Would like to be a Fit Person or be Rich?
On the face of it the above question may appear to you as contradictory. You may feel that I am putting yourself into a corner and asking you to make a choice between remaining fit but not rich or vice versa. If you have got in this way, you have got me wrong!!!
You can be fit as well as be rich too!!!
Why do not remain fit once we cross the age of thirty? The answer is simple that we eat consciously and do follow an exercise regime. However, many people cannot do any one of the above. They eat insensibly and also do not exercise. The result is an obese person in mid thirties. The positive thing is that more and more people is becoming conscious of their obesity and are now taking both the steps, eating sensibly and also following an exercise regime.
Can we carry forward this analogy to personal finance?
We all want to become rich. However, only a miniscule of people become not only rich but very rich. What about the mango middle class? Can they become rich too, if not very rich? Here in lies the catch. To me, they too can become rich like our those obese people who did drop the idea of eating insensibly and not doing exercise and moved over to eating sensibly and following a regular exercise regime.
How these two seemingly incongruous ideas are connected?
Well in a way they are? They do not spend even a little time, say, thirty minutes (like our exercise regime) everyday on looking at few things about their own financial goals and income. They could look into increasing their savings and putting them in to long term savings cum investment financial instruments. What are these instruments? As said above, they are bank fixed deposits, SIPs in mutual funds, public provident funds, gold, equity shares of proven corporates, to mention a few.
They spend time in discussing and arguing (remember dr. Amartya Sen's famous book titled, 'The Argumentative Indian”) on interest rates on bank fixed deposits, failure of certain mutual funds and corporate shares. They do not DECIDE which of these long term instruments will give them adequate return to develop corpus for taking care of long term fund requirements like education and marriage of children, certain exotic vacations and above all planning for retirement.
What they do instead?
They repeat the second sin of not remaining fit. Eat insensibly. They borrow to meet their above requirements of children education and marriage, exotic vacations and have little savings for retirement and have to keep on working. They even do not leave enough assets for the surviving spouse. Over and above they keep on paying interest and instalment all their life.
What they should actually do?
Like as to remain fit, a person has to do two things. One is to eat sensibly and two, to exercise regularly at least for 30 odd minutes. Similarly, to lead a peaceful and financially comfortable life one has to do two things. One, keep your unnecessary expenditure on check, and two, to save and invest by applying thirty minutes every day to look for good long term investment opportunities. Even the thirty minutes can be saved, if they consult a good personal financial consultant who will help them achieve all their financial goals including a happy retirement.
Is it asking for too much?
The non-believers argumentative types, who get satisfaction in looking at the half glass empty syndrome and do refrain from taking these two life saving decisions. All of us know that eating sensibly and doing regular exercise keeps a man healthy, and wise. The wealthy part can be added by controlling unnecessary expenditures and planning their finances usefully to meet their immediate, mid-term and long-term goals.
The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Director and Chief Financial Planner of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at firstname.lastname@example.org