A brief introduction of Nikil Vasudev Thakkar, Director, We Care Freedom Wealth Pvt Ltd.
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00:00 Brief introduction is like I am in this distribution field since last 19 years. I started my career
00:11 in 2004 and we started learning mutual funds and distributing mutual fund product. But
00:20 that was the time where we were educating people about mutual fund and how mutual fund
00:23 works. So those were the days and from those days to till date we are learning. So this
00:30 is a process but nowadays what we have found is distributor role has been changed and we
00:37 feel that even the classification or the way SEBI is expecting distributor to play the
00:45 role should be changed. This is what I feel because nowadays people needs so much clarity
00:52 and basic things like financial planning. So now we are learning and we are also doing
01:00 those things since last 4-5 years. So currently we are managing overall assets so far as mutual
01:05 fund is concerned around 650 crores and other assets like EMS and payment holding is around
01:12 another 150 crores. So approximately 785 crores we are managing in total. So this is what
01:21 the brief is. Basically we have started from Anand, Gujarat, a city called Miril city and
01:30 from there we have expanded to Baroda and last year we have expanded our wings to Ahmedabad.
01:37 So we are managing from 3 cities right now from Gujarat.
01:41 Fantastic. So let's start because you have already been in the field for such a long
01:45 time. My first question to you is what investment strategies should young professionals consider
01:52 follow to ensure that they have achieved their financial freedom and they can easily retire
01:59 at the age of 40 without having to worry about income inflow.
02:03 I think this is one of the biggest challenge which we see going forward because today's
02:10 population is young and overall India is young and the population in India is also young
02:15 and they are earning good money. But with the same they don't know how to plan. So we
02:24 have designed a strategy called 7 major events and to educate them we are running a campaign
02:34 called financial happiness program, in short we call it FHP. So there we educate them that
02:41 contingency planning is most important, after that there should be adequate life insurance
02:48 with the same adequate health insurance. Not only health insurance but adequate critical
02:53 illness should also be there. So these are few things which are definitely uncertain
02:58 but if it is not 100% secure then whatever planning they do in future, chances of failing
03:06 are maximum and this is what we have experienced in our 19 years tenure. So for that these
03:13 3 things which are uncertain, we plan them first and after that we will recommend that
03:21 in the future if you want to be financially free then it should be their 4th priority
03:26 to have adequate insurance. The 4th and most important priority is financial freedom because
03:32 the major risk which we foresee in the years to come is that you will get a good job and
03:38 money but after 40-45, whether the company keeps them or not that will be a big problem.
03:46 Even if somebody is doing business, continuous challenges are coming and earlier it was a
03:51 period of 7-10 years where changes were coming. Now it is moving very fast. So every 2-3 years
03:57 changes are coming and if somebody is doing business, he is not able to cope up with those
04:02 changes then also challenges will come. So their income can be cut down after 40 or they
04:10 can be jobless. So they should plan it from the very first day of their income.
04:17 They should do this planning and this is what we always recommend. That's why we are doing
04:27 this education program in colleges also. After that if somebody is married, they have kids
04:34 then for child education, child marriage, all those things can be taken care. So 5th
04:38 we talk about this. The 6th important thing is aspirational goals. That I want to travel
04:45 to, this and that. So all those things can be taken in 6th. And 7th is finally critical
04:52 illness. We recommend additional but that critical illness is because nowadays we know
04:58 that what we are eating and what we are drinking. So because of that there are 100% chances
05:04 that in the future whatever health we are conscious of, the food which we eat is not
05:10 that much clean. So pesticides are more in every food. So critical illness will definitely
05:16 help them to secure their finances. So these are the few things I will definitely recommend
05:22 to the youngsters. You have said it correctly that it is better to plan early than to plan
05:27 earlier. But what happens is when people start working, their first thing is that they are
05:32 not interested in saving. I am sure you must have come across that. It is only after a
05:36 few years of maturity, after a couple of years maybe they have settled down, they have a
05:41 family, that's when they think that now it is time for us to get serious about our financial
05:44 planning. And contingency planning is very critical because one never knows. Like Covid
05:49 came and most people were caught unaware and then they realized that there is no medical
05:54 or any support for Covid because it was just not there. So contingency planning is very
05:59 important. A lot of young people in the age group of 25-30 who have just gotten into the
06:05 labour force, they don't know exactly what contingency planning is. They don't understand.
06:11 They feel that we have life insurance, health policy, that's about it, we are good, maybe
06:17 we will probably have one aspiration like we want to buy a house or a car. That's usually
06:21 the thing or an international holiday. So according to you, how should they do long-term
06:27 contingency planning so that they are not caught unaware?
