In his book, Financial Spirituality #SabMohMayahai #Millenials, Rishabh Parakh, a chartered accountant, gives a lowdown on how the newly employed should invest early on in their career and how to plan, protect and play. The book has been published by Sakal Publications. Here’s more from the author....
What encouraged you to write the book? What is the target readership you kept in mind for this and why?
Over numerous conversations with clients and attendees at seminars, I realised that the problem we had 20 years ago no longer exists. The problem then was lack of information about financial planning and investing. Today, the problem is about having access to a lot of information but not knowing what to do about it.
I have written over 200 columns for a number of leading publications over the years, including Sakal. The logical thought process seemed to take it ahead and write a book to share the same lessons and more.
The target readership for Financial Spirituality is the millennial generation. Here, I mean everyone who is starting off with their career or is in the first few years of their career. This generation thinks differently as compared to the previous generation, and has more time in hand to be able to take more risks with regard to their financial planning and investing.
Millennials complain about a crumbling economy that makes it impossible for them to buy a house or save enough money to invest. What advice do you have for them?
The economy is definitely down right now. However, it is growing at around a rate of 5 per cent, and that is still growth. My advice is to not think so much about the state of the economy and the market. Instead, start investing as much as you can, even if it is an amount as small as 1000 rupees a month. You can always control your spending habits and investing, the key is to start and start early, howsoever small it is.
Where do you think most millennials go wrong with personal finance?
I believe that the most common mistake that everyone makes, not just millennials, is to jump the stages of life. We always recommend following the philosophy of ‘plan, protect, play’ at Money Plant Consultancy. Depending upon the stage of life that you are at, you need to follow the discipline that is needed and ensure that your saving, spending and investing follows a reasonable pattern.
So first make sure that you do your right financial planning to meet your financial goals like buying a house, car, getting married, kids’ education etc. And in case of any emergency, you are protected both by sufficient life and health cover for you and your family. Only then you can switch on to the play mode where you have financial freedom to do whatever you wish to do.
For example, buying a phone worth Rs 90,000 is a problem, if you are funding it through EMI. You can buy a product like that when you have disposable income that is many times more than the cost of that particular phone. Getting rich is not a difficult task unless you are in a hurry.
What steps can one take to manage their money properly so they can save enough to invest?
In the book, I have talked about following the ‘get set go’ approach. Here, you get clarity regarding your financial goals, set a plan in action, and then go for it. If this approach doesn’t work, then I would suggest the ‘go, set, get’ approach. Here, you take action first. Invest somewhere without thinking too much about whether or not it will fit in your long term financial planning. You will build up the habit of investing through this. As some time passes, you will understand what works and doesn’t work for you. Once you get this clarity, modify your planning and action accordingly.
For someone who plans to invest money for the first time, what should they take into account?