A Young Entrepreneur Explains Why “Your Financial Independence Is An Illusion”

Posted on September 28, 2016

By Amit Sharma:

Are you financially independent? Did you just nod your head yes? Why? Because you have a job, you earn money and have saved some in your bank account to help you deal with the expenses before your next month’s salary gets debited?

Well, your financial independence is an illusion. Why, you ask? Do you have enough fund for buying a house or a car? Have you saved enough for the times of emergency? Have you started saving for your children’s education and your retirement? Do you realise that these dreams will never turn into reality if you don’t plan for them?

Let’s just assume it struck you just now that you haven’t planned for anything and you really need to because nothing is getting cheaper by the day. Let’s take a look at the approximate estimation, to get an idea. A car costs around Rs six lakhs while a house in the city easily costs about a crore. You need to keep a good amount of money ready, say Rs four lakhs, in the emergency fund. You will probably need Rs 20 lakhs for your wedding and Rs 30 lakhs for your child’s education. And for your retired years, you may want to keep Rs one to three crores separately.

How on earth are you going to save that much money? Invest in equity? Or perhaps debentures, they are safer. How about balanced mutual funds? Oh! And how will you cover your health insurance?

According to a survey by the Economic Times, only 3% people are able to achieve their financial goals for only 8% people actually consult financial advisors, rest depend on the internet, magazine or their own experiences. While it is easy to blame people for being ignorant and not planning their finances or consulting an expert, it’s actually not that simple.

India does have a number of financial advisors and agents who get commissions from financial product providers and are usually self-proclaimed experts. And this hurts the customer financially. The agent will sell the product, earn the commission and move on but the customer has to live with it. They are the ones paying an insane amount of premiums for no value.

The concept of an independent financial advisor exists in metros but only for the rich. The middle class does not have access to them. In the west, an independent financial advisor is considered to be a doctor for all financial issues. Tech savvy Indians have access to all the kinds of calculators such as free EMI calculator on various websites but nothing to guide them through.

I belong to a middle-class family. I am an engineer by background but I wasn’t happy just ‘making the computer chips’. I was soon one of the youngest students at INSEAD, world’s leading business school on finance and investment management. During my 15 years of experience in investment management in London, the financial capital of the world, one thing became clear to me – the skills that I had developed by managing my own money were life-skills.

This is where I found myself as an advisor to my friends and family. On every other occasion, they used to approach me for financial advice. And well, I could not help them without knowing their entire financial circumstances and aspirations. This is how Money Minded– Your Financial Advisor, came into being.

The idea is simple. All I want is to help middle-class people with affordable and customised financial advice so that they never get duped by any agent or feel stressed due to financial problems. We are a team of 15 motivated individuals working towards financial literacy. We believe that if something can’t be explained simply, it is not worth investing in. Financial services industry has a knack for making a simple product complex. We like our customers to understand things the way they should – simply.

Unlike other start-ups, we are not in a hurry to achieve huge numbers. We don’t have the typical venture capital investors that want too much too quickly. Our friends and family are funding Money Minded. We understand that this is a patient game of financially educating India. We celebrate our success whenever we make someone understand that he or she has a real problem, and it can be fixed! For us, what matters is the trust of our customers. We have been engaging with people for five to six months now. We have struggled to make people believe that we can help them. There is a trust deficit in the society. People have been duped by so-called experts so many times that it’s difficult for them to trust again. But then the results cannot be seen in a short span of time. One needs to invest for at least three to five years to see the results. We always knew it was going to be a difficult road but we are not giving up because we are here to stay for long.


Image source: Mint/ Contributor/ Getty Images
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