It is never too early to think about ‘Retirement Planning’
We help you not just develop the retirement plan but also ensure that you stick to it!
Retirement is when you do what you want, not what you must
We ensure that having a good life would by your only job post retirement!
Failing to plan, is planning to fail
We don’t fail and we don’t let our clients fail either!
The question isn’t at what age I want to retire, it’s at what income
You decide the income, we calculate the age when you can retire peacefully!
It takes a complicated mind to think of simple things
We do the complex maths to give you the simple solution!
What’s the use of running if you are not on the right road?
We put you on the right road for a relaxed financial life!
You can be young without money, but you can’t be old without it
With our plans your old age will be much more enjoyable than your youth!
Risk comes from not knowing what you are doing
We give your financial life a definite direction that it needs!

The Funny Side of Money!!

Funnymoney

If our scientists ever make a machine to monitor our thoughts, I am pretty sure the number of thoughts about money would by far exceed the combined number of other thoughts that occupy our mind – especially from the age that we start understanding the relevance of “Money”. When we are young we hear people talk about what important role money plays in our life, we think they are idiots. And then we grow up… and realize how correct those idiots were!! Somewhere in the late 90’s one of our central minister was caught on tape saying – “Paisa khudatohnahi, par khudakikasamkhuda se kambhinahi”. Of course there was a media trial of that minister in its full tantrums – with news channel playing the 15 second clip 15 million times over and over and over and over again. There was even that one show with that bearded anchor with his strange accent screamed “Kaunhaiyehaadmi” pointing a finger at us through the TV screen, to the top of his voice and made us look suspiciously at our own father.

In fact we think so much about money all our life that if we had to think so much about our spouse, we would have led a more peaceful life – also we would have actually got to know our spouse.

The funny part is that in spite of all the reading, talking, listening, thinking and fantasizing about money so much, we know nothing about money. The social and academic knowledge bestowed upon us only tells us only one thing about money – That it is storage of value which can be exchanged to buy stuff. But if you give it a clear thought, this is an incomplete definition. The complete definition should have been “Money is storage of value which can be exchange to buy stuff which makes you happy“.

So there you go!! The ultimate goal is to ‘Be Happy’!! But in the process of evolution (from monkey to man and from man to superman), somewhere we seem to have messed it up… and ‘being rich’ got precedence over ‘being happy’. Now in all honesty, there is one strange quality about happiness – unlike money, happiness cannot be saved for future. It comes in small moments and those need to be grabbed instantly. The greatest myth that we live with is that happiness can be procrastinated – I will live a happy life after graduation or after getting a job or after getting a promotion or after getting married or after I become a parent, so on and so forth. My personal favorite is “I will be happy after retirement”. Never gonna happen. It is more about the journey than the destination. You cannot say I will slog till a certain age and then be happy. Wrong. It just cannot happen. The trick is to gather all those small moments of happiness and to lead a happy life throughout as compared to being happy “after retirement”.

Now, this brings us to two important questions:

  1. Is money the only medium of exchange to buy happiness?
  2. How do I ensure that I live a happy life throughout (& not just after retirement)?

Let us take these questions one by one –

  1. Is money the only medium of exchange to buy happiness?

The plain answer to this would be “No”. You can exchange other resources as well in order to buy those packets of happiness – the most common resource being your “Time”. After all it has been hammered into us since childhood that time is money remember?! Yes it indeed is. Have you experienced how much happiness you get when you spend your time to help somebody – an old women in you locality, the oldies in the old age home, the children from the matruchaya, even an animal in pain? If not, you should try that. The happiness you get is immeasurable and pure. Even when you help your own old parent – just a phone call perhaps to ask them how they are doing and whether they had their medicines on time. Just a casual chat perhaps to update them on your life. The unadulterated happiness that these things can fetch you is divine. You can also try spending time with yourself sometime – the “Me” time as it is called. Use some time for meditating, for listening to music, for cultivating some hobby. So there you go, now you know yet another secret of happiness – you don’t always need “money” to buy happiness. I like to call these the “Non-financial” happiness.

Yet, since we live in the materialistic world, more often than not, we do need money to buy happiness. And that brings us to the second important question:

  1. How do I ensure that I live a happy life throughout (& not just after retirement)?

It is said that the first 25 years of our life are for learning, the next 25 years are for earning and the next 25 years are for returning. No I have no clue what the rest of your life is for if you happen to live beyond 75 – the saying is silent. So perhaps one can spend the remaining years in entertaining. :)

Historically speaking, we spend the first 25 years spending our parent’s money – for good (education, clothes, utilities, etc), bad (partying, etc) as well as ugly (no comments). The ultimate goal still remains the same – being happy. But of course in that age we spend our father’s money and know practically nothing about money.

