Filed under: musings | Tags: education, Investiing, mutual funds, rupee cost averaging, school, SIP
Its taken me a few years and lots of reading and talking to people to understand the fact that I should invest and should start early since the later we start, the more I loose due to the principle of compounding and rupee cost averaging.
If we had a subject in school which taught us the ‘how to’ of investing, I am sure that a large majority of the working middle class would be much richer today than they actually are. Investing early and making the right calls in that domain would be highly beneficial to all. I would therefore request you, Mr.Sibal to please give some thought to this area and look at making it a policy decision to introduce Financial Education at school level and making it compulsory for all for at least 2-3 years.
It took me 4 years and reading books like ‘Rich Dad, Poor Dad’ to actually appreciate the value of investing and investing early. We have a good domestic savings rate (the Gross Domestic Savings rate is approx. 37% according to the “Macroeconomic and Monetary Developments in 2008-09” report from the RBI) and am sure that we can better that by just including this simple addition to the curriculum.
Investing in instruments like ULIP and SIP should be made compulsory for college goers (at least for professional courses like MBA) at least in the metros, for a period of a year and then leave it at the discretion of the student to continue the same once they get a job and start work. The BFSI sector hires thousands of summer trainees every semester and while one would think that this alone would stimulate them to start investing on their own since they are usually involved in selling the same products to potential clients, that is sadly not the case. Hence company HR departments should take the onus to educate students on the benefits of investing early.
Investing regularly and wisely is the key to financial independence. A colleague of mine recently gave me the ideal savings plan. She suggested I start an SIP for each financial objective with a horizon of one year and above. E.g. In case i need to take a holiday next year to Goa or Mauritius and the cost is working out to be say, 1 Lakh then if I start an SIP worth 10,000/- per month i could be well on my way to having all the money i need to take that holiday.
We harp that the economic recession has not hit India hard due to the fact that we have a high savings rate. Had we started education on investing, in the last decade, we would have no doubt been in a shorter recession cycle here in India.
