Young, Yet You’re Old Enough To Plan For Your Old Age

I recently addressed a small group of youngsters, all of them in possession of the three critical E’s that one looks forward to in every newbie so very much these days – enthusiasm, eagerness, and efficiency. I told them so in so many words, and before I wrapped up my little speech, I added that the only element that I found missing wasn’t an E. It was a word that begins with A, and it was ‘awareness’.

Just in case you are wondering what this was all about, I will tell you that the interaction revolved around a familiar theme: retirement. Not surprisingly, and I was not even remotely surprised, the bunch of young men and women I spoke to had low awareness of the subject. The situation, I mentioned, could only be corrected if they made an effort to familiarise themselves with it.

Such an effort, of course, would not materialise overnight. It needs – indeed, demands – the allocation of time. However, an exercise like that would have its charms, the principal one being the acquisition of knowledge on a subject that I hold dear. Now, like so many other things in life, the seed of knowledge is stuck deep inside it. Stoke it, feed it and take care of it, such a seed would certainly germinate. And before you know it, you would have a smart sapling waiting to grow up.

The point is, young people typically tend to ignore issues that appear to be mundane. For a 20-something who is full of beans, life holds a very different kind of promise than, say, an individual who has stepped into his 50’s. Age cannot wither nor custom stale is what William Shakespeare wrote so many years ago. And, as you can fully understand, that is truly reflected in the situation I am referring to.

Whether you are a young person or not, there are a few basic aspects of retirement that you should know about. These have been discussed time and again by many quarters, and for certain discerning sections, the subject has been milked dry already. Nevertheless, assuming many youngsters would read this, I think there would be no harm in reiteration.

One, the need for an early start can never be over-emphasised. Indeed, the sooner you start on a retirement programme, the better would it be for the growth and expansion of your portfolio.

Two, there is no substitute for method and order. So, investment goals must be clearly identified, risk analysis must be perfectly worked out, asset allocation must be diligently planned. These would lead to a concrete financial plan, complete with the most appropriate risk-return assessment. It has to be executed without delay, and the result must be closely monitored. After all, the performance of the plan must be tracked over a period of time.

Three, the support of professionals must be sought and acquired at every step of the way. If your plan (both formation and execution) requires you to engage the services of multiple intermediaries, this would have to be done without fail. 

For those who must execute an elaborate plan, this would well mean the engagement of all sorts of professional service providers – fund managers, insurance brokers, wealth advisors, bankers, lawyers, and estate planners. Over a longish stretch of time, these intermediaries must be paid their fees and sundry other charges in this connection must be borne. All in all, such fees and charges would together amount to one’s cost of investment.

As you would be no doubt aware, I am referring to the many costs borne by investors in some form or other. You know, stock brokers must receive their commissions, mutual funds must be paid their loads and bankers must be paid their service charges.

There is no point cribbing about the system, of course, and like plenty of other things in life, these too would just have to be accepted. But just ask an average bank customer about the sort of charges that are being imposed these days. Chances are, his knowledge would be limited as very few among us would know all about bankers’ fees conclusively. I am not even mentioning GST here; the imposition of GST would make the fee-payers burden a tad heavier. However, all I am asking for is some awareness.

Back to my young brigade. They are a promising bunch faced with a lot of challenges. And, okay, not all of them are eager to know about retirement at this stage of their lives. Retirement, however, is a universal subject that should cut across all sorts of age limits.

I leave you today with this thought. There would be more on this issue from my end on some other day. Between then and now, what do you think you should do? Yes, you have guessed it right. Read a bit about retirement and its many aspects. And, after you have finished the initial round of reading, read a bit more. Get the point?

The author is a Director, Wishlist Capital Advisors