What's good for the golden goose, may not be for the gander!

It is always good to get a variety of perspectives when it comes to managing money–whether from top investors, wealth managers, corporate executives and the like. However it is very important to remember that the financial planning strategies that apply to the rich and ultra-rich do not often apply to regular individuals, still trying to become financially free.

The financial planning strategies that apply to the rich and ultra-rich do not often apply to regular individuals, still trying to become financially free.

Here are some common examples of advice that might work well for the rich, but not necessarily for everyone.

Put everything in equities: When one already has enough wealth to last beyond one’s lifetime, the risk tolerance and approach is very different from that of regular people. As a high net worth individual (HNI), even if you lose significant net worth during a market downturn, your lifestyle will probably not change. This is not the case when you aren’t financially free. Equities are indeed one of the best long-term wealth creation tools, but you certainly should not go all in. A reasonable percentage of your wealth must be in alternate, safer assets such as debt and gold.

YOLO! Earn more, spend more: It sounds like an idyllic way to live–increase income, increase expenses, live your best life. But that also means you will always be on the treadmill trying to keep your earnings up with your lifestyle. And this advice is certainly not applicable if you have loans and EMIs to pay–your priority then should be to cut spending and pay off your loans first. I recommend that you try and “earn more, spend sensibly, and invest well” so you can get financially free faster. At which point, you can balance your earnings and expenses however you like.

I recommend that you “earn more, spend sensibly, and invest well” so you can get financially free faster.

Rent, don’t buy: Many people advocate renting a home rather than buying; the return you make on your investments will be a lot more than what you pay as rent. Mathematically, that’s true. But also, many of these people have the funds to buy a home whenever they would like, they have simply chosen not to. Renting vs buying your home is not as much a financial decision as a life decision; I have devoted an entire chapter to this in Three Pigs to Financial Freedom .

Renting vs buying your home is not as much a financial decision as a life decision

But quick summary–if you want the stability of a permanent roof over your head and be immune to the whims of the markets or landlords, you should buy a home. If you prefer the flexibility of packing up and moving anywhere, anytime, you could keep renting.

Insurance is not really required: Again, if you have enough wealth to take care of any eventualities, insurance could be an unnecessary expense. But for most people, you do need insurance–a lot of it. For your medical expenses, for your life, and even as an efficient long-term savings tool. ??

Financial Freedom is overrated: One often hears this from people who are already financially free, which I find quite ironic. A rich person telling this to someone struggling with EMIs and bills is no different than a sportsperson telling someone with a critical illness that good health is overrated.

A rich person telling someone struggling with EMIs and bills that financial freedom is overrated, is no different than a sportsperson telling someone with a critical illness that good health is overrated.

If you want to live life on your terms, as most people should, financial freedom should be a key focus.

That said, the “retire early” part of FIRE (Financial Independence, Retire Early) might be rightfully overrated for some, particularly if one doesn’t know what to do if they had all the time in the world. So, you should either develop your passions early, or maybe continue working even after financial freedom, else try to find the right balance between the two. But at least you are the one deciding, which is only possible if you are financially free.

You will encounter a lot of guides on your journey to financial freedom, yours truly included. But remember that people will invariably speak to you from their perspective, and while you should listen, only implement whatever is applicable from your perspective.

Rishi Piparaiya ?has held senior leadership positions in wealth management, strategy, sales and marketing with leading financial services organizations, including Citi, Aviva and Banco Santander. He left his corporate job at the helm of his career to pursue his passions. He is now a?bestselling author ,?world traveller ?and?angel investor . His latest book,?Three Pigs to Financial Freedom , demystifies financial planning and offers an incredibly easy system to manage your money for a comfortable, worry-free life.