Tag: retirement

Asking people out and saving for retirement

As early readers on this blog might be aware of, I had several unsuccessful attempts at getting into a relationship before I eventually met the person who is now my wife. Each of those early episodes had this unfailing pattern – I’d somehow decide one day that I loved someone, get obsessed with her within a short period of time, and see dreams for living together happily ever after.

All this would happen without my having made the least effort on figuring out how to communicate my feelings for the person in question, and that was something I was lousy at. On a couple of occasions I took a high risk strategy, simply approaching the person in question (either in person or online), and expressing my desire to possibly get into a long-term gene-propagating relationship with her.

Most times, though, I’d go full conservative. Try to make conversation. Talk about banal things. Talk about things so banal that the person would soon find me uninteresting and not want to talk to me any more; and which would mean that I had no chance of getting into a relationship – never mind “long-term” and “gene-propagating”.

So recently Pinky the ladywife (who, you might remember, is a Marriage Broker Auntie) and I were talking about strategies to chat up people you were interested in (I must mention here we used to talk about such random stuff in our early conversations as well – Pinky’s ability to indulge in “arbit conversations” were key in my wanting to get into a long-term gene-propagating relationship with her).

As it happens with such conversations, I was telling stories of how I’d approach this back in the day. And we were talking about the experiences of some other people we know who are on the lookout for long-term gene-propagating relationships.

Pinky, in one of her gyaan-spouting moods, was explaining why it’s important that you DON’T have banal conversations in your early days of hitting on someone. She said it is important that you try to make the conversation interesting, and that meant talking about potentially contentious stuff. Sometimes, this would throw off the counterparty and result in failure. But if the counterparty liked the potentially contentious stuff, there was a real chance things might go forward.

I might be paraphrasing here, but what Pinky essentially said is that in the early days, you should take a high-risk strategy, but as you progress in your relationship, you should eschew risk, and become more conservative. This way, she said, you maximise the chances of getting into and staying in a relationship.

While I broadly agree with this strategy (when she first told me this I made a mental note of why I’d never been able to properly hit on anyone in the first place), what I was struck by is how similar it is to save for your retirement. 

There are many common formulae that financial advisors and planners use when they help clients save for retirement. While the mechanics might vary, there is a simple principle – invest in riskier securities when you are young, and progressively decrease the risk profile of your portfolio as you grow older. This way, you get to maximise the expected portfolio value at the time of retirement. Some of these investment strategies are popularly known as “glide path” strategies.

Apart from gene propagation, one of the purposes of getting into a long-term relationship is that there will be “someone who’ll need you, someone who’ll feed you when you’re sixty four”. Sixty four is also the time when you’re possibly planning to retire, and want to have built up a significant retirement kitty. Isn’t it incredible that the strategies for achieving both are rather similar?

Financial Inclusion

Matt Levine had a superb newsletter recently on whether asset managers and pension funds who push customers towards buying high-cost retirement savings plans are doing a good thing or a bad thing. As Levine expertly explained, it all depends upon the context.

 Is bad retirement advice worse than no retirement advice? Like here is a simple hierarchy of things you could do to save for retirement, from best to worst:

  1. Save for retirement in an efficient portfolio of index funds with very low fees.
  2. Save for retirement in a mediocre product with very high fees.
  3. Not save for retirement.

…

So if some slick-talking hustler shows up at your place of employment and talks you into option 2, has he done you a favor, or done you harm? The answer depends on what you would have done if he hadn’t shown up. If you were on your way to Vanguard to buy index funds when he waylaid you, he has moved you from option 1 to option 2, and made you poorer in retirement. If you were on your way to blow your paycheck on lattes at Starbucks, he has moved you from option 3 to option 2, and made you richer in retirement. The context is key.

Earlier today, I was at a post office, trying to cash a National Savings Certificate that my parents had somehow bullied me into investing in, and was reminded of how inefficient post offices are. For a long time, India Post has allowed people to maintain deposits, in so-called “savings accounts” (though India Post is itself not a bank).

And as I’ve experienced while trying to operate such accounts on behalf of sundry relatives, it’s incredibly inefficient. Lines are long. Post offices are understaffed, and staff mostly overworked. Computerisation is minimal – while finally they have a way to print out pass books, it still lags significantly behind even nationalised banks. Things we take for granted at most banks – such as ATM cards – are absent. You need to line up to take your cash out.

The reason I’m describing this is that the “Post Office Savings Bank” has recently received a license to formalise its banking, to become a so-called “payment bank“. The “bank” won’t be able to lend, but can facilitate payments and movement of money. The amount of money in the savings accounts is capped at Rs. 1 Lakh.

The intention behind the license is sound – India Post has a network that goes into all sorts of nooks and corners of the country, and now people in those nooks and corners can have a bank account, and send money to each other! Which is a wonderful thing.

But then, India Post is a really large and slow-moving operations, so it’s unlikely that they’ll adapt much towards modern ways of banking after they become a proper (small) bank. So the customers they’ve “financially included” will need to wait in line to put or get out money, perhaps fill forms in order to be able to transfer funds, and face other inconveniences to be able to “bank”. So is the financial inclusion worth it?

To paraphrase Levine, it all depends on the context. To continue paraphrasing Levine, if India Post Payments Bank (as it will be called) were to waylay a customer who was on his way to opening a PayTM account, it has done a disservice, by replacing an easy-to-use electronic account with one where he will have to face lines, which might dissuade him from banking altogether.

If on the other hand IPPB were to waylay a customer who was on his way to the post office (!) to send a money order to a relative, they are actually doing him a service, providing him a more efficient method for transferring funds.

