Suresh Sadagopan August 23, 2010
I have just got my precious wings. I can fly. I’m soaring high and what a thrill it is ! These wings… they allow me to soar, dive, glide, coast… these wings have released me, given me the freedom, helped me measure the world with my flaps.
Rahul was reading a novel about a young eagle that has just started doing its sorties high up and feels the exhilaration of its new found skill & the thrills. Rahul could not but help comparing this eagle with his situation.
Rahul is young too, foot-loose & fancy free and is soaring high, enjoying his new found financial freedom in the city, with no one to telling him what to do; no boring books to pore over. The pay packet he gets in his IT company is far more than he could have imagined three years ago. At 24, Rs.32,000/-pm is a lot of money – especially when his parents are still working and are pretty well off, by themselves and so Rahul spends his money, without a care in the world. Entertainment, fine dining, excursions & gadgets current claim most of his money.
However, ones early twenties is the best time to save up on some cash. You're best bets now would be.
1. Investments in funds/equities
2. Medical Insurance
3. Insurance against accidents
Invest small amounts?
Yes, Rahul has heard about investing but is in no hurry to save. He has just about started working and investments are still a distant thought to him as of now. Why enjoy for a few more years before settling into the boring savings routine, he says.
His friend Vishnu has been coaxing Rahul to put aside just Rs.3,000/-pm, but in Vain. Vishnu has been investing around Rs.7,000/-pm, for the past year. Vishnu too has his fun, it’s not like he does not enjoy life. However, his motto is to first invest and then spend the rest. That way he does not feel guilty in spending money as he has an assurance of a fallback income.
But what fallback do you need, Rahul keeps asking. For Vishnu, the crisis of 2008 is still fresh in memory and he was aware of many who lost their jobs then. Rahul & Vishnu were not affected at all… but then the jolt was real. That’s when Vishnu decided to put aside some money for a rainy day. He had heard of some two good funds from his friend’s father and decided to invest in them on a monthly basis. He has accumulated over a lakh by now and feels safe. Now Vishnu is also considering opening a PPF account; again something he has heard of and wants to get off the blocks. He plans to invest upto Rs.70,000 of his bonus, and spend the rest. He has heard (correctly) that one can invest upto Rs.70,000/- in a year.
Vishnu does not know what his longterm goals are yet, but he may require money while getting married, for buying a home, for setting up an establishment and for his children. He just knows that one requires money and has set the ball rolling.
There are many Rahuls, who are buoyed by the hot air currents and are gliding comfortably. But at the same time there are many Vishnus too, who have their share of fun, but have also started to take some interest in their finances.
Health is wealth
Vishnu, however, does not have an insurance cover. According to him, he has no dependants and has heard that a life insurance cover is unnecessary if one has no dependants. The company was offering medical insurance of Rs.1 Lakh to all employees and so Vishnu does not see the need for further medical cover. Rahul on the hand has taken a separate medical insurance of policy of Rs.3 lakhs, as he feels the insurance from the company was offering as is miniscule.
Rahul was ofcourse instigated to take a medical cover after seeing the predicament faced by his cousin, Vipul who was of the same age group and had to undergo a hernia operation and had to shell out some 60,000/- bucks, as he did not have a medical cover. Rahul then and there decided to take further medical cover – he has heard enough scary stories of people becoming paupers paying hospitals and doctors.
Collision course
Vishnu has also heard of accident insurance, but never thought much of it. His friend Amol, however, is all for it. In fact he has taken a Rs.25 Lakh cover and is covered for death, disability, hospitalization due to an accident etc. Amol believes it is money well spent as he is an avid biker. Vishnu too straddles a Yamaha, but is not convinced. “Accidents happen… but not to me,” is his favourite line!
Rahul, Vishnu & Amol are going for dinner now. They have all made some right and wrong moves. Rahul feels he is soaring like the eagle on his Pulsar… he has grown wings no doubt and is enjoying the freedom, youth and money has conferred on him. He calls them hot currents. Can they learn from each other? They can. Overtime, they will.
From moneycontrol.com published on August 23, 2010
