While we all agree to seize the
moment, live the moment and be happy, it should not be construed to spend
whatever you have without giving a thought for tomorrow! Many messages float on
social media advising you to spend money on your well-being, don’t worry about
the future or don’t save too much (lest your kids would become lazy/dependent
on you, etc.). While I do agree with the
first part of the sentence, I would not agree with the latter part. Allow me to explain.
1. We (assuming most of my readers are living in
India) are living in a country where the inflation rate hovers between 7% to 9%. Those of you who are good in Mathematics or
in MS-Excel, just try to find out how much your monthly expenses would be in
year 2046 (assume your current monthly expenses as Rs. 70,000 – all inclusive
– Assume inflation rate a modest 7%) . Most of you would get a shock of your
life when you see that number..
2. Thanks to the overall rise in the standard of
living, increased awareness about health/fitness/nutrition, the average life
expectancy has increased in India (It was 66 yr. in 2012, it could be 70 now
& soon we could be catching up with the Developed countries where it is
80+)
3. We are also witnessing a disturbing rise in air
pollution, water pollution, food contamination which negate the earlier point
slightly. The mortality rate will not increase much but the risk of various respiratory,
gastro-intestinal diseases increases exponentially, expecting a big hole in the
pocket on account of hospitalization, medical expenses. (Also note –
Most of the health insurance plans cover only hospitalization & not
OPD charges – which are substantial and which most of us incur frequently)
4. Work environment has changed a lot. Increased
competition, more travel, working at odd hours, fast food / alcohol consumption
& lack of stress management has given invite to more life-style diseases.
Many are getting burnt out in 30s and considering to leave the rat race. Those
in their late 40s are struggling to survive in the ever-changing IT industry
(or even engineering industry) . While
many are opting for voluntary retirement, there are many cases of forced ones
too.
5. Most of us would be living in ‘empty nest’ since
kids would be living either abroad or in metro cities, necessitating need of a
driver, maid (and or a nurse in some cases). These expenses need to be planned.
Add this to the number you got in point 1)
6. The well-heeled can also add overseas vacations
Now tell me, would you want to spend money today (as if there was no tomorrow and find yourself in awkward situation in old age) OR would you
want to spend it discreetly?
(On a related note - Do NOT ever be an impulsive buyer using credit cards incessantly! And do note, pay the entire credit card outstanding amount on time & NOT just minimum due amount , as it puts so deceptively; because if you keep paying only minimum due amount, you might be coughing more than double of its purchase price without your knowledge!)
Coming back to investments, wouldn’t you want to invest your
money wisely so that the savings outgrow at least the inflation rate and
enables you to maintain your life style?
So you could be on the verge of graduation and looking for the first job
or you could be 40s, it makes sense to invest and …invest wisely!
To be honest, to invest or not to invest is not a question at
all.
Rather it should be, how to invest and which we will cover
in part II.
Waiting eagerly for part 2 :)
ReplyDeleteThanks! Hope you saw it!
DeleteGoodone
ReplyDeleteGood analysis. Well written. Explains nicely the importance of spending and saving wisely.
ReplyDeleteThanks RH!!
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