It all depends upon the context.

On cricket writing

This piece where Suveen Sinha of the Hindustan Times calls out Dhoni’s “joke” with respect to retirement has an interesting tailpiece:

When Dhoni was bantering with the Australian, the other journalists in the hall were laughing. They would, no sports journalist would want to be anything but nice to the formidable Indian captain. That’s why this piece had to be written by someone whose day job is to write on business and economy.

Looking at the reports of the incidents from both Sinha and EspnCricinfo’s standpoints, it is clear to me that Sinha’s view is more logical. That Dhoni’s calling of the journalist to the press conference table and cross-questioning him was unprofessional on the one hand and showed his lack of defences on the other.

Yet, the ending to Sinha’s piece also explains why other sports journalists have taken to lauding Dhoni’s view rather than critisicing him – for them, access to the Indian limited overs captain is important, and they wouldn’t like to damage that by taking an Australian colleague’s side.

The problem with a lot of sports journalism in general, and Indian cricket journalism in particular, is that jingoism and support for one’s team trumps objective reporting and analysis. One example of this was coverage from Indian and Australian newspapers of the Monkeygate scandal in 2007-08 (when Harbhajan Singh called Andrew Symonds a monkey).

More recently, there was the controversy about India losing games because of the tendency of Rohit Sharma (and Indian batsmen in general) to slow down in their 90s. Again, commentary about that took jingoistic tones, with the Indian sports media coming out strongly in favour of Sharma. There were reports defending his “commitment” and “grit” and all such flowery language sports journalists love, and that Glenn Maxwell’s comment was entirely unwarranted. Maxwell even backed down on his comments.

Data, however, showed that Maxwell need not have backed down on his comments. Some analysis based on ball-by-ball data that I published in Mint showed clearly that Indian batsmen do slow down in their 90s, and of all recent players, Sharma was the biggest culprit.

Indian batsmen slowing down in their 90s. My analysis for Mint
Rohit Sharma is among the biggest culprits in terms of slowing down in the 90s

The piece was a hit and was widely shared on social media. What was more interesting, however, was the patterns in which it was shared. For one, the editors at Mint loved it and shared it widely. It was also shared widely by mango people and people with a general interest in cricket.

The class of people which was conspicuous by its absence of commentary on my piece was sports journalists. While it could be reasoned that they didn’t see the piece (appearing as it did in a business publication, though I did send emails to some of them), my reasoning is that this piece didn’t gain much traction among them because it didn’t fit their priors, and didn’t fit the jingoistic narrative they had been building.

It is not necessary, though, that someone only shares pieces that they completely agree with – it is a fairly common practice to share (and abuse) pieces which you vehemently disagree with. The commentary I found about this piece was broadly positive – few people who had shared the piece disagreed with it.

My (untested) hypothesis on this is that this analysis flew in the face of all that mainstream sports journalists had been defending over the previous few days – that Maxwell’s comments were simply not true, or that Sharma was a committed cricketer, and all such hyperbole. With data being harder to refute (only option being to poke holes in the analysis, but this analysis was rather straightforward), they chose to not give it further publicity.

Of course, I might be taking too much credit here, but that doesn’t take away from the fact that there is a problem with sports (and more specifically, cricket) writing. Oh, and as for the ultra-flowery language, I’ll save my comments for another day and another post.

 

 

Working for money

One of these days during lunch at office, we had a fairly heated discussion about why people work. One guy and I were of the opinion that the primary reason people work is for money, and everything else is secondary. The third guy, who among the three of us perhaps works the hardest, argued that “people who make a difference” never work for money, and that it is only “ordinary people”, who have no desire to “make a difference” that work for money. He took the examples of people like Steve Jobs and a few famous scientists to make his point.

Now, while I agree that money is the primary reason I work, and which is what I argued that day during lunch, I disagree that the end-of-month salary credit tells the whole story. The way I see it, you need to take a longer-term view of things. So while the short-term money you make is important, and affects important decisions such as quality of short-term life, a more important thing is sustainable returns. While you do your work and get that end-of-month salary credit to bolster your bank account, an important thing is about how much the work you’re doing now will contribute to your income later on in life.

Digression 1: I keep oscillating between wanting to retire at forty and wanting to retire at sixty. And I must admit I haven’t frankly decided which one is more suitable for me. This analysis is more relevant with the retirement at sixty model (which is what I think I’ll end up following, health etc permitting). End of Digression 1.

Digression 2: Not so long ago, some people in my firm wanted to recruit “software engineers from IIT with two to three years of work experience”. Being one of the “CS guys” around, I interviewed quite a few people for that role. Their CVs indicated that had we “caught them” on campus, they would have been sure hires. But two years at a software services shop, I figured in all cases, had made them “rusty”. Spending all their time in mind-numbing activities (like building UIs), they had failed to build on the skills that would have been useful for the higher-up-the-value-chain job I was recruiting for (finally that team went to IITs and got a bunch of campus hires. They gave up on lateral hiring altogether). End of Digression 2.

Those two digressions weren’t particularly meaningless. I guess you know where this post is headed now. So, the thing with a job is that along with the short-term benefits it provides, it should also help you build on those skills that you think you can monetize later on in life. Every job (most jobs, really) teach you something. There is constant learning everywhere. But what matters is if the learning that the job offers is aligned with the kind of learning that you think you are geared for, which you think you can monetize at a later point of time in life.

I still claim that I work for money, but just that I take a longer-term view of it. And I strive to learn those things on a job which I think will be helpful for me in terms of monetization at a later point of time in my life.