How 'Early Bird Gets The Worm' Strategy Works In Real Life
Jul 23, 2019

Author: Deepika Khude

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(Image source: studiogstock from freepik)

Let's face it, we seldom remember the things that we were taught in school. Simple things that prove to be revolutionary. Things like, 'the early bird catches the worm' or that 'a bird in hand is better than two in a bush'. Blame it on our naivety or childhood ignorance; we don't really imbibe these morals in our adult life, and therein lies our biggest folly.

[Read: 7 Lessons From The Great Investment Gurus]

Now I'm in no way a philosopher and neither do I have epiphanies to offer. But last week two things happened which made me realize just how right my high school teacher was about the whole 'the early bird catches the worm' tidbit.

Often I study the case files of my colleagues to update myself with different planning strategies. Last Saturday was no different. While analyzing a particularly interesting financial plan, I soon realized that this plan was a prime example of how adage 'the early bird catches the worm' works in real life.

Episode No 1: The early bird gets the worm

The client, Mr. Swapnil Joshi (name changed), was a middle level bank executive in his mid-30s. He was married and resided in Mumbai with his parents.

He approached PersonalFN in 2015 and while he had many financial goals, we helped him articulate the goals as per his priorities. His revised goals revolved mainly around buying a house, one international vacation, retirement, and planning for his child's financial needs.

The last financial goal seemed to qualify in the 'early bird-gets-the-worm' genre. While it's not uncommon for married couples to plan for their children's financial needs, in 99% of the cases that I had worked on, the client had children and hence there was a need to plan for their future.

[Read: Step-By-Step Approach To Plan Your Child's Education Needs]

However, Mr. Joshi did not have a child, not yet. Fortunately, he fell in the rare 1% of people who listened to their teachers and adapted good habits early on. And boy, did this good habit build him a fortune!

Table 1: Articulating the financial goals

Goal Years to Goal  Present Value  Future Value
Child's 1st Birthday 5 years                  200,000                322,102
Child's Kindergarten Fees 7 years                  200,000                389,743
Child's School Fees 9 years              1,500,000            3,536,922
Child's Graduation 22 years              2,000,000          16,280,550
Child's Post Graduation 25 years              3,000,000          32,504,118
Child's Marriage 31 years              2,500,000          47,985,856
*assumed rate of inflation - 10% p.a.


As you can see from the table above, Mr Joshi wanted to plan for the smallest and biggest of expenses when it came to his (future) child. From accumulating funds for the child's first birthday to marriage, he wanted a comprehensive plan on how to achieve these super-long term goals.

A graduation of Rs 20 Lakhs would cost Rs 1.62 Crore in the next 22 years; whereas a post- graduate degree worth Rs 25 Lakhs would end up costing Rs 3.25 Crore in the next 25 years. The marriage corpus of Rs 4.79 Crore could easily make the heart of any optimistic drop. But this case proves, listening to your teacher does pay off.

Table 2: Small steps to achieve huge corpus

Goal Years to Goal  Present Value  Future Value Monthly Savings
Child's 1st Birthday 5 years                  200,000                322,102                         4,355
Child's Kindergarten Fees 7 years                  200,000                389,743                         3,453
Child's School Fees 9 years              1,500,000            3,536,922                       20,153
Child's Graduation 22 years              2,000,000          16,280,550                         7,862
Child's Post Graduation 25 years              3,000,000          32,504,118                         9,897
Child's Marriage 31 years              2,500,000          47,985,856                         5,888


PersonalFN assured Mr Joshi that a collective SIP of Rs 23,648 along with strategic portfolio allocation and review would help him accumulate Rs 9.67 Crore for his child's graduation, post-graduation and marriage goals. This seemed achievable for Mr. Joshi.

[Read: SIP: A Rewarding Strategy - Everything You Need To Know]

Episode No 2: India Vs. New Zealand, Semi Final, Old Trafford, England

It was a highly anticipated match and all the neighbourhood cricket fanatics had assembled in my living room to witness New Zealand's defeat. But what a shocker-of-a-match it was! The Indian middle order crumbled like an illegal building being demolished by the BMC. First went Rohit Sharma, followed by Virat Kohli, followed by KL Rahul in quick succession. The loss of Dinesh Kartik, Hardik Pandya, and Rishabh Pant post the power play led to half the neighbourhood fans leaving.

Then came Dhoni and Jadeja, and they started smashing the New Zealand pacers. But the joy was short lived. MS Dhoni being run out is as ludicrous as England winning the final based on number of boundaries scored. At one point it felt as though Jadeja will bring the semi-finals home, but Trent Boult has other plans. The tail order fell and it was all out for India.

My intention to bring up this particular match is the lesson to be learned here: A financial lesson. No matter how many centuries MS Dhoni has scored or the match winning knocks rendered by Jadeja, if your foundation is not strong, you are doomed.

Like Jadeja and Dhoni, just imagine how different Mr Joshi's scenario would be if he had slugged in planning for his child's goals. A simple delay of 5 years would have resulted in him being defeated in his life's semi-finals.

Table 3: How a delay of 5 years can hamper your financial goals

Goal Years to Goal  Present Value  Future Value Monthly Savings
Child's Kindergarten Fees 7 years                  200,000               389,743                      15,168
Child's School Fees 9 years              1,500,000            3,536,922                      64,371
Child's Graduation 22 years              2,000,000         16,280,550                      14,743
Child's Post Graduation 25 years              3,000,000         32,504,118                      18,336
Child's Marriage 31 years              2,500,000         47,985,856                      10,776


In case he started accumulating for these goals 5 years later, Mr. Joshi would have to shell out Rs 43,856 per month to achieve his child's financial goals. That's an additional SIP of Rs 20,208. If he invested this Rs 20,208 for the next 31 years, he would accumulate a whopping Rs 16.46 Crore!

Not only would Mr Joshi have secured his child's future, he would have secured his own second innings as well. An additional retirement corpus of Rs 16.46 Crore is like genie in a bottle for a middle class man.

All this is achievable, not only for Mr. Joshi, but for every individual who has financial goals. A good financial plan works not just on paper, but in reality as well. While all this seems good on paper, if Mr. Joshi slips up, stops his SIPs, or withdraws from his child's corpus, he will be back to the pavilion, having thrown away his life's match in the final overs.

It's been said, it's never too late to start, but I recommend following the 'early-bird-gets-the-worm' principle and becoming the finisher of your own innings.

Like in a cricket match, having a coach is utmost necessary as he has a bird's eye view of the opponent's strategy. It is equally important for you to have a financial planner, who has a bird's eye view of your financial strategy and can guide you to success.

If you have a hard time taking control of your life's personal innings, all your worries can be laid to rest by simply reaching out to PersonalFN's Financial Guardian (coach) on 022-61361200 or write to info@personalfn.com. You may also fill in this form and our experienced financial planners will reach out to you.

Until the next World Cup, happy planning!



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