Working to Retire Early

“Hey Vishnu!” Clinton called from the water cooler where Sneha and Reshma were already talking excitedly.

As Vishnu approached the exuberant group, Clinton patted his back in a friendly manner and asked, “So, you are coming to the club tonight, right?”

Vishnu smiled, and politely declined the offer.

“What, man! Today we are getting our first paycheque. We ought to celebrate!” said Reshma, who seemed incredulous at the idea of not partying when you have the money.

“Come on, brother. Don’t be a scrooge, let’s go and party, we deserve it after a month-long hard work,” cajoled Clinton. But Vishnu was firm.

“I am not a miser, dear. I just want to manage my money responsibly so that when I need it, it’s there for me.”

“Oh, big words,” Sneha pulled a face at Vishnu.

The group had been working together in the IT firm from the past year, but they had known each other for a good part of four years during their engineering program. All four had cracked the campus placements with a leading IT MNC and were now fortunate to be working together on the same project.

Vishnu was a smart, sensible, brooding young man who didn’t act on an impulse. He took his time to turn over things in his mind before making a decision. Kind, mellow and soft-spoken, Vishnu was perhaps the only one in the group having a concrete vision about his future. And the beginning of all his dreams and ambitions was attaining financial independence much earlier in his life.

Vishnu had always looked up to his cousin, Yash, who was a serial entrepreneur and deeply devoted to several social causes. Yash had attained financial independence in his early thirties, and then on, he devoted his time, intellect and efforts to initiatives and projects that were close to his heart.

Yash had taken his younger brother under his wings when he turned 15. Yash would spend a lot of quality time with Vishnu, explaining to him the nuances of wealth creation.

“Attaining financial freedom is the first, and the most definitive step towards growing rich,” Yash had once shared with Vishnu.

Through Yash, Vishnu had learned that by making small, yet regular investments for a long period of time can help anyone grow rich. Vishnu had taken the pledge to create a substantial corpus of money by the time he turned 40 years old.

When he finished telling his story to his friends and explained his commitment towards creating a self-sustaining portfolio over the next fifteen years, Vishnu asked his friends, “So, what do you suggest? Should I go out with you guys and spend a major portion of my salary in one night, or I invest the same money to attain financial independence?”

Hearing Vishnu’s well-laid out plans for the future, and seeing his determination, his friends grew silent – each of them reflecting over what Vishnu had said a moment ago.

“I think I agree with you Vishnu,” it was Reshma who broke the silence. “But can you tell us more about the investment part? I mean, there are hundreds of investment options out there, and not all are safe or effective,” she voiced her concerns.

“You can start investing in the equity market, which has given consistent returns over the years, provided you invest for a long time. A good way to invest in equities is via mutual funds through monthly payments. A mutual fund is managed by a qualified fund manager so that you don’t have to worry about which stocks to invest,” said Vishnu. “The compounding effect in mutual fund investments pays rich returns, and only by exercising sheer determination, and financial discipline, you can attain financial independence. I suggest you guys must invest at least 25% of your salary,” he added.

“Well, you are saying this word, financial independence, over and over again. What does it mean?” asked a clueless Sneha.

Vishnu explained to her that financial independence meant, “Not having to work to pay your bills.”

As a perplexed group of young engineers looked on, Vishnu urged them to imagine a life where they don’t have to slog every day just to earn enough money to pay the bills. Instead, he asked them to think of a life where they could follow their interests, hobbies, or passion without having to worry about paying the expenses.

“Once your portfolio grows significantly, it starts earning sizeable returns, even when you stop investing. This passive income takes care of your expenses, and you don’t have to do a job you don’t like to pay for your living expenses.”

The new insights dawned upon the group, and they started to see a lot of sense in Vishnu’s attitude towards spending money.

“I know what you say is cent percent correct, Vishnu. But I really wanted to let my hair down and have a good time,” said Clinton gloomily.

But Reshma cheered him up instantly. “We can still have a lot of fun! Let’s meet at Vishnu’s apartment today evening, split the cost for food and beverages, play some games and sing songs,” she said excitedly.

Clinton liked the idea very much. “I will get my guitar and Sneha can sing. We will have our own little party of friends!” he exclaimed.

The friends high-fived just before being shooed away to their workstations by their project manager who hated youngsters wasting time near the water cooler.

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Celso Fernandes, Goa’s financial doctor, can be reached at +91-9422058741.