06:31 Let me take it in a different way. All the young people, one survey we did, the majority
06:41 had either an iPhone or a Samsung, the brand was more than two. But they were planning
06:46 to have an EMI of these two phones. As soon as they get a job, one of these two phones
06:52 will be EMI. So I will say that if the phone can delay for 6 months, then definitely contingency
07:01 planning will be easy because the more EMI they put on the phone, the more money they
07:07 start saving every month. So definitely contingency planning will be done and that will remain
07:15 for a long time. Just remember one thing, the basic expense, like living expense, lifestyle
07:21 expense, let's say somebody is earning 2 lakh rupees, but his lifestyle expense is 1 lakh
07:26 rupees. So for at least he should have that contingency planning of 1 lakh into 6 months
07:31 that is 6 lakh rupees. So his routine life should not be disturbed anywhere. And to avoid
07:37 this EMI trap, this EMI trap is definitely good but after a certain age. Because what
07:43 do parents do, if the child will earn directly, then the parents will also guide that you
07:48 should take this salary, if you take this salary then you will get this tax benefit
07:52 and XYZ. But this is one trap where in a small age, you must have heard a story of this,
07:59 when the elephant's child is small, then we tie a strong iron chain around his feet.
08:09 Why we are doing this? Because he knows that he can get away with it and he puts in efforts
08:14 but as he grows up, he becomes a bigger elephant than the small rope. Though the energy, the
08:22 strength is more in the bigger one, but he will not do, he makes a mindset that if I
08:28 am tied to this, I will not be able to move. This is what happens in the life of children.
08:33 When they fall in the EMI trap at an initial age, then they will have a psychological problem
08:40 and they will not be able to move themselves easily. Or if they put money in a real estate
08:46 then they will not earn that much money, still they feel that it is their investment.
08:51 But practically, everybody should know where the money is being made and liquidity will
08:56 be the major concern. I think youngsters should keep away from this EMI trap.
09:02 This is the first suggestion from my side and second is to reverse it. If you want to make an EMI,
09:09 then let's make an EMI of savings first, in which the amount will be accumulated continuously.
09:14 You are absolutely right. EMI and debt trap is a very dangerous pit to fall into.
09:21 So while we talk about the contingency planning, which you have very correctly highlighted,
09:27 the other one is just like you mentioned, there is a requirement to have a corpus.
09:32 Now corpus planning is also something like for example, when you are in your 25s or when you are in your 30s,
09:38 you at that point in time think that maybe I am earning a lakh a month, so my corpus should probably be 40 lakhs or something.
09:49 But maybe that is not enough 10 years down the line. So how can the young professional establish their financial goals
10:00 considering the current expenses and also in a way so that they can create a corpus that will help them
10:05 maintain the same lifestyle or any incremental lifestyle as you call it.
10:09 Here I would like to share one thing with you, Vinita. Normally, how people have to build a corpus,
10:16 for that, a little financial planning is necessary. Nowadays, what is happening is that people are considering
10:21 even SIP as a product, which is a process of investing. But SIP is also taken as a product.
10:27 If everyone does it, then I do it. Somewhere or the other, people will purchase it.
10:32 If the market is good, then they buy it. And when it is bad, negative, then they sell it.
10:37 This is what we are experiencing because today all platforms are available and so many platforms are selling mutual funds.
10:43 So people think that I will buy it and create a value. But they don't know what is the right corpus.
10:50 That corpus should be of contingency and should be of financial freedom.
10:56 Then they should have a disciplined way of approach.
11:01 When we talk about fitness, I focused for 6 months and then I got fit. It is not possible.
11:08 I have to be disciplined and I have to do exercise regularly. I have to track my diet regularly.
11:16 For all these things, you will have to put in conscious efforts.
11:20 And for that, there should be some person who helps you or guides you.
11:24 The one you meet every 3-6 months, he will help you.
11:28 Your weight has increased so much, your body mass index has increased, your fat level has increased.
11:33 So that person will help you to make a pattern for your diet.
11:38 So this is a continuous process. Similarly, in case of financial planning also,
11:42 what we have seen is that review meetings are very important.
11:46 If they have worked with distributors, then they should keep doing review meetings.
11:50 How much corpus is needed, how will they achieve that corpus.
11:53 Because today, if somebody wants to be financially free at 25-40, he needs 6-7 crores.
12:01 When I say this figure, people think that it is not possible.
12:04 I will not be able to achieve this. But how is this possible?
12:08 When you review once every 6 months, you will keep getting it.
12:11 How is their growth going on? How can they increase their investment incrementally with the increase in S&R?
