading started because I felt some of the stocks that I was interested in, were really overpriced, and I’d love to buy them and they got more reasonable, and then collect the premium along the way if they stayed above my comfort zone.

If I felt they were overpriced, fine, I would just sell options and collect the premium. And this worked well till you get real over-leverage. And it’s still a fine strategy, I think, for investing in sideways markets, or markets where you know you’d like to get a discount on the price, but you’re pretty confident that you would like to own that stock. So I think that’s where it went. And then the real estate stuff, this was really a couple of years back when I felt that the markets were getting a little bit too expensive. And I wanted something that would sort of both give me somewhat stable and recurring income, which they do because they invest in multifamily real estate.

So they’re really built to rent the kind of investments where you’ve got people there, and the incomes based on the rent that you collect. And I didn’t want to manage real estate. I mean, it’s a pain. My home, managing the personal home loan is painful enough, but I wanted to be somewhat uncorrelated. And the other thing is, frankly, having a long time horizon, and we spoke about this before, I think it’s a feature, not a bug. And also the illiquid, as long as you’re not doing stupid stuff is also a feature, not a bug because you can’t touch it. So that almost forces you to be patient, and right out and you can’t panic because you can’t do it. It’s illiquid. So I think diversification was really the main impetus because I felt the stock markets are getting a little bit too frothy.

Amit Ray: I actually wanted to kind of highlight the point you made about employer match. So interestingly, I worked in the US for about three years. And I worked at Citigroup, and they had an employer match for the 401K as well. And you know, weirdly enough for the first year, I didn’t take advantage of that. I was like, oh, you know, don’t understand, don’t care, I’m not going to be in the US forever. All of that. But then I realized this is free money, I mean, it is so stupid not to take advantage of the match. So if anybody anywhere has a pension plan, or is kind of a retirement fund, where the employer is matching, it’s a no-brainer for somebody to take advantage of that match.

Prasenjit Dasgupta: And that’s a tax saving because you’re taking it out, it’s pre-tax income. So that amount is not taxed, the amount that Microsoft contributes on top is not taxed either till the age of 70 in the US, right? So after that, it is taxed at ordinary income rates. But if you’re not working at that time, your income is likely to be lower. So you’re basically deferring your tax liability, and you’re hopefully paying it out at the time that your tax burden is going to be lower. But yeah, to your point absolutely you know the first thing you should be doing is taking advantage of the match, because that is just not doing it is just dumb because it gets a salary increase effectively. It’s something that the company is paying for you and it’s not tax.

Amit Ray: It sounded to me earlier, when we were discussing this whole options thing that you actually had a pretty bad experience. So if you don’t mind kind of sharing a little bit more with our audience, what are you trying to do, and what happened?

Prasenjit Dasgupta: Yeah, two things A it’s very tax-inefficient because all those gains and premiums are taxable at the short-term tax rates. So basically, if you’re in a high tax rate, it is taxable at that rate, and secondly, it works great till it doesn’t. I mean, it’s horrible in terms of a market crash and it doesn’t even have to be a huge crash if you’re being stupid like I was, and margining stuff and all, which is basically you’re kind of borrowing money to fund these options and if the market goes against you, you can lose a lot of money very, very quickly, which happened to me in 2014 2015, sometime around that, and also 2020.

And the worst part of it is, you know the stocks that you’re then being forced to buy, you know they’re great stocks, and you know you want to hold on to them, but just because you’re over-leveraged yourself, you can’t, and you have to force sell. And by the way, I think that accounts for a lot of the panic selling that we’re seeing now and that we see, that’s why crashes tend to be so fast because they tend to cascade on themselves.

Amit Ray: Yeah, they spiral essentially. And I think, what you said, I mean, this is the whole concept of margin calls, etc. Like, companies and individuals are buying on leverage and then if things go below a certain threshold, or above a certain threshold, depending on how you bet then you have to sell in order to cover that loss.

