investing chat

A candid investing chat with “Dr. Nugget” Muthukrishnan

“A Single conversation with a wise man is worth a month’s study of books”  Chinese proverb

It has been an absolute pleasure for many of us to read and reflect on the financial nuggets shared by the prolific Mr. Muthukrishnan. Mr. Muthu is a Certified Financial Planner (CFP) and the founder of Wise Wealth Advisors, a financial advisory firm which helps clients to build and manage their wealth. More information on his firm is available at and he also actively tweets @dmuthuk.
I was very curious to learn more about the man I have nicknamed “Dr. Nugget”. When I reached out, Mr. Muthu was gracious and generous in agreeing to spare some time for a candid investing chat.

Ravichand: Hello Mr. Muthu. Firstly I am delighted and excited that so many questions are running in my head right now. Let me begin by asking you, when and what made you realize that personal finance is your passion and the area in which you wish to chart a career?
Muthu: When I was studying in college, I was attracted towards the stock market. I hail from a very low income family and naively thought that the stock market is a quick way to get rich.
I joined a stock broking firm in Madras Stock Exchange (MSE) which gave me an opportunity to read financial newspapers, business magazines and also interact with many investors. That kindled my interest to take up a career as a personal financial advisor.
But destiny had a different plan. After the start of National Stock Exchange, many small broking houses had to shut down and I lost my job. At the same time, in the second half of nineties, the BPO industry in India had started coming up. I got an opening and soon found myself progressing well in my new job.
Because of my innate interest in investing and personal finance, I used to give financial advices to many of my colleagues. They found my inputs very useful and also encouraged me to share more.
This went on for a decade. Though I was getting paid well, various factors including the odd working hours, continuous travel and stringent timelines started to take a toll on my health. By then I was married and discussed with my wife about pursuing my passion in personal finance and becoming a financial advisor.
Being high savers, by the age 34, we had a house, no loans and also had a corpus worth 10 years of our expenses. Since my wife continued to work (she quit after our son was born 6 years ago), she encouraged me to become a full time advisor. I took up the CFP (Certified Financial Planner) certification and then started my own practice about 11 years ago.
Ravichand: Very uplifting to know your story. Remembered what Bill Gates said “If you are born poor it’s not your mistake, but if you die poor it’s your mistake”. Kudos for taking the plunge and following your passion. As I was reading your writings, I noticed that you have stated that your main goal is to make as many clients of yours financially independent (FI) as possible. Why did you choose this goal?
Muthu: I always cherished the idea of financial independence and started thinking about it from the early stages of my career.
Financial independence is an important goal worth pursuing as it:
a) Allows you to do what you like,
b) Allows you to avoid doing what you hate
c) Gives you control over your time to pursue your interests.
This makes it a worthwhile pursuit as one’s main goal.
Ravichand:  The desire to pursue one’s dream and not help build someone else’s dream is certainly worth striving hard for. From your experience of interacting with multiple clients, what has been the one (or more) common trait / habit of clients who have achieved this goal of Financial Independence (FI)?
Muthu: I have found that those who achieve early financial independence share these two common traits:

