This is surely an attractive title…but Suzie Orman says she has a Money book for the Young, Fabulous and Broke! So this cannot be a title for my book…

Now what is young?

Young is what young does! So young is somebody who is 10 years younger to me and old is somebody who is 10 years older than me. Since I am 48 years old, anybody less than 38 is young and anybody over 58 is old…and obviously these numbers will change next year…

Earning Well is another relative term…too many people under 30 are not very clear about their earnings – ctc, perks, contributory provident fund, esop, OMG all this is Latin, Greek, Pali,…why even mother tongue to them – they just do not understand it!

Broke: this word they sure understand, and understand well!

What is broke:

well you pay the credit card in parts

you are scared to see the credit card bill…so you do not open it when it comes

your bank regularly charges you for bounced cheques – YOURS!!

you and your wife are afraid that the kids will soon be in college

if your car breaks down, so will you — the extra 30k for repairs..?

your marriage was funded by your father, her father and Hdfc bank, but you gave expensive gifts to your friends who came for the wedding

you think you do not spend much on gifts but 2k gift for a birthday or a 5k gift for a wedding is ok. Of course the airfare and hotel stay for the wedding is not really a gift, is it?

well I hope to write a book…for the YOUNG, earning well but BROKE types…message me here…

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  1. Sirji

    the best i like was ” the numbers will change next year….”

    from a young guy you have a qustion to answer…

    what you would have done differently in your personal finance 10 years back.

    Regards

    Shinu

  2. A great Topic Subra. Something I feel passionate about as well… If you are looking for a collaborator to write the book I will signup in a heartbeat. Seriously…

  3. i always wonder why they have a silly civics period in school and not functional literacy about financial matters. instead of being confused over stuff like preamble and directive principles (which are a nice joke anyway),time could be utilized to teach children what money is and why savings and investment help us and the society.

  4. Hi Subra,
    I am a 25 yr old guy reading your blog for last one year.
    i have never replied before but seeing this post i thought i should reply.
    I am in IT industry and daily i see people making these kind of mistakes without thinking..one of my friends spent 50K on a ULIP to save tax [in december] he also made downpayement for a house..now his promoter is chasing him for money sending demand letters ..and out of nowhere his father had to be admitted in a hospital for operation[ofcourse no mediclaim].
    Despite earning well he is in trouble.This case is same for most of them..others who have not faced this situation keep the money in savings a/c and invest in ppf/Lic only[that too in december].
    I have tried telling them things like SIP but their reaction is like– “i am no way going to get into the market.. its too risky i have heard..if i spend so much time on thinking about money i wont be able to enjoy my life” [but they switch jobs every year :))]..
    This attitude irritates me to say the least but i dont know what to do..
    In My case,I am lucky i have read your and Manish’s blog..i have a few SIPS running ,try to understand and invest in stocks as hobby, have rented a house and did not buy a car as i dont need it…
    but problem is i am not so sure what my goals are ..and what i should do with these investments without any specific target,which seems very dangerous..

  5. @Anindya
    following from ‘honest truth’ would be of interest perhaps:
    Richard Russell. The name may not ring a bell or two in India. But it certainly does in the US. The gentleman is not only a very famous investor but is also known as the grand old man of financial newsletters. He has undoubtedly penned many memorable articles over the years. But today we are going to discuss perhaps his most popular piece till date. In it, he has dispensed what we believe as one of the most important financial advice that a person can get. If closely adhered to, the advice can do wonders to one’s wealth over the long term.

    Imagine two investors A and B. We assume that investor B starts earning at the young age of 19 and decides to put aside Rs 20,000 every year till the time he turns 26. And that’s it. He doesn’t invest a penny afterwards. Now, let us consider investor A. Unlike B, investor A starts investing Rs 20,000 only after he turns 26. But does so dutifully every year till the time he reaches 65 years of age. Both of them are assumed to earn 10% per annum on their investments.

    Now here comes the real shocker. We know that investor B has made only seven contributions while A has made around 40 contributions towards his portfolio. Despite this, you’d be amazed to know that B will end up with more money than A when both of them turn 65. In other words, while A’s money has grown around 11 times, B has been able to grow its money a whopping 66 times.

    The above example clearly highlights the magic that the process of compounding works on one’s portfolio. Just by letting his money compound over a slightly more number of years, investor B was able to make more money than A even though he made far less number of contributions. And therein lies the biggest secret to becoming rich we believe. Investment returns over a long period are not dependant as much on the amount of money one puts aside. They are more a function of letting compounding work its magic by starting to invest as early as possible.

  6. Thanks Bharat for your detailed explanation.
    Really liked it :).
    To be honest, at the moment i really have no idea where i would be and what i would be doing in 5-10 years and really cant visualize Age 65 now.But only because of reading this blog and some more stuff like this i have started investing early without any clear goal in mind ,as i believe it would help me in future.
    But as i said above i have a real hard time convincing my peers about this stuff :(.

  7. Anindya, Sooner or later everyone will understand. That’s what Subra sir, Manish chauhan and deepak shenoy and many more are doing. Thanks to all of them.

  8. Anindya,

    there are a couple of 23 year old girls who are doing a 10k SIP. One of those girls was talked about in an article I did for LOKMAT – saying how she will have 25 crores at the end of her retired life. Let us face it, trying to see what will happen 35 years hence requires some clairvoyance. Only thing we know is the sooner we start and the higher the amount that we put, the corpus SHOULD be more.

    What are the reasons why some of these SIPs could stop?

    A husband who does not want her to decide, she marrying and migrating, taking a break of 4-5 years to have a baby or two, the fund house not performing well, withdrawing the money for consumption, – the list is really long.

    However if she did not touch it at all…it could be there waiting for her and let her retire.

    You do business and plan for retirement as though you will live permanently, but your attachment should be like you will die tomorrow.

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