Prasenjit Dasgupta: Yeah, I have been on margin calls once and it was the worst day of my investing life and it is not fun. So I would not recommend that to anybody. What I was trying to do is eke out more and more option premium, and that’s fine. But I think you got to have the capital to support it and I frankly didn’t. So what ended up happening is the stock went down all of a sudden, so options trading is great for when stocks are going up that is by definition, fine. But even when they go down slowly, that’s okay. I mean, you go down half a percent a day 3% a day, that’s okay, you still can make decent money. You get in trouble, basically when the market crashes.

You can get in serious trouble if you don’t have enough capital because then by the way, you just realise your dream, you are getting to buy those stocks that you like in theory that you like, at the price you wanted to pay for them. It’s just that if you put too many chips against that, I said, Okay, I’m gonna buy 1000 shares of Apple, but at 100 bucks, you better make sure you have 80,000 bucks in your account to cover that. And if you don’t, what ends up happening, if you make too many of those bets, and all those stocks are falling at the same time, what happens is that you will be required, you’re obliged to buy all that stock at that prices, and when your money runs out, then your broker will actually start liquidating or selling those stocks at the current prices, so you will lock in losses, because let’s say you would sell an option to buy Apple at 100, Apple crashes to 100, and then it goes to 80, the broker will sell your stock at 80 and you’ve just guaranteed yourself $2,000 loss on every 100 stocks because you run out of capital.

And that’s definitely something that happens to a lot of people who don’t know what they’re doing obviously at that time, because it happened to me, and it’s one of the most disheartening things that can happen to you because you’re like, No, I don’t want to sell I’ll hold on I’ll wait for it to go up but you can’t because you over leverage yourself.

Amit Ray: Wow that is some story. So effectively, you’ve taken a bet, which actually turns out to be right but you overbet on that. So you don’t have enough capital to actually satisfy the bet. That’s the greed part of it. So it’s like you were taking a bet, but not quite believing that it’s gonna happen utmost.

Prasenjit Dasgupta: In some ways, yes. That’s actually a very good way of putting it because you don’t really believe that Apple can go down so cheap. And by the way, at that point, the last thing you want to do is sell and the thing you want to do is buy more of it at those lower prices but you can’t because you’ve just lost the ability to put that capital to work.

Amit Ray: Wow, that is crazy. And obviously, you simply can’t control it because you’ve set this ball in motion at the start when you made those bets.

Prasenjit Dasgupta: Yeah you might have made those bets three months back, six months back a year back sometimes. And it’s all great till the market crashes, 20% in a month, and then you’re like, Okay, how you’re left holding the bat.

Amit Ray: Wow, that’s huge. Thanks for sharing. I think it’s good to hear it sort of real life from someone because you read about all of these and yeah, some hedge fund has lost money and folded. But a hedge fund is not a person so it doesn’t matter so much to the rest of us. But it’s good to hear it from an actual person and to understand the risks in real life. So what did your family say about this when it was happening?

Prasenjit Dasgupta: I don’t think I was super transparent to them. And thankfully, the market turned just in time and yes, that was a lesson to me and going forward that resulted in important lessons like always having a cash cushion in there where even in that time I could have done certain things had I known how to do them, you know, certain emergency fundraising, I could have consolidated assets and put them into that so that I had some cover, which I actually did put in place, and which by the way enormously helped me in 2020, which was again, the last big COVID crash when the market dropped 30% in that time, so it was a painful loss, it was painful for everyone. But unlike the first time, I didn’t have to force them. To participate when it comes back. Now we’ll see what happens with this one.

Amit Ray: Yeah, thanks for sharing. And in return, let me also say that I’ve had my TTS investment as well, not in options and stuff, because I am too scared to do things on margin and anything that has leverage. But when oil prices had turned negative and stuff, I was looking for oil as a commodity. And I hit upon this one fund, which I really didn’t understand much about. And I thought it was just one normal fund that invests in this commodity. And it turned out to be like a fund that invests in the future and then when oil turned negative, all hell broke loose on this fund Long story short, I think I bought in at 13 bucks or 12 bucks, and it went down to $2 before I was like, Okay, this is it is just gonna zero out at this rate, so I’m just gonna sell it.

