By looking at my clients’ desires and following the madness of social media I thought to share my 10 thoughts about personal finance. I hope you enjoy it!!
# FIRE (Financial Independence Retire Early) is OVERRATED
Recently, I expressed this perspective on Twitter (now known as X), and a few individuals who assert they have attained Financial Independence, Retire Early (FIRE) and spend their time on social media promoting their insights or courses deemed it a partial truth. I cannot alter their views. Nevertheless, the purpose of sharing this perspective is twofold: Firstly, many aspiring FIRE individuals lack clarity regarding what to do upon achieving this goal, and they often struggle to comprehend the true meanings of FREEDOM and HAPPINESS. Their primary aspiration seems to be escaping their current professions, which they find deeply frustrating. Additionally, the urgency to amass wealth significantly increases the likelihood of making poor investment decisions, often resulting in mis-selling. The financial industry is keenly aware of this and preys on those who wish to achieve wealth quickly.
Majority souls who are desperate about FIRE (Financial Independence Retire Early) are in reality, souls who are exhausted due to work pressure.
But clueless of how to achieve & what to do after achieving.
The financial industry or experts know well how to exploit these souls.
— BasuNivesh Fee Only Financial Planners (@BasuNivesh) August 16, 2024
Numerous billionaires possess the ability to act according to their desires at any time and to spend their wealth without limitation. However, a significant number of these individuals appear to be unhappy or fail to fully embrace the freedom they are believed to have.
Achieving financial contentment is a more worthwhile objective than merely attaining financial freedom. Try to achieve contentment, happiness, health, and social connection (not social proofing).
# Money Can’t buy HAPPINESS is a half-truth!!
Although it’s true that money doesn’t guarantee happiness, this sentiment is often expressed by those who are financially well-off. A person in poverty may advocate for the notion of being unconcerned with material wealth, but it’s easier to adopt that perspective when there’s little at stake. Having financial resources can provide comfort, increase choices, and even allow for more leisure time. For example, traveling in a sleeper coach is a significantly different experience than traveling in an air-conditioned sleeper coach, particularly in the summer.
# Comparison of Renting vs. Buying a house is MISGUIDING
Few financial experts advocate the notion of renting rather than buying, primarily because their income relies on individuals investing in their suggested financial products. If these experts were to sell their current properties and reside in rental accommodations, their argument would hold more credibility. It is noteworthy that those who promote the idea that renting is significantly better than purchasing are often involved in the sale of financial products or services in some capacity.
Nevertheless, I am not suggesting that you should impulsively exceed your financial limits by taking on a substantial home loan. It is essential to approach this decision with careful planning. Ensure that you can provide a down payment of approximately 40% to 50%, and also confirm that your primary financial objectives, such as funding your children’s education and preparing for retirement, remain unaffected by this commitment to monthly mortgage payments.
# There are always few people who are richer than you and faster than you
If you start to look at society, you will find that there are always few people richer than you and creating wealth fastly than you. It does not mean you have be in that trap of race. Your birth, where you grown up, your parents financial life, your education and your journey of earning and investment is entirely different than with whom you are comparing. Hence, it is always better to feel alone in your wealth creation journey than comparing with others.
# Never ignore the biggest asset which can create a highest returns of your life
I am talking here about your profession or skills you can develop. Your profession is the biggest asset which can create the highest returns in your life than all these investments. Hence, always try to create a NEED in your industry for your skill.
It does not mean that we have to ignore the investment or personal finance. However, my point is that concentrate on upgrading your skill or learning new skills. Once you create a NEED for your industry then the cashflow will be of long term.
# Majority of BIG Cars and BIG Houses are under EMI trap
Observe your friends, colleagues, or acquaintances; many of them who possess large vehicles and spacious homes, often exceeding their actual requirements, find themselves ensnared in an EMI trap. The ownership of a large car or an expansive house by others does not necessitate your participation in that competitive pursuit.
If you find yourself entangled in this quest, it’s improbable that you’ll ever break free from its hold. Show me one person who lived happily FOREVER after buying big car and big house!! The answer is NO.
# Scarcity is in MINDSET
Indeed, an individual who is grappling with the fulfillment of their fundamental needs and experiences a sense of scarcity is distinct from someone whose basic needs are adequately met. Until one establishes a clear boundary of what constitutes “enough,” the sensation of fulfillment may remain elusive, and feelings of scarcity may evolve into a form of psychological distress.
It is important to recognize that the primary objective of the financial industry is to instill a sense of scarcity within individuals through the proliferation of various narratives. Life fundamentally revolves around the equilibrium between needs and desires.
# Frugality is a mental disease
Concentrate on creating a wealth by increasing your income than being frugal lifestyle. There are many instances in the history who few people after acquiring the enough assets still living a frugal life by curtailing their basic needs also. Don’t be in this mental disorder. Instead concentrate on earning more and trying to be a conscious spender.
Let me share with you the example of Hetty Green who is considered as the “The world’s stingiest woman”. Green was born in 1834 in New Bedford, Massachusetts, into a prosperous family that amassed their fortune through the shipping industry. In her early twenties, she relocated to New York and began her career on Wall Street, where she was one of the few women in a predominantly male environment, earning her the nickname “Witch of Wall Street.”
It was said that Green was exceptionally frugal, opting never to use hot water and shunning the purchase of costly garments. There were rumors that she wore a black dress for so long that she refused to replace it until it was entirely tattered.
There were allegations regarding the amputation of her son’s leg following a fracture, which was attributed to Green’s delay in seeking treatment and her refusal to cover medical expenses. Nevertheless, considerable evidence indicates that Green sought consultations from various specialists and even moved temporarily to provide care for her son.
On July 3, 1916, Green passed away at the age of 81 in her son’s residence located in New York City. She bequeathed a fortune that would equate to Rs.4,19,82,60,00,000 in today’s Indian currency (approximately)!!
# Never rely on a single asset class to create wealth
The financial industry conceals a fundamental reality from us: no one can accurately predict which asset class will yield superior performance. We are all caught in a cycle of speculation, basing our decisions on historical returns. Numerous financial experts present the notion that investing solely in equities will lead to wealth, but this is only a partial truth. A more prudent strategy involves adopting a well-diversified approach rather than placing excessive reliance on a single asset class.
I have consistently challenged those who assert that equity is the sole asset capable of generating wealth, by pointing out that in India, less than 10% of the total population engages in equity investment. This statistic does not imply that the remaining 90% are poor or uneducated. Rather, they have developed their own methods for wealth creation.
It is crucial to adhere to asset allocation strategies that align with your time horizon and risk tolerance. One should not automatically consider equities as risky while viewing real estate or gold as safe investments.
# Health is WEALTH
Ultimately, health is paramount. Regardless of the amount of wealth one accumulates, if one is in poor health, that wealth holds little value. For instance, possessing Rs.100 is insignificant if one is unable to move or even digest a meal. Therefore, while the pursuit of wealth is a significant endeavor, neglecting one’s health in the process constitutes a grave error.
Cultivate beneficial health practices concerning nutrition and physical activity. Surround yourself with individuals who prioritize health. Most health-related activities are cost-free, such as walking, practicing yoga, or jogging. The primary requirement is to invest time rather than possessing branded footwear or equipment.
Establishing a healthy lifestyle necessitates a reliable daily routine, much like the process of generating wealth. Therefore, to achieve both financial prosperity and physical well-being, it is essential to diligently maintain a monotonous daily regimen without exception.
