financial planning: Mind Over Money: Health is real wealth! Chasing a crorepati dream is possible by investing Rs 10,000 every month

“It is quite possible for a young man to set aside 10,000 rupees a month for investment. After 30 years, it would be Rs 6.92 crore which would have a current value which is a purchasing power of Rs 85 lakh. At least Rs 3 crore of purchasing power is essential when you reach 50 years old,” says
Dr Sandeep Sahasrabudhechief financial planner
Moneywise Wealth Planners.

In an interview with ETMarkets, Sahasrabudhe said: “For investments to work optimally, exposure to different asset classes based on one’s risk appetite works best. Therefore, both health and wealth creation need regular and consistent doses for optimal function” Edited excerpts:

In a fast-paced environment like the one we find ourselves in today, most of us have put our health on the back burner, as has our financial planning. However, Covid turned out to be a revelation to some extent for many. What are your views on that?
The pandemic has turned out to be an eye opener for Indians in terms of financial planning and awareness. A new term has emerged for most Indians called “financial immunity”.

Financial immunity means being able to maintain the safety and stability of your family in case something happens to them or being financially prepared for any unforeseen life and health related emergencies.

According to a survey conducted by

57% of respondents associated financial immunity with maintaining financial security for themselves and their family.

78% of Indians believe that insurance is an extremely important part of financial planning. According to the survey, 56% of Indians have accumulated emergency funds since the pandemic and 53% have secured life and health insurance.

Before the pandemic, less than 30% of Indians had any kind of life insurance policy. During the pandemic, almost everyone has witnessed the passing of someone within their close circle.

This led to the awareness of increasing life insurance coverage in case something happened to the breadwinner.

In how many ways can both health and wealth be improved?
Discipline is common to both health and wealth. 1 hour of daily exercise in any format (be it cycling/swimming/running or any sport is essential for physical fitness).

Similarly, for wealth building, the easiest and most proven methodology is long-term wealth building through an SIP and asset allocation.

Through the SIP route, you are not timing the market and staying invested during the ups and downs of the stock market.

The biggest advantage that SIP brings to the table is the magic of capitalization. Let me illustrate the power of compounding by giving an example:

A monthly SIP of Rs 10,000 over a period of 10 years has generated a return on investment (ROI) of 15%, it will create a corpus of Rs 27.5 lakh. Now suppose you increase the tenure for another 10 years.

Over a period of 10 years, he would have invested an additional Rs 12 lakh. The corpus at the end of 20 years would be Rs 1.49 crore. To conclude, Rs 12 lakh would convert to Rs 27.5 lakh over 10 years and Rs 24 lakh would convert to Rs 1.49 crore at the end of 20 years. Those extra 10 years are very crucial.

The wealth creation, as well as a significant improvement in health outcomes for both, will be visible over a period of time. What is required is sticking to routine and consistency.

You must undergo health checks once a year from the age of 40. Similarly, you should review your investment portfolio every 3 months for changes, if any.

The same rule of starting early applies to both health and wealth.

If you develop the habit of exercising regularly or playing a particular sport from your teens and stick with it, you will not only enjoy the sport throughout your life, but also cherish those moments of camaraderie and sportsmanship associated with that sport.

Aside from these traits, leadership, presence of mind, faster decision-making, improved sleep, increased confidence, and reduced risk of obesity are additional benefits associated with exercising or playing a particular sport.

As in the diet, we need proteins, carbohydrates, etc. To create wealth, we need a proper allocation of assets. What are your views?
Asset allocation depends on several factors, such as: the lifestyle you grew up with, your parents’ investment preferences, and the influence of your spouse.

It also depends on the risk-taking capacity of an individual. It is inherent for investors to check their risk profile before they start investing.

For those investors who cannot tolerate even a small drop in their stock portfolio, stay away from stocks. The problem with staying away from stocks is that the whole purpose of investments outpacing inflation is defeated, as the returns on instruments that have fixed returns erode the wealth-building process and lead to negative real returns, as the return on fixed deposits after taxes cannot beat inflation.

It is best to have a balanced approach with exposure to different asset classes to beat inflation and improve your returns to meet your lifestyle in later years.

Different varieties of food intake are required, for example bodybuilders need protein intake but also a decent amount of carbohydrates and vitamins as the body needs to have several variants to function optimally.

Therefore, for investments to perform optimally, exposure to different asset classes based on risk appetite works best. Therefore, both health and wealth creation need regular and consistent doses for optimal function.

Can investors who are 20 years old think about becoming a crorepati say at 50 and that too in a healthy way, which means with a lean diet or disciplined investing?
It is definitely possible. Let me illustrate with an example: Rs 10,000 invested in a 5-star rated equity mutual fund SIP that generates a return on investment of 15% per annum over a period of 30 years creates a corpus of Rs 6.92 crore.

Rs 10,000 pm is quite possible for a young man to set aside pm for investment. Rs 6.92 crore after 30 years would have a present value i.e. have purchasing power worth Rs 85 lakhs. At least Rs 3 crore of purchasing power is essential when you reach the age of 50.

The important thing is a constant long-term investment without interruptions. We live in a materialistic world.

From time to time there are things that young people will buy to impress their peers that may not be necessary. This would lead to redeeming existing investments and using them to purchase that product.

It is very possible to build a good corpus and retire at 50 through a disciplined monthly investment habit.

Similarly, with regard to food, a controlled diet helps to stay healthy along with adequate daily exercise.

(Disclaimer: The recommendations, suggestions, points of view and opinions given by the experts are their own. These do not represent the views of the Economic Times)

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