Nithin Kamath, CEO and the founder of India’s largest stockbroking house Zerodha, has one advise for youngsters looking to make it big: focus on developing skills, money and success will follow.
“It’s very hard to set a money goal and chase it down. The idea is to find something that you like to do and get better at it,” Kamath said in an interview to Moneycontrol on Children’s Day, November 14, as he stressed on striking a balance between spending and saving.
In today’s world, if you are good at something, money will automatically follow, said Kamath who started trading when he was just 17.
Setting up “money goals” can lead to all decisions being driven by the urge to get rich, which can create ethical problems, he said.
“I am trying to help my son explore what he likes or loves to do, without keeping any material goods in mind,” Kamath said, adding the only money lesson that kids should be taught in the early years is to not take it for granted.
But it is important for young adults to understand the way money worked and find a balance in their spending-saving goals.
Skills play a crucial role here as well. With the average life expectancy going up and the retirement age coming down due to technological progress, if one is not able to keep up with technology, a lot of people will be forced out of work even before they reach the retirement age of 60.
The number of years one would need to support themselves will gradually go up, thus is important to start investing early, Kamath said.
Investing early doesn’t mean one should not live life to the fullest. “Investing in experiences will make you more intellectual than anything else ever will,” he said.
If you like music, find a nice music teacher. If you are into fitness, find a good trainer. These things add incremental value to you as a person.
Start early
But when it comes to spending on material goods which are depreciating in nature like a car or a bike, mark a budget and donot exceed it. Not more than 25 percent of the money earned should be spent on material things, Kamath said.
It’s important to inculcate this habit early so that it becomes second nature by the time you enter adulthood and start earning, he said.
There are a lot of triggers influencing one to buy things they don’t need and it’s easy to get carried away unless that habit is ingrained in a person. The trick is to start investing early and not to borrow and buy things you don’t need, he said.
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