Mark Mobius strongly believed borrowing was never a good option, a big virtue learned from his father. This led him to work in local bars and clubs to keep his college dream alive. According to Mobius, real wealth is beyond money. It has intellectual growth, emotional strength, social connections and so on. It’s the richness of your life as a whole which is true wealth. He admires billionaires living modestly like Warren Buffett and Mark Zuckerberg.
What is wealth?
Wealth covers more than just money and includes happiness, knowledge, health, fame. Mobius refers to some financially successful people like Alexander Winston who died unhappy as his luxurious lifestyle separated him from society. People around him got interested in his wealth and not him. Mobius believes health is the real wealth and without health, wealth is meaningless. The longer you live you have a better chance of creating and enjoying wealth. Warren Buffet is one such living example; Rakesh Jhunjhunwala died early due to a poor lifestyle. To gain more in life you need to sustain yourself first.
Your best asset is you
Fortune begins with investing in your best asset — you. Your earnings power depends on how good your health is which allows you to perform your duties best which can result in better outcomes. Always give importance to invest in your skills, education and health, he emphasises. This allows self-empowerment where you control your destiny and become less reliant on external factors. The key aspect of self-development is to set higher goals and aspire for bigger things.
Endless learning will help you to be top of your chosen field which can aid one to create strong material wealth. Buffett invested approximately 80 per cent of time reading and thinking about investment which led to his huge investment success.
Connection is another important source of wealth. It is not what you know but who you know that can help one climb the ladder of success. Every turn of your life is dependent on other people and to build strong relationships first become genuinely interested about them and their interests.
Mobius discusses various investment assets classes like cash, stocks, bonds, property, precious gems, cryptos and so on and substantiating each class’ merit and disadvantage. No currency, he says, holds value over time and is the biggest risk of cash as an asset. He also emphasises that it’s important to have a vibrant capital market. Mobius prefers equity for long term investment as the return tends to be 2x better than bonds. One dollar of equity in 1801 resulted in $8.8 million by 2001 vs $13,975 in bonds over a 200-year period.
Both, a steep bull market and bear market, are not representative of the long term potential of the equity asset class. He shares the example of Jesse Livermore, who was called Great Bear of Wall Street, who made a big fortune during the 1929 Depression by shorting the market.
Bonds are also very effective tools in managing portfolios. During the period between 1870 and 1940, both bonds and equities delivered equivalent return reflecting the importance of bonds in certain economic circumstances.
Mobius’ last chapter is devoted to investment strategies to put all assets together to create one’s own unique portfolio. Mobius believes emotion controls everyone’s behaviours more than anyone realises and we are subject to such behaviours like herd mentality which results in selling stocks in panic or buying voraciously in panic to grab stocks whose price is rapidly rising. People attempt to move to a decision faster than normal and suspend reason and become irrational and start following what others are doing rather than considering the alternative strategies.
To conclude, there are many paths to wealth and people can take different routes to achieve the same but wealth has all the meaning when it results in happiness which is the ultimate need of every human being.
The reviewer is Head of Research, ithought Financial Consulting
Title: The Book of Wealth: A Young Investor’s Guide to Wealth and Happiness
Author: Mark Mobius
Publisher: Penguin
Price: ₹215
Check out the book on Amazon.