16-Rakesh Shah-1.qxp_A4 Temp 02/07/2018 14:11 Page 16
Rakesh Shah, Ten Point Trading
How grandparents and parents can help children avoid facing a personal financial challenge There is no formal education about managing money for school children. Experience of basic budgeting is often learnt through managing a fixed amount of pocket money, with some advice from parents on how they should either spend it or save it. Beyond this, later on in life, any advice on managing money, investments and debt can become very personal subjects to discuss and often, when problems exist, the issues will be easily swept under the carpet and ignored, until desperate situations arise, forced by time or a lack of cash. Many of these can be prevented by some advice on personal financial management. ften unknowingly, many parents forget that we have wonderful and profound advice for managing wealth in our Vedic scriptures discussing principles on “Artha” that I suggest, all parents should educate their children with. Many of life’s problems can thus be avoided by following these time honoured and wise principles. In this article I will discuss three principles of Artha that my father avidly taught me, to ensure I built a good financial foundation from a very young age to help with any problems that may possibly come later in life. Prevention is often the best cure.
THREE PRINCIPLES THAT MAKE UP A TRIANGLE OF SUCCESS 1. Firstly Knowledge: Become an expert in at least one area of knowledge. The world pays us for the expertise that we have. The higher the level, the greater the reward. This is true across all professions, from cooking (as a chef) to medical experience as a
Doctor or Nurse. We are paid for our “value added” to any business or organisation. Every month, we should encourage our youth to learn and sharpen their tools in their chosen profession. Whether this means reading some books, attending industry events or networking with other peers, this habit will yield long term growth and ensure you are always growing your skills and therefore increasing your value. 2. Secondly Gaining Material Wealth: Once you have succeeded in acquiring some wealth, it is important to invest a part of it, into areas that allow increase the value of your assets. Young adults should begin saving as soon as they can. Set aside a fixed amount every month from your income, so that you can reach the required amount for a longer term investment as soon as is possible. With the advent of the internet, there are thousands of business opportunities open to everyone, which are both scalable and have a low cost to entry.
FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018
Securing a second source of income, is invaluable, as long term job security has been diminishing in recent decades and this trend looks like it will continue. It’s a good idea to look to invest in business that are scalable. Try to find a high growth business that you can invest in over the long term. 3. Thirdly, we look at financial Contentment: Once you have built up a nest egg and have some returns from investments, we should begin to plan for our retirement as soon as possible. After all, who wants to work in their retirement years (unless offcourse, you love your job more than your retirement plans). Financial contentment comes when we no longer worry about any lack of income for our future (our future being our retirement in this case). We should look to take the income and gains earned from the previous two principles and begin to invest them in areas of high interest return with low capital risk. Here we are using the power of compound interest to our advantage. Everyone should learn the ‘formula rule’ to calculate the number of years required to double money at a given interest rate. You simply “divide the interest rate into 72”. E.g. if you want to know how long it will take to double your money at six percent interest, divide 6 into 72 and you get 12 years. Teach the future generation to evaluate as many investments as possible and calculate how long it will take them to double their money. You will need to achieve an interest rate of 7.2% to double your money every 10 years. As a closing remark, revered teacher Jeffrey Armstong (Kavindra Rishi) reminds all of us that “good health is the foundation of a good life” and we should never forget that includes your spiritual, physical and financial health. Rakesh Shah is a keen Investor and Consultant. Based at Kingly Capital [email@example.com], working with HNWI’s and family offices for investment opportunities. For more information please get in touch.
Finance Banking Insurance 2018 (Issue 18)