Unless you have been hibernating for a few months, there is no way you have not heard about the song “Kolaveri Di”.
It is a song from an upcoming Tamil film, and the lyrics are in Tamil and English.
The song is HUGELY popular – not only in Tamilnadu, not only in Southern India, not only in India, but all around the world!
The song has become a big hit in so many countries – from USA to Japan to Egypt to UK.
And the success of the “kolaveri di’ song has a lot to teach us about personal finance.
Why is “Kolaveri Di” a hit?
What is the purpose of a song? When does a song become a hit? When it:
- Entertains us
- Appeals to our emotions
- Is easy to understand
- Is easy to sing and hum
“Kolaveri di” scores on all these counts, so no wonder it is a super hit song!
The simplicity of “Kolaveri Di”
But how is “kolaveri di” different from all the other songs – both good and bad – that have not become as popular?
- It is not shot at picturesque foreign locations
- Its lyrics is not exotic
- The voice of the singer, although above average and pleasing, is not top notch
- The musical instruments used for the song are basic
Do you see a theme here? It is the simplicity of the song that has made it unique – and popular.
Keep It Simple, Stupid (KISS)
And that is what the song “Kolaveri di” teaches us about personal finance – to keep things simple.
Just like the song, you don’t need complexity to achieve success in your finances. Let’s see what that means for the different areas of personal finance.
Life Insurance
Why do you insure yourself? So that your loved ones and dependents can enjoy the same quality of life even after you.
And therefore, for life insurance, you need a product that provides exactly this – term insurance.
Why mix insurance with investment, and buy products like endowment plans or Unit Linked Insurance Plans (ULIPs)? Why complicate things when you can keep it simple?
You can read the following articles for more on this:
- Life after life – Why you should buy Life Insurance
- What is Endowment Plan in Life Insurance?
- ULIP v/s Endowment Plan for Life Insurance
- “Term policy” (term insurance) is the best policy
- Are ULIPs a costly form of term insurance plus MF investments?
Mutual Funds
When there are so many great diversified equity funds available, do you really need to invest using a specialty or sectoral fund?
When there are so many establish MF schemes available, do you need to invest it a New Fund Offer (NFO)?
Not really! Just keep it simple, and invest in established diversified equity funds with a good track record.
You can read the following articles for more on this:
- Direct investment in Stocks versus Mutual Funds (MFs)?
- Mutual Funds – Growth or Dividend option?
- When “at-par” is not so good: New Fund Offer (NFO) versus existing MF schemes
- Close Ended vs Open Ended Mutual Funds (MFs)
- How should you withdraw your money from an equity mutual fund (MF)?
Retirement Planning / Long Term Goals
How do you plan for retirement? Do you have a pension plan, or a ULIP for it?
What about your long term goals? I am sure you have some ULIP for your child’s education.
But are these really required? What about the trusted Voluntary Provident Fund (VPF) and Public Provident Fund (PPF) options that give great post-tax returns at virtually no risk? Can these not be combined with diversified equity MF investment for your retirement and other long term goals? Think about it!
You can read the following articles for more on this:
- Retirement Planning – How Much Should You Save To Build Your Retirement Corpus?
- Provident Fund (PF) and Voluntary Provident Fund (VPF)
- Public Provident Fund (PPF) – Plan Your Retirement and Save Tax
- Stocks – The winning bet for the long term
- Equity Investment is Risk Free – Here’s the Proof
What do you think?
So what is your take on this? Have you benefited by simplifying things when it comes to personal finance, or you believe it is not as good?
Please let everyone know through your comments below. And do enjoy the song:
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