This topic is so close to heart of each 1 of us out here & to me, specific for people who have just started their Careers or at young age of 25-30, without any Financial Liabilities or Additional Responsibilities, which again come by age & Financial Stability (Marriage, Parent’s take Care, Kids etc etc…) & who have still not seen the entire Cycle of their Earning Potential say for at least a Decade, this thought process of quitting a Job seem to be totally a same analogy of Infatuation, on seeing a Girl at First sight & thinking that this is the Only Girl you would like to marry.
Refraining myself to further say anything as per lack of my competencies & abilities on others Scenario, as it is all about Personal Finance. Personal Means related to 1’s own Individual Circumstances, Age, Risk Taking Appetite, Responsibilities & Obligations & so much of other related stuff.
Lemme now try to put things in Perspective & in continuation of the healthy discussion, initiated by so many respectable, knowledgeable, experienced fellow members.
I would like to share my own story & by any means its not to be followed blindly, or taken as any suggestion or methodology to be followed per se. I would try to keep things straight & simple & put in a Pointer Format.
1. There is no substitute of Reading & attaining knowledge in every walk of life. This knowledge coupled with your sincere efforts to implement or passion in that field (applicable to Investment/Stock Markets as well), in turn will impart Self-Confidence to first make wrong decisions (demonstrating passion to your own self), but my making such wrong decisions, you are learning vital & significant truth of life i.e. Experiences. Read a lot & make yourself equipped with ongoing learning mechanism Yes you read it right— I mean On-going!!! Again choice of reading lies with an Individual ranging from AR, Company Presentations, blogs, Books, Biographies of Great Investors of all times, watching movies or any other source of learning.
2. 2nd Baby step in this Investment Journey of yours should be to assess your Risk taking Appetite & also clarity of your investment rational or goal behind making this investment & how much time frame are you comfortable with, without touching this money or even to the extent, I would say forgetting that this money belongs to you even.
3. **Next Step is to start building your nviction in Businesses & Managements & not Stocks. You need to understand the basics of Finance—What is Leverage, how is it gonna affect your company under analysis, Why its Revenues/Top-line is not increasing or is stagnant for past few Quarters, Is it Raw Material or something else, which is dragging the Operating Margins, Is the Company/Business operating on a Asset Light Model or Capital Intensive Model (i.e How frequently Capex is required & to what Quantum), Is Bottom Line growing in tandem with the Top-line & in turn EPS, What are the entry Barriers or reason behind monopoly of the Business,if it enjoys, Whay Margins are getting Squeezed, Promoters Integrity, Some Quantitative stuff, such as ROE, ROCE (in case Debt is Source of Funding), OPM, NPM, Valuations & so much other stuff. What I have quoted here is just a food for thought.
4. Then you need to set the Capital Allocation Right, based on your assessment of your own Self, based on point 1,2 & 3. Refrain yourself in comparing with the likes of Warrens, Soros, Munger’s Kedia’s, Jhunjhunwala’s & Dolly Khann’s of the world. You are you & its your style of Investment. If you are copying or following any Individual’s Investment Style even, use your own presence of mind or thinking before taking a stance on that Investment, as you can only know their entry points but exits will be not known to you so easily. Example is Mohnish Pabrai: He copies too with due diligence & understanding.
5. Last but not the least everybody IMHO, should start 1st with Debt, as it gives you assured return & some confidence & surplus to fall back upon as well in times of cruel realities of life or what ever you call it as Contingency or Emergency Fund.
Note: All these 5 Points have to coincide with your Primary/Active Source of Income, may be in form of Salary from your Job or Rental Income or any other Active Source of Income & has to be practiced religiously for at least a decade with your Ongoing Job & Results of Portfolio Performance (your Passion & reason to quit Job) need to be continuously evaluated.
I am sailing in the same boat, for quite a while now, but all 5 steps mentioned above, I have made those as a Bible for me, which I recite daily, devoting sufficient amount of time, along with my daily/Regular Job in IT. I am too a victim of IT Syndrome for now a Decade of Professional Job & in my Investment Journey of 7 years, I too have committed my own set of Mistakes, but now through experience attained on Ground Zero of Dalal Street, I am on a right track to achieve Financial Independence in the coming years.
Hope this helps.
For my thoughts on the similar topics in nature, please feel free to dig a bit more at the below mentioned links. I would be more than happy to assist or help anybody, from my own experience, if I could be of any help.