Here’s a question no financial advisor (at least in India) asks. “Dude, do you like, or better yet, love your job?”
They ask how much you make, how much you can invest, what’s your risk appetite, yada yada. Yawn. The truth is, it’s not the usual “form filling” stuff that really matters when it comes to investing. It’s the touchy-feely stuff that actually throws you off.
How you feel about your job matters a lot when it comes to investing. After all, most of us invest from our savings which generally comes out of our paychecks. However, different people have different relationships with their paychecks, depending on their affection or the lack of it for their jobs.
I, for example, find it hard to stick to jobs for any duration longer than a couple of years. I get bored easily I guess. I know a lot of people who are like me. But then there are those who stick to the 9-5 or 9-9 grind through thick and thin. It’s generally because they have commitments – Wife, kids, parents, siblings, the apartment your parents always dreamed of you owning, the car you drive to work through traffic that makes you want to scream.
Anyway, the point is that not everyone is steady with their jobs, paychecks, or girlfriends/boyfriends.
Millennials, and younger, belonging to even marginally affluent families can be remarkably nonconformist when it comes to having a steady paycheck. The reasons can be many, but essentially when you remove external commitments, sticking to jobs just for the sake of a paycheck isn’t exactly a given.
Now how does it relate to investing, and more importantly SIPs in mutual funds?
Why not SIP for investing?
An SIP (Systematic Investment Plan) is essentially an EMI sort of thing where you invest a certain sum every month in a particular mutual fund. Focus on the phrase “every month”. That’s where the rub lies. You know what else comes every month? Ding ding ding – your salary.
So, if you get a steady sum every month and will continue to do so for a while, then an SIP is great. It’s the simplest approach to investing in any mutual fund, and probably one of the main reasons which make them attractive.
Now if you are the kind of commitment-phobe I am ( only when it comes to jobs), an SIP is not that attractive. I don’t know when I may quit and planning a steady outflow and more importantly building financial plans based on that steady investment drip, doesn’t seem awfully realistic. Life is no normal distribution. Sh**t happens that you can’t predict.
Sure, it’s not that difficult to close an SIP. If you use online services, then it’s even easier. That’s what the market players will tell you.
However, dear detractors, that ain’t the point.
The point is that investing is as personal as it gets, irrespective of what the big boys say. the individual realities of investors matter a lot when it comes to successful investing. A 30,000 SIP is a joke for some, and a jaw-dropping number for others. So consider your reality before you decide your investment approach.
If not SIP, what should I do?
Know thyself, my friends. Knowing your flaws is more important than knowing your strengths when it comes to investing. At least that’s what I discovered for myself.
If your relationship with your job is on slippery ground, and especially if you have a history of making such so-called stupid decisions, then don’t do SIPs. Rather, have a “go to hell” plan.
Till the time you got a paycheck coming in, stash away as much as you can in fixed income and then equity mutual funds or even individual stocks. Just because you are an HR manager’s nightmare, doesn’t mean you can’t invest like the stable nice people. You just invest a heck of a lot more, whenever you can.
You control how much you invest, and sure it’s not fire and forget. As long as you do this, you will at least be able to quit your job with a smile on your face and a spring in your step.