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Secret of starting young to be financially independant

We are in the New Year, a time for making new resolutions, a time for new beginnings, a time to look at situations in a new way. This then is the time in one’s life to make a choice, whether to continue to live life along the path, being used until now, or choose to take a different path. Doing either may or may not make a difference to one’s life. But choosing or at least attempting to alter the original path, will definitely reap benefits as I discovered. I am now a staunch believer in the adage, ‘Change is the only constant in life.’

The reason why most youth or adults both young and old, choose not to think too far ahead, or think differently, is probably because they have gotten too accustomed, to the comfort zone of the regular life they live, and are either daunted or plainly reluctant to change anything, within it. I would be the first to agree that ‘The Comfort Zone’ is a beautiful place to be in but inefficacious, for nothing grows there.

Our savings or money do not grow if placed in the bank or stored under our beds, ‘safely’ and ’comfortably’.

We need to choose to take a step that could allow us to reap rich dividends in the future. That major step commences with a change in our thought processes.

Another reason why people refrain from thinking about monetary needs in the future or even how to use excess funds generated in the present is the lack of awareness. In the olden days the well-known, safe and secure ‘F.D’ or ‘Bullion’ were the go-to products for people as an investment, and this line of thinking has persisted to date. But times they are a – changing and so should our methods of investment.

Today there are a plethora of avenues one can avail of to invest one’s money.

I am convinced that often it is the lack of funds that is the main stumbling block between an individual and the attainment of goals. If there is an awareness of how to generate funds towards the same, beginning NOW and by that I mean as early as the undergraduate stage of life, it would be smooth sailing all the way. My son today ages 23 began when in the first year of graduation with an SIP (Systematic Investment Plan) of Rs. 500/ which continues even today, though he has made other personal investments in much higher multiples of the same in the last three years.

We live in an era that has opened up an avenue of various products, each with different features, so that individuals can choose the desired product as per their needs and requirements. With the growth of the economy, in recent times, there has been a splurge in the range of products and services, all designed to benefit and suit individual needs.

With so many new products in the market there is also the scope for gullible / first time consumers ending up confused or partly informed by misleading product advertisements. Thus it is mandatory, for each individual while considering a new investment, to get legitimate research done, and ensure the information source is authentic. Sometimes the main CONS of a product are mentioned in the fine print which more often than not goes unread by investors. This may be harmful as the same information may come back to haunt the individual in the future. So it is essential to go through whatever terms and conditions come with the specified product before considering the investment. This could be tedious and time consuming but it’s always better to be safe than to be sorry.

There has been a serious inflow of funds into new products like ULIP’s, Mutual Funds etc. but many investors do not realize that certain products are not suited for them again due to lack of awareness or proper guidance. Each product will have its pro’s and con’s, and the ability to choose a product that matches the time horizon, risk appetite, and purpose of the investment is the job profile of a ‘Financial Advisor’.

Someone who has better knowledge in providing solutions to individuals depending on their requirements.

The need of an advisor would ideally depend on the investor themselves. If one can spare the time and take an overview of one’s own financial condition, i.e. loans and other liabilities, assets, income, previous investments etc. then one need not require outside help, before proceeding with a new investment. All they would ideally need would be the details of the product they are interested in, and as well informed investors they would have a better idea of what product to choose for themselves.

Finding facts about investment products and having a control over finances, are simple yet efficient methods, for changing the way we think about our future. By just going through the motions one will never reach any financial goal. Thus a new approach towards having a plan for the future is the need of the hour. I would caution the adrenal flow that comes with the idea of treading a new path, beginning with a new trend of thought. But going in ‘head first’ and ‘all in’ is definitely not the way. There is a process and one must understand and respect that process before committing to it.

Finding facts about investment products and having a control over finances, are simple yet efficient methods, for changing the way we think about our future. By just going through the motions one will never reach any financial goal. Thus a new approach towards having a plan for the future is the need of the hour. I would caution the adrenal flow that comes with the idea of treading a new path, beginning with a new trend of thought. But going in ‘head first’ and ‘all in’ is definitely not the way. There is a process and one must understand and respect that process before committing to it.

Individuals need to have discipline irrespective of the choices they make.

When investments are done with thorough knowledge and complete research, they have provided more than satisfactory returns. Even if a product doesn’t provide returns it may be useful for providing savings as and when necessary or for protection of wealth. Hence the purpose of investment in a product is also a crucial factor to be considered while investing.

They say the best time to plant a tree is 20 years ago, and the second best time, is today. So get out of your comfort zones and find out the need of investment in your life. Take that decisive first step and the others steps will seem easier.

Trust me. 3 of us in the family are graduates from the Science stream and as parents, in particular my husband, we found it difficult to accept that our younger son wanted to take up Commerce, do his BBI and follow it up with a CFP course (Certified Financial Planner). Thankfully he managed to convince us and today he oversees the investments of not just the family and some friends but other clients, both young and old. It is only when one takes the initiative that one can pursue and achieve one’s objectives. After all the smart do at once what the foolish choose to do last.

My advice for the New Year: Be SMART or Be LAST.

Please read our earlier article on Mutual Funds.

Please check our Smart Deals.

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