Girish Ganaraj | Finwise

But I am scared of Equity!

Girish Ganaraj Financial Planning, Personal Finance May 30, 2019May 30, 2019financial planning, Goal-based investing, Investment Planning, personal finance 0 Comment

During most client financial planning conversations, the financial planning process generates a sort of awakening. For some, its like “blinkers off”, while for some others, it’s like “a huge load off my shoulders”. For some, it’s a scientific validation of their understanding of their finances, while for others, some aspects come as a rude shock. But usually for everybody, the discussions lead to a clear shared understanding of their current financial position, a discovery of what their financial future priorities are and what they need to do going forward to achieve them.

As a part of our conversations, we also transparently share the short-term volatilities that asset classes like equities have, which could lead to a capital loss of even 20-30%, even if temporary. Over the course of our discussions, most customers end up building comfort with various available asset classes, as well as the differences between them. With our help, they also get to know what (and how) they will need to invest in each asset class to achieve which goal, and get comfortable with the risk-return trade-offs of each asset class.

Rarely though, we come across some customers who are quite resistant to the idea of investing a part of their savings into equity, irrespective of how critical it is to achieve their financial goals. When we try to understand more, the following deeper truths emerge

I do not want to take any risk, I am very conservative
I just don’t understand Equity
I have no idea of how the stock market works
I am worried that I will lose all my money
I prefer to invest in something I understand – like Real Estate or Gold

To many of you, these reasons may sound familiar. So, how can these worries be addressed?

For us, these worries are opportunities for us to understand customers better so that we are able to adapt their investments to their risk appetites in the best possible way, while enabling them to meet their goals. At the same time, it is also an opportunity for customers to understand a bit more about various asset classes, especially the ones they do not know much about, confront their beliefs and overcome their fears.

Irrespective of your mental approach towards decisions, the below rationales should help you to understand and update your beliefs about the risks attached with equity.

History shows that while in the short-term, investments in equities are very volatile, in the long-term, a well-selected and adequately-diversified portfolio of equity mutual funds is very safe from a capital loss perspective. The below table illustrates this

A significant part of our own portfolio is in equities and we are usually invested in most recommendations to our customers. Our own experiences in investing in equities has been very positive. This also helps build confidence in our customers that we have skin in the game and that our interests are aligned.

Many customers who come to us have a significant % of their Net Worth in Real Estate, which hasn’t had a great run in the last decade or so. That being the case, the risk of remaining further invested in Real Estate is higher, and investing in equities not only helps them meet their goals more safely, it also reduces risk in their portfolio through diversification.

As a people, we are used to taking risks in many aspects of our life. We take those risks by managing them better, by constantly building and updating our understanding of the risks and taking appropriate corrective actions, when needed. Our approach to risks in investing needs to be similar.

Equities are an important asset class, arguably the most important from a wealth creation perspective, and much needed for all of us to meet our long-term financial goals. Avoiding Equities due to your fears of them is something that can severely impact your financial security in the future. The better thing to do would be to understand your reasons for fearing equities and seek the correct information in order to overcome them.

Finwise is a personal finance solutions firm that helps individuals and families plan for their financial goals, follow their passions and achieve financial independence. For consultations, please reach us at getfinwise@finwise.in or +91 9870702277/9820818007.

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Managing our fears while investing our money

Girish Ganaraj Financial Planning, Personal Finance May 22, 2019May 22, 2019Asset Allocation, fear of investing, Goal-based investing, investing 0 Comment

“Planning is bringing the future into the present so that you can do something about it now.” – Alan Lakein

While we have always lived in uncertain times (is there any other kind?), none of us actually welcome uncertainty, especially in our personal lives. As human beings, we avoid uncertainty – just evidence the popularity of daily horoscopes or the rush for numerologists and astrologers.

While we are fearful of uncertainty, we are generally good at managing it. One of the ways one can manage uncertainty is by preparing for it. One way to prepare well for uncertainty is to plan for the probable outcomes.

