The 9th Morningstar Investment Conference held in Mumbai on September 17 and 18, was a resounding success with around 1,600 delegates.
Dr SARAH NEWCOMB, Director of Behavioural Finance at Morningstar, shared simple, but profound, insights with the audience.
She spoke on the criteria of financial health and saving for retirement.
Below are some takeaways.
How to quickly assess your financial situation
Ask yourself these three questions to get a holistic view of your financial situation. Put percentages to this. It's powerful.
- How much are you paying your past? (Servicing debt)
- How much are you paying your current self? (Lifestyle)
- How much are you paying your future self? (Saving & Investing).
How to think about wealth
Turn income into assets.
A substantial income is a good feeling, but it can be fleeting if you don’t harness it to build wealth and meet future needs. You must understand the difference between income and assets.
There are three sources of income: land, labour, and capital.
If you ever want to get to a point where you can stop working, you have to have other assets to generate income and replace your labour. That’s as simple as money management gets.
If you think in terms of income, you’re always thinking about the stream, but if you think in terms of assets, you’re thinking about the source of the stream. Assets generate income.
Financial freedom can be achieved at any point in life by investing intelligently in land and capital.
How to get a retirement-saving mentality
It is human nature to care more about immediate issues than something that feels far away, like retirement. By the time people get around to caring about retirement, they have already wasted precious time.
Use visualization strategies.
Think about what your life in retirement looks like. Don’t keep it vague. Force detail into the picture. What will your home look like? How do you see your travel plans? What sort of social life do you envisage? Doing this will make the far-away future feel closer. And provoke you into action.
Once you train your mind to think about your future, it creates an internal motivation to save for retirement. It also helps you be emotionally prepared to change your mindset.
Have a retirement goal and a strategy to achieve it.
If you don't have a plan, you will not know what path to follow.
If you don't have a goal, you will never reach it.
How to be financially healthy
A healthy financial mindset covers 2 aspects:
- Economic Stability
- Emotional well-being
You can be rich, but far from peace about your money. Or, you can be happy-go-lucky, but have zero savings.
You need a balance of both.
Be careful of social comparisons because they really impact our financial decisions and emotional well-being. Be careful whom you benchmark against. Ask yourself why – why that particular person. Pick people whose traits you admire and benchmark against them. It is human nature to benchmark and compare, so work it to your advantage.

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