Striking a balance between financial and physical wellbeing in life

Financial wellbeing is the most important purpose of everyone’s life. Rightly so, as the money gives freedom to buy what you like, enjoy luxuries and comforts and guards against exigencies

Striking a balance between financial and physical wellbeing in life

Focus on strengthening both financial and physical wellbeing in life

Financial wellbeing is the most important purpose of everyone’s life.  Rightly so, as the money gives freedom to buy what you like, enjoy luxuries and comforts and guards against exigencies.  Precisely, this is the reason that parents spend huge amount of money on educating their children which is gateway to getting good jobs and enjoy that financial freedom.  However, often in the pursuit of the financial security, often the physical wellbeing is not taken care of.  Years of ignorance and lack of discipline in maintaining a healthy lifestyle results in huge damage to physical health which is indeed a true wealth. This was very much evident during the recent pandemic when long hours of work, sickness of the loved one, lack of social outing and travelling took a toll on mental and physical wellbeing. Hence, rather than just chasing money and focus on fulfilling just short-term aspirations, becoming too ambitious for long term goals, strike a balance and concentrate on building both financial and physical wellness which can help you to leading a happy fulfilling life in the long term.

For easy understanding and implementation of both the aspects, we list down the key parameters that requires attention and action:

Attaining financial wellbeing

Financial wellbeing or financial freedom or financial security simply refers to ability to do things that you like. In financial parlance, it indicates ability to meet the goals at different stages of life be it professional qualification, buying home, taking care of the dependent parents and family, spending on luxuries, going for foreign vacations and enjoying the retired life.  Now all of this calls for few timely actions – Not just save but invest, start investing early in life which leads to smaller investment amount getting the boost of compounding resulting in long term wealth creation.  It is equally important to keep a check on spending. While buying of house or other goals may call for taking up the bank loan, prudent management of debt and timely repayment is essential. Also, apart from the traditional avenues like bank fixed deposit, Public provident fund (PPF) it is also crucial to invest in varied asset classes. Most important equity which has potential to give relatively better returns in the long term.  Diversification across asset classes like equity, bonds, golds and cash is must to negate the market volatility and get the best of each of the asset classes. (See chart)

Key asset classes and their objectives

Diversification will be governed by the age, risk appetite, goals, returns expectations, investment horizon etc.  Diversification can be done by seeking a help of the financial advisor or in today’s time mutual funds is one such investment avenue which helps to spread money across all these asset classes via different type of schemes. Like equity mutual funds can aid in capital appreciation, debt mutual funds can give stability and capital preservation, liquid funds can serve the emergency capital requirements while gold exchange traded funds and funds of funds can act as a diversifier in the portfolio as gold has low correlation with other asset classes. 

Mutual fund comes with merits of portfolio managed by the experienced fund managers, liquidity, transparency, well-regulated and systematic investing.  Systematic investment plan (SIP) allows one to invest fixed some of money in a mutual fund scheme at a pre-defined frequency which could be monthly, weekly, quarterly or annually.  A monthly investment of Rs 3000 totalling to Rs 7.2 lakh assuming 15% returns which is 20 years annualized returns of S&P BSE Sensex for the period of June 2001 to June 2021 grows to Rs 44.92^ lakh in 20 years period. If with the rise in the income if the monthly amount of Rs 7000 totalling to Rs 16.8 lakh is invested in the same period with same rate of return the value of investment grows to Rs 1.05^ crore. One should note that past performance is not necessarily indicative of the future performance of the fund and one should do the due diligence before investing. 

^Source: Yahoo finance and AMFI SIP calculator                                                                      

Once you build the corpus with the help of SIP. Mutual funds also offer systematic transfer plan (STP) enabling one to transfer from equity to debt and vice versa based on change in risk appetite as age advances and also systematic withdrawal plan (SWP) allowing to withdraw fixed amount on a pre-defined frequency which can be a useful tool especially during the retirement stage.

Once you build your investment portfolio, be patient, don’t get panic by the market movements or get carried away by any rumours or tips.  This is particularly important in case of equity which is a highly volatile asset and one should not sell the investments in hurry when market fall or book the profits when the market reach the record highs.  Investment decisions should not get impacted by the market movements.  Stay abreast of the market developments, review the portfolio twice a year and do the rebalancing if the portfolio drifts away from the target asset allocation or you have any unexpected life event like a loss of job or medical emergency which calls for liquidating a portion of the portfolio.  While investment is key, remember insurance (term, health) is must as it acts as a cushion and financially guard’s one against unpredictable life occurrences.  Lastly, while investment is key building an emergency corpus which takes care of the expenses over 6 months to 1 year is vital. As rising economic uncertainties and pandemic can put one in challenging situation this corpus will serve basic needs in these times.

Attaining physical wellbeing

In the zest to enjoy the financial freedom, the significance of the physical wellbeing is often overlooked.  Work-life balance is ignored under the pretext “I am young and healthy” and the result of such ignorance often leads to lack of sleep, proper nutrition, lack of exercise, stress gradually acts a silent killer and individual typically suffers from the life style diseases which causes life long damages to your body. The wealth one created to enjoy happy retired life is spent in paying medical bills. Hence, don’t ignore the physical and mental health.  Follow a schedule of exercise, intake of balanced diet, work but take time off whenever body needs a break, spend time with family and friends to enjoy a peaceful life.

If just like maintaining a financial discipline, if you are finding it difficult to maintain the physical discipline than seek a help of certified nutrition and health consultant who can guide you to live a healthy lifestyle. Also ensure to practice meditation, yoga which can act as healer and helps to you to recharge yourself.  This is very important in the pandemic times when we are confined to four walls of our house.  A well-balanced home cooked meals is another important action one must execute. While it is fine to cheat on few days and indulge in fast food thanks to their easy availability with Zomato and Swiggy. It is important to eat and enjoy vegetables, fruits which are locally grown and seasonal.  This will help in not just reducing those unwanted calories but also help in flourishing the local economy.  Pursue a hobby of your interest area, read, learn new stuff every day which can give you a sense of fulfilment and excitement.  Lastly, we all might be going through some sort of struggle in today’s time but it is important to be calm, accept the negative emotions or anxiety we all are experiencing, replace it with some positive attitude and hope for the best.

Summing up

Remember no wealth can substitute your health and also there are no shortcuts when it comes to your health and wealth. Both the financial and physical wellness calls for discipline, perseverance, patience and calmness.  Life is unpredictable and at times things may not go as per the plans or expectations but a constant effort, hard work can at least help to mitigate the downside risk and reduce the damage and help you lead a secured and fulfilling life.