In many facets of our life, we manage uncertainty very well. A person catching a regular train to work keeps a buffer of a couple of minutes to reach the station to account for a sudden traffic jam. He will also have an alternate plan to reach work in time, just in case the train is missed (eg. take a cab). While this may seem a very basic example, this principle is employed everywhere by us.

Also, when we plan for uncertainty, we plan suitably keeping in mind the “risk”. We make sure that we don’t take more than an acceptable amount of risk for a given event, depending on the severity of the uncertainty and the opportunity cost of failure. We use a “margin of safety” to manage uncertainty and the higher the uncertainty or the higher the stakes (probable losses), higher is the margin of safety. The whole objective is to try and make sure that the plan doesn’t fail, except in extremely unforeseen circumstances.

Eg. in the above case, in order to catch a local train, one would be comfortable reaching the station about a few minutes before the departure time. But in case of an airplane journey, one generally reaches the airport nearly 1.5-2 hours before the journey. This is despite knowing that the check-in counter closes only 45 minutes prior to departure. In this case, we keep a higher buffer because the “cost” of a missed flight here is much higher than the cost of the missed local train.

So how is this relevant to Investing? When we invest our hard-earned money, we wish to reduce uncertainty. Hence, we seek surety in returns. We also fear the risk of capital loss, even if it temporary. So, how does one handle these fears? Let us attempt to answer this in light of what we learnt from the above quoted examples.

One lesson is to choose the appropriate asset class depending on the time-horizon of the investment. When you do that well, time is the “buffer” that ensures that “risk” (eg. market volatility) gets evened out and generates the necessary return over the long term. Going back to our example – when we have enough time on our hand to reach the airport in time, does an unforeseen traffic jam (or a punctured tire) worry us? The answer is no, because we know that this is temporary, and we have enough time to reach our destination comfortably.

Another lesson is to have a “margin of safety”. As a retail investor, not following the herd to jump in when markets are booming would ensure that “margin of safety” is not compromised. Making sure that your asset selection is in the right products and in the hands of accomplished managers also helps manage this risk fairly successfully. After all, trying to catch a flight with 30 minutes left (before counter closes) versus 5 minutes, would make your journey so much more worry-free in terms of experience, even with the unplanned traffic jams and punctured tires, wouldn’t it?

Having fears while investing your money is natural. They cannot be wished away. But they can be managed and overcome by implementing these lessons. Having a plan for your financial goals, which identifies the right asset classes and investments to meet them, can make your investing journey a far more peaceful one, despite volatilities that will be faced along the way. And having a good financial planner to hold your hand through the planning journey, while keeping in mind your needs and risk appetites, will make sure that you will enjoy your present, secure in the knowledge that your future is also in safe hands.

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You spend across the globe, do you also invest internationally?

Girish Ganaraj Financial Planning, International Investing, Personal Finance April 26, 2019April 26, 2019Diversification, financial planning, International Investing, Investment Planning 0 Comment

One of the key pillars of building a stable yet strong investment portfolio for your long-term goals is Diversification. The objective of diversification is simply to “not put all your eggs in one basket”. Ie. apportion your money across different investments, in order to reduce risk. Conventionally, diversification for retail investors has meant the following –

Invest across asset classes – eg. Equity, Debt, Gold, Commodities, Real Estate
Invest across categories – eg. within Equity – large/mid/small cap, within debt – liquid, duration, credit risk

One key area available for diversification, yet, not taken advantage of by the retail investor is – Geography. Think about it – while we all agree that as a country India has a great long-term future and is one of the fastest growing markets in the world, from a risk perspective, having all your investments in one country – isn’t it another way of “having all your eggs in one basket”? While during happier times your pure Indian portfolio might grow healthily, what about the volatility risks during uncertain times (eg. global recessions, oil prices peaking – haven’t we seen these before?) when global money flows out of emerging markets such as India?

