Cash Flow vs Life Span
On this page 5 headings
Start here A cricketer may earn the most at 25. A software engineer may earn the most at 45. A doctor may earn the most at 60. Same country, very different money stories. When you earn decides how you should invest.
Three earning curves
Your income is not the same every year. It rises, peaks, then falls.
| Curve | Who | Income peaks around | Then |
|---|---|---|---|
| Early | Sports people, actors, YouTubers and social-media creators | 20s (starts at about 20) | Falls after about 25–30 |
| Middle | IT and corporate employees (who add a master’s or MBA) | 45–50 | Falls as family duties grow |
| Late | Doctors, research scientists, some professionals | 55–65 (may work till 70–75) | Starts late, around 30 |
Know which curve you are on. If your earning curve is long, you can take more risk.
Six things to think about when building your portfolio
- Know yourself: your curve, your stage, how you earn.
- Investment options: a long time horizon means you can take more risk, because higher risk can bring higher reward.
- Diversification: don’t put everything in one basket, including your own business.
- Risk vs reward:
- At 25, avoid endowment or whole-life policies; they drain your cash. Don’t lock all your money in a big 3 or 4 BHK flat.
- At 50–55, such safer products may make sense.
- Timing: perfect timing is impossible. But if markets fall a lot (like during COVID) and your horizon is 10–15 years, it can be a good time to invest. A one-year recession matters less over 15–20 years.
- Role of your advisor: what does your advisor gain from what they sell you? Avoid herd mentality.
What a typical portfolio looks like
The lecturer studied about 2,000–2,500 real portfolios:
| Age | What people usually hold |
|---|---|
| Under 30 | One apartment takes up about 65% of everything (parents say “buy a flat”). The rest sits in savings, PF, FDs and insurance. Only about 5% invest smartly. |
| 30–50 | The apartment’s share falls. Mutual funds and direct equity grow as salaries rise. |
| Above 50 | Some gold is added (often for a daughter’s wedding). Mutual funds and others reach about 18%. |
The common regret at 50: “Direct equity gave the best return, but I learned it too late.” Don’t repeat this. Give equity a place early. If you can’t manage shares yourself, use professional fund managers (mutual funds).
Make a yearly cash-flow plan
Once a year, use either:
- the calendar year (January–December), or
- the financial year (April–March), which India uses for tax.
| Step | What to do |
|---|---|
| 1. Budget | List expected inflows (salary, interest, gifts) and outflows (EMIs, rent, living expenses). |
| 2. Actuals | At the end of each month, write what really happened. |
| 3. Stay positive | Inflows must be more than outflows. |
“Cash flow is like blood. It has to keep flowing.” Even about ₹100 a day, invested every month from age 25 and left to compound, can grow to crores by retirement.
Everyday example Riya wants to be a doctor (late curve). Arjun is a state-level cricketer (early curve). Arjun must save most of what he earns in his 20s, because his income may drop by 30. Riya will earn later, so she should keep loans small and plan for a late start.
In one line: Know when your income will peak, invest according to that, avoid locking everything in one flat, and track your budget against actuals every month. Exam words: cash flow, life span, earning curve, time horizon, portfolio, diversification, timing, herd mentality, budget, actuals, calendar year, financial year.