Plan your finances in your 30s to enjoy financial freedom later

Plan your finances in your 30s to enjoy financial freedom later

I would rather enjoy with my money now than save it to enjoy at a later date,” professed Anuj Arora (name changed to protect identity), a few days back.

A young man in his mid-twenties, Anuj has shifted to Mumbai from Delhi after taking up a job. He had approached me for some guidance on admission in B-Schools. Among other things he shared with me how his expenses had increased after he had taken up the job and shifted base. He also told me that whenever he called up his parents, they would invariably advise him to start investing.

I said it was a very sound advice and suggested that he should take it seriously. That is when he told me that he would rather enjoy with his money now than save it for later, and added that most people of his age group think in a similar way. When I further probed on how he would fund for his MBA expense, he retorted with an air of nonchalance that his parents would sponsor him.

For many young people like Anuj, investing may seem like a very uninteresting proposition; so they defer it. But in doing so they tend to miss out on the opportunity to have financial freedom later in life when they would need to incur bigger expenses.

What I said to him goes as follows, and this generally holds good for all young people.

Relationship between Income and Expenses

When you are in your teens or even in your earlier twenties managing expenses is quite simple. All you do is to call up your dad or mom and ask them to send you money. But as you grow up the degree of difficulty in managing expenses also goes up. Your paycheck may get fatter each year, yet your expenses will also somehow always seem to shoot up.  You will need to pay off your bills, rent, etc. EMIs will start from the time you take a loan to purchase a car.

As you take another loan to purchase your house, more EMI gets deducted from your salary. When you get married, your expenses increase further, and when you have children your expenses hit the roof. You first want to send your children to the best school, then to the best college and you want to ensure that your family in good health. You aspire for a bigger house, a bigger car, trendy dressing, vacations, fine dining etc. All of these cost money. And yes, prices also go up each year!

Overall, as your income increases so do your expenses, as you tend to spend more towards improving your standard of living, and you may also have financial contingencies to deal with.

Must Read:  Are you saving enough for your child’s education?

Benefits of Investing Early

Invest Early

A rupee saved is worth more than a rupee spent. When you invest your money, you are making your money work for you. The earlier you start investing, the greater are the potential gains due to compounding.

By the time you are in your 30s, you are settled to a career choice. You should then consider investing in a long-term investment plan to achieve the financial flexibility to fulfil your dreams like travelling or purchasing your house, or a car etc.

If you have made up the mind to invest but are not sure where to invest, you can make use of a Guided Portfolio.

A Guided Portfolio is an advised portfolio by Edelweiss that helps you to decide on an investment strategy based on your age and risk profile. By allocating your investment amount in an optimal manner across asset classes (Equity and Debt). It selects suitable mutual funds for you. Once schemes are selected, you can execute the transaction in one click. You can monitor your portfolio performance on a regular basis.

Remember that the benefits of starting to invest early are enormous. Time proves to be your biggest ally as you have 2- 3 decades to take advantage of market opportunities and you also have the time to recover if something were to go wrong. By taking advantage of time, you can get a head start on saving for your future and take the steps forward towards an improved quality of life in the long run.

 

 

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Are you saving enough for your child’s education?

Are you saving enough for your child’s education?

My son has got a rank of 2400 in JEE advance. He’ll get into one of the IITs. We are now deciding on the branch for Engineering,” read a WhatsApp message that I received from a friend last month.

I called up my friend to congratulate her on her son’s result. As she spoke, I could make out the sense of deep satisfaction in her tone. I could easily relate to her feeling as I myself had felt so relieved when my daughter got admission into an engineering college.  For a parent, it is a big respite when your child gets into a good college – a coveted one at that.

One of the goals that most Indian parents have for their children is that they build successful careers in their adult life. Since education is the first step towards a successful career, so when it comes to education, there are no cutting corners.

The struggle for good education begins with securing the child’s admission in a good school of choice. This is followed by the struggle to get into a good college for an undergraduate course. Engineering, medical and law aspirants start preparing for the entrance exam while they are still in school.

ChildEducation

Coaching institutes that prepare students for these entrance exam charge between Rs 80,000 – Rs 1 Lakh a year. Cracking these entrance exams is tough and getting admission into a premier university becomes a bigger challenge. If the child manages to get into a college of repute, one has to be ready with the finances.

