India created history in space research. Amazing achievement by our ISRO (Indian Space Research Organization) scientists.
I believe that each achievement in any field provides us an opportunity to learn. Yesterday’s achievement by our ISRO team also teaches us some important things which we can relate to personal finances.
Identification of Goal & Time frame:
The ISRO team were of the view that it is better to place the Mars Orbiter first in Earth’s orbit and then alter its path towards the Mar’s orbit. This requires low budget than sending the Orbiter directly to Mars’ orbit. This exercise can be performed once in 26 months only.
ISRO received the project approval in August 2012. The possible dates to launch the orbiter were in November-2013 (or) January-2016.
They had set the time frame as Nov-2013. They had just 15 months to work on the project (from Aug-2012).
Before identifying any financial product, it is advisable to set a FINANCIAL GOAL and the time frame.
Budgeting is the process of creating a plan to spend your money.
This mission is a clear case of prudent budgeting. The then central government allotted around Rs 450 crores for this project. This is way beyond the budgets allotted to some of the other missions of the developed nations. It is estimated that the US Maven’s (Mar’s mission) budget is around Rs 4,100 crores.
With the available limited resources, our scientists worked round the clock to identify better ways of doing the things and also identified cheap but better alternate materials.
So to become wealthy, it is not how much we earn/have but it is a matter of MANAGING the money/budget properly.
The ISRO’s mission was not only the cheapest but also the fastest one. They had taken calculated risks and achieved the success.
In my previous post I had provided information on “How Indian households are investing their financial savings.” As per the RBI’s data it is very clear that around 57% of our financial savings are invested in Bank Fixed Deposits.
The average returns on a bank FD is around 9%. If we assume the average inflation is around 7% then the Real Rate of return is just 1.87%. If we account for taxes then this return will further come down.
(You may visit my post on ” Five important formulas to calculate investment returns“)
“The biggest risk is not taking any risk… In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks..” – Mark Zuckerberg ( Co-Founder of Facebook)
To achieve long term financial goals (like retirement corpus or kid’s education etc.,) we have to consider taking risks. We should invest part of our savings in financial products like mutual funds and stocks.
Do not hesitate to do the unknown. If you have not invested in a financial product say mutual funds earlier then do not hesitate to invest now. Try to learn the basics of the mutual funds. Analyze the performance of suitable funds. Then take calculated risk and invest.
(On a lighter note, Cost of Mangalyaan project is Rs. 450 crore. That amounts to Rs.11/KM. Significantly lesser than what autos charge for their ride on earth..!! Courtesy – one of my Facebook friends)