If there’s one thing we Indians love the most; it is our freedom, the sense of liberation. We want freedom in every aspect of our lives – from simple things like what we eat, drink and wear to some of the most serious things like our career choices and political preferences. We hate it when we are controlled by anyone – parents, boss or the Government! In this context, I find it highly ironical to see slaves everywhere – in offices, parties and even colleges. Most youngsters today are slaves – slaves of money, slaves of their financial commitments.
Are you one of these slaves? Do you find it difficult to manage your finances by the end of the month? If yes, it is time for you to FLIP! Flip means
turning over something quickly. You need to turnover your financial position quickly. And to flip you need a FLIP – Financial Liberation Investment Plan. A simple, powerful and effective way to achieve financial liberation.
What is FLIP?
As I said, FLIP is a simple and yet effective way to achieve financial freedom. Let me explain how this works and how can this flip your financial worries.
FLIP consists of two products to meet two objectives. It addresses the two possible scenarios in your life – an ideal situation where life goes as planned and a realistic situation where life throws various unexpected twists and turns. And it does this through ease – by just using two products!
The Not So Good Times
First, let us look at the unexpected part. Things go wrong for everyone and they will go wrong for you too. We cannot control everything that happens and thus the only way out is to focus on how we can minimize the damage. The worst things that can happen to you is premature death or any kind of permanent or temporary loss of earning capabilities. You might meet with an accident or fall sick that keeps you out of job for weeks or months. While premature death leaves behind your family in distress – emotionally as well as financially, an accident or sickness is a double whammy. Not only you are not earning during the period of recovery, there is also a huge medical cost of getting you back to normalcy. Unfortunately, medical expenses these days can ruin families.
We need to address these concerns and the only way to do is to be adequately insured. The phrase to remember is ‘adequately insured’. If you have been follower of my blogs, by now you know that you need a term insurance plan for all earning members and a health insurance plan for all family members. But do you know if your insurance is adequate? To find out if your insurance is adequate, click here.
The Good Times
Now that you have addressed the possible concerns in your life, you need to plan for the ideal life. A scenario where you get increments and bonuses every year. A scenario where you have more money left with you at the end of the month. A scenario where all your dreams can become reality. For this to happen, you need to plan your investments well. This is where FLIP helps you achieve what you always sought.
At the core of any investment pan is the risk-return trade off. You need to understand the returns that you seek are always associated with corresponding risk. If you don’t know the kind of risk you should be taking, take a simple risk profiling test by clicking here. Once you know the level of risk suited for you, you need to choose appropriate investments to match that risk. This is where mutual funds help you.
Irrespective of the level of risk that is suited for you, there is a mutual fund for you. Not all mutual funds carry the same degree of risk and it is high time you break this myth. All you need to do is pick the combination of funds that match your risk profile and you are good to go! Yes, it sounds simple but choosing six to eight funds out of thousands available is no easy task. This is where a financial advisor comes handy. I would not advise you to go through sites offering ‘free’ plans unless you are an expert in understanding the nuances of investing. The fee that you pay a financial advisor is much lesser than that you spend on a couple of movies or a party that you hosted on your birthday!
Requisites for a successful FLIP:
Whether you want to gain muscles or lose weight, you need to adhere to certain practices if you want best results. Similarly, if you want FLIP to give you best results, you need to follow the three conditions, which I call the 3S.
Start committing money towards investments early in your working lives. You are aware of the power of compounding and to make this power work, you need to give it as much time as you can. If you had an option to choose between Rs. 1.8 crores and Rs. 87 lakhs which one would you choose? Certainly Rs. 1.8 crores. The difference between the two amounts is the difference between an investor who starts at age 25 over another who starts at age 30. So START EARLY!
In early parts of our career, our responsibilities are limited and so are our unavoidable expenses. In the first few years, you need to stretch a little more and start with bigger commitments towards investments. The reasoning is again simple – exploit the power of compounding. So START BIG!
Check out our new tool, FLIP forecaster to understand the difference starting early and investing big can make to your money.
This is one of the most common mistakes you do. You stop your investment contributions for varied reasons. The reasons I have heard from people range from ‘diverted my funds to EMI’ to ‘did not renew my SIP after it got expired’. The worst I have come across is ‘markets are down, I will stop momentarily and resume when market gets back to normal’. Stopping your investments is one of the gravest mistakes that you ten to do. Never ever stop your contribution. The guys managing your money at the mutual fund and your financial advisor know better than you about markets. ‘Markets are never up or down’ or ‘markets are always up and down’! It is just how you see things. So STOP NEVER!
FLIP will work for every individual who follows every word in this blog. Don’t wait, don’t delay, this is your time to flip before it’s alreadylate!