Financial Planning for 2 Generations – A Journey from Financial Stress to Financial Freedom !!!
Special Families have a daunting
task of planning finances for 2 Generations. The fact of the matter is most special
parents are running after various therapies and they may not be able to give
enough attention to long-term as well as goal-based financial planning.
In the early days after Shlok’s
birth (that was way back in 2009 J),
I recollect in a book namely Uncommon
Fathers, a special father, Lloyd Robertson wrote that parents are likely to feel anger and sadness after
receiving diagnosis of a special child. The
feeling of anger is perhaps due to insecurity borne out of thought of caring
for the special child whose care is very expensive, and who is likely to
outlive his or her parents. In the early years I had spent countless nights
worrying about future (finances). As author Vinayak Sapre mentions his book
“Dohanomics”, in a way I was relating to Rahimdas’s couplet (Doha);
Kharach Badhyo Udyam Ghatyo, Nripati Nithur Mann Kin
Kahu Rahim Kaise Jiye, Thode Jal Ki Meen
Over the years, as I started
reading various authors ranging from Warren Buffet to Morgan Housel, I started
realizing that Incremental Savings
channeled to long-term investments can help us realize our financial security
through compounding of wealth …of course slowly and steadily …without taking
undue risks or rather calibrated risks along the way.
In his book, “The Psychology of Money”,
Morgan Housel delves into the behavioral and psychological aspects of money
management, highlighting the role of emotions, biases, and long-term thinking
in financial success. One should go through the entire book and its 20
psychological lessons.
I found its fourth chapter about compounding
very intriguing. Everybody who is into investing has heard of Warren Buffett
and how phenomenal of an investor he is. But very few people know that he has
been investing for almost 75 years. His secret to success is time. Buffett is not the greatest when
measured by average annual returns. Jim Simons, head of hedge fund Renaissance
Technologies, has compounded money at 66% annually since 1988; whereas Buffett
is at hardly a third at 22% CAGR. Simon’s
net worth was close to $21 billion when Warren’s was close to $85 Billion. Why
the difference? Because Jim Simons didn’t have as many years to accumulate the
wealth as Warrant Buffet did. Bottom-line,
start early – save more – invest wisely and keep doing it over very long times J
Here is small check-list that special parents can look at as broader markers in their respective journeys -
- Incremental Savings realized through monthly budget etc.
- Buying Term-Life Insurance and Family Health Cover
- SIPs in Large Cap/ Multi Cap MFs for conservative investors. Mid-Cap/Small-Cap MFs either through SIP or periodic investments (Only if investor has longer horizon for investments).
- Applying for UDID card and getting aware about various govt. schemes including Tax benefits etc.
- Pursuing Careers by Mothers – At the very least, Part-time/free-lance etc. + Exploring opportunities for supplementary incomes
- Asset Allocation – It could be DIY or with help of an RIA ( SEBI Registered Investment Advisor) for goal-based financial planning
- Taking small exposure to select few stocks where the investor have working experience or domain knowledge ( Only with long-term view and willingness for disciplined ongoing study/tracking )
- Estate Planning through Will & Trust
Caution- One of the crucial things that tend to be ignored in special
families is maintaining enough liquidity for near-term needs/ emergencies. For
special families, keeping funds worth of 8-12 months' house-hold expenses is very
important.
As author Vinayak Sapre mentions his book “Dohanomics”, our ultimate goal is to reach financial freedom. That is in a way embodied in Kabir’s couplet (Doha)-
Chaah Miti Chinta Miti, Manwa Beparwah
Jisko Kuchh nahi Chahiye, Woh Asli Shahanshah
In the same spirit, cultivating savings habit within family (including kids), Asset allocation & long-term Investment mind-set would go a long way in addressing financial needs of 2 generations…at least that’s the pursuit 😀
Don’t Forget to check out my blog article featured for IDPD last year; exactly an year ago on 10th Dec 2022- "Pursuit of Happiness (& Profits too !!!)
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Sachin Jakhotia, Bavdhan, Pune (India)
Sachin is a proud special
father of a 14-yr bright youngster, Shlok. He is an active investor is capital
markets and pays close attention to asset allocation and financial planning. He is
also NISM-certified Financial Planner.
For Comments & Suggestion, Please Contact - Sachin Jakhotia /C.+91 83088 79900/ shlok.ability@gmail.com
You can find me at:
Blog: https://shlokabiity.blogspot.com/
Linked-in: https://www.linkedin.com/in/sachin-jakhotia-4602711/
This post is a part of “International Day of Persons with
Disability” blog hop hosted by Sakshi Varma – Tripleamommy. #IDPD2023Bloghop.
Access all posts of this bloghop at Championing Diversity, Uniting Voices:Commemorating IDPD Together