12:18 And how can they achieve on corpus?
12:22 So the goal remains, the focus remains, the discipline remains, then it definitely gets achieved.
12:27 But people are not taking financial planning as a serious matter.
12:32 The more serious the job is, the more serious the earning is, the more serious the investment is.
12:38 So I think there should be a dual role play where parents who are going to be dependent on their young kids,
12:49 their role will also be very important.
12:52 Because what has happened till now is that parents would like to dominate kids.
12:56 Now kids are walking on their own thoughts.
12:59 So here there are so many, I mean there is a lot of news and data is also available.
13:05 But there should be somebody with whom he or she should connect and they should have the right guidance.
13:11 So you are right about that.
13:13 I mean at any age, especially at a young age, when you have just started working,
13:17 you need the right kind of guidance to take you in the right direction.
13:21 Either they can go to their parents or they can go to their seniors in the organization.
13:26 Maybe the best is to go to a professional wealth management expert.
13:30 And with this, we are requesting to so many corporates also that you should do events like this
13:38 where we guide these basic things.
13:42 It is not mandatory that they should invest with us.
13:47 But one thing is that they should get the right guidance.
13:50 And there the AMCs and people like us, we can work together, collaborate together
13:57 and we can do this financial education program continuously in the organizations
14:01 where new people, young people are recruited.
14:04 And make them a part of the induction itself that they have to qualify.
14:10 So that will help him or her to give a better life.
14:14 That's a great suggestion.
14:15 And then the other thing that we also noticed is that right now in the current economy
14:19 and over the past few years, and I think you can probably blame COVID for it,
14:26 was that people would get into a job, they will continue the job for a couple of years
14:31 and they will move into another organization.
14:33 But what we saw during COVID is that a lot of people decided to go for unconventional jobs.
14:38 Started doing a lot of gig employment, started doing freelancing assignments.
14:44 Now, how can these young people, while it is necessary,
14:49 so many people just decided to give up their corporate jobs
14:52 and they decided they will probably become a freelance software coder
14:55 or they will become a financial planner or anything like that.
15:00 It might have helped during those couple of years.
15:03 Maybe further down the line, it might not help them earn as much as they would in a conventional job.
15:11 So how can young people diversify their income sources beyond these traditional 9-5 jobs
15:17 and create multiple revenue streams, which will ensure that their current
15:21 and their future financial stability is taken care of?
15:25 This is an extraordinary question, because I can see one thing in this.
15:32 People had to leave their conventional jobs and go for other jobs or were working.
15:39 Some people even started new ventures, so trial and error method.
15:44 But the most important thing is that people always focus on returns.
15:49 When it comes to investment, people focus on returns.
15:53 Whereas money is made with time.
15:56 So when they do trial and error in life, they do new things,
16:00 so you don't know where they go for 3, 5, 6, 7 years.
16:04 I have seen both kinds of people who were in conventional jobs
16:09 and they had a process of investment and it was continuous.
16:13 And I have seen people who have done their ventures also.
16:17 But those who didn't break their investment pattern or discipline,
16:21 whatever, what they decided, let's say he is doing 20,000 SIP for his financial freedom,
16:27 so that 20,000 was added in his lifestyle expenses.
16:32 He added it in his basic expenses, like an EMI.
16:36 So what was the benefit of that? After 5, 6, 7 years, he had a backbone,
16:41 let's say a 50 lakhs or 80 lakhs backbone, which is there.
16:45 So he was able to take risks in a very better way.
16:51 And because of that, the risks he takes, even if he has started a venture,
16:56 the risks he takes there, they are earning better and his chances of being successful increase.
17:01 Because of this backbone created.
17:03 So one thing is that you are fearless, okay, you will work in a venture,
17:09 maybe you won't get money for 6 months or a year, but still you are able to sustain yourself,
17:13 so definitely you will do better in business also.
17:16 So if you want to move forward fearless, either it is job or business,
17:21 but if you want to move forward fearless, then there should be a,
17:25 which we call a strong backend.
17:28 So we call it a backend in Gujarati.
17:31 When we were in college, there is a backend of the friend circle,
17:35 and because of that, if you want to give a proposal to anyone, there is no tension.
17:39 You can give, you don't have to be afraid of anyone's buy.
17:42 So the same thing, if there is financial planning, then you can do a backend,
17:46 and because of that, your chances of being successful increase a lot.
17:51 So financial planning is not only for him, for the future,
17:54 but in between also these things will help a lot.
17:58 So my final question to you is, I mean you covered most of it,
18:02 but my final question is, you know, you told about risk appetite.
