Take money out to smell the roses

The client believes that a financial planner’s role is to tell him to spend as little as possible now and keep investing to secure his future.

Dhanesh, our client, works for a firm that has benefitted tremendously the Covid-19 crisis. The project he was leading has been one of the main contributors to the company’s performance. He received a special bonus recently and wanted to know where to invest.

A little background about Dhanesh. He is in his late 30s with two children who are still not teenagers. He has been a very conscientious, disciplined investor. We had already mapped out all his goals and his resources have been allocated, according to his risk profile. His ongoing savings are also being invested by following this plan. If he continues to invest regularly for the next 10-12 years and the returns were according to the assumptions, it looks most likely that all his goals would be achieved with plenty to spare. More importantly, it will allow him to retire at 50 – his main goal. So, this additional bonus amount was just that – a real bonus.

When asked about his desire, Dhanesh said that he would like to make an accelerated investment for his goals to reduce the dependence on fresh investments in the future. I suggested that he should at least consider using a part of his bonus to for an “Enjoy-life” goal rather than investing all of it to pre-empt some future investments.

Basically, the “Enjoy-life” goals are all the things that the client wants to do but never gets around to doing so due to lack of time or money or both. There is a strange reluctance among clients to even discuss what they would do to “Enjoy-life”, even if they had the time and money to do it. They feel guilty about even thinking about enjoying themselves till they have finished making the necessary provisions for the children, for retirement, for siblings – in short, the whole hog. But it comes tumbling out after a bit of structured prodding. The excitement in their voices, the animation on their faces must be experienced to be believed.

The client believes that a financial planner’s role is to tell him to spend as little as possible now and keep investing to secure his future. And most fall off their seats when I suggest that they spend some of their current monies to enjoy themselves. While there can never be complete certainty in life, it makes sense to enjoy your money while you still can. Of course, you will only be able to enjoy these experiences if you have done the numbers and are reasonably confident that your goals will be met. But while it is important to reach the destination, but it is equally important to enjoy the journey as well. And according to me, imparting this confidence and making the journey enjoyable is the real role of a financial planner and investment adviser. We help you stop and “smell the roses” even as you go about doing your work and secure that all you have planned for are likely to happen.

Not all clients agree with this philosophy. Even for such clients, we work with them to define the number of “miles to go before I sleep”. As for Dhanesh – he has still not decided which way he will go. What do you think he should do?