One key factor that large and HNI investors use successfully to not only de-risk their portfolios but also take advantage of global growth cycles is investing internationally. This has many advantages

Companies such as Apple, Google, Amazon, Facebook, Netflix – are driving huge behavior and consumption changes across consumers. And none of these are Indian. Investing internationally means having a finger in this pie.
Most clients we meet today have a significant portion of their goals planned abroad. Eg. Children’s foreign education, International holidays every few years both before and after retirement, destination weddings abroad. Investing internationally helps you plan for these goals better.
While India is a higher-growth market, it is also a higher inflation country, and hence its currency depreciates against most developed country currencies eg. Dollar, Euro, GBP. Investing abroad allows you to take advantage of the rupee depreciating and adds to the gains.

Remember though, investing internationally also has its share of “new” risks that one needs to plan for. Eg. knowledge of global cycles, international geo-politics and its impact as well as currency risks. That said, there are significant investment opportunities available today that helps us invest internationally. More importantly, not investing internationally may be a bigger risk over the long term, keeping in mind the increasing inter-connectedness the world is moving towards.

It is also not something that a retail investor can DIY. It is important to reach out to a trusted financial advisor who can help you sift through and find these opportunities. For our clients, who have anywhere between 10-25 years left for retirement, we recommend at least 10-20% of their investment portfolio should be invested abroad, both to take advantage of global investment opportunities as well as act as a hedge during volatile times.

Going on international holidays or spending on international products – a good part of your expenses goes towards international companies. Then, why haven’t you invested a decent part of your inve/stments in them yet?

Finwise is a personal finance solutions firm that helps both residents and NRIs plan for their financial goals, follow their passions and achieve financial independence. For consultations, please reach us at getfinwise@finwise.in or +91 9870702277/9820818007.

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Why being a diligent saver may be making you a bad investor

Girish Ganaraj Financial Freedom, Financial Planning, Personal Finance April 10, 2019April 20, 2019financial planning, Saving vs Investing 0 Comment

“Saving is a great habit, but without investing and tracking, it just sleeps” – Manoj Arora

In general, we are aggressive savers and “keeping something aside for a rainy day” comes to us more naturally than most (probably because we live in a country that is used to quite a bit of excess rain! 😊). We are people who save because we are taught to save. For most of us, our earlier generation (or the one before that) has gone through tough times bringing their children up and we have seen it. We have lived through times of “scarcity” and this scarcity has automatically built into us the values of both prudence (living within our means) and caution (hesitation to take the risk).

This prudence has held us in good stead and manifests itself in our lives in many ways. Not only do we usually have Plan Bs (ie. jugaads) ready for most important situations (ab kya karein is not something we get stuck at usually), it has also taught us to have a savings habit and spend carefully. Our ability to survive and manage short-term household cash crises is also quite good, purely because there is some savings lying somewhere that turns up to be used in that emergency.

At the same time, this caution has led us to being not-so-good investors. For most of us, our investing experiences are formed by what people around us have done. Hence the moment one has a secure job, “ghar kareedna hai” becomes the goal. For our earlier generation, investing a large part of their savings in gold was common since “bachchon ki shaadi mein dena hai”.

The values of caution have also been built into us because of past experiences that we may have had or seen. Someone in the family losing all their money because “usne share-market mein gawah diya” can be a very tough experience for a young adult and can form the basis for his or her life-long investing thinking process.

As financial planners, we commonly see large parts of client savings parked in illiquid assets such as gold or real estate. Most clients we get usually have significant holdings in these asset classes, to the extent of being too dependent on the performance of these asset classes to secure their financial futures. What such strategies also end up risking is that while we spend our lives building “assets”, we don’t necessarily have enough wealth when the time comes, and corrective actions in such situations, unless taken in time, also can prove costly.

It is only recently that people are getting more comfortable with financial assets such as mutual funds, and stocks. Even today, personal finance and investing isn’t taught to kids right from school to graduate programs. It is ironical sometimes to see senior professionals, directors and vice-presidents in large companies, managing company balance-sheets and P&Ls, but struggling at home to have a clear plan that will help them secure their long-term goals.

