Vivek Law: Hello and welcome to this special series Finance Made Simple. Joining me today is Tarun Rustagi who is the chief financial officer at Canara HSBC Life Insurance. Thanks very much Tarun for joining in this conversation. You manage a whole lot of money for your company. So, let me start with a simple question how should one go about saving? We keep telling consumers, investors that you must save, you must focus on saving but what according to you is the right way to go about saving?
Tarun Rustagi: Thank you Vivek and welcome to all the viewers. And I think this is the most asked question from any finance professional and especially to CFOs and I'm not different in terms of people reaching out and asking me this question. So, this is my experience and basis what I've seen or over many years I can give some guidance in terms of how much each should save. So, and over the last one year during the forced lockdown due to pandemic what has happened is there are few things which we all are aware and we know that these are the basic things. So, I'll classify our needs into three categories - the first one is I call it roti, kapra and makaan. In a simple language where the house, last part will come under the saving category. The second one is obviously the internet which we need which I'm not putting so much pressure and focus on that. And the third one is very important, right and I will merge protection and saving together. So, these are the three things if I see for anyone at any stage of the life these are the three things they require in today's life. Now in order to assess how much saving you do, what we need to do is how I asses is you assess, you divide your overall lifespan into three categories or three time period. One is a short term needs which is basically up to one year or 18 months and there I will say that what you need is your requirement for travels, maybe you need a vehicle or something, very small thing. The second category is medium term where it is up to five to six years. So, if you are 25 years of age around that then you'll be thinking about marriage. So, marriage is something for which you need to save. If you are student then you need to probably save for your higher studies etc. And the rest of the like you want to purchase a vehicle, you also want to go for and the third which is a long term period. There what you need to assess is probably you are looking for a house, second one is you're looking for education for your children and the third one is education and the marriage of your children and the fourth one which is related to you is your retirement planning. So, this is a longest period this require a lot of planning and a lot of calculation from that perspective. So, if you're starting your career then my assessment is that you should at least save 50% of a salary and at no time I'm saying that you should spend all your money into saving. You should spend on your entertainment; you should spend on some of the other things like travel etc. Because this is the time which you can enjoy and later on you'll have more responsibilities like after marriage you'll have a responsibility of your spouse. If there is something of family and so on. So, from short to medium term what you can do is there are various instruments available and life insurance again is one of the instruments, which is available for you to meet these requirements. For long term definitely if I classify various financial instruments then there are various things which will come into picture and for the long term category what you need is, you need to plan from now, right how much you need to save.
So, for example sometimes we feel that in the early ages of your career you don't need to save more what how I feel is you need to start creating that habit. So, one of the aspect is you start saving for your taxes second one is you can invest in some affordable homes maybe for your living and maybe as an investment strategy but what it will help you is to save small money for the later period. And then you can use those things for some other requirement. And for retirement also, the earlier you start saving the better it will be and rest of the stuff like your child marriage, your child education, your family support, etc again. It's like you have to start spending or saving small money and then as your needs grow and your income grows, you start saving more and more. But again I will repeat, Vivek I believe in spending money. I believe in entertainment, I believe in enjoying life along with saving money. So, don't put so much pressure on yourself in terms of saving significant money. It will happen if you plan properly. So, that's how I will probably guide and suggest.
Vivek Law: Alright. We leave it there. Thank you very much for joining us and sharing your very detailed perspective with our viewers. Thank you.
Tarun Rustagi: Thanks Vivek and thanks viewers.
Annual Income (In Lacs)
We will call you shortly.