A company should give a good return every quarter, but what about your return??

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Once I was travelling in a local and I happened to hear two girls talking. They were talking about their respective careers and both of them wanted to get into finance. They listed out atleast 10 fields they wanted to get into and throughout the journey not once the field of Personal Finance was even mentioned.

 


This is the case all over India. Personal Finance has always taken a backseat and Corporate Finance is the name of the day. People of all age groups feel that companies are more important than people themselves!! Whereas who has built all these companies? People like you and me.


Accounting Standard’s first and most important assumption “Every company is a GOING CONCERN.” Basically a company will live forever and so will its finances. But think from this perspective. A person’s life is very limited and nothing compared to a company’s life. So shouldn’t managing  your own finances be the top most priority than making sure that a company, who is going to live “forever”, have a good financial structure?


In the recent financial crisis, we saw that companies like AIG and CitiBank, the cream of the lot, had to actually be saved by the government whereas people working for the success of these companies all their lives lost their jobs. Did “corporate finance” suffer in this or was the retirement benefits and security of these employees put to stake? Entrepreneurs like Steve Jobs and Narayan Murthy started companies so that they’re own financial futures are secured. They also thought about their own finances first of course, then why the employees of such companies should not do that.


In India there is no concept of social security like in the USA. Our government does not guarantee any retirement benefits to us. This makes it all the more important that we plan for our futures. The total number of companies in India as of 2010 is 9 lacs with a country whose population is more than 1.2 billion. Still for everyone managing a company’s finances is more important than managing your own money.


“Portfolio Management” and “Wealth Management” are the two most called upon fields of finance. Ask any MBA in Finance or even a CFA for that matter and he’ll tell you that he’ll love to go in these two fields because the money is just amazing. Looking closely at these fields, I realized that these fields become a part of Personal Finance. In the end wealth management is managing the money of HNI clients. These clients are mostly owners of these huge companies. Even Mukesh Ambani has a wealth manager. Ratan Tata actually planned for his retirement. If people like them need financial planning, then it becomes imperative for common people like you and me to start planning for ourselves. HNI clients wanting their money to be managed, just proves the need for financial planning for the common middle class salaried man.


Next time you are discussing your career in Finance with anyone, do include Personal Finance as one of the prospective fields as the number of people will always remain more than the number of companies!

 

This article has been written by Drasty Kothari.
Fpguru.com in its efforts to spread financial enlightenment organises financial planning article-writing competitions in colleges. Drastyl was the 2nd Runner-up in the competition held for the BBA program of NMIMS University ASM School of Commerce. We thank the Management & Dean of NMIMS  for their support.

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