Most likely, you aren’t.
By that, we don’t mean to say that you’re doing something wrong. It’s just likely that you’re not doing something right.
Here’s how the average 30-35 year old is spending his/her life currently.
The job takes 5 (or 6) days a week, the weekend is spent relaxing with family and friends, catching a movie, going out for a meal, taking a day trip or overnight trip to a nearby holiday location, making the odd investment for tax saving purposes, making the regular investment on the advice of one’s friends, broker or bank relationship manager. Time goes on, life keeps you very busy.
Before you know it, you’re in your 50s, with retirement around the corner.
Being a professional today, whether you’re a doctor, a lawyer, an engineer, a physical trainer, an architect, an actor or a psychologist, boils down to the same thing. You’re working to be good at what you do, it takes up a lot, or in fact most, of your mental and physical energy, but it will all be worth it because you have a goal that you’re going to achieve.
But in the meantime, what’s happening to your finances? Are they growing the way they need to be?
Did you know that the average 30 year old does not want to work until the age of 60? 55 is the new popular retirement age.
Did you also know that the average 30 year old has strong aspirations in terms of what he / she wants in a post retirement lifestyle?
If you want to spend Rs. 40,000 a month (in today’s terms) on household expenses, and Rs. 300,000 a year on other expenses such as travel, medical and lifestyle expenditure, then in order to retire safely and comfortably at 55, and live till 85 (life expectancy is increasing so this is not unrealistic), you will need roughly Rs. 24.66 crores when you retire.
If you start an SIP of Rs. 25,000 now, and increase your SIP investment amount by 10% every year, and you do this until you retire i.e. the next 25 years (assuming you are 30), you will build a corpus of Rs. 14.30 crores. That leaves you short by Rs. 10 crores approximately, for your retirement corpus.
And that’s just your retirement. You’ll also want to send your kids to the best schools and colleges, buy new cars every few years, take foreign trips, plan for your kids’ marriages, buy property… the list goes on, as it should.
So what now?
Your job is always going to keep you busy. That’s normal. Whether you’re just starting out, or a veteran in your field, you’re going to be busy at work.
You are also always going to want to spend your free time with your family and friends. This is perfectly normal too.
But that doesn’t mean that you shouldn’t take care of your finances, or better yet – hire an expert to do so.
Somebody who knows what you want to achieve out of your life, who builds a plan to help you do just that, who implements the plan for you, monitors your investments and keeps you updated on changes that are required if any, as time goes on.
This is what financial planners do. We take an active interest in the fact that you need to achieve your life goals.
Whoever you choose, be sure to be comfortable with your financial planner, and be sure that your planner fully explains to you, in very simple language, exactly what your finances look like, and what they should look like, and what steps you need to take to make them look optimum. You need to communicate with your planner regularly, so comfort and simple open communication are very important.
Also make sure that your financial planner is unbiased. Which means that your planner does not recommend mediocre investments to you because he/she is earning hefty commissions from mutual fund companies on the side. You pay your financial planner a fee, he / she does the work for you – it’s that simple.*
So remember – it’s great to get deeply involved in what life has to offer, but you should also do what’s best for your wealth.
*At PersonalFN, we follow an unbiased methodology.
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