The fundamental issue with not knowing the basics of investing means 2 things. One, you are dependent on the mercies of whichever “salesperson” you meet (whether from a bank/NBFC, a newspaper ad or a well-wisher friend/relative) to take your investing decisions. Two, even more importantly, you are dependent on the vagaries of luck and time to determine whether you have made the right choice or not.

So, what can we do about it? While Saving is about controlling your expenses to keep aside something for the future, Investing is about making sure it is enough when the time comes. This requires the layman to have some rudimentary knowledge about various financial assets, the return they can generate as well as the risks they entail over various time horizons. Importantly, it also requires us to recognize the corrosive power of inflation on our savings and the ability to assess which investments can build wealth over the long term and which erode it.

Investing is primarily about understanding risk and putting your money to work when and where it favours you. It is not something alien to us since we generally take risks in other domains all the time. In today’s times, we cannot remain ignorant about the basics of investing especially when it does seem that the future of wealth creation lies more in financial assets like equity, mutual funds and bonds, rather than conventional old-time favourites such as real estate and gold. Start your learning and investing journey today. If required, reach out to a good financial planner, just make sure that their interests are aligned to yours.

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Dont just plan to invest, Invest to a Plan

Girish Ganaraj Financial Freedom, Financial Planning, Personal Finance March 20, 2019March 20, 2019financial freedom, financial independence, financial plan, personal financial planning 0 Comment

“If you don’t know where you are going, you will probably end up somewhere else” – Laurence J. Peter

There are two reasons why people don’t achieve financial independence, despite being able to. I have earlier written about one reason, which is the importance of “understanding (as against underestimating) the long-term”. Today, let us talk about another, which I have termed (a bit simplistically) as “lack of direction”. Lack of direction here pertains to 2 important aspects of our personal financial “kundli”, which is unique to each one of us.

While it is good to enjoy the journey, its important to know where you are going!

The first is about knowing how good (or bad) is our financial situation with respect to the quality of life that we are leading currently. As a people, we are savers, and most people we meet usually show fair diligence in terms of managing their personal “fiscal” situation. A few times though, we do come across clients who need help in managing their “personal budgets”. Where this goes awry usually is in terms of either having excessive debt, especially of the wrong kind (to fuel a lifestyle which threatens to become unsustainable) or being prone to impulse big-ticket purchases – either for unplanned holidays or gifts or expensive goods to add to their home.

Such situations are relatively simpler to address, since all it requires is enabling people to “allocate” their incomes to different “wallets” and to have the discipline to do this consistently, month after month. There are easy tools that do this such as maintaining separate accounts for incomes and expenses, using pre-set sweep-outs to ensure regularity, maintaining the savings in a not-so-accessible demat account, and having a monthly income-vs-expenses check.

The second aspect is about how well are we preparing to face our future financial needs. While most people have a handle on their present financial situation, when it comes to knowing how prepared they are for their future, most are fairly unprepared. Here, what’s interesting to note is that while we are good savers, we aren’t necessarily good investors. This could be because our investing decisions are usually ad-hoc, driven by what friends and acquaintances tell us or to meet our aspirations.

Quite a few clients we meet don’t necessarily know what they are investing for (except that it seems to be a “good” avenue for “returns”) and what is the “outcome” that they desire from this investment. A key “minimum qualification” to become a good investor is to know what one’s financial goals are, which part of one’s investment portfolio addresses which goal, and with what compatibility.

An easy tool for this is what is simply called a “personal financial plan” which maps your savings and future investments to your goals, and also recommends the best investments to achieve the goals in the most effective and optimum-risk manner. A good financial plan ensures the right mix of asset classes to provide both liquidity as well as stability, the right priorities in terms of goal-funding and the right amount of risk taken to generate the best return, depending on the time-frame of the investment and the risk-profile of the investor.

