[izzikio_rage]

Hi All

I see a ton of very experienced members here who've had successful careers and have found the time and resources for their automobiles and various other hobbies.

Starting this thread for advise that you'd want to share with others on what things have helped you build all this and how people relatively new to their careers should approach this

[Shreyans_Jain]

Do the basics right

- don’t spend frivolously
- try to lead a disciplined life
- start investing at an early age
- don’t rush into making big purchases like cars too early
- try not to get caught in the web of crass consumerism
- live within your means. No loans for depreciating assets, as much as possible.

[warrioraks]

Let me start with what has not worked well:
1. Taking a highly risk-averse approach. This led to under-investment in equity. Also resulted in higher taxation towards any gains
2. Not investing in property. The mathematics of it never supported buying a house because of prevailing interest rates in our country. Renting always turns out to be cheaper. But in this high inflation scenario, no longer sure if that was a wise decision. Atleast when I see how prices have skyrocketed over last few years

What has worked well:
1. Do not save what is left after spending; instead spend what is left after saving - Warren Buffet
2. Goal based investing vs trying to beat the markets
3. Power of compounding - starting early and staying committed. No amount is small enough and everything accumulates. Fiscal discipline is the key
4. Maintaining a lifestyle with low fixed cost - Rent, EMIs, memberships, etc
5. Continuous investment in developing those skills (professional, financial, negotiation related etc etc) that can enable financial freedom
6. Don’t buy low quality things. They will more often than not be more expensive in the longer term


Lastly and most importantly - take out time to invest in thyself from a health and well being perspective. No amount of wealth and financial freedom is worth it if we don’t get this part right.

[dragonfire]

Originally Posted by Shreyans_Jain

- don’t rush into making big purchases like cars too early

I disagree. Before buying your first house, you should buy your first car. That too one with a 5 star crash rating. Your life is more precious than something that you can leave in the hands of autos and buses. I bought my first car as soon as I got my first job and was sure I could afford the emi.

[Shreyans_Jain]

Originally Posted by warrioraks

2. Not investing in property. The mathematics of it never supported buying a house because of prevailing interest rates in our country. Renting always turns out to be cheaper. But in this high inflation scenario, no longer sure if that was a wise decision. Atleast when I see how prices have skyrocketed over last few years

For the purpose of residence, renting usually turns out cheaper. Apartments and flats do not tend to appreciate that much over time, except in a few prime areas. Land appreciates more.

If circumstances permit, the best approach is to stay in a rented or ancestral place, and invest either in land, or in a commercial property. That will allow you to generate additional rental income as well.

[SmartCat]

Originally Posted by izzikio_rage

Starting this thread for advise that you'd want to share with others on what things have helped you build all this and how people relatively new to their careers should approach this

Keep a tab of your income and expenses in an excel sheet. Do some number crunching (eg: categorize expenses) & add some pretty graphs to see where your money is going.

Here is my cash inflow/outflow snapshot in January 2002. Looks like I spent most of my income on my Yamaha RXG!

[Turbanator]

Originally Posted by SmartCat

Looks like I spent most of my income on my Yamaha RXG!

I think you had a secret code - Yamaha for the expenses you don't want others to know

Puncture - Rs 125 in 2002! And so much for Petrol on the Yamaha (unless it was 350) something does not add up

[vedirah]

Three main concepts are important:

1. Spend after you save.
2. Learn the concept of hedging.
3. Risk is good. Risk fetches return.

I disagree with some of the points made by others. If you need something and can't afford it, a loan can make your life easier. Loans are not bad if you understand how to hedge your losses. In fact, even if you had the money lying around for buying things outright, I'd advise you to instead take a loan. The concept is simple - put your own money in appreciating assets only, and for depreciating assets put the bank's money.

[Raghu M]

Whatever you do, do not take a credit card and try to manage spending by paying interests and the actual amount before the due dates. I have been working for the last 17 years and have never had a credit card. Trust me, it's peace of mind. Also, like others mentioned, spend after you have saved. The final one is - never borrow money from individuals or give money on interest. It's fine to take a loan from an institution (bank/NBFs). I follow the above rules diligently and I believe I have done pretty well so far.

[deepak_misra]

There is this facebook group called "Asan Ideas for wealth" which will give you most of the information required.

