When you are in your 20s and 30s which is the biggest asset that you have?

House? Car? Mutual funds? No. None of them. Then what is it?

It is your future earnings. In Finance terms the NPV of the future cash flow of your earnings. Let us say you are a CA and are in the process of doing your CFA from the US. Your current salary is Rs. 9 lakhs per annum and you will end up at a salary of say Rs. 3 crores per annum at the end of your career assuming everything goes fine.

I am sure you can put it in an excel sheet and find the NPV. So concentrating on this (hence doing CFA), protecting it (term insurance Rs. 5 crores over a period of time, start with Rs. 1 crore today) and making sure that you are in the optimal job is your FIRST WEALTH CREATION STEP.

The job need not be the best paying, but it surely should lead to a lot of learning. This is because you are laying the academic and practical foundation to a high income. Sure you should be doing your SIP, making sure you have cash for the short term needs, buying a health and term insurance, etc…..but concentrating on your learning, and laying a foundation for earning is THE MOST IMPORTANT JOB TODAY.

This extremely important asset should be assessed regularly (and for heavens sake not by peer comparison alone), and steps taken to enhance it. Remember it deserves all the respect of being the 98% of the portfolio value!

If you have a job in a government organisation, it is like a debt instrument. Sure growth, nothing spectacular in cash terms, but sure pension….so your portfolio has to be in equities. See ultimately your asset allocation has to take into account the NPV of your job. As your age increases you need to increase allocation – after all the NPV will keep falling as your age increases. If you are a businessman and have uncertainties in your business, your investments should be in less volatile assets like PPF, nsc, bank deposits. Sure once you reach a pre intended level you have to be in equities, but the start could be in debt.

So go out there get a great degree (the IIM is still a great place to get  degree from – but only A, B or K, in the current year I know the others are struggling with placements) or an Ivy League school. It is not a bad idea to pick up 4-5 years of experience and then get into ISB, Hyderabad….if you are serious about a corporate career.

Then go and learn corporate politics, know whom NOT to antagonise in the field in which you are, and encash your NPV. God bless.


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  1. Sir,
    I am a 25 yrs old clerk in a Public Sector Bank. Necessarily I must invest in NPS & also in Contributory Provident Fund. What should be the investment strategy for me? My salary appreciates by approx 15% every yr including d.a. & increment.

  2. invest the minimum in nps and cont pf. Do a SIP in an ELSS like Franklin India Taxplan, Hdfc Tax Saver or Prudential Icici Tax plan – ANY ONE of your choice…- all this for your 80C. DO NOT OPEN A PPF, or buy NSC or keep a bank fd …- all the debt instruments you are already getting in cont pf and nps

  3. If i am not wrong NPS is mandatory for PSU Bank employees who joined after 2005.
    I am working in CPSE and we don’t have pension.what should be my strategy for towards retirement corpus?

  4. No Shankar. The assumption is you understand interest movement in US and India, asset prices movement and currency movement. To me that looks tough.

    Yes if I were earning in US $ I would not mind borrowing in US for investing in an asset in India. Assuming that I do not care over a 20 year period what happens to the Re-$ rate, BECAUSE I am repaying it in US. However such a game is being played blind.

  5. Then go and learn corporate politics, know whom NOT to antagonise in the field in which you are, Advise extremely important if only it was easy to learn…..

  6. ‘Then go and learn corporate politics, know whom NOT to antagonise in the field in which you are, and encash your NPV.’

    It is the most diffficult thing to learn for me… can i request a seperate post on it…

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