Success and Finances

What is success? For different people, success means different things. But we usually see similar traits or measurement of success in a particular age group. What I have seen, is for people in their 40’s success means having a good position in his/her job and earning is good. So here the focus in mostly on making money. Taking the current working environment, earnings growth peaks in your mid 40’s (this is average). This is the time to invest so that your wealth also grows aggressively.

Most of the couples, I have met (who are in their 40’s) have very good income streams, but their finances are in shambles. The reason is simple, they have been totally concentrating on their earnings, then add to it, home and car loans, Children’s education and holidays to beat the pressure and the worst peer pressure. In all this they did not get time to look at their investments. Most of them are professionals, but have not even thought of employing a professional to look after their investments, even when they do not have the time. Some are so burnt out by the time they reach 50, they just give up, if they do not reach the board room.

One of the things they could do is start investing wisely with the help of a professional, so that even if they plan to quit, they do not have to worry. As your earnings increase, increase your savings percentage. Most of them have savings, but in Fixed Deposits and PPF. This is good, but this investment will not beat inflation and your rising lifestyle expenses. When I talk about SIP’s they say let’s start with Rs.5000/-, it’s like only 1% of your regular expense is lifestyle expense. Rs.5000/- is small at the age of 40, it should be a minimum of Rs.40000/- pm. After 10 years when you look back and see the corpus, this Rs. 40000/- will look like a small amount.

The other think I have seen most of them do is go for a second house as investment. Do not do this till your goals are met. If you need a bigger house depending on your status, go for it. As with most capital intensive purchases, all you will do is build up your liabilities and your savings will come down. As this is the time to let your money grow. This is the time to work on your dreams and let a professional work on your finances to help you reach your long term dreams. It should not happen that you meet your current dreams and then when you reach your sunset years, you will spend your time dreaming, instead of living your dreams.