Lost Opportunities

The thing about opportunity is that you will know about it only when it passes you by. The gate opens now but what will happen if you enter (or if you choose not to enter) can be known only post-facto. That is how the life unfolds and there is nothing you can do about it.

But what you can do is spread your risk.
First, figure out your risk appetite.
Then enter every window of 'opportunity' that opens up within your risk band.
Some will click and some will not.
But you would have tried.

For a person who is as risk averse as I am, the goal to shoot for would be: preserve my initial investment + 14% return.

What is your goal?

Plan your death

Just read an interesting piece of news. The Apollo 11 heroes had planned their death. Identifying that their journey to moon was hazardous, aware that the government compensation would be meager and since no insurance company was willing to insure them, they worked out a sort of 'family-pension' plan. Read more here.

My advise: take this lesson to heart. Plan for your death, even if you are not planning to go to moon any time soon. You have a family to look after. Look after them even after your death.

How can medical insurance make me rich?

Do you have a medical insurance? Oh! you are covered by your company. Is that adequate? And does that cover your parents, for instance? What will happen if they are hospitalized? The money that you wanted to invest will go to the hospital, won't it?

Wouldn't it make sense if you cover such contingencies with a good medical insurance? I learned this very recently and fortunately, not the hard way.

I was hospitalized for an appendectomy that cost me (or could have cost me) Rs. 80,000. (Rs. 80,000 for an appendectomy? Well what can you do?) And, I took out a medical insurance three months before that. Just 3 months ago. At Rs 5000+ premium, this is perhaps the best investment I ever made :-)

The premium for such medical insurance goes up with age. Someone who is 20-25 will have to pay less than half my premium. And in 4 years time, the insurance starts covering pre-existing diseases too.

You work day and night. Then you get to earn money. This you would like to save / invest / spend on yourself and your family. I do not see the logic in spending huge sums on money on health when small amount of premium will do.

You will meet people who will tell you that insurance is a worst kind of investment, poorest ROI. They don't know what they are talking about. Insurance is not an investment. It frees you to invest as you desire.

Insure you way to wealth

To become rich, get insured. 'You must be joking," you say.
Insurance has the lowest Return On Investment.
So I must be out of my mind when I propose that one of the ways to become rich, you need to get insured.
Hear me out please.

Contrary to popular belief, insurance is not just for your future. Yes, you pay a premium to offset any future eventuality.

So, for instance, if you are hospitalized and you have a medical insurance, the insurance will cover your expenses.
If you are disabled and you are covered by insurance, you get an amount that will take care of your loss of capability to earn.

If you die, your family will get a sum of money that will hopefully take the place of the earning member - you - who is no longer there.

But this is only part of the story.
Insurance allows you to take risks in the present.
This is not recognised easily.
If you are insured for the future for a small premium, you do not have to bother to save a huge amount of money for any eventuality.

You can take a part of your present income and start investing without fear of a failure.
And investing, though fraught with risks, is the only game in town that can make you rich.

Lesson: Cover yourself adequately for the future. Get insured. And then invest boldly in the present.