Prasenjit Dasgupta: But did you buy before oil went negative or when oil became negative?

Amit Ray: Before. I think oil was dropping, and it seemed obvious to me that it can’t stay at $20 or $30 a barrel.

Prasenjit Dasgupta: You didn’t price in the minus $37.

Amit Ray: Exactly. And it was some future thing that has to roll over every month. And there were a lot of technicalities and something called contango, which I only learned when I was losing money big time in it.

Prasenjit Dasgupta: Yeah, I know. That was just insane because you were literally being paid to take oil off.

Amit Ray: Yeah, so we talked about the disaster. So what are some of the investments that have turned out really well for you?

Prasenjit Dasgupta: See, I think and this goes back to the first one, we talked about some of the most simple things and some of the things where I’ve kind of literally shut, automatically. Actually, my wife’s a great example of this because she’s like, don’t sell my stuff. And she’s been at Microsoft now for seven, eight years. But she’s like, I’m gonna put 15% of my salary into that. And I’m just gonna stay put and you’re not to touch that even no matter how high Microsoft rose. And that’s been a huge success because the stock has done well. But I think over time, it’s raised its dividend. So it’s actually just paying us back also.

Personally, for me, Apple’s been a big success, because I did feel it was seriously undervalued in the early 2010s. So it’s the biggest part of my it’s biggest individual stock on my 401K. So Apple and Microsoft, I mean, very traditional, and then again, but the biggest thing has been really that Systematic Investment in the 401K, mostly in index funds in the S&P 500, a few bonds, like put 80% S&P 500 20% bonds, those have been really the highlights, you know, some of those pre IPO investments have done well, but some have not. So I would say it’s kind of a wash really, the simple stuff has worked out the best for me.

Amit Ray: I think that’s good insight as well, which is the simple stuff often works out the best. And the reason for that, I mean, it’s simple, because it has a long history, and everything is adapted around it, people understand how to do it, there are many ways to invest in those things, and so on.

Prasenjit Dasgupta: Yeah and Amit, one thing, if I might add, it’s actually, if you invest in index funds, it almost is an automatic stabiliser, because the worst performing stocks are kicked off the index. So companies that have lost market share, lost competitive advantage, they’ve kicked off the index, and they disappear and they are replaced with companies that are performing well. So if you look at it over 50-100 years, the composition of the S&P 500 has changed significantly, and the stocks in it have changed significantly. So by just investing in it at an extremely low cost I mean, I think you can buy funds that cost 2 or $3 per $10,000 of investment.

So that’s an insanely cheap way to invest, you can basically get the top 500 stocks at any given point that are doing well, and it almost acts as an automatic money manager for you. And you don’t have to do anything. And like yeah, you will not get Warren Buffett-like returns. But I mean, beating 80% of people who are paid to do this, that’s not the bad outcome.

Amit Ray: Tell me more about your property investments, because that seems to be a large chunk of your investing portfolio.

Prasenjit Dasgupta: I think property has a couple of advantages, particularly in the US. I don’t know about other countries, but definitely, in the US, it’s the one place where the only real way to buy property is on leverage, right, because you’re putting 20 or 25% down, you’re borrowing the rest. Now in the US, the big advantage is that if you buy a property for yourself, you can get a tax deduction on the mortgage interest you pay for it. And mortgage interest rates apart from the huge rise now for a long time I mean, last year, you could get them on a 30-year mortgage, a two and a half 2.75%. And then if you discount the tax deductibility of that you effectively are getting a 30-year mortgage at a 2% effective rate.

