Generally investment managers emphasise a lot on financial or money management for all the people they meet. This is of course nice, their job depends on the assets under their management, so they should do this.

Let us look at it from the ‘investor’ or ‘client’ ‘s point of view.

When you are young (say age 24 to 34) you spend a lot of time LEARNING and build a base for future EARNING. At this stage you are much better off concentrating on your career. Of course you will earn – do the simple things like doing a SIP, take a term insurance, be careful while you borrow. In short keep it simple. Learning your craft, doing the extra courses, working late hours, having a good time with friends, and once in a while checking your mutual fund statements! That is how life should be. Ignoring investments is risky, and you want the power of compounding…so do your investing, but keep it simple.

When you are 34-45 – both you and your money should be working hard. Differentiate the wheat from the chaff. Jump up your SIPs. Take some big bets on equity, if you know how. Learn the rudiments of wealth creation.  Your investments are now bigger, so you have to be more careful. If you do not wish to invest in learning, just jump up your indexing. Start your PPF. Check out your pension requirements. Decide where you want to stay once you retire.

When you are 45-55: Your money has to work real hard now! you will be withdrawing for your needs like children’s education, children’s marriage, buying a second house, leisure travel etc. You will also be earning very well…It is the time when you consider quitting your job. Ascertain to see how prepared are you to quit your job. How rich you are is a function of how many months/ years can you live WITHOUT a pay packet. Get realistic about getting a new job if you lose your current job. YOU HAVE TO know everything about your money now – and make it work real hard.

I wrote this piece because I am finding a lot of people who concentrate on mutual funds, ulips, etc. but earning much below their potential! Please remember that when the corpus is small (when you are young) and extra 1-2% MAY NOT MATTER as much as it would matter when your age is more. That extra effort in finding a better job in a different location – city or country.

I hope people do not take this to mean ‘ignore your money’. NO. Just index and concentrate on your career.

Do not think that because your dad opened a PPF ACCOUNT for you when you were 4 years old (you were lucky, sure!) you will end up RICH. YOU WILL NOT. The final figure that you have in any account is a function of:

HOW MUCH MONEY YOU PUT (make no mistake, this is VITAL),

HOW SOON YOU PUT IT (earlier the better)

HOW LONG YOU LEFT IT UNTOUCHED (the best, do not keep removing to see how it is!)

Do not buy ULIPs….all those instruction stay as it is. CONCENTRATE MORE ON YOUR CAREER that is what it means.