Investment Strategies and Personal Finance

Study Notes

Actuary with six levels cleared and holds a BFM from NM College and M.Com in Business Management from UPG College.
Experience in trading and investing since 2020, with previous roles as Wealth Relationship Manager at ICICI Bank and as a Wealth Advisor at a SEBI RIA Fintech startup.
Managed portfolios over Rs. 10 crores and performed equity research at an AIF Category III fund.
Currently a faculty member at LeapUp Edutech, teaching share market and personal finance courses, mentoring over 100 students.

30 years old, works at a bank, with a family including a wife and 5-year-old daughter.
Net savings of Rs. 20,000 per month kept at home, believing in cash savings over growth investments.
Plans to retire at the age of 50, with a potential retirement corpus of Rs. 1.37 crore after 20 years.
Expects monthly expenses of Rs. 1 lakh (growing at 10%), resulting in exhausting savings within 7-8 years post-retirement.
Vulnerable to unforeseen events such as increased expenses, decreased income, medical emergencies, natural calamities, job loss, or changes in career path.

Also 30 years old, working in the same bank with a similar family setup.
Saves the same Rs. 20,000 per month, but invests in a security generating a 14% return.
Retires at 50 with a projected corpus of Rs. 4.96 crore after 20 years of consistent investing.
Monthly expenses of Rs. 1 lakh (growing at 10%) funded through a corpus that compounds, leading to a projected Rs. 5.87 crore upon retirement.
Retains a reserve of Rs. 63 lakhs after covering expenses, ensuring financial security without the risk of running out of money.

Both individuals have identical salaries, family structures, constraints, and net savings.
The key difference lies in investment strategies: Mr. Cash opts for cash savings, while Mr. Compounder chooses investments that yield growth.
Mr. Cash ends up with Rs. 1.37 crore, which depletes within 8 years of retirement, while Mr. Compounder grows his wealth substantially and never faces depletion.

Importance of investing to meet future financial needs, create wealth, and enhance living standards.
Investing effectively combats inflation and is crucial for maintaining financial stability.
Analyzing inflation provides practical insights into its impact on purchasing power and savings.

Choosing the right investment strategy is pivotal in securing a financially stable and worry-free retirement.
Encourages proactive financial planning and investment in growth-focused assets to achieve long-term financial goals.