In an interview with Shweta Dhoka of Myiris.com, Jeet Shah, CFP, Veer Consultancy Services, says, 'Being wealthy is a very different thing from being rich. The difference between rich and wealthy is very simple. It's knowledge. Wealthy people know how to make money. Rich people only have money.'
> How did you start as a Financial Planner? What services do you offer?
I completed my CFP in March 2006 and I guess it was the 5th batch of CFP's in India, where the passing requirements were 60% and the last module was a five hour case study. There was no FPSB-India, but at that time it was called Association of Financial Planners. That was the time when hardly a few knew about CFP and financial planning.
I wanted to enter into a new profession wherein I can make a productive difference in the life of fellow citizens and that's why I chose financial planning. I started my practice in June 2006 before which I worked with a reputed tax consultant, Praful C.Shah, where I got a ample knowledge and experience in the areas of corporate finance, capital syndication, income and wealth tax, estate planning, law, insurance and fixed income securities.
Presently I specialise in the area of family wealth management wherein I not only look on the hard side of Wealth Planning but also on the soft side of business family viz. bringing harmony and unity in the family etc. We don't have any agency of insurance or share broking.
> Could you explain us what is wealth managment? How important is it in today's world?
Wealth Management is a process of managing your finances and emotions to help you make the most of your money to achieve your goals.
It is a process of determining an individual’s financial goals, purposes in life & life priorities and after considering his resources, limitations, risk profile and current life style, to detail a balanced and realistic plan to achieve those goals.
The importance of Wealth Management has been discussed in ancient Indian scriptures and literature like Kautaliyas Arthashastra, Arham Niti etc. As an ancient Sanskrit Sutra goes- dharma mulam artha i.e even material wealth can help to follow the path of Dharma.
Its importance in today's complex and uncertain world has grown more than any other time in the human civilisation. For example the change in social fabric does not guarantee that today the kids will take care of their parents in their old age and hence retirement planning becomes of prime importance.
> Could you suggest a savings scheme/ plan for a single mother who has saving upto Rs 50,000 p.a and a son of 10 years
It is difficult to make a plan without some information like the amount required for his Education, Marriage etc. Still, assuming that such a mother will be moderate risk taker it will be fair enough to target a growth rate of 11% CAGR over next 10 years by investing 50% in diversified equity Fund, 30% in pure debt instruments and 20% in Gold ETF. Such an allocation will give her an total accumulated amount of Rs 8,36,000.
> What should the retail investors do in the prevailing market conditions?
Even though most of the literature undermines the importance of timing of investing and says that its only the time for which you are in the market that determines your returns, I personally believe timing does play a important role ( if not a big role ) in deciding the returns. Currently both the national and international economic conditions are not conducive for business and investing, hence small retail investors should tilt their portfolio in favour of highly rated pure debt instruments. The equity portion of the portfolio should be build up using value cost averaging and not the most popular rupee cost average. Also the metals which are in the deepest trouble can be a good bet at the current price to accumulate, if the horizon is fairly long.
> Probably what is the age at which a person should start palnning his retirement. Why?
In my opinion the most correct answer is- 'Once You Start Earning'. This is because as explained in the Q.1 retirement planning is one of the most important goal due to changing social fabric , increase in medical cost, increased life expectation, uncertain employment scenario etc.
Also if the goal is far away than one can take a higher risk to achieve it as the time is on his side.
> What could be the ideal retirement plan for a person who is 40 now, and has lumpsum amount of savings summing upto Rs 2,50,000 p.a.; Where should he invest?
Assuming that he will work for next 20 years i.e till 60 years of his age and keep investing Rs 2,50,000 p.a, he can get a lumpsum of Rs 1,80,13,000 after 20 years. For such a corpus one a consider a portfolio asset allocation of 60% diversified equity funds, 25% pure debt instruments , 15% Gold. Such a portfolio and yield a return of 12% CAGR.
This if invested in a annuity plan or a debt laddering plan @ 7% p.a after retirement for 20 years ( assuming a life expectancy of 80 years ) can fetch him a yearly pension of Rs 17,00,000 p.a. This translates into a present per month pension of Rs 4,39,000.
> Is there a thing that you would like to share with our readers?
Being wealthy is a very different thing from being rich. While wealth is often confused with richness, my personal belief is that being wealthy is a much more pure in satisfying experience than being rich. The idea of being financially wealthy is that you can stop doing anything that resembles work and still manage to survive at the same quality of life that you have previously become accustomed to. This is a powerful idea because it is not influenced by any outside factors as being rich is. The difference between rich and wealthy is very simple. It's knowledge. Wealthy people know how to make money. Rich people only have money.
As gujarati saying goes- 'Chet to Nar Sada Sukhi' i.e an alert man is always happy. Please remember its your money and your life and hence if you are not an expert hire one and trust him but do remember 'Trust but Verify'.