  1. They are high savers
  2. They live well below their means.

Ravichand: Conversely, what has been the one (or more) common trait / habit of clients, which is seen impeding them in achieving their FI?
Muthu: In my experience, I have found that taking on huge debts (loans) and leading a flashy life style way above one’s means are a great hindrance for FI. This leads to only negligible wealth accumulation for even the very high income earners. Financial independence becomes a distant dream for such people.
Ravichand: I know that you are equally passionate about investing as you are about personal finance. Can you please tell us something about your present investing philosophy and how it has evolved over a period of time?
Muthu: High savings coupled with some plain luck in the bull market (2003 to 2007) helped me to build a good corpus. I’ve done a lot of dumb things in the market with respect to both my investing strategy as well as with my investing behavior. Never lost big but never made it big either till 2010.
When I started as an adviser in 2007, I started finding that neither am I “behaving” in the right way on investing nor am I able to coach the clients on the right behavior towards investing. I realized one cannot do something you’re not actually following.
I began reading intensely to understand what leads to success in investing. Over the next 3 to 4 years, the readings and my conscious practice helped in slowly changing my approach and behavior to investing. As I changed, I soon realized on what I needed to do to help my clients also navigate their investing life better.
I started seeing a remarkable difference in the way I approached the stock market. From 2011, I started investing in quality companies and in good capital allocators. In 2013, reading Prof.Sanjay Bakshi’s articles on quality really helped cement my current investing approach.
Ravichand: Is there any particular investor(s) or author(s) who has had a significant influence on your thinking, say in terms of mentoring or in inspiring?
Muthu: I’m not able to pinpoint any single individual or source. But my investment strategy is definitely influenced by Prof. Sanjay Bakshi (his writings on quality), Terry Smith and Nick Train.
I define my investment strategy as follows (influenced by Terry Smith)
1) Buy quality companies
2) Expect to hold for 10+ years
3) Try not to overpay
4) Keep track
5) Sell rarely
Ravichand: That sounds like a great investing strategy to follow. Curious to know, If  there was a time machine to rewind the clock and you could start your investing innings afresh then how different would that journey be ?
Muthu: Though we cannot undo the past, I certainly wish I could have started focusing more clearly on my “investing behavior” as well as ensured on having a well-defined investing philosophy from the very beginning of my investing journey.
By behavior, I meant to say, when I started my investing journey I did not have an emotional control, lacked discipline & patience and more importantly did not follow the “staying the course” principle. High savings was not backed by good investing acumen and behavior. These traits were developed over a period of time.
Ravichand: Cannot agree more on the two things you mentioned. A correct “investing behavior” along with a clear investing philosophy really helps bring clarity of thought to our decision making. Graham put this eloquently ” The investor’s chief problem and his worst enemy is likely to be himself”. It was mentioned earlier that you had read intensely on what leads to success in investing. What has been the single best piece of investing advice you have ever read?
Muthu: It is actually a quote from John Bogle:
“Stay the course. No matter what happens, stick to your program. I’ve said ‘stay the course’ a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you.”
Ravichand: A great piece of advice indeed. As they say, time in the market is more important than timing the market. On a related note, If a budding investor seeks your advice (in terms of, what they should do or should not do) to have a better chance of being successful then what would be your advice for them?
Muthu: My Advice would be:

  1. Save more,
  2. avoid or minimise debts,
  3. be willing to get rich slowly,
  4. don’t chase performance,
  5. be a continuous learner and
  6. Lastly, remember that investing is about 10% knowledge and 90% about your behavior.

Ravichand: I think that’s a terrific piece of advice for all investors. Continuing on my earlier question on reading, let us say you were conferred with the powers to decide on three books every investor should read before they start investing then which three books would that be?
Muthu: ‘One Up on Wall Street’ and ‘Beating the street’ by Peter Lynch are a great read before starting your investing journey. I would also recommend reading “The Little book that builds wealth” by Pat Dorsey.
Ravichand: Next thing I wish to ask is on something which I am really curious about. You share a lot of fine nuggets on financial wisdom daily, each equally better than the previous one. Can you please share some details on the work done in the back ground to deliver this quantity with quality?
Muthu: I believe that if you want to write well then you need to read a lot. I spend about 4 to 5 hours a day on reading. None of my ideas are original. It’s all from reading about the investing legends and the money masters of our times. I try to put my understanding in own words.
Ravichand: Last Question; of all the nuggets you have shared, which one is your most favorite?
Muthu: I like so many of them. Since you want me to choose, I’ll share three:

  1. Real financial freedom is not in what we are able to buy. It is in what control we have over our time.
  1. Income is for a limited period. Expenses are forever. Always remember this.
  1. Good investment advice is repetitive and boring. There is nothing exciting about it.

Ravichand: Fine nuggets as always. It has been a real pleasure to have this insightful and candid conversation. My sincere thanks once again for your time and for this memorable conversation. Diwali wishes to you and your family.
Dear Readers, they say “Fine conversation is food for the soul”. I sincerely hope you found this investing conversation as useful as I found it, with loads of food for your thought. Also, hopefully, this is the first of many such fine conversations I share on this blog.
Please do follow me on Twitter (@stocknladdr) where I share a lot more good things I read.
Wishing you all a very happy Diwali !!!
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