Dilbert’s 9 Point Financial Plan: Will it work for India?
Adam Scott’s secret nine point formula is here and many people have said it deserves the Nobel prize. Ha simplicity is in. However all the people who want simplicity in THEORY actually LOVE to make their lives more COMPLEX.
Given a choice between Idli and Aloo Parathan if you choose A.P, remember you are choosing craving over hunger and nutrition. Nothing wrong, but you will live with the consequences. That is all.
Notice its simple brilliance in the exact reproduction of his formula:
1. Make a will
I have said this enough number of times on Subramoney. com, however results are a consequence of action, NOT GOOD INTENTIONS. How many of you actually got down to do it – that is the question.
2. Pay off your credit cards
More an American problem, but yes pay off all your credit cards, cut up all your credit cards, except one, and hey learn to live within your income.
3. Get term life insurance if you have a family to support
Even if you are in business – say you are a partner you will need business insurance. Make sure that the firm pays the premium and insures the partners. So that in case of a partners demise the firm does not suffer.
4. Fund your 401k to the maximum
In the Indian context this can mean the PPF or the NPS. I fully agree with the PPF, but hate to say that I do not like the NPS. However at an younger age I would put more in ELSS and at the age of say 50 start pumping up my PPF.
5. Fund your IRA to the maximum
If this is your personal pension plan, yes fund it to the fullest -but remember if by paying this and PPF if all your investment surplus is exhausted, you will have to make alterations.
6. Buy a house if you want to live in a house and can afford it
Absolutely brilliant. To me affordable house is when you pay 50% downpayment for the house, not 10% contribution and a 90% loan and a 10% personal loan to pay for the stamp duty and party for friends.
7. Put six months worth of expenses in a money-market account
A combination of SB account, M M Fund, and bank FD could also work.
8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement
If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio.
Ok these are all NICE TO DO. Let us say what happens in real life.
People go to a planner and have a nice ‘MUST DO LIST’ then they go and do what ever they want! No point in telling the dietician that you are going to have idli…..and then saying ‘Oh my friends forced me…so I had butter chicken’ .
Just Do It. But do remember 3 of Nikes heroes are now in trouble!
Muthu
Scott Adams, who is the creator of Dilbert is a man of depth.
He has said that he cannot write a personal finance book more than the 9 points mentioned above.
Many may not be aware of his book God’s Debris which explores mystical side of life. He has made it available free in the web.
A client gave me a book recently for reading. It is ‘Pound Foolish: Exposing the dark side of the personal finance industry’ by Helaine Olen. It’s an interesting and an eye opening book and must read for all investors.
prashant
Hi Subra,
Thanks for your nice post.. 15 days back, i stumbled upon your blog and became instant fan of your simple yet effective thoughts!! Everyday I make sure to read your blog..
Regarding your comments on term insurance, wanted some clarification on online term policies.. Few months back, I had SBI Life term insurance for 50 laks(9k premium). But since online policies were much cheaper, i cancelled my policy after one year.. But now, I am unable to decide whether to go for online term policy, can we believe in them? Once I registered my number on some comparison website, started getting many calls..
Appreciate your reply
Thanks,
Prashant
sandeep
Excellent expansion of the idea.
I will share this too.
yesterday i had shared part of DK’s Mail.
Amrut
Very true in American context.
Just like to throw additional light on housing sector in US and how it is different from India.
1. In US, home loan interest rates are around 3.5 -4.0% plus you get tax breaks on your interest payments. So eventually you are doing actual investment and earning (if you actually calculate amount you are saving from taxes) from home purchase.
2. Unfortunately in India, house prices are sky rocketed, interest rates are 10-12%, tax breaks are limited so eventually you are not earning so much.
Paresh K
“Just Do It. But do remember 3 of Nikes heroes are now in trouble! ” Too good
subra
All that AS has mentioned has been written about. I keep screaming about simplicity – and i think people know. However when you offer people simple idli vs a complex convulted dish, they always choose the second dish. Same is true even in investing…
Sachin
Moral of the story – If you want to get rich, eat idlis.
Just kidding!
It will be an interesting exercise. When we go to a restaurant with a group of friends, let’s observe what everybody orders – who orders idli, poha, upma and who orders potatowada, butter masala dosa, samosa etc. and then compare what we know of their financial status and life styles.
ddshah
Yes Sir….this reminds me the simplicity of GANDHI BAPU…