Financial advisory can be divided into components. One which is generic advice, the kind available at the cost of only electricity and internet usage charges in blogs, forums and elsewhere. Then there is personal advice which can be obtained for a fee from a planner or free from your LIC agent uncle. Unfortunately most confuse one component with the other, but let’s not open that Pandora’s Box today. Personal advice is personal and not much can be written about that. Generic advice on the other hand, is and must be (in my unimportant opinion) grounded in mathematics. That is the principles must be supported by consistent mathematics. All very well, what has this got to do with the post’s title?
I had earlier written about Bemoneyaware: A Unique Personal Finance Blog authored by Kirti S Desai. The blog is part of the main Bemoneyaware site. The site was originally started with the intention of promoting money awareness among children. Everyone will agree that educating a child about money early in life is an important parental responsibility. Yet the only thing most school children know about money is in terms of products: expensive, affordable and cheap .. for their parents that is! The biggest challenge in teaching children about money is that they don't want to learn it (among other things of course!). They think it is boring adult stuff which can wait until they become adults (little do they know that after you become an adult all you want is to be a child!). So you can't tell them, 'you need to know this'. The learning has to be fun and exciting. As an educator I know just how tough this can be!
Worried that you will never be able to invest enough for retirement? Do the results of a retirement calculator scare you? Learning about the 'bucket strategy' might help cope with these issues.
How much do I need to retire? Most people (among those who bother to ask!) are troubled by the answer to this question. The corpus required and therefore the monthly investment required seems so high that some think inflation is an urban myth! A middle-aged person who has not paid attention to retirement earlier is likely to end up with a much lower corpus than required. How does one cope with such grim realities?
Most personal finance bloggers talk about their mission to spread financial literacy and yet ...
1. Tax-saving Every year in Jan. and Feb. there is invariably an article on 'how to save tax this financial year' and none for the rest of the year. Tax-planning should be integrated with goal-planning. A prudent investor starts his/her planning in April based on the union budget. Very few blogs stress this. Why? Is it because no one will be interested in a 'how to save tax this financial year' in April?
Manish Chauhan's second book, "How to be your own financial planner in 10 steps" is a great 'action' book guiding people through the basic steps of financial planning. This post describes a retirement calculator inspired by the book and is based on 'corpus withdrawal rate'
Step no. 6 is "Start your retirement planning". In this chapter Manish writes: "If you had to take only one learning from this book and implement it, I would suggest that you take this particular point from this book and seriously save for your retirement. If you don't do anything else, life will still move on, but this particular part cannot be ignored, simply cannot!". The 'point' being, 'delaying your retirement planning will put serious pressure on your retirement life'.