It’s kind of a no-brainer investment, and you can do it across both your home or your primary residence and your rental properties, because you can show that as an expense. So if you can borrow at 2%, in an asset that over time, generally tends to grow, you know, even if it grows 3, 4% a year, if you’re paying only 20% so you have a leverage of four to one, right? So that kind of effectively gives you double-digit returns at a cost that is just 2% effective. And the other thing about property is that you don’t get those wild swings that you see in the stock market and it tends to be somewhat uncorrelated and it’s also kind of for saving because it’s illiquid so you can’t say oh my god, my property is down 30% and I have to sell as long as you’re either living in it, or you’re renting it out, and your renters paying their bills, your kind of security from a cash flow perspective as well.

You tend to worry less about depreciation again. I keep coming back to the things, the things you see the least and worry about the least. They tend to be your biggest winners over time if your time horizon is long enough.

Amit Ray: Yeah, that’s right. So actually, that’s a good segue into maybe let’s discuss some of the main lessons that you’ve learned from your investing journey.

Prasenjit Dasgupta: Yeah, I think the biggest lesson is that investing doesn’t have to be complex. All you really have to do is set aside the maximum amount of money that you can afford to do so and put it in the markets to work and just keep doing it over and over every month over your career. And I think that will guarantee you better results than the vast majority of investors, but the discipline to do that every month, regardless of whether markets are going up, down, or sideways, that’s the key thing. I think the two biggest success factors in my mind in investing are patience and discipline. If you have those two, then I think you can really forget about how your stocks are doing in any particular given month or quarter, and just focus on why you’re doing this and when you actually need the money, or the fruits of your investments to cash out against those. So I think that’s the biggest lesson.

Secondly, I would say, if you’re not interested in researching the market and buying individual stocks, don’t do that. Don’t go on tips from friends on, hey, this is great. If I had to trade on it, I would get the direction 50% wrong. It’s funny. But once we printed just a bad quarter at Microsoft, and I was like, Oh, my God, I can’t sell but I wish I could have because I know this is a disaster, the stock went up 5%, because people had expected an even worse quarter. So it’s a fool’s game to trade on individual stocks, unless you really, really have a feel for the market. So I would say that. We talked about leverage, I won’t mention it too much again, but borrowing is dangerous.

Apart from real estate, I would encourage people not to do that. Or if they do that, keep it modest and ensure the markets can fall 30-50%, you will lose a lot of money, and everyone will but ensure you do not get margin calls that take you to leverage to an extent that you’re able to do that. And finally, I think in some ways you think about the end goal in mind, right? Why are you doing this? Or is it for retirement security? Is it to buy a home or put down a down payment for a home? Is it for kid’s education? Because the types of assets you would have to invest in would be different based on the timeframe for when you would need those resources because if you’ve got to pay for your kid’s education in two years’ time, you shouldn’t be investing in stocks.

Because if the market goes down 30%, what are you going to do? If you have liabilities or outflows that you know are going to come at a certain point in time, you should be fairly confident that you are going to have that amount of money with a certain amount of cushion. But if that’s 8 or 10 years old, if you have young kids, yeah, you should probably have a decent chunk of your money in spending in the stock market. That’s the other thing as well. Again, for someone who’s not into this big time, I’d say just think about the goals and what you need to do to fulfill those goals.

Amit Ray: Yeah, actually, this event-based or goal-based approach is something that I’m a big fan of, and I’ve been trying to do it for ourselves. But it’s in theory, it’s something that makes a lot of sense to me, which is you know, you have big life events, and you make sure that you plan around those events. But it’s easier said than done in that aspect, which is why what most people do is just say, Okay, I’m just going to maximise my wealth and do the other way around, which is I will just focus on inputs and not on the output. Is there a way that you think one can actually structure around these kinds of events?

