Making a tradeoff between current and future needs

Possible options

Here are a few options:

* Buy a brand-new car by taking a loan for the additional amount required;

* Go on a family vacation;

* Buy a piece of land;

* Invest in equity shares directly;

* Invest in markets through mutual funds;

* Invest in a fixed deposit for 3-5 years;

* Buy gold or gold ETFs;

* Take an insurance policy — either an endowment policy or a moneyback policy, or a unit-linked insurance policy

* Spend on buying costly clothing, replacing durables, mobile phone, computer or laptop , and so on.

Present vs future needs

Everyone needs to take a call on whether to fulfill our current requirements or save for future needs. Though we would like to save for the future requirements, for instance, to meet the post-retirement life-cycle requirements, often, we settle with consumption alternatives available in front of us. So, Mr Kumar may prefer to spend his accumulated savings on alternatives of going on family vacation or spending on costly clothings, replacement of durables, computer or mobile or a combination of these two alternatives. Why should he sacrifice the future requirements (which are necessities) to his present luxuries?

... contd.