Of investing and financial planning

I turned 47 this year.

And I admit it – in my 47 years of life, I have never really planned my finances.

Colours have always fascinated me more than numbers (not a statement one would expect from an Engineer, I know), and that is probably why I had had a happy-go-lucky approach when it came to financial planning.

Get a stable job, work till you no longer can, and save a bit of money every month for retirement was the main concept that most of us in my generation lived by. We also did purchase a few LIC policies that various uncles, aunties and neighbours sold us.

And then I got a bit adventurous when I turned 34. I decided to resign from my job to try my hand at entrepreneurship.

However, I did not give much thought to serious financial planning even at that stage before I took the plunge!

I had about 4 years’ worth of cash to live by, apart from 20 lakh rupees in equity investments. To me, the 4 years’ worth of cash was a long enough runway to make my startup successful.

And a lot happened in 4 years. But since this is not a post about my adventures in entrepreneurship, I will skip over those details and come directly to the point about finances.

We sold our product to another company, and I got a decent exit from the company. Using this money, I spun off another startup. In another 3 years, I found myself in a position where the company was not generating enough cash to make a decent living off it.

Financially, I was down to the nest egg I had saved in stocks (remember the 20 lakhs I mentioned earlier?). I didn’t want to dig into that since it would risk my family’s future. Hence, I got back into the job market and got employed again.

So, what is the point of this post again? I wanted to use my own life experiences to highlight the importance of financial planning from a young age.

And it is not rocket science. In the most simplistic terms, here’s all one needs to do:

  • Start saving early
  • Clearly understand the difference between assets and liabilities
  • Use a portion of the money you earn to buy assets that can generate passive income later
  • Invest in financial instruments that can give good returns (Equities, Bonds, Mutual funds and such) and use the power of compounding.

Below are a few quick links to useful content around investing that I have seen recently and found useful:

Sharique samsudeenSharique Samsudeen is a young, 26-year-old who is making waves in Kerala for popularizing the concepts articulated in Robert Kiyosaki’s Rich Dad Poor Dad to help Malayalees achieve financial freedom.

Watch one of his TEDx talks here, and you sure will get inspired.

He has developed a full-fledged course on Youtube about investing in stock markets and has garnered a large following.

Rachana RanadeHis company, Fundfolio, is about educating common folk to help them win in capital markets. Youngsters like Sharique deserve appreciation for the efforts they’ve taken to improve the lives of so many people.

Rachana Ranade’s channel: This is a wonderful channel run by the sprightly and knowledgeable Chartered Accountant Rachana Phadke Ranade. The videos are breezy, fun, filled with knowledge and articulated in simple terms.

Another experimental investment that my friend Smiling Buddha and I have done is in a Small case (Capitalmind Momentum). We started with a 4L investment, which in the past 6 months has appreciated by as much as 45%.

Investing in bonds – I had never seriously looked at investing in bonds; I had done it once to save on capital tax. There are good options that can give more than 13% on your investments.

Check out the GoldenPi app.

Investing in Mutual funds: Well, nothing new about this. Check out Scripbox to identify the investments that are right for you.

Zerodha’s Coin is another great option for investing in Mutual fund and bonds.

Check out my Store page to see some of the books that have helped me in my personal finance journey. I will keep giving frequent updates as we go along.

Do you have any financial tips and techniques that have worked for you? I would love to hear from you.

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