“Planning is bringing the future into the present”. When it comes to financial planning, I had been fascinated from a very young age. I remember a conversation with my father where he said, money, if properly managed has the ability to change individuals, corporates and even countries. So, while the rest of my friends wanted to be doctors or engineers, I wanted to manage money as it has always fascinated me. Catering to this fascination and my parent’s aspiration of a secured future for me, I became an Investment banker post my MBA. Hi, I am Rahul, an investment banker since the last 7 years. The dream of a six-figure salary in my 20s and being captivated by the Wall Street culture, made the proposition of working as an investment banker quite enticing.

However, the flip side to my career is that I spend a considerable amount of time dealing with stress related to career, growth, family, etc. The hours, the pressure to deliver consistently compelling results and the responsibilities – they all add up. And, if you are thinking that it’s me alone, think again. India is often called the stress capital of the world. But, when there is a problem, there is a solution to the same. The only way you can steer yourself out of this stress is to plan for all contingencies. It will be difficult for our generation to secure a stable life if we do not plan our financial future properly. Understanding the importance of planned investments is critical for youngsters. Managing money in your 20’s typically involves trial and error. It is the age when you get the first taste of earning money and also the freedom to spend it as you like. You should obviously spend, but there should be a cap on it. Where to put the breaker is an art, and it needs to be learnt or self-taught.

As for me, I understood the basics and used them for securing my financial future. Not living on the financial support of my parents was one of the defining moments in my life. Our generation prefers living through experiences, relishing every big and small moments and this often leads us to living paycheck-to-paycheck and that doesn’t make it easy. Spending frivolously was never an option, cutting back on my Starbucks intake also wasn’t going to make me a fortune. For me, accumulating wealth requires long-term and broader thinking. Concentrating less on being stingy and more on augmenting your earning capacity, via smart investments that ensure the benefits of protection against uncertainties, growth of wealth and tax savings.

In this blog, I will briefly try to explain few tips and tricks of how you can be a smart investor. First of all, your spends to savings ratio should be 70:30 ideally. Now, the 70% that you spend; well, how to spend that, I leave it on you, but the real trick is where to invest the 30%. Ideally for me, I divide it into a few key areas and it has worked for me. I invest a part of it in instruments that grow my money i.e., equity. This investment is for the long term goals (house, family vacations abroad, etc.) that I have set for myself. Another part of it, I invest in risk-free instruments like FDs and RDs which is for my short-term goals (home repair, few weddings of relatives, etc.) that I have set for myself. I invest the last part in contingencies so that my short-term and long-term goals are not compromised. The most common mistake we make is, we just plan for the first two components of savings and ignore the third. We commit the classic mistake of “It won’t happen to me!!” I too thought the same initially. However, given my profession in investment banking, I have long working hours, with 80-100 hour work-week being the norm for even an entry-level investment analyst. The tragic breakdown of my junior, due to illness related to stress regarding work, a few years ago focused my attention on living a healthy lifestyle. Stress at work and paucity of time in this urban lifestyle, could result in the negligence of things that are most important, particularly health.

Health and stress are closely connected. In India, the stress levels seem to be high, as compared to other nations. Around 89 percent of India’s population is suffering from stress.

Being a millennial looking to build a strong financial future for myself and my family, getting the right health insurance was one of the crucial steps. However, initially I was preoccupied with paying off my student loan, kick-starting my career and like many fellow millennials maintaining my social image and thus was unable to dedicate much time towards financial planning. Gradually with the understanding of financial planning and the importance of health insurance in that, changed my mindset.

Health insurance premiums, like any other life insurance policies, are positively correlated with your age. The best time for investing in a comprehensive health insurance policy would be when you’re young and healthy. In economic terms, you would be paying higher premiums for the exact same benefits if you opt for it in the later stages of your life. Health insurance is a crucial element of the financial portfolio from the very start and quite often skipped as part of financial planning. And, as I have already mentioned, our generation is seeing a surge in lifestyle related diseases, due to the hectic way of life. Rise in service sector jobs, stress, workplace concerns, smoking habits and an inactive way of life have all taken a toll on the human body. The two most frequent lifestyle related disease in India are heart related ailments and cancer. As per some oncologists, lifestyle disorders are responsible for 85% of the cases for cancer and cardiovascular diseases. Not just that, these two diseases are the costliest to treat in India. Hence, unless expenses towards these are planned, it would compromise on the savings made for various life goals.

With rising hospitalization charges, it is essential to consider specialized healthcare insurance related to heart and cancer. ICICI Pru Heart/Cancer Protect Plan from ICICI Prudential Life is one such policy that is designed towards reducing the financial burden, with their plan offering financial protection against such ailments. The plan offers INR 20 lakh health cover, extendable up to 75 lakhs, at less than INR 160 per month. Unlike other health insurance plans, this plan offers upfront money on diagnosis. This money can be used for meeting your immediate financial requirements or treatment in the hospital of your choice. Not just that, the plan also offers tax benefit of up to Rs. 25,000 under Section 80D of the Income Tax Act. Seeing all these features and much more, this plan is worth considering.

Hence, before you save towards your goals, a health insurance plan adds a layer of protections towards your savings. Now that I have revealed my learnings over the years, let me know your secrets too in comments below!!!

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June 2021