Wealth creation - Life cycle planning

Creating a financial plan is like looking into the future with a telescope that provides at best a blurred image, financially speaking. However, there are certain aspects of this vision which is fairly clear. Let us understand, why?

There are 4 stages of an individual’s career –

1. Green-horn
2. Office junior
3. Middle-level functionary/Managerial category
4. Leadership level / Senior babu

Each stage has its own characteristics - the roles, responsibilities, rewards and growth opportunities. In the green-horn years - one learns the ropes, works his back-off and tries to get recognized as someone who can figure in the organization chart. Roles are barely defined and responsibilities can be described as anything from running errands to doing the work of two people. From an earnings and savings perspective, you are lucky if you don’t get time to socialize - you get to save some money!

The office junior is the gal who has been confirmed in service. She gets a reasonable salary. She can look forward to some planned savings. This may not be much, as the family may be interested in getting her hitched and started off in a family way.

It is only at the middle-level - which if you reach at a relatively early age of mid-thirties, you get a reasonable opportunity to make some serious savings. This is when you can add some bone & muscle to your financial plan.

You are lucky to graduate to a level of senior leadership by the time you are in your forties. Then, you are really able to take off in terms of wealth creation. Only, if you have built a strong foundation, you are in a position to take some risks to push your returns from your investments and get to create some ‘serious’ wealth.

From this one can conclude that –

1. At all stages, your returns on investments are likely to be less than the returns you generate from your intellectual capital as a professional (job or business).
2. At every stage your priorities are likely to be in focusing on your profession, hence, the basic business of wealth management is better left to the pros.

A level-headed gal will realize that not until very late in life, the financial balance sheet will always be smaller in comparison to the intellectual balance sheet or the simple value of the professional, quantified in financial terms (remember, Infosys quantifies the value of its human resource).

You decide, whether you want to fight the battles or win the war!