This August,train your mind for independence

Indian household mindset goes through a set drill. In work years, one prioritises children’s education or marriage over one’s own retirement
This August,train your mind for independence

When you play a sport, a significant part of it is played in mind. You may have noticed that franchise football or cricket teams have a mental strength coach. It helps players to deal with pressure situations. A lot of mind games are played off the field and on the ground. You have noticed the way the opposition team plays mind games to get under someone’s skin. A quality player gets a red card for bad behaviour in football. In test cricket, a quality innings ends just because the batsman’s concentration is disrupted by sledging.

The investment game also needs you to play to your strength. Your temperament matters much more in personal finance. A lot of events that influence your investments are beyond your control. Hence, the general tendency is to react to situations. Your ability to adapt to any situation matters a lot. Your temperament comes into play with several aspects of finance.

Change the way you think
For years, you have owned gold and property. The last household survey conducted in 2017 revealed that 77 per cent of Indian households own only gold and real estate. Few of you own financial assets. A lot of that money goes into fixed deposits or government schemes like a public provident fund or National Savings Certificate. The idea is to cling to something tangible or something that guarantees a return. There is a mindset problem. Owning a lot of gold for long is unproductive. It does not lead to wealth creation over the long term.

Similarly, owning too many properties makes managing them cumbersome. You invest in generating a rental income out of your surplus properties. By owning financial assets, you can achieve long-term wealth creation and generate income too. Financial assets like shares and bonds are easy to manage, buy or sell. Besides easy liquidity on stock exchanges, you also get real-time price trend. An even more straightforward method to own them is through mutual funds. It is like hiring professionals to manage money.

On retirement, be pro-active
Your dreams and goals often drive your ability to save and invest. However, Indian household mindset goes through a set drill. You give priority to others over self. In work years, you prioritise children’s education or marriage, over your own retirement. It is your responsibility to some extent, but you do not have to own it entirely.
When it comes to retirement, everyone takes it for granted that you would have enough savings. After all, you spent well on your child’s marriage and education. Instead of listening to friends or family on retirement solutions, it is vital to plan it early. You need professional help. That would be a very pro-active step.

Dealing with emergencies
A medical emergency can create a lot of problem with your finances. Healthcare for the elderly is expensive. If your parents have saved enough for their health or are adequately insured, you could think of yourself as the lucky one. However, it may be an excellent idea to save and invest for a family emergency pro-actively. That is in addition to the health insurance you have taken. One way of doing that could be to support your parents by setting aside some money when you start work. You can use it 10 years later when your parents are old as a support fund for them. Health insurance is expensive in old age. There is no better solution than having your own money.  

Perks of investing in financial assets
Owning too many properties makes managing them cumbersome. You invest in generating a rental income out of your surplus properties. By owning financial assets, you can achieve long-term wealth creation and generate income too. Financial assets like shares and bonds are easy to manage, buy or sell. Besides easy liquidity on stock exchanges, you also get real-time price trend.

Support fund
it may be an excellent idea to save and invest for a family emergency pro-actively. One way of doing that could be to support your parents by setting aside some money when you start work. You can use it 10 years later when your parents are old as a support fund for them.

77% of Indian households own only gold and real estate, according to the last household survey conducted in 2017.

Related Stories

No stories found.
The New Indian Express
www.newindianexpress.com