Prasenjit Dasgupta: Look, Amit, I think for us, really, the two big events that we need to plan for people like us is kids’ education, super expensive in the US, probably Singapore as well and our own retirements because I don’t think we can count on any government funding for to fund our retirements, anything that does happen is kind of a bonus. So luckily, both those are fairly predictable in terms of when you might want to look to retire or use the word retire within airports, because none of us might want to retire per se, but at least be financially free to pursue it at the time that we might want to do them without having to rely on a regular paycheck.

That’s what I define retirement as right, you are financially free and you don’t have to work whether you choose to do or not is a completely different question. So I would say those two are the main things. Now in the US again, you can actually plan for your kids’ education, there are tax advantage plans that allow you to do that. So I went ahead and funded four years each of public education, and university education for each of my kids. So that’s done. So I talked about how we pay ourselves first in terms of maxing out our 401k’s and employee stock purchase plans. So that’s the one thing we do for retirement. And the other thing I’ve done that’s event-driven is the college fund for my kids.

Amit Ray: So I think my takeaway from this is all the stuff you said, of course, you’re in the US and there are certain schemes in the US. But everywhere around the world, there are targeted schemes for targeted events. So at the very minimum, one can aim for that. So use whatever the pension or the retirement fund concept is, whatever the education fund concept is, or any such plans that one can use for specific, pretty much-known purposes.

Prasenjit Dasgupta: Yeah, absolutely. And I think for younger investors, one of the big priorities might be saving a down payment to buy a house. So if you start working at whatever 22, 23 if you’re looking to buy a house in five, six years, then I would say you have a fairly good idea of how much down payment you need, you might look at a more balanced outcome where you get some of the appreciation potential from a stock market fund but you also have a little bit of downside protection.

Amit Ray: Yeah, that’s right. So I think what you’re saying is no upfront, what are some of the big ticket items and roughly when that’s going to occur, and then if there’s a targeted fund, just put money into that fund and forget about it. Or if there’s nothing targeted, like a down payment for a house, then just plan for that and put it where it makes more sense to get.

Prasenjit Dasgupta: Yeah, again, I mean, even for a house, you will have some idea hey, given my income, where I’m at right now, given the type of house I’m looking to buy, here’s how much I need to put down as a down payment. So you have to have some idea of how much you need and based on that, and how much you have and how much you can save, you can build up a plan that enables you to do that actually, it’s not too much more complicated. It’s not a very complicated Excel spreadsheet.

Amit Ray: Okay, we’ve talked about your journey, and you’ve actually done quite a few different things and had your highs and lows and so on. So looking back, what advice would you give people who are starting out on their investing journey, or maybe they’re early in their journey right now?

Prasenjit Dasgupta: First thing, I would say I would start early, I would start again, what I call pay yourself first, which is the first few years of your career, yeah, maybe you’re not earning that much. But expenses also tend to be low because if you’re single, you don’t have other liabilities, you know, your rental expense is probably going to be your highest, your biggest ticket item.

So this is the way to really put in that discipline of putting in the maximum of whatever you can save in that because it’s interesting that you’re saving a comparatively small amount of money relative to what we’ll be doing later but that money has the potential to compound for 40, 50 years. So it’s going to give you a lot of bang for your buck in later years because that’s going to snowball and compound on itself. So just put everything that you can maximise your savings potential, and then just invest systematically in the market every month or every so often that you are but focus on actually following that discipline plan. Save consistently, and let compounding do the work.

That’s something I did not do in the first eight or nine years of my career. But I think you’ll do well. The other advantage is I mean, a lot of companies, you will get matches. I mean, there’s stuff like this to any fear of saving X, you can get to at least 1.2x or 1.5x, even in some circumstances, by things that the government or your employer might have put in place for you. I think we talked about that earlier. The second thing is, if you’re not super interested in this, but just want to grow and do other things with your life, unlike me, there’s a human urge to just think and do something. And if you avoid that, you’ll often make more money than by doing nothing and just letting things be.

