(The author is a financial planning coach. Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai. Mail at: finplancoach@gmail.com)
iShield your financial future:
Inflation is on fire...The recent rise in fuel prices came as a rude shock for the common man and affluent alike. On the face of it, the rise is in only in the fuel prices. But the cascading effect will be felt all across the economy in various spheres. The rise can be felt in our day to day life starting with our food and vegetable prices, our daily commute and other services which are utilized. That's the impact of Inflation. When we look to plan our financial future we must consider the effect of inflation on our plans very carefully. Consider the following examples:
- Cost of college education now assumed @ Rs 7.5 lacs; after 15 years Rs 61 lacs.
- Cost of foreign education now assumed @ Rs 15 lacs; after 15 years Rs 1.23 crores.
- Wedding cost now assumed @ Rs 7.5 lacs; after 20 years Rs 1.23 crores.
- To retire now if one needs Rs 25 lacs, after 20 years Rs 4.10 crores.
India, as we all know is on the verge of a viable long term economic growth journey. In any growing economy, inflation tends to be on the higher side given the fact that the consumption and spending increases substantially alongside the vibrant economic growth.
iShield or inflation shield your financial future in seven ways:
1. Money should work as they do not grow on ZZZZZs:
Money neither grows nor beats inflation if it sleeps in a bank A/C.. Money should be deployed effectively to earn higher returns and most importantly should be able to beat the inflation over the longer run...After all its your money and it should work as hard as you.
2. Start investing early:
It's important to start investing early as the power of compounding (POC) is @ work very very silently.... POC is an effective and powerful tool to tackle the rising inflation and make better returns over the longer horizon.
3. Start investing rightly:
Consider this classic example:
100 shares of INFOSYS issued in the IPO in 1993 valued at Rs 9,500 would have become 12,800 shares valued at a whopping Rs 4.15 crore as on March 31, 2011. This is an astounding annual compounded growth rate of 59 %, with a total gain of 464,422 %.Just investing is not enough, investing right is important to beat inflation and earn higher returns.
4. Fully insure @ the earliest and do it NOW:
Fully insure your and your family's health and life to the fullest possible extent and at the earliest. The delay will come at a definite cost owing to inflation and the age factor. Buying insurance @ early stages gives you the benefit of higher cover @ a lower cost...
5. Secure Children's future NOW:
The future cost of education could be mind boggling... both Indian and overseas. Its ideal to plan right now to tackle the future costs very effectively.
Consider these points:
- Cost of college education now assumed @ Rs 7.5 lacs; after 15 years Rs 61 lacs.
- Cost of foreign education now assumed @ Rs 15 lacs; after 15 years Rs 1.23 crores.
To retire now lets for a moment assume if one needs Rs 25 lacs, after 20 years the same would translate to Rs 4.10 crores. And that's inflation for you..... So start the plan now....
7. Make your financial plan NOW:
A disciplined and well thought out financial plan outlining your financial goals and objectives is the right tool to take on inflation which is purely not in our control... A well made plan can fairly take you to the planned destination.
(The author is a financial planning coach. Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai. Mail at: finplancoach@gmail.com)
