Here’s a silver lining to the downturn of 2008-09: we may have got poorer, but who says we can’t get wiser! 

By Poornima Kavlekar

2009 was a year that many would like to forget. After an ecstatic 2004-07, the unprecedented downturn of 2008 altered investment paths severely. You can consider yourself lucky if you escaped this meltdown, what with the massive drop in value of investments in stocks, mutual funds and unit linked insurance plans.

What is even more agonizing is that for most people, it came without notice and impacted jobs, investments and long-term goals. Some of us are still in the process of damage control. But the fact is that this meltdown has lessons for us on how to manage one’s money without compromising too much on returns and long-term goals.

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A must-read primer on the do’s and don’t's of good money management, especially for those just starting out on their careers.

By Poornima Kavlekar

When I started my career in the mid-90s, my father gave me two basic money rules to follow. One was to start an insurance plan as early as possible and the other to follow a disciplined approach towards savings. I did. Today, I am reaping the benefits. I would like to share my learning with our 20-something young readers who are taking their baby steps into becoming financially independent. With time on your side and fewer responsibilities, this is the perfect period to lay the foundation for a secure future by regulating savings and smart investing.

1. Start planning early. Something that Mumbai-based financial analyst Varsha Thakur, 21, did. Just three months into her financially independent world, she has already invested in fixed deposits with banks and bought some gold coins. Varsha’s approach allows more time on your side for money to grow. This is when the power of compounding works best. This is nothing but reinvestment of income for the long-term at the same rate of return to constantly grow the principal amount, year after year. For example, if you make a single investment of Rs 1,000 in an instrument that offers you a return of say 10 per cent, it will grow by more than 10 times at the end of 25 years.

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