Depending on your income you could hire a registered fee only advisor who will help you to plan out our finances. Check https://www.feeonlyindia.com/ for a list of planners.
Avoid insurance agents (even if close friends or family) and bank relationship managers

[NetfreakBombay]

Originally Posted by izzikio_rage

Starting this thread for advise ...how people relatively new to their careers should approach this

Assuming that you do not have any financial responsibility (such as parent's healthcare) :

1. Pay all your loans (E.g.: If you have education loan)
2. Do not incur new debt (except home loan)
3. Live your life for first 2 -3 years. This time will not come back till your are an Empty-Nester in 50s /60s. Travel, buy that PS5 / bike or whatever you can do within your means.
4. At some point, start saving significant portion of your earnings
5. Buy health insurance for yourself and your parents (if they are dependent on you)
6. Buy term insurance if your parents are dependent on you

Say you can save 10k per month. That 10k, you can "allocate" across few buckets.

You can start with :

1. 25% in Equity (Stocks / MF)
2. 25% in Gold (Physical or Electronic like SGB)
3. 25% Liquid (FD)
4. 25% towards buying a home eventually

For equity, just start investing in some Index fund (Like SBI / ICICI / HDFC Nifty 50 Fund). You can explore later and invest in stocks or more risky funds like small cap / medium cap.

[Samfromindia]

Good that you are financially aware and proactively want to be disciplined which many of us do after as much as 5-10 yrs of our career. Here are a few pointers I like to mention:


1: Always make a point to save as little as you can, even if its a few thousand rupees every month. This will incorporate financial discipline in our life in future. Also let the magic of compounding take its effect.

2: Learn the basics of investing. In this young age, most of your investments will go to equities. Index funds are a good option to start with before you diversify your investments in different avenues.

3: Always keep a contingency fund having around 3 months expenses in your account before making any big purchases or investments. So if your monthly expense are around 30K, keep min 1L in your bank.

4: Term Life insurance and Health Insurance are a must and rates are lowest if you are young. Your office may provide that, however their coverage may not be enough and will come handy in case you lose your job in unforeseen circumstances. Typically you can begin with 1Cr Term insurance and 10L life insurance. Quit smoking if you want to save on premium rates

5: Do try to exhaust your Tax saving investments before anything else. You should split your savings / investments in long term - mid term and short term goals.

6: Learn the difference between good and bad debt. Good debt maybe investing in a property which will appreciate in value. Bad debt is buying the latest iPhone Ultra Max with 1 month or more salary through credit card installments. Learn to use credit card benefits without letting the card companies use you.

7: Consider taking part in the fire movement. You are in the best age group to achieve F.I.R.E

8: And lastly don't forget to reward yourself. Its okay to get the fancy phone or gadget you are looking for once a while, so long you are not changing them every year or buying things on credit.


Some inspirational videos for you:

https://youtu.be/A_PVV23MxJc

https://youtu.be/dkTbBmJnp9U

https://youtu.be/cmTN4kQC5BU

[HowardRoark]

1. Save minimum 50% of your salary
2. Divide your savings into 4 parts. 1 part into fd/cash savings, 1 part into index funds, 1 part into real estate(emi/house loan), 1 part into gold/bitcoin etc.
3. Get life insurance first if you have dependents.
4. Never go into debt for depreciating assets
5. Use 10% of your salary for your enjoyment like eating out, vacations, hobbies etc

[mahen_narang]

Pretty good thread and really nice that you @izzikio_rage are thinking of this at early stage of your earnings.

@Samfromindia, has very rightly written about the Term Insurance and Health Insurance. Keep that as priority ONE.

On similar lines i would suggest two books to you
1. Let's talk Money by Monica Halan
2. Coffee Can Investing by Saurabh Mukherjee

These will sort you out to a very large extent.

Remember, earning gives you power, use this power in accordance with the responsibilities that you have on you OR that you anticipate in near future, and keep revising this periodically.

Also remember that your dreams are also your responsibility, Go Chase them, if it means to buy a car.........DO IT, just stay responsible.

[buzzy_boy]

House (apartment) is not an "investment".

Someone people i know have bought 2 or 3 of them, and a simple FD could beat their returns.

So, don't buy an apartment unless you absolutely have to! Stay in rented accommodation for as long as possible.