For all those who are in their 30s and above, am sure you would agree that your lifestyle has changed 180 degrees, if not more.  Higher disposable incomes, digitalisation,  nuclear families, freedom have impacted our lives in the last 20 years. And we have only our parents to thank for giving us all the education that helped us achieve all this.

We would have moved from a one bedroom house in a single building to apartments in larger complexes with amenities, from public transport to own vehicle (maybe more than one), from local family doctors to super specialists, from hiring VCR to watch movies to owning home theater systems, and now Netflix.

But some things have not changed much, and that is investments. We still follow our parent’s investment style and continue to invest in the same way and in the same traditional investment products for e.g. Fixed Deposit. What’s wrong with it, it has put our parents in good space, they are self-sufficient, you may ask.

Nothing wrong, just that our parent’s lifestyle was/is distinctly different from ours. They did not own as many clothes, bags, shoes, watches etc., as we do, they never had mobile phones leave alone buying new ones every year, they had one car(if they did), they did not travel or eat out , parties, movies, and more. And I have not even talked about education, medical, marriage etc. which are basic.

Considering that their lifestyle was so frugal in comparison to ours, it was fine for them to invest in less risk investment products like fixed deposits and be happy with the returns that it would fetch.

But what about us? Can we afford to do that? With an inflated style of living, can we afford to be happy with the returns from Fixed Deposit, especially after the tax deduction on the interest earned.

Will a post-tax return of around 6-7% be enough to take care of not just your basic needs but also foot your lifestyle bills? Seems difficult to me, when the cost of basic needs itself is growing at the rate of 5-6% and more in cases of education and medical.

Some people also invest in stocks and not surprisingly would not be earning much from this either. Both these investment products are at two ends of the spectrum, the first is low/no risk and hence low return, it does not require any research. The second product i.e. stocks is high risk and high return, but to get high returns one needs detailed knowledge and research of the stocks that you are investing in.

Of course people invest in real estate and gold too, but I will leave that discussion for another day.

The problem with this approach is that you are choosing the investment products randomly without being sure what you want and where you want to go. This is like undertaking a long road trip without knowing your route and asking people for directions along the way.

It is about time you changed your entire approach towards money and investment, a 180 degrees change to the approach to investments as well.

First start with making your financial plan, roadmap, a journey.  Put down your personal milestones in this plan and then fit in each investment product according to your milestones. Choose among the various investment products that will help you reach your next milestone. A one size fits all kind of an approach will not help. You have an option to seek professional help who can guide you with this. In this day and age of GPS, why struggle to find your way!

Unlike our parents who were happy to invest in FD and forget till the time of its maturity, you need to be actively involved. Remember, this is your journey, a GPS can guide you through it, but you still need to drive.

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