financial planning: Mind Over Money: Health is real wealth! Pursuing a crorepati dream is possible by investing Rs 10,000 every month
Dr Sandeep Sahasrabudhechief financial planner at
Moneywise Wealth Planners.
In an interview with ETMarkets, Sahasrabudhe, said, “For investments to perform optimally, exposure to different asset classes based on one’s risk appetite works best. Thus, health and wealth creation both require regular and consistent doses for optimal functioning” Edited excerpts:
In a rapidly changing environment like the one we find ourselves in today, most of us have put our health on the back burner, as has our financial planning. However, Covid turned out to be an eye opener to some degree for many. What is your opinion on that?
The pandemic has proven to be an eye opener for Indians in terms of financial planning and awareness. A new term has emerged for majority Indians called “financial immunity”.
Financial immunity means being able to maintain your family’s security and stability in case something happens to them or being financially prepared for any unforeseen life and health emergencies.
According to a survey conducted by
57% of survey respondents associated financial immunity with maintaining financial security for themselves and their family.
78% of Indians believe that insurance is an extremely important part of financial planning. According to the poll, 56% of Indians have accumulated emergency funds since the pandemic and 53% have insured themselves with life and health insurance.
Before the pandemic, less than 30% of Indians had some sort of life insurance policy. During the pandemic, almost everyone has witnessed the death of someone in their close circle.
This led to an awareness of increased life insurance coverage in case something happened to the breadwinner of the family.
How many ways can one improve health as well as wealth?
Discipline is common to both health and wealth. 1 hour of daily exercise in any format (be it cycling/swimming/running or any other fitness essential sport).
Similarly, for wealth creation, the simplest and most proven methodology is long-term wealth creation via SIP and asset allocation.
With the SIP lane, you don’t time the market and stay invested through the ups and downs of the stock market.
The biggest advantage SIP brings to the table is the magic of compounding. Let me illustrate the power of compounding with an example:
A monthly SIP of Rs 10,000 over a period of 10 years has generated a return on investment (ROI) of 15%, will create a corpus of Rs 27.5 lakh. Now suppose you increase the term by another 10 years.
Over a period of 10 years, you would have invested an additional Rs 12 lakh. The corpus after 20 years would be Rs 1.49 crore. To conclude, Rs 12 lakh would become Rs 27.5 lakh over 10 years and Rs 24 lakh would become Rs 1.49 crore after 20 years. These 10 additional years are absolutely crucial.
Wealth creation as well as significant improvement in health outcomes for both must be visible over a period of time. What is needed is to stick to routine and consistency.
You should have health checkups once a year from the age of 40. Likewise, you should review your investment portfolio every 3 months for any changes.
The same rule of starting early applies to both health and wealth.
If you develop the habit of exercising regularly or playing a particular sport from your teenage years and stick with it, not only will you enjoy the sport throughout your life, but you will also cherish those moments of camaraderie. and sportsmanship associated with this sport.
In addition to these characteristics, leadership, presence of mind, faster decision-making, improved sleep, greater confidence and reduced risk of obesity are additional benefits associated with exercise/practice. a particular sport.
Just like in food, we need proteins, carbohydrates, etc. to create wealth, we need proper asset allocation. What are your views?
Asset allocation depends on several factors such as: the lifestyle he was raised with, his parents’ investment preferences, and the influence of his spouse.
It also depends on an individual’s risk-taking capacity. It is inherent for investors to have their risk profile checked before they start investing.
For investors who cannot tolerate even a small drop in their stock portfolio, they stay away from stocks. The problem with staying away from equities is that the very purpose of having inflation beating investments is defeated because the returns from fixed return instruments erode the wealth creation process and generate a negative real return since the returns on fixed deposits after taxes cannot beat inflation.
It’s best to have a balanced approach with exposure to different asset classes to fight inflation and enhance your returns to suit your lifestyle over the past few years.
Different varieties of dietary intake are needed, for example, bodybuilders need protein intake but also a decent amount of carbohydrates and vitamins because the body needs different variants to function optimally.
So, for investments to perform optimally, exposure to different asset classes based on one’s risk appetite works best. Thus, health and wealth creation both require regular and consistent doses for optimal functioning.
Can investors in their 20s think of becoming a crorepati, say by their 50s, and that too in a healthy way, ie with a lean diet or disciplined investing?
It’s entirely possible. Let me illustrate with an example: Rs 10,000 invested in a 5 star rated equity mutual fund SIP which generates a return on investment of 15% per annum over a period of 30 years creates a corpus of 6 .92 crores.
Rs 10,000 pm is quite possible for a young person to set aside pm for investments. Rs 6.92 crores after 30 years would have present value i.e. purchasing power worth Rs 85 lakhs. At least 3 crores of purchasing power is essential when you reach the age of 50.
What is important is a constant investment over the long term without any interruption. We live in a materialistic world.
Once in a while, there are things that young people buy to impress their peers, which may not be necessary. This would lead to buying out existing investments and using them to buy that product.
It is entirely possible to build a good corpus and retire at age 50 with a disciplined monthly investing habit.
Likewise, when it comes to diet, a controlled diet helps maintain good health with adequate daily physical activity.
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)