Sound financial life doesn’t mean to show off in your
community with your wealth, it is risk protected well planned financial life
which will increase your status in the long run for sure. A proper insurance
and planned investment will take your life to next level, but insurance is made
as a tax saving avenue (which is untrue) and investment is made without knowing
its actual returns.
Let us take Khan and Shaan from the age
of 20,
Khan has just finished his college and got placed in a
reputed corporate company with a handsome salary. After a year he has
approached IFA (Independent Financial Advisor) to plan for his financial
future. He has a dream of buying a home, a car, short vacations and he may
startup his own company or want a huge corpus for his retirement. IFA has provided
a plan to take ‘Term Insurance’ considering his age and a separate ‘Health
Insurance’ plan to protect from Medical spending if it happens any, advised him
to allocate around 70% in equity mutual
funds by investing monthly(SIP) as all his plans are after 3 years. As
he comes in tax bracket, he has been advised to partly invest in Tax saver
mutual funds. After 4 years he had partly used his invested money in buying
home and his salary is now good enough to pay the EMI and enjoy the life.
Shaan also finished college with Khan and got placed in the
same company, but he is not ready to pay for the advice of IFA and went on with
his own plan of insurance and investments. He had bought expensive insurance
plan which will not create corpus in the long run and invested in shares and
mutual funds without knowing his risk appetite, during volatility he had lost
most of his money. After same 4 years he is not left with any corpus and ended
up buying a flat. Now 50% of his salary going into home loan EMI. Though he has
wishes to buy a car, to plan for vacation, enjoy spending, he is squeezed out
to even think about it.
Essentials:
The needs for sound financial life are,
1)
Term Insurance to protect our family
2)
Health Insurance to protect our wealth from
getting eroded because of treatment
3)
Saving a % in a monthly salary
4)
Investments in Equities
5)
Gold for hedging
Insurance and investment can be started with even 15Rs per day;
only thing is gettin correct advice from the right person. Even if you have
insurance policies, cross check if it covers and protects you, if you lost
money by investing in shares or mutual funds, no worries, you can learn about
your risk appetite and earn more than you have lost.
You can’t enjoy the food how good it may be, if you don’t
have appetite for it. You can save for a lifetime, but it may not useful or you
would have lost your age for enjoying certain things. Similarly serve the life
with risk protection insurance and right investments to enjoy each and every
moment to the core.
Bill Gates once said “If you are born poor it is not your
mistake, but if you die poor it’s your mistake”, you may not have great ideas
like him to become rich, invest properly and earnestly to lead a good financial
life. Buffet became one of the richest people just by investing with focused
principles.
