Follow Influencers For Entertainment Not Education: Pranjal Kamra, Founder, Finology Ventures, Sebi RIA

The second day of Outlook Money’s 40After40 Retirement Expo in New Delhi got off to a rollicking start with the keynote address by Pranjal Kamra, Founder of Finology Ventures Pvt. Ltd. and Sebi RIA on “Why Gen Z Should Think Long Term”. A well-known fin-fluencer, with a massive following on Social Media, especially YouTube, Kamra’s revelation that he follows no social media and all such apps have been uninstalled from his phone left the audience awestruck. “Honestly, I don't have a single social media app on my phone and I don't miss it. Not even YouTube,” Kamra said to everyone’s amusement adding that he does not even doom scroll websites. Recently, I met a CEO managing a unicorn, and he uses a feature phone, not even a Smartphone. He doesn't use his WhatsApp. So he's my inspiration and I am figuring out ways out of WhatsApp.” He added that influencers are now promoting lottery and betting apps and lots of misselling is happening because of influencers. “Follow influencers for entertainment, not education,” Kamra said.  

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Gen Z Problem

Kamra said that he sees one major problem with Gen Z, and it's not their fault. “Probably it's our fault. Indians were traditionally known to be savers, we took debt either when our business demanded it or for education or loan. We never took debt for discretionary consumable assets. We were not comfortable with it. Our savings rate was always very healthy. I recently saw in the last three-four years, young people in their first job, the first thing they do is buy an iPhone on EMI. What is the root cause behind it? What's creating this behavioral change? And last month I realized what's causing it.  From a behavioral point of view I realized (people becoming comfortable with EMIs) this is how they eventually they have got more and more comfortable with leverage. And this is how, probably, Gen Z are hardwired to take debt for their purchases. I think this is really dangerous because at 25 years of age, sometimes less than that, you don't want to be trapped in this cycle of paying EMIs as soon as you get your job.

The retirement question

Kamra talked about retirement planning and asked how many of us have started investing for our retirement planning. “I wanted to give you a small tip, a small thumb rule that you will never forget. We need to understand two concepts to determine the right retirement corpus. One is inflation which doubles every 11-12 years. So if your retirement is twelve years down the line, you need to double whatever your expenses are currently. The other rule is the 4 per cent rule which says that your yearly expenses during retirement years should not be more than 4 per cent of your retirement corpus.”

NPS is the best retirement tool

“Sometimes we keep withdrawing money from our retirement savings for short and medium-term priorities. We keep redeeming money from our retirement corpus. Which is why I believe the best retirement instrument is NPS. We often look down upon it saying we can't withdraw it before we are 55- 60 years of age but that's why it's a great instrument. Otherwise, throughout our life, all our medium-term and short-term requirements take priority and before we realize we'll be at retirement. So NPS is really good,” Kamra said.

A big NO

“If we are falling behind on our retirement goals, instead of pushing our retirement, if possible, by two years or slightly, so instead of downgrading our monthly expenses most of us start taking additional risk. We try to compensate for the lost time by taking additional risks. It can be really, really deadly as in some ways or the other, we start gambling to try and make up for lost time, lost discipline or unplanned expense. But we need to understand it only takes us behind. If you are falling behind on your retirement planning trek, you could probably moonlight, you could probably teach, do something else, but you can’t take an incremental risk on your investments,” Kamra cautioned.

Right age to retire

Kamra suggested, “if you want to retire at 40 or 45, which a lot of Gen Z aspire to, then I don't see them making the kind of lifestyle compromise and adjustments that an early retirement would require them to. So the earlier you want to retire and the more you want to live on your passive income, the more compromises you would need to make in your active earning phase. If someone chooses to retire between 50 – 65 years, I think that's a nice balance. But if you say that you want to retire at 35 or 40, this tells me that you don't understand how much monthly investments you would need to do for the next ten years to actually retire at 35 - 40, you won't be able to do it. That will lead to sadness and sorrow. And if you actually end up being that disciplined, then you are actually compromising on your lifestyle and your family's lifestyle in your peak years. So, I think it's a bit too aggressive. A nice balance would be around 50, in my opinion.”