18:06 Now typically, risk appetite, again, you know, there are people who might be very conventional,
18:11 who would rather go for a very traditional outlook,
18:15 but it has been noticed that your risk appetite also evolves as you grow in your professional life, right?
18:22 Because if you are starting with a salary of, let's say, 20,000,
18:24 you feel like, no, let's put it in FD, let's put it in SIP,
18:27 that's a safer thing because I don't know how much I will earn in the future.
18:31 But as you progress and you scale, you know, grow up the corporate ladder,
18:35 your risk appetite also increases.
18:37 And in such a situation, how can these professionals identify the best financial products
18:43 that they should invest in, based on how their financial capabilities also evolve?
18:49 Here, Vinita, my answer is very simple.
18:52 Risk appetite comes when you know your why very clearly.
18:56 I mean, for what purpose I am doing this investment or saving.
19:01 If I know that, then there will be no risk appetite problem.
19:05 So let's say, risk appetite is something like, you must have traveled to many places,
19:13 so you have to go to the US from here, and you will see,
19:17 the highest accidents are on the road or on the air?
19:23 Which is the most common accident?
19:25 Absolutely, it's usually when you're traveling in air.
19:29 But I know that there are more chances of air accidents,
19:34 still, if I want to travel from India to the US,
19:38 then no matter how much risk appetite I have, I know that if I want to go to the US,
19:42 I have to go by air only.
19:44 I will have to catch a flight.
19:46 Now, where did this problem of risk appetite come from?
19:48 If a young person is planning for his retirement,
19:51 he has to be in equity without thinking about anything.
19:55 He will not be in risk appetite because he is planning for the next 20, 25, 30 years.
19:59 Now, if he does not plan in equity, then it will be risky.
20:03 If he starts planning with fixed deposits, then definitely it will be risky
20:07 because the space in which the economy will grow,
20:09 your investment will not grow in that space.
20:11 And if it does not grow, then no matter how much inflation we get,
20:14 we will not get any return.
20:16 So instead of preserving wealth, he will become poor.
20:20 So if he wants to make money, become wealthy, and achieve his goal,
20:24 then in the longer term, he has to be in equity only.
20:27 But when will there be confusion here?
20:30 When it is a shorter period or a medium-term period.
20:32 So let's say I am in Baroda or Anand and I want to travel to Mumbai.
20:37 So at that time, I will have the option that I can go by train, I can go by car,
20:41 I can go by flight. It depends on my time,
20:44 it depends on how much investment I have in my corpus,
20:48 and it depends on my risk appetite.
20:51 So here, risk appetite definitely works.
20:54 So the medium-term planning of 3 to 5 years,
20:58 there he or she has to take care of his risk appetite.
21:02 But there also, you have to take care of inflation and make decisions.
21:06 Because whatever you do, whether you do FD or take a loan,
21:11 wherever, who makes the most money?
21:15 Bank.
21:16 And who makes more than the bank?
21:18 The one who has invested in the bank.
21:20 Ideally, you should understand these basic things.
21:22 Because if you look at the economy today,
21:25 whether you want it or not,
21:28 I am giving business to 500 to 700 companies.
21:31 Now these 700 companies are growing.
21:34 You may keep your money for free, but those 700 companies are growing.
21:38 So now it is up to him how he wants to grow.
21:42 Okay, which is fine.
21:44 So I am done with all my questions.
21:47 Is there a final thing that you would like to tell any of the young professionals out there?
21:53 You covered most of it.
21:55 One thing I would definitely say to the young professionals,
21:59 Warren Buffett also says that I was lucky to be born in the US.
22:05 And because of this, I became rich.
22:08 So the young people who are in India,
22:11 they are lucky to have been born in India.
22:14 And the next 20-30 years,
22:17 where wealth creation is going to be crazy.
22:21 And in fact, those people, we are all lucky that we are in India.
22:26 And if you doubt India at this time,
22:29 then 100% they have to doubt themselves.
22:33 They have all the right to doubt themselves,
22:35 but they don't have any right to doubt India.
22:39 So don't doubt India.
22:42 Be bullish and definitely money is going to be made in India.
22:46 So in the coming time, if you don't want to leave the country and don't have to do anyone's work,
22:53 then start your planning from today itself.
22:55 So thank you so much for your time.
22:57 I think you've covered the entire scenario about how young people should do their financial mapping
23:04 in a very simple to understand way without complicating the issue.
23:08 So thank you so much, Vedha.
23:09 That's great. Thank you so much.
23:11 Thank you so much Vedha and thank you so much to the entire Outlook group
23:13 and ICICI mutual fund for giving me this opportunity.
23:16 Thank you so much.
23:17 Thank you.