Three secrets for a happy and healthy financial life

25 years of being a financial adviser and an investor! Being part of Gen X, I was fortunate to witness significant changes in India and their impact on our lives. Economic development, technological advances were many, and with that, the way we invest has shifted too. From a high-interest rate environment with fixed deposit rates being upwards of 12% p.a. to a 6% p.a. now and the adoption of financial instruments, change has been constant!

The years teach much, which days may never know! As I reflect on my financial journey, three things worked for me.

Being financially compatible with my spouse

Financial compatibility is generally overlooked in money management, but I found it to be an important aspect. Imagine having a partner who doesn’t share your thoughts on saving, spending, investing, and borrowing.  You would be forever arguing about money.

Money conversations are not comfortable conversations to have but understanding early on as to how the spouse views money is important. I have seen many cases where couples do not save because one partner is a spendthrift or has too many loans or they are simply not thinking about the future.

Having similar backgrounds and upbringing helped us in having converging views on savings and borrowing. In our early years, with low salaries, we followed a budget, with an amount earmarked each month for fun expenses. For large purchases, we stuck to what we could afford, rather than buying the most expensive item through loans. Frankly, it didn’t really matter that we had a smaller house or TV as compared to our friends. Thankfully, peer pressure wasn’t so prevalent then and the savings attitude trumped living on EMIs. Being debt-free was an important goal even if it meant sacrificing some wants or not being able to invest.

Having similar financial priorities made money management a tad easier.

How to invest sensibly and not gamble

It has taken many years to get the asset allocation right. In the initial investing years, I chased returns, bought on tips, tried out new products. Even though I made some decent returns on stocks, my investments were all over and getting difficult to manage. There was no strategy on the investment amount or the investment period.

The dot com bubble was the first turning point for realising why a structured portfolio is very important. It was painful to see investments languishing for a couple of years and it was during this period that I started investing in debt funds.  I experimented with different allocations and finally, the choice was the allocation that gave me mental comfort. I have never really believed in risk profiles.

Figuring out the right balance between asset classes, having some bad investing experiences with stocks, alternate products and good experience in long-term investing with mutual funds shaped my investment strategy.

Each phase of the market teaches us something new. The ability to not get swayed but have the flexibility to make changes within the chosen balance keeps you in good stead.

Cryptocurrencies, please excuse

As I grow older, money mindfulness matters a lot. With life getting busier and more responsibilities and commitments, one wants to simplify life in any way that one can. This means not investing in complex investments and optimising time spent on money management.

This is one of the reasons I have not invested in cryptocurrencies or direct stocks. Why spend time tracking stocks and take the stress of wondering how an unregulated investment will protect my money.  Similarly, with international stocks, the tax compliance is higher and options trading is too complicated. Without sacrificing returns, I chose simpler investments like mutual funds, which provide professional management and diversification.

A meaningful life is what matters and towards that, even if I need to pay a slightly higher cost for freeing up my time and having lesser strain, it is worth it.  The focus is on enjoying life and spending my money on what brings me happiness rather than spending time on trading screens or chasing the current trending product.

The last 25 years of being an investor have taught me that good money management is about harmony, balance, and purpose.

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