Soaring twenties...

I have just got my precious wings. I can fly. I’m soaring high and what a thrill it is ! These wings… they allow me to soar, dive, glide, coast… these wings have released me, given me the freedom, helped me measure the world with my flaps…

Rahul was reading a novel where the young eagle who has started doing it’s sorties high up, is feeling the exhilaration of it’s new found skill & the thrills… Rahul could not but help comparing this eagle with his situation. He is young too, foot-loose & fancy free. He is soaring high and is enjoying the freedom in this new city. No one to tell him what to do; no boring books to pore over... The pay packet he gets in his IT company is far more than he could have imagined three years ago. At 24, Rs.32,000/-pm is a lot of money – especially when his parents are still working and are pretty well off, by themselves.

So, he is flapping around and doing a few tricks with his money, without a care in the world. Entertainment, fine dining, excursions & gadgets are currently claiming most of his money. He has heard about investment. Yes. But that’s still a distant thought. He has just about started working. Why not flap around for a few more years before settling into the boring saving routine, is his thought. Give me a life, he tells Vishnu, when he broaches the subject of savings.

There are many Rahuls, who are buoyed by the hot air currents and are gliding comfortably. But there are Vishnus too, who have their share of fun, but have also started to take some interest in their finances.

A bit of this won’t hurt – Vishnu has been telling Rahul to put aside just Rs.3,000/-pm, unsuccessfully. He is doing about Rs.7,000/-pm, since the past year. Not that Vishnu does not enjoy life… he has his fun too. He invests first and then spends the rest. That way, there is no guilt and there is something to fall back on.

But what fallback do you need, Rahul keeps asking. For Vishnu, the crisis of 2008 is still fresh in memory and he was aware of many who lost their jobs then. Rahul & Vishnu were not affected at all… but then the jolt was real. That’s when Vishnu decided to put aside some money for a rainy day. He had heard of some two good funds from his friend’s father and decided to invest in them on a monthly basis. He has accumulated over a lakh by now and feels safe. He is thinking of opening a PPF account, again something he has heard of and wants to get off the blocks. He wants to invest upto Rs.70,000 of the bonus, and spend the rest. He has heard ( correctly )that one can invest upto Rs.70,000/- in a year.

He does not know what his longterm goals are yet, but he may require money while getting married, for buying a home, for setting up an establishment and for his children… He just knows that one requires money and has set the ball rolling.

A safety net to cushion the drop - Vishnu does not again have any dependants. He has heard that life insurance is not needed if there are no dependants. The company is offering medical insurance of Rs.1 Lakh to all employees. Vishnu does not hence see the need for Medical insurance. Rahul however has taken a medical insurance of Rs.3 Lakhs personally, as he feels the insurance from the company is miniscule.
Vishnu does not think so. Rahul is ofcourse tempered by the predicament faced by his cousin, Vipul who is of the same age group. He had to undergo a hernia operation and had to shell out some 60,000/- bucks, as he did not have a medical cover. Rahul then and there decided to take further medical cover – he has heard enough scary stories of people becoming paupers paying hospitals and doctors.

Collision course – Vishnu has also heard of Accident insurance, but never thought much of it. His friend Amol however, is all for it. In fact he has taken a Rs.25 Lakh cover and is covered for death, disability, hospitalization due to an accident etc. Amol believes it is money well spent as he is an avid biker. Vishnu too straddles a Yamaha, but is not convinced. Accidents happen… but not to me, is his favourite line!

Rahul, Vishnu & Amol are going for dinner now. They have made some right moves and have not done some, which they should have. Rahul feels he is soaring like the eagle on his Pulsar… he has grown wings no doubt and is enjoying the freedom, youth and money has conferred on him. He calls them hot currents. Can they learn from each other? They can. Overtime, they will.

Published in moneycontrol.com on 23/8/2010