My investment portfolio returns have consistently exceeded the market since I started my meditation practice. Is it a coincidence? Or some new-age “law of attraction” phenomena? Neither, I think. Yoga and meditation teach you principles for making wise investment decisions, some of which I note below:
1. Abhaya=Fearless Investing.
Fear holds people back from exploring the range of financial tools available for investment. As a result, they default to cash or real estate, neither of which gives the long-term returns that equities do (in any 20-year period in history, the equity market has outperformed real estate 1.3-2 times). Unburdened by fear or irrational sentiments, a Yogi invests thoughtfully in equities and enjoys the tremendous long-term benefit of compounding. Of course, there are excellent reasons to invest in real estate as well as to hold cash. But fear is not one of them.
2. Satya & Ahimsa =Truth & Non Violence
Like all of a Yogi’s actions, investing too should be rooted in the values of truth and non-violence. I’ve made great returns by investing early in companies that I perceived as wanting to do good in the world eg, Google and Whole Foods and CEO’s that seemed committed to constant learning eg, Facebook. If you don’t feel confident in picking individual stocks, select among the mutual funds dedicated to socially responsible companies eg Parnassus Funds (PRBLX, PARWX). My whole portfolio today is a diversified mix of companies that have a strong commitment to the society, the environment, their employees, or to the idea of constantly learning and growig and it consistently remains at par or outperforms the market.
3. Vairagya=Dispassion
Unless there is a fundamental change in the core values of the “good” companies you choose above, buy once and hold for years. Ignore the ever-changing expert opinions and the fluctuations in paper value of your holdings. A Yogi is detached from the cyclical ups and downs of nature. Trees grow and wither, seasons change, oceans crest and trough, stocks rise and fall. Don’t try to time the market. If you’ve bought companies with strong foundations, all times are good times to buy and no time is a good time to sell. Don’t sell the stocks to chase a “hot tip”. Nothing is hotter than goodness. I bought Facebook after seeing Charlie Rose’s interview with Mark Zuckerberg where he talks very sincerely about his mission to make an impact in the world and his desire to keep transforming himself as a leader. The stock was trading at $25 then and most analysts were calling its true value in the single digits. The stock is at $78 now and experts say its a “Strong Buy”. What changed? The company is still living by the same values. Market watchers and business news anchors are incentivized to create news, fear and volatility where none should exist–and should typically be ignored.
4. Asteya=Non covetousness
Don’t covet outsized rewards from the markets. Wall Street is full of Ivy League graduates who are trying to beat the stock market and rarely succeed. Instead follow these time honored principles that give solid, consistent returns.
- Diversify. No individual stock should be more than 10-15% of your portfolio.
- % of money in stocks= (110%-your age). When you are young, you can ride the ups and downs of the market better. As you get older and have need for more liquidity, invest more in conservative assets eg, bonds and cash.
- Buy a house or land only if you plan to live in it/hold it for 5 years. Otherwise returns will marginally offset transaction costs.
- Maximize your 401-K contribution since it’s hard, if not impossible, to beat, pre-tax investment.
- If still afraid of stocks and mutual funds, just buy Index Funds. They follow the broad market and give predictable returns without requiring active involvement.
5. Invest in yourself.
The tips above will help keep your financial investments in auto-pilot so you can focus on your greatest asset—yourself. That could mean pushing yourself to learn new things in your corporate job, becoming a better writer, developing spiritually, becoming more creative, anything that step-changes your growth as an individual. Sooner or later, the material world will reward the inner growth.
For instance, the advance for my third novel is forty times that of my first novel. Nothing drives higher returns than higher asset base and the only way to guarantee that is to invest in your human capital.
What is your investment strategy? Does your spiritual life impact your financial life at all? I’d love to know your thoughts.
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