Index funds, I think are a very, very efficient way for most investors for 90% of investors, because they’re super cheap, actually, you don’t even have to pay a financial advisor, I haven’t had one and I don’t think I need one naturally, because it’s just all the information’s out there and it’s really not that complicated. And then we talked about real estate. I like investing in real estate, because I think it is for saving, it is a place where leverage actually helps and works in your favour, and the interest rates are tax deductible. So if you can put down the money to buy a house, I would recommend it.

Now, there are disadvantages because housing ties you down, it’s difficult to move, and transaction costs are higher. So you can’t just pack up, cut your lease short, and just move somewhere else. So there are real costs to it. And there are all these discussions where, hey, if you’d invested the down payment, then you might do better than if you invest in a house. But the thing is, housing is also emotional. I think it is very emotional for a lot of people. And it’s a very personal choice as well. I think it can be a good financial choice. But again, there are definitely trade-offs to it that I mentioned, it definitely limits your flexibility.

And finally, I would say just from a big, big picture now the whole point of investing, unless you’re probably a buffet or someone who does this for a living is not to show who has the maximum returns. What I find really beautiful is this quote from Joseph Heller, who wrote Catch-22 when he was at this hedge fund billionaire’s party sometime in the 1950s.

An acquaintance got up and asked him Hey, don’t you feel jealous because that guy’s thought so much. And you’re such an awesome writer, and he basically trades stocks, and he’s got so much money and Joseph Heller said this, I got something that he never has and that’s enough. And that word is enough, I think it is just so meaningful. It’s easier said than done, more is always better, but think about what enough means for you and work towards that.

Amit Ray: Yeah, I think that is one of the most valuable points from this whole conversation, which is the concept of enough for most people, that enough number tends to keep moving. Like I know, I had enough numbers and that seems like four times in the last 10 years or so it also doesn’t help that now within quotes so you can see how other people are living and they seem to be living extremely well, versus you are doing whatever you’re doing saving money and so on. But you don’t know what their lives are like inside you only see the Instagram version of their life.

Prasenjit Dasgupta: I will say, by the way, enough doesn’t mean that you have to sort of never go out or live like a hermit. Absolutely not. I think you should absolutely look. And as I said, it should be tied to your goals. So, for me, having a fancy car was never, it just didn’t appeal to me, I couldn’t care less. So we don’t do that. I drive sort of 7, 10-year-old cars, and I’ll keep driving them till I can’t drive them anymore, because they will just not work. But for some of my friends, that’s part of their aspiration and what their life goals are and that’s fine. Thankfully, my wife and I have relatively inexpensive hobbies, we like biking.

So I’ve got a nice bike. I mean, at some point, my bike was actually worth more than the car I was riding. True story, it was a good bike and it was not such a good car, which I would say it’s very, very personal. So focus on what’s personal to you, and focus on what you need to do to make that happen. And yeah, as you said Amit, what’s personal to you, and what’s important may change, and that’s okay. But again, think about it, Okay, does that really make you happy?

Is that fancy new car going to make you happier? And chances are not really, on the other hand, is that awesome trip to somewhere you’ve always dreamt up. I’m a huge cricket fan, something I would absolutely love to do is travel to Australia when I’m retired, travel to the West Indies, and follow the cricket team around is that something that will make me happy? You bet. So you know, that is part of my life goals and something that is more time than money frankly, at this point. But again, that’s something that is a life goal that I will be working towards. So again, very, very individual, very personal.

Amit Ray: So Prasenjit, thanks a lot for sharing all of this. Just the last couple of questions, maybe which is, given your experience so far, what are some actionable ways in which our listeners can implement these ideas or just get started on the right?

Prasenjit Dasgupta: Yeah, I would say these days, it’s super easy to get started investing in the stock markets, you can open a brokerage account in whichever geography you are located. There are often, no minimum amount, or very, very modest minimums, I mean, in the US, you can open up an account for $100. Actually, I’m going to do it for my 16-year-old, because he wants to get started. I’m like, yeah, it’s actually good that he wants, I’m going to fund a little bit of it, he has some savings and we’ll see how he does.

