Ancient lessons for financial success

Who doesn't know Chanakya? The revered Indian economist and philosopher, gave timeless lessons on money that still hold relevance in today's world of personal finance. Emphasising that money should be earned ethically, managed wisely, and used to aid others, his teachings guide us toward a balanced financial life that values relationships, happiness, and health.

The lasting wealth of learning

Chanakya's wisdom on prioritising learning and intellectual growth over material wealth is very similar to that of modern financial experts who emphasise continuous education. Whether it is about investing in your own upskilling, about financial literacy, or about investment strategies including mutual funds.

For instance, look at the impact of investor education, specially the 'Mutual Fund Sahi Hai' campaign. According to recent data, mutual funds have grown by 22.98 per cent (open-ended schemes), in the last year, reflecting their growing popularity as an investment avenue.

Integrity in earnings

Chanakya warned against dishonestly acquired wealth, a principle relevant even today as financial fraud and corruption persist. The collapse of large companies due to unethical practices stands testament to his teachings that ill-gotten wealth can lead to ruin. On the contrary, the reason why the mutual fund industry continues to grow stably is because of the regulatory transparency and ethics.

Wise saving and investment

"A person who cannot control his expenses will never have control over his savings," said Chanakya. In today's context, this underscores the importance of budgeting and wise investments in platforms like mutual funds.

They will also suggest you to pick low-risk moderate-return instruments so you can beat inflation. For instance, the average return on equity mutual funds over the last decade has been around 12-15 per cent, which is significantly higher than bank FDs, and yet relatively low-risk as sometimes compared to stocks.

The balance of spending and saving

Chanakya's analogy of the flow of water with wealth emphasises the balance of spending, saving, and investing. Modern financial planners often recommend a rule of thumb like the 50/30/20 rule - 50 per cent for necessities, 30 per cent for wants, and 20 per cent for savings and investments, including mutual funds, to avoid financial stagnation. But more importantly, any good financial advisor will suggest you to save first, invest next, and spend afterwards.

The impermanence of wealth

The transient nature of material wealth, tells you to prepare for unforeseen challenges. The 2020 market crash demonstrated that even substantial investments can vanish quickly, reiterating the need for diversified portfolios, to mitigate risks.

Chanakya's teachings on money, though centuries old, have a contemporary resonance in the realm of personal finance, including the burgeoning field of mutual funds.

His principles of ethical earning, wise investment, balanced spending, and acknowledgment of wealth's impermanence offer a comprehensive guide to financial well-being in today's complex financial landscape.

Embracing these principles, individuals can navigate their financial lives with integrity, wisdom, and balance, harnessing money as a tool for a fulfilling and prosperous life.

This article was originally published on August 18, 2023.