In the third phase – i.e. post 50 years – a person is expected to retire. “Retire” does not mean not working – it just means not working solely for money. Retirement is when you do what you want, not what you must. A person can opt to spend time rewinding his life – visiting different places, cultivating new hobbies, spending time with children, grandchildren, doing social service, and the list goes on. But wait, what about the expenses? Do they stop? No!!Quite to the contrary they increase. Why? Due to the devils called inflation and old age. We all know about Inflation – it is that thing which makes things costlier every bloody day. It is also the thing which the political parties in opposition keep screaming about till their lungs burst out but do nothing about when they are in power. J But old age is also equally lethal. With old age come increased uncertainty, increased medical expenses and other unplanned unavoidable expenses. So if one is not earning then where will all the money for these expenses come from? To answer this question, we need to understand the second phase of our life.

The second phase is extremely crucial – Age 25 to 50. This is the age when many good and scary things happen- graduation, the first job, the marriage, the kids, etc. This is also the phase when a person is expected to support himself / herself financially. Not just that, this is also the phase when the person is supposed to “save” “enough” for the retirement. Now these are the two most crucial (& the most ignored) words. If I was a great author, I would have written an entire epic on those two words. But since I am not, I will just write a few more articles on those two words in the coming weeks.

As of now let us just understand the relevance of these two words.

Save: Among all the things that an Indian parents are notorious for, the topmost prize would go to their habit of pestering their kid to save money. I remember my father giving me Rs. 100 as pocket money during school days and asking me to keep an account of where I spent it and to save at least Rs. 60 out of it. Used to beat me why he gave me the money if he wanted me to save it. He might as well have just put that Rs. 60 in the damn piggy bank and give me only Rs. 40/-. Well after some years I grew old but my parents didn’t. When I got my first job, my salary was Rs. 25K and my mother insisted that I put Rs. 15K in a Fixed Deposit (in my own name of course) and send the hard copy of the FD receipt home as a proof. Every time I called home, she used to ask first about the FD receipt and then about my well being. Every single time!! So I finally gave up…. and stopped calling home. But my mom is a mom after all. She started calling me every day to remind me about saving. So finally I started saving Rs. 15 K every month. Till this day I live with that habit of saving. And now looking back, I love my mom& dad so much more for imbibing that habit in me.

But while it is important that you save, it is more important that you save in the right financial instrument. Now investing in a financial instrument is like marriage – it is a long term commitment, you need to have faith in the instrument and what it offers should match your requirement. Requirements in case of investments (unlike in case of marriage) is related to your liquidity, your expected return on investment, your risk appetite, your short term and long term goals, etc. I will write more on how to choose the right investment and how to build the right personal financial plan in the coming weeks. Let us now read a bit about the second holy word about savings: “Enough”.

Enough: Most of us just concentrate of earning and saving without bothering to calculate how much is enough. By not calculating how much “enough” is, we may end up in two difficult situations:

  1. We can either save less than what we are required spend post retirement
  2. We can end up saving more than what we are required spend post retirement

Now, I am pretty sure you did relate to the first problem (saving less than required) but did not quite understand how saving more can be a problem. Well, like I said in the beginning of the article, the ultimate goal is to be happy. For earning that extra money, you must have spent those extra hours at office and scarified your health, which you actually did not need to – you could have spent those extra hours with your family or friends or doing something (described in the initial paragraphs) which although give you happiness do not cost you a penny!! The ‘Non-financial’ happiness. So while it is important to save enough, it is equally important to know when to stop and retire. After all, unlike what most of us would like to believe, retirement is not a factor age but a factor of corpus that you build up during the second phase.

In the coming few weeks I will write more on both these aspects of financial planning in details and will touch upon topics like:

  1. Best Investment options – Bank Fixed Deposits, Corporate Fixed Deposits, Mutual Funds, SIP’s, Equities, etc.
  2. How much to save, how to prepare a financial plan
  3. Power of compounding, etc.

Basically we will discuss more on – yes you guessed it right –“The Funny side of Money”!! Till then I wish you all a very ‘happy’ life.

 

[AshwinKamat is a Chartered Accountant and has expertise in Financial & Retirement Planning. You can reach him on ashwin@strategik.in or ashwinakamat@gmail.com ].