10 Tips for Healthy and Wealthy life

Start Early

The key to good health is starting early and maintaining the regime of exercise. Ignoring health and fitness at a young age could lead to early, the onset of issues and complications as you grow older. Think of it as an investment for your physical well-being. Wealth accumulation too is a long-term process, which if started early, makes the journey of retirement much easier. It is also very important to understand how your investments multiply over a period. In financial terms, it is known as the ‘Power of Compounding’. Early investments, no matter how small it is, can take you a long way in your journey towards financial prosperity. The compounding effect can generate even more earnings by way of interest, dividends and capital gains that accumulate – so your money can grow fast and faster as the years roll on.

Tailor-made

There is no such thing as a universal health and fitness regimen. It is something that needs to be tailor-made for every individual, based on a host of factors such as your current levels of fitness, goals and objectives, body-type, age, current diet and so on. Similarly financial planning is a process that takes into account multiple factors pertaining to your current financial health, life goals and risk appetite. Like good health, there is no ‘one size fits all’ formula for financial health either. What is good for one person, does not necessarily make it right for you. Financial planning is an individual exercise and needs to be tailored for every individual.

Balanced Approach

The secret to staying healthy is to eat well and having a well-balanced diet that comprises of all food groups that provide the requisite nutrition. Avoid certain foods that contain empty calories and don’t do much for the body. Similarly a key aspect of a financial plan is a diversified portfolio that balances risks and returns based on an individual’s financial objectives.

Discipline is Non-negotiable

Staying fit requires a lot of discipline and self-determination. It requires you to avoid eating unhealthy foods and binge eating, to go for morning walk or jogging regularly. Any deviation or break from it, may lead to waste all the efforts you may have put in upto that point. It is as much physical as it is mental, and staying on track is the only way forward. Managing money and investments too demand an equally high level of discipline and effort. An impulsive purchase or missing out investment commitments owing to a non-critical expenditure can severely hamper your financial health.

Stay Agile

Staying fit and healthy is a continuous process. You do not plan one regimen and stick to it for the rest of your life. The objective is to remain agile and aware throughout your journey of health and fitness. Similarly, wealth accumulation is not a one time exercise. For instance if you invest in stocks, it is important for you to track the markets and increase or decrease your investment in a particular stock or sector. Failing to do this could lead to an erosion of wealth you may have accumulated by then.

Never Too Late

The first few years of a person’s life after college can be quite busy with work, taking care of aging parents, marriage, buying a home, having children and so on. Amidst all this, it is easy to lose track of financial planning or failing to do it all. And perhaps by the time you realise, it could be easy for you to fall into the ‘it is too late now’ trap. Remember, whether it is health or money, it is yours; your future depends on it and you are responsible for it. So no, it is never too late to start the journey for a good health and financial planning.

Avoid Investing in Stocks Based on ‘Tips’

Very often we come across self-proclaimed ‘experts’ or ‘well-wishers’ who recommend certain investments based on information which they and only they claim to have. The golden rule is to avoid any investment based on tips, just as you must avoid taking medicines based on internet or other non-medical/unqualified persons. Just as quacks are not the ones who give good medical advice and we avoid quacks, there are quacks like ponzi schemes/telecalling scams which should be totally avoided.

Ponzi Schemes

Actually speaking, a ponzi scheme is nothing but a scheme to cheat. According to Wikipedia, the basic premise of a Ponzi scheme is “To rob Peter to pay Paul”. Initially, the operator will pay high returns to attract investors and entice current investors to invest more money. When other investors begin to participate, a cascade effect begins. The “return” to the initial investors is paid by the investments of new participants, rather than from profits of the product. More than often, high returns encourage investors to leave their money in the scheme, so that the operator does not actually have to pay much to investors. The operator will simply send statements showing how much they have earned, which maintains the deception that the scheme is an investment with high returns. How long a Ponzi scheme manages to survive, depends on the operators ‘skills’. By design, it is bound to die, leaving investors to loose their money, sooner or later.

So how do you identify a Ponzi scheme? Just visit SEBI https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognised=yes) and RBI’s websites (https://www.rbi.org.in/Scripts/BS_NBFCList.aspx), to check if the scheme or the company offering it, is a SEBI registered Collective Investment Management Company or RBI registered NBFC or not. If not, just stay away. If you want to read more about various ponzi schemes, visit https://en.wikipedia.org/wiki/List_of_Ponzi_schemes

Phishing and Telecalling Scams

There is a huge rise in financial frauds through phishing and telecalling where fraudsters pretending to be authorized person or agent of bank calls you and make you to share details about your bank account, password and / or OTP. This information is then used to hack into your bank account and clearing it out. Please remember that no bank will ever ask for these details. If you get any such calls, just disconnect the call and block the number (if you want to disable it from calling your ever again). If you get any SMS, please do not reply with any information. Simply walk into your branch to check with the staff about such schemes.

Take Health Insurance

Despite your all efforts to stay healthy, sickness and medical emergencies are not completely avoidable. Many factors such as stress, increasing pollution, decreasing air quality etc. have lead to emergence of various lifestyle-related diseases and corresponding expenses. This category of expenditure increases with age, whether you like it or not. So medical or health insurance is a must and should be a critical component of your financial planning. Failure to do this could have an adverse impact on your personal as well as financial health. Having said this, while taking health insurance is important, even more important is to choose a right health coverage plan which suits ‘your needs’. (We would cover this topic in detail in one of next issue of the newsletter).

A. Sulthan

Author and Assistant professor in finance

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