But look, give a 16-year-old can do it and he can do it on his own, you can do it as well, it’s super easy, and put some money in just low-cost index funds, I would say it’s a good time to invest right now, with the recent downturn in the market, your starting point is actually lower than it would have been just three months back so not about time, it can go lower. But again, remember what I said, put money in that you can put in sort of every month or every quarter, or at whatever interval make sense to you. So that’s the first thing to take action on if you haven’t, and that you should do whether you’re getting started in your 20s or 30s.

If you haven’t gotten started yet, I would say the first thing to do is get started, get started first. Now if you’re interested in researching individual stocks, you have to do a little bit of hard work, you have to learn a bit of accounting and how to analyse financial statements. But there are a bunch of websites and Twitter accounts that are a great resource for this. There’s frankly a lot of really nice knowledge on the internet. There’s this Twitter account by the name of 10K diver that really, really breaks out financial statements for beginners beautifully illustratively. And you don’t need more than 8 trademarks to understand it. Actually, it’s not super exotic. If you happen to be in an industry I think it’s more insightful, and maybe easier for you to get started on stocks that you understand because you know the company and how it operates.

Real estate actually, if you’re interested in real estate, I’m sure there are a number of crowdfunding sites everywhere in the world in the US, there are definitely a few that allow you to participate in opportunities that are typically not available elsewhere or they’re not liquid, you need to have a fairly decent income for this. But if you’re doing reasonably well, it’s not out of the realm for folks. So that’s kind of what I would suggest. I mean, now there are a bunch of entertaining websites. The Motley Fool is really good. There’s a number of books, Morgan Housel.

He’s one of my favorite investment writers he used to write for the Motley Fool. He has a bestseller called the psychology of Money. It’s a quick read, but again, very philosophical rather than focusing on this or that strategy. I found that very meaningful. There’s a guy called Nick Magically, I follow him on Twitter. Again, a great data-driven approach to why a consistent simple, and a long-term strategy works for most people, I’d recommend. And then if you’re in the US or even outside, a Morningstar subscription is pretty good value, it’s probably just 100 bucks for a year. And it’s a lot of good advice on a number of topics, not just stock picking, but a number of different topics.

So I think there are a bunch of ways to get started. Again, with social media, there’s just the cost of entry, or the barriers to entry are very, very low. And people sort of dump on Robin Hood and everything for all the excesses they have been responsible for on the crypto side, but they have really democratised investing. And so for someone who wants to get started and doesn’t have a lot of resources, it is really a good way to get started as long as you don’t get into some of the craziness that’s also out there.

Amit Ray: So Prasenjit, thank you so much. This was a really entertaining conversation, and I really loved chatting with you on this topic and anyway, catching up after quite a while.

Prasenjit Dasgupta: Thanks, Amit. Yeah, it was great catching up again, and I love the conversation. So thank you for having me.

Amit Ray: Yeah, thanks a lot for joining. And for those listening, I really hope you enjoyed this conversation. It was a bit different from our usual discussions around specific financial topics, much more broad-ranging, much more about what a regular person might actually do. And I hope I took away from this the main lesson, which is that you just have to get started and you can make money and build wealth doing normal things. In fact, you could possibly erode wealth by doing exotic things.

Prasenjit Dasgupta: Yes, exactly we can as I have demonstrated.

Amit Ray: Yeah, so thanks a lot for joining. If you liked this episode, please rate us five stars. We were Prasenjit & Amit with MoneyTok. See you next time.

Prasenjit Dasgupta: Thanks Amit. Bye.

Our Guest: Prasenjit Dasgupta

Prasenjit Dasgupta is a graduate of IIM Calcutta and the Chief Financial Officer of Digital.ai. He started investing in his 30s and built up wealth through a combination of stock options and traditional investing routes.