The Millennial Dilemma: A Ferrari at 70 or Retirement at 40
Choose your vehicle
It is 10 AM in the morning. Like every Monday, you are heading towards your work and driving your car into a gas station. But today, you see an unusual crowd in front of you. It doesn’t take you long to discover the center of attraction- a red Ferrari. You look around. The onlookers are taking quick snaps, the RAM owner across the pump is nodding his head in reverence, cars passing by are slowing down before rolling the window down. And you? You found yourself sharing the same emotion of the Ferrari-stricken mob and thinking how lucky the owner must be. And then, you see, an old man comes out of the store, strolls down the path ignoring the gazing eyes, and slowly fits himself in the driver’s seat.
Pay close attention to the last line and ask yourself, whom do you want to see driving that car? Of course, if it’s you, that would be fascinating. But everyone will admit it, supercars match better with youth. But why do we put importance on age when it comes to material possession?
Choose your path
Luxury items, such as cars, watches, branded clothing, have always been referred to as Status Symbols. A direct inference to one’s fortune, owning these items would conclusively determine that the persons flaunting them are wealthy. Our experience tells us that a 20-something is much less likely to achieve that much financial strength than a 60-year-old veteran. Hence, a parameter was set in our culture that rich people with grey hair drive supercars.
But the last two decades observed a dramatic shift in this reality. The advent of the internet and dot-com boom (err, bubble) made a lot of people a lot of riches. Most of them had not crossed 40, as tech was relatively a young man’s game then. But these people were not only smart, but they were also visionary. They looked through the maze and understood- Money is never the issue; managing the money is. So, they proposed a slightly modified version of personal finance- don’t earn money, earn the lifestyle. The presentation was simple- being liberated from paycheck to paycheck is the end goal of financial independence. And a casual look at social media will tell you- this idea has gained traction.
The proponents of this group are advocating for a system that would empower them to be free from the rat race of mundane work culture. The crux of this idea is the same as the old school method, attaining financial independence. But this group wants it fast, very fast. Their voice is unequivocal when they say this: If we work for 10 hours 6 days a week, we better do it for ourselves, not some big MNC. They are not running for the degrees, hence renouncing the need of joining expensive colleges with outrageous student loans, but for the title of Founder before their names. They are new-age entrepreneurs, betting their passion, hard work, and money on technology and building successful companies across many industries. Start-up has become the new rage.
Caution! Steep Curve Ahead!
A very popular adage amongst the wise goes like this- “To know your friends, read their lines; To know your enemies, read between their lines.” Nothing in the financial world is risk-free, and speed can only accentuate it. This expressway is by no means a sure shot to riches. In fact, recent studies show that 90% of the start-ups eventually fail to make a mark. Not to forget, the associated risk factors with early retirement are also enormous and, well, unpredictable. Unless you build a business so great that it generates a steady cash flow no matter how little your involvement is, you are going to have a hard time financing your relaxation 20 years into your retirement. The basic calculations are performed based on the sole assumption that the financial market will continue to behave like it did in the last 50 years. While the probability of this happening is high, betting your life on pure chance will make our financial forefathers roll over in their graves.
Proceed at your own risk:
It is true that building enormous wealth for the next generation no longer ranks much higher on the millennial to-do list. But the alternative way does not paint a rosy picture either. After all the dust settles, the bottom-line remains intact- hard work pays. There will always be alternatives to traditional wisdom, and it is our responsibility to choose what is best for us. Not everyone’s appetite for risk is the same, and one should choose accordingly. Know yourself, choose a path and stick to your guns till the end.