In Conversation with Dharmendra Satapathy

Financial Freedom

Editor’s note: When most of us hear the term retirement, it sounds like coming back home from work permanently. While the traditional definition of retirement isn’t much different, in this day and age, the conventional thinking needs a fresh perspective.

To discuss this ignored, somewhat cliché yet pretty important topic of retirement planning, we invited a renowned speaker, Dharmendra Satapathy—founder-director of Next Level Education and the author of Simplifying Financial Jargons.  

Dharmendra not only shed light on the neglected areas of retirement planning but encouraged our audience to think about retirement planning differently without taking on stress.

Below are the highlights of our conversation with Dharmendra Satapathy  

Dharmendra started off with a very thought provocative question. Do people want to retire from work or from stress? He enquired. Majority of the audience agreed that they want to free themselves from the stress of earning money for a living. Emphasizing this point further, Dharmendra reminded the audience that retirement planning doesn’t only concern people in their 60s but the basis of retirement planning is managing cash flows.

According to him, with rising life expectancy and shrinking career spans, cash flow planning has become extremely important. His observation about jobs paying lofty packages has been quite relevant in today’s context. He believed all people earning fat salaries but working under tremendous stress might be heading towards early retirement. Therefore, it’s crucial to have a ‘cash flow guarantee’ after the age of 45-50 years. A cash flow guarantee, in simple words, means having adequate savings to generate returns that can take care of all your expenses.

Retirement redefined…

As time elapsed, the discussion became even more candid. He went on to rename retirement planning as financial freedom. By this he meant, anyone who is financially free can retire from whatever hassles them early and pursue various work options that make them happy although this may not necessarily come with commensurable monetary rewards.

He thought since many people are uncertain about the size of corpus they would require to achieve financial independence, they often demonstrate a behavioural pattern (bias) of die rich and live poor.

And this is precisely why many of us focus only on maximizing returns on our investments, completely ignoring the risks involved. According to Dharmendra, many investors often take excessive risks when the markets are buoyant, but become extremely risk averse when the market conditions are turbulent.

How much money do you need to enjoy your golden years?

At present, any person having a nuclear family can achieve financial independence at Rs 4 crore and at around Rs 6-7 crore, one can be completely free from all stress pertaining to finances, believes Dharmendra.

How can youngsters achieve financial freedom?

Before addressing youngsters about achieving financial freedom, he asked the audience what their biggest worry with respect to their job these days was. Is it not getting promoted or not being able to improve lifestyle or not having job guarantee? Surprisingly, a majority in the audience expressed job guarantee (rather lack of it) as their biggest worry today. Dharmendra was of the view that with this level of confidence one can’t opt for a housing loan. This was the implied way to underscore the risks one may have in building cash flows for the future.

Changing compensation system

Dharmendra highlighted that unlike yesteryears when people were paid for spending more time at the office premises, doing a certain amount of work, the remuneration arrangements in the gig economy are changing to a task-based reward system rather than time-based system. He advised youngsters to start early so that they can achieve financial freedom sooner.

Businessmen beware …

According to him, uneven cash flows is a bigger worry for businessmen than problems associated with expansion. In his view, businessmen shouldn’t commit all their funds to the business and should build a kitty over time to achieve financial freedom.

Asset allocation and priorities

He insisted that investors should pay attention to asset allocation at all times, but more so when approaching retirement and during their golden years. As one grows older and attains financial freedom, capital preservation becomes, or rather should become, the priority.

His concluding remarks were equally enlightening. Assuming 80 years as the average life expectancy, Dharmendra appealed to the audience to breakdown the entire lifespan of 80 years into 8 stages of 10 years rather than treating it as one block. Priorities change every ten years, thus, you must plan accordingly, was the implied advice!

To sum up, steps in achieving financial freedom

  • Remember, retirement is freedom from hassles
  • Cash flow planning is the key to achieving financial freedom
  • Risk and returns go hand in hand
  • Know the power of your money
  • Start early

PS: At Ventura Securities, we encourage our investors to take well-informed decisions pertaining to their finances. As part of that, we follow a hand-holding approach while offering services. In case you are not sure how should begin your journey to financial freedom, please feel free to drop an email at mfcustomercare@ventura1.com. We will be happy to resolve all queries that you may have!

Please note (Read as a disclaimer): All views expressed herein, regarding but not limited to personal finance, overtly or even otherwise are solely that of the guest and under no circumstances should be construed as those of Ventura Securities. The only purpose of this coverage is to create awareness amongst investors. Please consult your financial advisor before taking any decision pertaining to your finances.

Disclaimer:

We, Ventura Securities Ltd, (SEBI Registration Number INH000001634) its Analysts & Associates with regard to blog article hereby solemnly declare & disclose that:

We do not have any financial interest of any nature in the company. We do not individually or collectively hold 1% or more of the securities of the company. We do not have any other material conflict of interest in the company. We do not act as a market maker in securities of the company. We do not have any directorships or other material relationships with the company. We do not have any personal interests in the securities of the company. We do not have any past significant relationships with the company such as Investment Banking or other advisory assignments or intermediary relationships. We are not responsible for the risk associated with the investment/disinvestment decision made on the basis of this blog article.

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