The story is the same in every house. Each of us tell our children that they have so many facilities and opportunities that we never had at that age. Thinking back, our parents had the same conversation with us, because they felt that you as a child got so much more than they did.
We all want to give nothing less than the best for our children. We do not want to say ‘no’ to anything they ask for, all so that we feel that we have been good parents and have not had to compromise for anything when it comes to our children’s future.
“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.”
Having learnt from the successes of luminaries like Warren Buffet and his long-term partner Charlie Munger, we are driven towards a concentrated portfolio allocation approach led by sufficient sector diversification. However, we keep a close watch on the number of sectors we are invested in as an over-diversification often leads to a progressive dilution in the returns expected from the portfolio on an overall basis. In order to achieve sustained long-term goals, we rely on an in-depth, data-driven research methodology that consists of both quantitative and qualitative research techniques.
We also work hard to inculcate the right values and belief system in our children so that they stay grounded and grow up as good human beings. There is an old saying that explains this sentiment, ‘If children are cultured, money hoarding is worthless. If children are vultures, money hoarding is futile’.
You will agree that the biggest expenditure today is higher education abroad, especially if one is looking at the USA, United Kingdom, Australia, or Canada. Parents may have to spend over USD 500,000 for their children’s higher education depending on the course and the institute.
We are happy that many of our clients can fulfill their dreams with us for their children’s educational expenses while growing their wealth. In fact, when I was working in a Bank, I always thought sending my children to Harvard. My dream will come true because I planned and I am looking to grow my personal wealth in double-digits, along with you, and never have to compromise on their aspirations for a good education.
A survey conducted by a leading Bank in the UAE in 2017 said that on an average, parents spend approximately USD 99,378 (or AED 365,025) on one child’s education in the UAE from primary school to university. Multiply this by the number of children you have. For most of us, such a figure is enough to make us feel worried and tense. With a good child education plan we can make sure that we cater to the education needs of our children, no matter what they choose to be. Whether they want to be scientists. doctors, entrepreneurs, designers, developers or enter professions that are yet to become mainstream, we can be ready with good planning.
"In the stock market, we want companies that make money. So, preferably we would like to buy companies which have a strategy that makes money, despite the competition in the sector."
It is important to keep in mind that the market is full of brokers who sell wrapped-up products which come with heavily tail-ended fees or hidden charges. The Goal Tracker could be a great tool to assess the amount needed to be invested each month or on a quarterly or yearly basis to achieve a desired amount at a specific rate of return. We stress that one must not fall for an insurance linked or guaranteed savings plan since an insurance linked plan does not give a growth of more than 5% annualized and guaranteed savings plans tend to lose their value to inflation. Though we are very long-term focused investors, we believe that you must have access to your investment whenever there is a pressing and unavoidable need. One must understand that if the need is for higher returns, these won’t come linear and they will need higher tenure to sustain the period of volatility.
It is important to keep in mind that the market is full of brokers who sell wrapped-up products which come with heavily tail-ended fees or hidden charges. The Goal Tracker could be a great tool to assess the amount needed to be invested each month or on a quarterly or yearly basis to achieve a desired amount at a specific rate of return. We stress that one must not fall for an insurance linked or guaranteed savings plan since an insurance linked plan does not give a growth of more than 5% annualized and guaranteed savings plans tend to lose their value to inflation. Though we are very long-term focused investors, we believe that you must have access to your investment whenever there is a pressing and unavoidable need. One must understand that if the need is for higher returns, these won’t come linear and they will need higher tenure to sustain the period of volatility.
Let me give you my own case study. I have two younger daughters who were 6 years old at that time – two years ago. Six years ago, I was prepared to send them to Germany or schools with full scholarships or low tuition fees since I was unable to afford the education cost. I was introduced to the idea of compounding and found that if I can grow my wealth at 15% annualised, an investment of USD 200,000 will become USD 800,000 in 10 years, just in the time for my daughters to be ready for college.
“One can best prepare themselves for the economic future by investing in your own education”
I invested my money in one of India’s finest private equity funds and as of writing this my investment has grown to USD 350,000. The instrument I invested in is diversified in 10 companies and I can sell this investment at 5% discount to a secondary buyer at any given time. Not only am I making money, but I was also meeting one of the best minds and entrepreneurs each year, which helped shape the launch of my own strategy in 2019.
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