Education is an area that is highly affected by inflation. Between 2007 and 2017, the average annual education cost (from primary level to post graduation and above) has shot up heavily.

Higher education costs have the highest inflation rates

The decade from 2007 – 2017 has seen an eight-fold increase in the tuition fee in the IITs (India Institute of Technology). Whereas in 2007, the total tuition fee for doing a graduate course in Engineering from an IIT amounted to Rs 1 Lakh, today the same course costs a fee of Rs 8 Lakhs. With the hostel rent, mess charges etc. added, the total cost works out to be around Rs 10L or more for an Engineering course in a government college. The cost of doing engineering from a private engineering college works out to a minimum of Rs 15 – 16 Lakhs.

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Be a Smart Investor – March consistently towards prosperity

Be a Smart Investor – March consistently towards prosperity

I can calculate the motion of heavenly bodies, but not the madness of people.”

These words were said by none other than Sir Isaac Newton after he lost a fortune in the stock market.

The story goes back to 1720. Ebullient after making a huge profit of £7000 by selling the shares of South Sea Company that he owned, Sir Isaac Newton decided to re-enter the market, when the market was closer to the peak. Thinking that the uptrend would continue, Newton kept holding the stock, only to sell it at a loss of £20,000. The brilliant scientist that he was, Newton got swept away by the frenzy of the market and lost a fortune in a stock bubble. The story goes on to prove that it is almost impossible to time the market and make gains consistently.

Three centuries later, the above statement still holds good.

The question that arises is how to be a smart investor. Here’s a simple rule of thumb that can help you to invest wisely:

Resist the impulse to Time the Market

Most of us are tempted to time the market in order to make big gains. While trying to time the market, we often tend to be overconfident of our judgement and overlook the fact that the chances of losing our money also increases as we time the market.

Some of the most successful investors agree that when it comes to investing, discipline beats intelligence. Studies have shown that a regular investor makes more money than one who times the market.

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Cat Café Studio – A café for ‘Coffee with Cats’

Cat Café Studio – A café for ‘Coffee with Cats’

I am going to have coffee with cats. Will you come along?” My daughter asked me.

What!” I wondered aloud. Till now I had heard only about ‘Koffee with Karan’, but when she said something like coffee with cats, I wasn’t sure if I had heard it right.

 

The cat at home keeps a constant watch on me and two more in the society stalk me for food the moment they see me. And, you want me to go to some place to have coffee with some more cats?” I asked her.

Not paying much heed to my questions, my daughter urged me to join her. Though it didn’t make much sense to me, yet I agreed and we reached the Cat Café Studio in Andheri.

CatCafeStudio
Cat Cafe Studio

At the first glance, it looked like a small, cosy place.  We stepped inside the corridor. Right at the entrance lying down on the floor was a huge Labrador dog, who raised his head once, looked sheepishly at us, and then continued to doze. We saw a counter at one end; there was a small café along the corridor.

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GST Impact on household and lifestyle

GST Impact on household and lifestyle

On Friday the 1st of July, 2017, ‘One Nation One Tax’ finally became a reality for India, as the Government launched the Goods & Services Tax, which is considered as the biggest tax reform in India till date.

So, what is the impact on our household and lifestyle? Read my post on UC News

*** If you want to join UC News as a  content creator to spread your voice, follow this link ⇒ Join UC We-media Program.

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Image credit: https://india.gov.in/

ICICI Pru Heart/Cancer Protect: Review of the Health Insurance Plan

ICICI Pru Heart/Cancer Protect: Review of the Health Insurance Plan

Lifestyle diseases are on the rise in India!

Increased screen time, a sedentary lifestyle, lack of fitness, unhealthy food habits, high-stress levels, and increased levels of pollution have increased the risk of lifestyle-related diseases. We must make conscious changes to our habits to prevent the occurrence of health-related problems arising due to our lifestyle. At the same time, we should be financially prepared to deal with medical expenses that come with the diagnosis of any of these lifestyle diseases.

Cancer and Heart ailments are two such deadly lifestyle diseases that can affect young and old, and rich and poor, alike. It thus becomes imperative to be adequately insured to deal with the expenses incurred.

Here, I present a review of ICICI Pru Heart/Cancer Protect, a specific plan that covers both, heart diseases and cancer, starting from early stage cancer and heart conditions to severe stages.

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