Achieving financial freedom (or even getting on the road to it with an even chance of getting there) requires you to know what your future financial goals are, and put in place a good plan to fund them from your savings today, thereby giving you the peace of mind that you are not compromising your tomorrow. A good financial planner, whose interests are aligned to yours, can help you put this together for a reasonable fee, while taking the load off you entirely in terms of monitoring and course-correcting, allowing you to live your life fully in the present.

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Don’t Underestimate the Long-Term, Understand it

Girish Ganaraj Financial Freedom, Financial Planning, Personal Finance, Retirement February 13, 2019February 13, 2019compounding, effect of time, financial planning, inflation, long term, Retirement planning, underestimate 0 Comment

While most people can be financially free, many don’t reach there. My earlier article spoke about 2 reasons (that I have observed, there would be more) – Underestimating the long-term and lack of direction. Today, lets understand how people underestimate the long term (and possibly why).

“Humans are terrible in predicting the future. We really overestimate what we can do in the short term and underestimate what we can do in the long term… If we can glimpse even a couple of years into the future, even that’s difficult to do” – Bill Maris

Underestimating the long-term is key to understand, since it is a weakness in the way humans think. We are used to thinking linearly whereas events in life have exponential effects – both on the upside as well as down. While the above quote originally alluded to technology driven evolution, it equally applies to the effect that money decisions can have on one’s future.

The upside impact of time is fairly straight-forward and I will not elaborate much on it as most of you would know it – the effect of compounding over time on money. Suffice it to say that this is like a lottery that you have a near-guaranteed chance at winning, the only condition being to start early. A common example that many mutual funds show to promote starting SIPs early goes something like this.

a SIP of Rs 10000/month from age 25 to 35 (10 years) creates a corpus of Rs 4.60^* cr at age 60 (ie. Start early with a sum at age 25, invest for just 10 years)
a SIP of Rs 25000/month from age 35 to 60 (25 years) creates a corpus of Rs 4.74^* cr at age 60 (ie. Start just 10 years later, but with 2.5x the sum, invest for 25 years)

* (12% pa rate of return assumed in both examples, monthly compounding)

On the other hand, the downside impact of time is not something that is understood as freely. Here, there are 2 impacts that one needs to watch out for, namely Inflation and asset mix.

As we already know, Inflation reduces the purchasing power of your money, and therefore you need more every year to maintain the same lifestyle. Importantly, lifestyle inflation (which is what impacts us) is also a few percentage points higher than the headline inflation that is reported.

What this means is we do not readily understand the sums of money that we need for events/expenses that are beyond a few years ahead. Let me share a recent customer conversation. The customer is nearing 50, and has 2 goals, one short term (daughter’s marriage 3 years away) and the other a bit more into the future (retirement at 60).

His initial estimate for the cost of the marriage was fairly accurate. He estimated a requirement of Rs 70 lakhs 3 years from now, considering a current cost of Rs 50 lakhs. At an estimated lifestyle inflation rate of 8%, the required amount is approx. Rs 63 lakhs, hence not very off the mark.

But when it came to retirement, his estimates were way off. Basis his current monthly expenses (only him and his wife) of Rs 2 lakhs per month, he estimated that by age 60, he might need about Rs 3 lakhs. While intuitively this seems ok (a 50% increase!), when one looks at the effect of inflation on it, it is very inadequate. Assuming a lifestyle inflation of 8% per year, the sum required 10 years ahead per month goes up to Rs 4.32 lakh!

Remember this is nearly 44% higher than his estimate, month after month, for an entire retired life, of maybe 25-30 years. An underestimation like this proves very costly for retired people, needing them to make drastic changes to their lifestyle, at a difficult age, to sustain themselves.

A connected but important effect of underestimating the long-term is having an adequate corpus, but with the wrong asset mix. A real-life example occurred recently with very close family friends who came to us for advice.

While the retired couple were reasonably secure financially, the bulk of their assets were in real-estate, gold and fixed deposits. Their cash-flows were in control currently, but in a couple of years from now, they would have had to start breaking their deposits for monthly expenses, and were projected to exhaust them in about 8 years, leaving them with assets but no cash.

