Let me start with two examples.

The Airline industry is an amazing example of level playing field. An airline based in Dhaka, Sri Lanka, India, Tokyo or Singapore, all of them buy their aircrafts from the same manufacturer, have similar funding arrangements, fly similar routes, and have dramatically different Profit and Loss accounts. In fact they could even be recruiting from the similar markets.

What makes a difference between these airlines?

Similarly all the batsmen of a team have similar ground conditions, same opposition, same weather conditions, same food, access to the same gym and other facilities, same/similar doctors, – still you find a Sachin scoring 135 and say a Jadeja scoring 3.

What makes a difference between these players?

Well the quality of training, practice, talent, and of course attitude.

Now cut to personal finance.

A man earning Rs. 5 lakhs a month is successful in his professional life, right? He bought a house for Rs. 55 lakhs and that is now worth Rs. 2.6 crores. He bought a car costing Rs. 20Lakhs. He of course got married, has a wife and 2 smart children. He takes a vacation every year.

He never consulted anybody for any of his activities. Only thing is he goes to a doctor – that is so obvious, he does not know medicine.

However when it comes to investing, he does not feel the need for any consultant. He can do it himself. After all he went to the top Engineering college and then went abroad and got a top MBA degree, did he not. He is also a ‘Prime’ customer with 2 banks, and they did provide him investing advice, did they not? He was impressed with their presentations, risk profilers, and the range of options that they had given him. He had bought a few ULIPs, a unit linked pension plan and he had also invested in some mutual funds. IN fact he was told that he should have some liquidity, so he had kept some money in liquid funds too.

All seemed fine.

After all finance was not some heart surgery, was it. He could understand the need for his team to go for a 2 day training in logistics, but both personal finance and business finance, were quite intuitive, were they not?

Why attend a training for that? or have a consultant?

The last time Subra did a session in Trident he was charging Rs. 17900 for a 2 day session.

How can I find 2 days time for personal finance?

Now come to what he says to HIMSELF:

  • My portfolio is doing well
  • I have a good debt: equity assets ratio
  • I am adequately insured
  • I have grown my assets well over the past few years
  • I will be able to get my children well educated
  • I will be able to retire well.

Actually he does not know the following:

  • What is the CAGR on his portfolio, no clue at all.
  • Good asset allocation, but specifically, has no clue.
  • He is insured for Rs. 80 lakhs, his annual ctc is not very far away 🙂
  • He has money in a liquid fund, and a car loan from the same RM.
  • He has not estimated how much the children’s education will cost, he is hoping.
  • Retirement? He has no clue.

What the RM is telling him:

  • the ulip is not doing well because the market conditions were bad
  • makes sense to have some liquidity, hence the liquid fund
  • car loan because he is eligible for top rates
  • pushing him for a second home loan (sir real estate can never fall theory)
  • Retirement – sir take another ULIP

Now you decide whether he needs personal finance help. For a fee of course. If he cannot afford it, who can?

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  1. What a joke? You are intentionally making fun of Middle Class People like us. Try to include people earning Rs30,000 per month instead of Rs. 5 lakhs a month.

  2. the joke is on you Hari..change the figure to 50k a month, does the essence of the article change? the article is not saying ‘how to spend 5L a month’ it is about attitude…

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