| ET: What are the barriers & pain points for people to manage their finances?
Although everyone works to make money and live a financially independent life, most people are not aware about their current net worth. Most people do not have a clear strategy for financial discipline. Common reasons for not doing so include many, such as, “I do not have a finance background and so cannot manage it” or “I don’t have the time”, etc. Most people are of the opinion that they are not aware about ‘Money Management’. They happily hide behind the fact that they are not finance professionals, do not understand investing strategies, etc., hence should be excused for not personally managing their money. My argument against this theory is, in that case, why should one eat less oily food or avoid unnecessary calories? They are not Doctors either. I feel that just as you care for your physical health without being ‘Doctors’, you should also care for your financial health without being ‘Finance Professionals’.
Another barrier is the availability of information at their fingertips. It is understandable that people cannot manage their finances simply because they are not looking at the complete picture. Typically, an individual today would have a Tax Consultant, an Insurance Agent (or two), a Share Broker (probably an online service), a Mutual Fund Advisor, Bankers and not to mention a multitude of ‘Advisors’. As a result, he never looks at the complete picture. This stops the person from working out a comprehensive personal financial plan. VAULT aims to address this very problem.
ET: ‘Catch them young’ is a slogan that does not seem to work with youngsters when it comes to Personal Finance! How early in your life should you think of Personal Finance? What is your advice for young professionals in this matter?
VA: Youngsters are best placed to create a large retirement corpus as they have the time element on their side. It is a known fact that even a small amount invested regularly can total up to a large corpus at the time of retirement. The biggest roadblock that I see to this is "Financial Discipline". Youngsters generally feel that they have a lot of time on their hands to save up for later. In my opinion, one’s financial life is like a 20-20 match - you need to keep up the run rate consistently to attain a good total and not rely on sixes and fours in the last few overs.
ET: What are the various options for savings for someone who believes in planning his financial matters?
VA: In today's financial world there are several options for savings. I can broadly classify the options based on risk into:
- Conservative (Bank FDs, PPF, Government Bonds, Property, etc.)
- Moderate (Mutual Funds – Debt & Equity mix, Corporate FDs, Gold, Commercial Property, etc.)
- Aggressive (Equity Mutual Funds and Direct Investments in the stock market, Private Equity in Businesses, etc.)
Each option has its advantages and disadvantages. It is not a bad idea to seek advice before choosing your investment option(s).
ET: Are there any financial software products to manage Personal Finance?
VA: There are some products in the market. Let me tell you about VAULT. VAULT is India’s first portable Personal Finance Management software, designed & developed for an individual user. VAULT helps the user in organizing his personal financial as well as non-financial records. The software has been designed to meet specific needs of individuals with regard to money management, document storage, etc. The software has wide ranging features from scanning & storing your personal documents, storing passwords, day to day accounting (including bank statement import), investment analysis and even creating a ‘Will’.
It is a one-of-its-kind software available in India, as for the first time, a Personal Finance Management software is being deployed and sold on a pen drive. The complete software as well as data stays on the pen drive, and therefore assures complete safety, security, mobility and portability.
ET: Tell us about your Company (Vsoft Solutions & Consultancy Pvt. Ltd.).
VA: Our Company was formed in 2006 by a group of Chartered Accountants. The core team was aware of the practical issues in money management due to the fact that we were assisting several people in filing their tax returns.
The company has focused on Software products, specifically in the field of Finance which is our area of expertise. Our policy for product development is to create solutions that are:
- Addressing a specific problem area
- Are easy to use
- Are targeted at individual end users
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