WHERE DOES YOUR MONEY REALLY COME FROM?
ONE STRATEGY THAT WORKED FOR YOU IN THE PAST YEAR?
ANY LEARNINGS FROM PAST MISTAKES?
DO YOU HAVE HOME OR CAR LOANS?
No outstanding loans. Took last loan in 1998 to buy a house. Don't like burden of paying interest.
DO YOU HAVE ANY LIFE INSURANCE COVER?
Yes — high insurance cover. Can't disclose coverage.
DO YOU
HAVE ANY CONTINGENCY FUND?
Don't maintain one separately. Have 10% of portfolio in liquid funds.
AT 54, HOW DO YOU STAY FIT?
I like to walk a lot and remain very active.
Data analytics is a passion. Also, like to travel, interact with different people across the world.
DO YOU HAVE ANY POST-RETIREMENT PLANS? instead of real estate, he could have generated larger wealth creation. “There used to be that mindset that, as soon as you get your first savings, you should start building a house. In those early days, I took loan to purchase my first house. Then as a family, we bought a couple of more houses. However, if I had used those funds to invest in equities, the wealth created would have been much larger,” he says. Contingency fund
Tandon says he doesn’t keep a contingency fund separately, as in any case he maintains 10% of his allocation in liquid funds.
He says he doesn’t believe that one needs to be 100% invested in markets all the time. “In any case, I have a very large holding in equities. The liquid fund allocation gives me a huge psychological comfort,” Tandon says. Retirement corpus
Tandon says he doesn’t plan to retire anytime soon. “I don’t like to think of retirement as it has negative connotations for me. I believe in working till the last day of life. When you think like that, your involvement will be on the higher side, your reflexes will be on the higher side. The mental agility remains intact,” he says.
He has not planned any separate retirement corpus. All his investments can be easily liquidated as and when he requires them.
Loans
One of the most common errors we make is visualising our income as arriving from a distant source like our organisation. We put a ‘psychological distance’, a gap between our income and ourselves. Sarah Newcomb, in her book Loaded highlights this phenomenon, which might resonate with those who perceive their income originating externally. “Our money doesn’t simply flow from our ‘jobs’ or ‘professions’; it emanates from our unique skills and talents.” James Grubman, a psychologist and a financial expert who had spent several years counselling people through challenges of managing great wealth, stresses that those who sustain wealth transition from considering money in terms of income to viewing it as ‘assets’. Your skills and talents are the true generators of income. When you lend your skilled labour to your employer— your time, energy, and intelligence— this amalgamation creates value. Moreover, possessing specialized knowledge or experience amplifies the value of your assets, offering substantial potential for income generation.
Shifting this paradigm of thinking empowers a sense of control over one’s financial journey, fostering positive experiences and emotions with money. Therefore nurturing one’s assets, like upskilling oneself or learning a new skill altogether becomes crucial. Also, skills lose their value if left stagnant, making continuous learning imperative to safeguard the worth of your assets. A recent survey conducted by PGIM in knowledge partnership with Nielsen, indicates a rising trend in Indians allocating a significant portion of their household income, approximately 5% towards enhancing their human capital—repaying education loans and enhancing skills. This trend is undeniably motivating.
The survey also underscores Indians’ pursuit of additional income streams by monetising their passions, their hobbies and acquiring new skills, both pre and post retirement and they feel better prepared for their retirement if they have a secondary source of income—36% of respondents reported to have an alternate source of income, where 39% of Indians reported that they are planning to start it in near future, highlighting the fact that Indians acknowledge this as to be an important aspect of planning for now as well as future.
Flipping the perspective of focusing solely on the income flow rather than its source equips us to make wiser financial decisions. Here’s how. Beyond skilled labour, there exist three primary assets from which we can derive income: labour, land and capital. Labour translates into income when we exchange our time, energy and skills for monetary compensation. Land can yield income through renting, mining, farming, or even through appreciation in value if left untouched. Then there’s capital, essentially our savings— investments, cash, bonds, gold—that can generate more money by accruing interest when we lend it to others such as individuals, banks or governments. Alternatively, capital grows through profits obtained from investments like mutual funds or company shares. Surprisingly, capital can extend into the social sphere as well by nurturing relationships, building networks, and maintaining a sterling reputation often yield favourable financial outcomes. Leveraging social connections for job references, recommendations for promotions or bartering services with friends significantly impacts our financial standing. Therefore, utilizing one’s social network wisely opens the doors to financial advantages.
Understanding the bigger picture is the key to control of our financial well-being. The real game changer comes when we widen our view a bit more, by redirecting our focus from reliance on a single occupation, think about growing income from stuff you control- like land, capital, or even skills you are passionate about turning into a side hustle pre-retirement, It is all about consciously and holistically choosing your options for a more secure financial future.
Specialized knowledge or experience amplifies the value of your assets