Plan.Protect.Play. The Path to Fiscal Nirvana
‘Financial Spirituality’ by a chartered accountant and personal finance strategist, Rishabh Parakh is all about planning based on common sense that isn’t very common in the first place. While targeted at millennials, the book is a must-read for all investors. Basic financial concepts have been explained simply but powerfully in an easy to read and understand manner with lucid illustrations and examples. A fun but informative read to be sure
“If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and five minutes thinking about solutions.”
-Albert Einstein.
Rishabh Parakh’s motivation for writ-ing Financial Spirituality is clear. “Millennials are a Do-it-Yourself generation. They love doing things by themselves: learning, travelling, acquiring knowledge and even making mistakes on their own, in their own unique way. But they face a unique set of challenges that the previous generations did not face and in this, they might need a little help,” he shares.
More than any other generation, they are the ones seeking quality of life. But this is a subjective concept and in the absence of the firm anchor of knowing how to handle personal finances, it might cause an unnecessary tumult. Someone could have Rs.1,000 crore and not be financially free and someone with Rs.5 crore could be the happiest person you ever saw. There is no fixed formula that works for all. “You need to sit down and figure what out what works for you, not follow your friends,” points out Rishabh. “This is where the philosophy of Plan/Protect/Play comes into the picture. This is the three-pronged core of my financial advice that will teach you to plan for your goals, take care of your investments and enjoy the wealth you create, so you can live your best life.”
He continues: “My goal is to help you define your plan and help you act upon it promptly so you can create a portfolio for a lifetime. I will not attempt to do a quick-fix because it does not exist. Instead, I will let my years of experience as a per-sonal finance strategist talk to your better judgment. In its essence, the book is designed to help you Plan/Protect/Play by getting you to answer the ‘why’ of your hustle, so you eventually get to a stage of inner and outer well-being.”
Three-fold path to fiscal nirvana
What makes this book such a gripping read is its easy structuring and lack of jargon. Anyone can understand it, even the financial dummies amongst us. While the first section “Plan” defines the target audience in the deftly observed chapter: Snapshot of a Millennial, it then goes on to ask you to sit down at the drawing board and sketch out your financial plan. Tips like getting your money to work for you and carrying a steady basket for your eggs finally sound like achievable goals. There is also sound advice for the self-employed, a section often overlooked by several fiscal writers: Open a separate bank account for your business and personal expenses, be disciplined, budget and plan for retirement.
A particularly riveting chapter would be Hits and Flops: Lessons from Celebrities. Three interesting stories include the rise and fall of tennis superstar Boris Becker who despite a net worth of $167 million at one point was forced to declare bankruptcy, the Rise, Fall and Rise of Amitabh Bachchan and the Rise and Rise of the canniest investor of them all Shah Rukh Khan.
The same section further asks you to plough your money and invest wisely. Pointers covered include: When to flock to the stocks, and understanding that mutual funds are about logic, not magic.
“Millennials are a Do-it-Yourself generation. They love doing things by themselves: learning, travelling, acquiring knowledge and even making mistakes on their own, in their own unique way”
The second section of the book is aptly titled “Protect” given that it covers topics like ‘Cover your life, shield your health: insurance is a safety net’, ‘When to bet on taking a debt: not all loans are bad loans’ and ‘how it’s good to save tax, not evade tax.’
Top pointers would include: not mixing insurance with investment and the fact that a life insurance cover needs to be at least ten times your annual income.
Not to forget the facts that money is of use only when it is available at the right time and the premium for a life insurance policy is locked for its duration once you decide to buy it.
The third section is called “Play” and is all about how to love money and execute the plan in time.
Importantly, the book makes a solid point when it argues that there is a distinct difference between the love of money and greed. “Thinking ill of money hampers your ability to get more of it”, he writes. “The role of money in your life needs to be very clear. It should be able to enable you to follow your dreams after meeting your financial obligations. Understand the difference between loving money and lusting after it. The right planning process should consider your relationship with money, because investing is more about behaviour patterns than scientific methods. So be mindful about your attitude towards money and its usefulness.”
This section also shows you how to beat inflation. “One way to do this is to see how inflation will increase your monthly expenses. The second is to see how the purchasing power of the money you have will be reduced over time due to inflation. The following charts illustrate this for the purpose of your understanding, by assuming an inflation rate of six per cent.
Sins and virtues to be mindful of: What stays on in mind is the unambiguous advice the book gives you. The wisdom is relatable and the advice practical. A few examples:
Spending beyond your means is the plot of a financial horror movie.
Delaying repayment of loans is not advisable.
Never dip into your retirement savings
Avoid pouring money into a business venture without research or a proper plan
Diversify your investments and portfolio to mitigate any risks flowing from market volatil-ity or changes in industry conditions.
Investing in FDs is one of the most old school mistakes ever. Both the taxes and rate of inflation will eat into any modest returns.
Too many loans is a bad idea as you are paying money you haven’t earned yet.
Real estate is not always a good investment strategy.
Have a well-thought out plan: since there is a huge pressure on a majority of Indians to manage their families in the absence of good, affordable medical and educational facilities and ever-increasing pressures, it is natural that financial planning would take a backseat. This leads to hasty decisions ending in less than ideal results. So a clear plan that keeps your lifestyle and goals in mind is basic.
While gold has always been considered a safe investment, it should not be more than 10 per cent of your overall portfolio.
The stock market will not make you ultra wealthy unless you get into it full-time. And for that, you need a good amount to start off.
Last but not the least, the biggest risk you take in your life is not to take a risk at all. This applies even to managing money. It is understandable that you would not want to lose money. But if you don’t take calculated risks with your investments, you won’t be able to beat inflation or create wealth.
“The role of money in your life needs to be very clear. it should be able to enable you to follow your dreams after meeting your financial obligations. Understand the difference between loving money and lusting after it”
corporate citizen take:
The book is a practical and simple handbook unto financial planning. The language is easy and the gyaan is summed up in succinct one-liners and helps break down complex fundamentals into digestible, easy to chew bits. The illustrations and printing rock too!
About the author
Rishabh Parakh has over 15 years of experience in managing tax and wealth for High Net Individuals. He serves his clients through his Pune based company, Money Plant Consultancy a firm that offers wealth management services to over 5,000 clients across India, Singapore and the UK.