5 lessons I learnt from my grandpa on money management and investments
I was 16 when I first received my cheque — a scholarship of INR 10,000 from NCC (National Cadet Corps)on scoring well in 10th grade board exams in India. I was happy to see the cheque and showed it to everyone. And why not? Practically, this was my first ever earnings. Immediately, my grandfather took me to bank, added some additional amount and converted it into a FD (fixed deposit). This is how it all began — my education on personal finance management.
I think myself fortunate enough to have spent a lot of time with my grandfather , who was a retired Chief Accounts Officer of the state (Rajasthan, India)and had the honor to prepare the state’s financial budgets for more than a decade. He definitely knew more about about finance than anyone in the family. I had seen him taking care of the personal finances of the entire family — which included himself and my working parents (only because they had least interest at that time). And as a result, my family never struggled when it came to take important decisions such as getting our own home, buying a car, financing the higher education and marriage of my sister and myself.
So when I entered the workforce at the age of 23, my grandfather told me just one thing — You should learn to manage your money. There is no point in earning so much if you don’t learn how to manage it. And being a young woman in a country like India, it is rather important for you to have your financial independence.
My learnings
Over the years that I spent with him, I gained better understanding of personal wealth management, became well-versed in the gamut of investments and developed a fair idea of investing as per my goals, risk-taking abilities and most importantly the traits of a good investor. Following are some of my key learnings:
- Take measured risk
One should not avoid risks rather know how to manage it. My grandfather decided to invest in stock market under the influence of some friends but he had a major fallout. He then reassessed his risk taking ability and decided to stay away from it. But that didn’t deter him to explore other opportunities to invest and manage money. When I started investing in stock market, I did my research on the risks and returns and only after having understood it, I decided to take a shot at it. Not only in stock, I apply this rule to all the financial instruments at my disposal. So, always know your risk appetite and plan your wealth management approach accordingly.
2. Have a disciplined approach
One of the key traits when it comes to creating wealth is discipline. Have a disciplined approach to do your research. My grandfather ensured that he is well aware of the financial investments, risks involved and returns expected. He would keep himself updated on economic development, industrial sector growth, government decisions as all of it would make him take better decisions. Have a discipline to invest regularly and watch it grow. Have a disciplined approach in investing and not become an emotional fool. It takes a lot of discipline and patience to stay on the course when the market is going up and down.
3. Always invest with right intent
Goal-based investing can come handy when it comes to long-term investment. As I mentioned above, my family invested in the financial instruments keeping in mind the goals — home, car, education etc. When one has a goal in mind, it’s easier to be disciplined in approach, stick to it and not get thrown offtrack. Now the reason why I mentioned ‘right intent’ is that many of us get competitive when it comes to wealth creation. One must always remember that we are not in race with others to create more wealth.
4. Never waste money to impress others
This in continuation to point 3. Never go all out to impress others and create a false image of yourself. I never saw my grandparents and parents waste the money on unnecessary things. We lived a comfortable simple life where all our needs were met and rational desires met. In today’s world, where our lifestyle is so much influenced by the social media, social circle, the lesson of not comparing yourself with others and living within your means come handy. Always live below your means but within your needs.
5. Regularly revise your personal finance portfolio
If you don’t learn to manage your money, then other people may find ways to mismanage it for you. Even though we had a family CA as a personal financial advisor, my grandfather would check the portfolio on regular intervals and have discussions with him. In fact, he used to maintain a notebook with all the investments noted clearly and would take us through it once in a while so that we are well aware of it. No matter how busy you are, never forget to pay attention to your personal finances on regular intervals and ensure your family knows about it.
In a nutshell, my grandfather seeded in me the awareness and knowledge of personal wealth management at a very young age. It helped me avoid mistakes that my peers committed. It helped me grow into a confident financially independent young woman.
Today, if given a chance to gift something to my younger family members, I would like to give them a course on personal finance management. For someone said — the best thing that money can buy is financial freedom and this freedom will come with financial literacy.