While these assets are safe, they are both illiquid and not necessarily inflation-protected. While real estate may protect inflation to some extent, important to remember than it has the disadvantage of not only being very illiquid, but also stops appreciating at market rates once the house is more than 20-30 years old.

The effect of time on money can be deleterious if not estimated properly in time and necessary corrective actions taken. Hence, underestimate this risk at your own peril.

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So, what does it mean to become Financially Free?

Girish Ganaraj Financial Freedom, Financial Planning, Personal Finance, Retirement January 23, 2019January 23, 2019financial freedom, financial independence, financial planning, retirement 0 Comment

Dear readers, as I said in my last article, the most significant words that I have experienced since becoming an independent adult have been “Become Financially Free”. So, how did these words happen? And what do these words mean?

As I mentioned in my earlier post, early in our careers, (am talking about 1999-2000), like most people our age, we were merrily travelling along life’s highway, earning, spending and salting away a bit for the future, and ticking away at various “achievements” which were largely material acquisitions. But our middle-class genes also automatically built in some caution and I remember that we had started thinking about what should be the financial goal that we should be looking to build to “be comfortable”. At that time, the number “x” seemed both luxurious and unattainable and hence that was the number that we set ourselves a “target” to reach.

Of course, as a few more years passed by (by about 2005-6), the number started looking small! Not because our nest egg was getting closer to the number though, since we had continued to follow a fairly haphazard (in hindsight) approach to building wealth – a second house, some bit in the stock market, some insurance, etc. Just that “x” suddenly seemed both “within reach” and “not enough”. So, the target became larger (about “3x”) and we continued to earn and spend while saving up.

As we entered our middle years (around 2011-12) and our kids started growing up, life began to resemble a treadmill. Just that while the run in itself was enjoyable, the faster we went, the faster the treadmill also seemed to go and the ultimate destination seemed like a mirage. The target again started seeming “not enough”. That’s when we consciously decided to slow down the treadmill and asked ourselves a few questions.

What kind of lifestyle did we desire for ourselves and our children?
How much of a role should debt play in our lives?
What is really the corpus that we wanted to “be comfortable” for the rest of our life?

Our search for answers to these questions helped us fulfil our need for financial security as well as discover the concept of “financial freedom”. Essentially, Being Financially Free in the simplest way meant having enough money that one need not have to work for money for the rest of his or her life. That said, it isn’t as one-dimensional as that. Being Financially Free necessitates the following

Having enough money to ensure that all foreseen (and unforeseen) expenses are taken care of
Still having money post that to take care of all future events/milestones until one’s death
Making sure that assets are in the right form to enable one to live the lifestyle that one has planned for
Last but not the least, making sure that your money is invested wisely enough to ensure that it is not getting eroded by factors such as unplanned expenses, inflation, market cycles, illiquidity, concentration, etc.

This process also helped us recognize the fact that how much people go wrong in their understanding of money and their efforts to build wealth. And 2 reasons stood out

Underestimating the long term – both in terms of inflation as well as asset composition
Lack of direction – Building assets doesn’t necessarily build adequate wealth, unless one knows what are one’s milestones and goals

In our personal case, as we underwent and completed the comprehensive planning exercise for ourselves, we discovered that the “number” we were looking for to be “comfortable”, rather “financially free” was about “10x” from the original number we started with, and that too in current value terms. We now know what is the number we are working towards, and we also have a clear understanding of what are our future financial milestones and how we need to plan for them.

As an aside, our personal experiences with money helped us set up Finwise, a firm that helps busy people achieve their financial goals, grow their wealth substantially and work towards financial freedom. In a way, we ourselves were our first “financial planning” customer!

I hope our story helps you understand what it means to “Be Financially Free”. Do let me know your thoughts at getfinwise@finwise.in.

Finwise is a personal finance solutions firm that helps people plan for their financial goals, follow their passions and achieve financial independence. For advice, please reach us at getfinwise@finwise.in or +91 9870702277/9820818007.

