For your investments to succeed you need to have a lot of insurance. Let me explain. Let’s say my father started investing in 1960, and I started investing in 1980 and my daughter starts investing in 2018. Remember we are building on what is already there. For money to compound over long periods of time there should be no interruption. For there to be no interruption all your other distractions should be INSURED.

What could be the interruptions?

Assuming that my father started investing Rs. 1000 a year, I started investing Rs. 3000 a year and my daughter starts investing Rs. 100,000 a year – all this compounding would come to a nought if it was interrupted. What could be the interruptions?

Well it could be the following:

a. Big medical expense – the word ‘big’ may have meant different things at different points in time. Say my grandfather fell ill and my father had to spend Rs. 50,000 and that was uninsured. My dad’s compounding would have been impacted by 5 YEARS! That is not small considering that a man invests for only about 25 years of his life!

b. Day to day expenses including expenses like marriage – if you can meet your day to day expenses from your current income, and savings you may not interrupt your compounding. It happens that some people spend a huge amount on weddings – interrupting their compounding. If you earn very well, that earning is an INSURANCE against interrupting the compounding.

c. No other asset class investing – if you are pushed by your parents into buying a house (one house, second house….this game never stops), gold for your sister’s marriage, etc. all that diverts money from equity / potential equity investments. All these are interruptions to the compounding game that you have started.

d. Good qualification / good job / good cash flow: whether you do business or are in employment you need to have good cash flow to meet your day to day expenses. Also there should not be a long period of poor cash flow. This ensures that you are able to keep investing regularly and even if you do not invest at least you are not selling your investments to meet your day to day cash requirement.

e. No natural or man made calamity: Imagine you had a house in Bhuj…and lost it in an earthquake! It would have upset all your calculations of how to build your wealth.

So Investing is a must. Choosing a good, smart adviser is a must.

Investing regularly in a good portfolio is a must,

Keeping the process uninterrupted is a must – remember insurance and prayers are the only things which can help here!!