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The 3 most important words I have said as an adult

Girish Ganaraj Budget, Financial Freedom, Financial Planning, Personal Finance, Retirement January 9, 2019January 23, 2019 2 Comments

Becoming an adult is one of the biggest thresholds that a human being crosses in his or her life. For a young one on the verge of this threshold (for context, we are talking here about the legal definition of crossing the age of 18 years), it comes with the promises of many excitements and thrills. It is about being an independent person (As Bollywood would say – apne pairon par khada hona), owning a driver’s license, the right to cast a vote, legally marrying a partner and much more. It also comes with the sense of responsibility of having to fend for oneself officially since he or she is no longer on someone’s dependent list. It is also about being responsible about making many important life choices, including partner and career.

So, all of my readers, tell me, which do you think are the most important 3 words that you have ever said since becoming an adult? While I am sure there would be many, am putting down below a few which I would think make the top of the list.

Right at the beginning, there’s the cliched but very important “Mujhse shaadi karogi / karoge”. Arguably one of the biggest decisions that a young adult makes is to select his or her life partner and these three words signify a huge commitment that one makes, one that is expected to last the entire lifetime. These 3 words would count as some of the most important words said, and rightly so.

But there are others. As the early excitement wears off adulthood and responsibilities begin to make themselves felt, 3 more important words are uttered, this time, “Buy a house”. Important because, these signify a long-term financial commitment that the young adult makes from the meagre salary that he or she makes, all for the promise of “apna ghar”.

And then, as the years pass by, either due to personal choices or egged on by familial pressures, the next set of 3 words get uttered, these being “Start a family”. Again important, because, apart from long-term financial commitments, these words also add the responsibility of bringing up new lives in this world, with the right set of values, just as the adult was brought up, many years back.

There may be more, but I would guess the above 3 would largely be the 3 biggest decisions that any adult would take in his or her life, especially in their early adulthood years. I have to admit, I have uttered all the above, and whenever I said them, they felt to me at that time to be the most important words that I have uttered until then.

So then, which of these 3 were my most important words, you ask? Well, while at the time I found each of these to be very important, let me say that my most important 3 words are none of these, especially with the benefit of hindsight. So, what are my most important 3 words?

My most important 3 words were uttered some years back, in what I would like to think was a moment of enlightenment. And they were – “Become financially free”.

Let me explain. Like most adults my age, I was caught up in the race to build assets and fulfil responsibilities, and like all others, went about “ticking” off the various “goals” – namely marriage, first house, second house, children, nice cars, latest gadgets, name it. Thankfully, both me and my spouse Prathiba come from middle-class families and still remember those struggles that our parents went through in bringing us up. Somewhere, as we were zipping along merrily through this “tunnel”, prudence prevailed and we also started looking for the light at the end of it.

It was then (about 8 years back) that Prathiba and me decided that we would become first debt-free and then work towards becoming financially free. We achieved our first goal of becoming completely debt-free about 5 years back and since then are working our way towards achieving financial independence. For us, financial independence means having enough money or assets to take care of our major goals in life, allowing us to work towards one’s passions.

Following this and emboldened by our own experience, Prathiba left a lucrative private sector career and founded and successfully runs a Financial Planning firm called Finwise Personal Finance Solutions some years back, which helps families plan for and achieve financial independence.

As far as I am concerned, I spent a few more years in the corporate world to bolster our financials and have recently left the corporate world to join Prathiba and grow Finwise to the next level. This would have been unthinkable a few years back, but timely planning as well as diligent focus over the last few years has allowed us to take this bold step.

So, now that you have heard my story, what’s yours? Have you discovered 3 new words that seem important to you? Do you wish to get on the path of financial independence? Do write in to me with your thoughts at getfinwise@finwise.in.

Finwise is a personal finance solutions firm that helps people plan for their financial goals, follow their passions and achieve financial independence. For consultations, please reach us at getfinwise@finwise.in or +91 9870702277/9820818007.

Image credit: Unsplash.com, Shot by Victor Rodriguez