15 Mistakes to be avoided for Healthy Financial Future
What are some of the mistakes of Indians that are
destroying their financial lives? This Independence Day we are Sharing 15
Mistakes to be avoided for Healthy Financial Future.
1.
Buying
insurance policies for investment purpose: Have you invested your money in
insurance plan to get a return in future? Big mistake! Out of 100 people I have
spoken, 95 have made this mistake.. Very few people understand the difference
between term plan, endowment plan, etc.
2.
No idea
about the power of compounding: Everyone has come across the formula of
compounding but very few people really understand its power like Mutual Funds,
etc. This is the reason people do not start saving early and hence lose out on
the power of compounding. Albert Einstein said that power of compounding is the
eighth wonder of the world.
3.
Buying
stocks based on tips without any knowledge: You will find every Tom, Dick
and Harry giving stock tips over Facebook, Whatsapp and TV. Unfortunately, a
lot of people fall in a trap of these people and invest money without any
knowledge. What is the end result? They lose everything!
4.
Becoming
a victim of lifestyle inflation: Moving from 2bhk to 3bhk just because you
have got a good hike, upgrading your car because you have got some bonus are
some of the examples of lifestyle inflation destroying financial lives.
5.
Buying
things just because they are on discount / Spending a lot of money on fancy
stuff: From Amazon’s “Great Indian Sale” to Flipkart’s “The Big Billion
Days”, everyone is en-cashing on the weakness of Indians buying things just
because it is on discount. Funny thing is now you will find such sales every
other month. A fancy car, a fancy
house, a fancy watch, a fancy vacation. People want fancy stuff and willing to
pay a premium irrespective of the value it generates.
6.
Spending
a bomb on weekend parties: 5 days work and 2 days party: This is the new
culture in India. Pubs are jam-packed on weekends where people would spend a
bomb on Food and drinks. By the end of
the month, they are left with no money.
7.
No
emergency budget: Not having any extra money in the case of an emergency
results in embarrassing situations of borrowing money from friends and
relative. Some people even break their investments and make a big mistake.
8.
No
medical insurance: I have seen people losing out the lifetime savings just
because they did not take medical insurance. One accident can shatter all
financial dreams. Better be insured. Healthcare cost is rising and it is impossible
to manage it without insurance.
9.
No
diversification: Some people would invest all their money in real estate,
some would invest all the money in gold, some would just keep it in the locker,
some would invest all the money in the stock market. Very few people understand
the right way of diversifying the investments.
10.
Buying
excessive gold only to keep it in the locker: Gold worth lakhs is kept in
lockers only to be used once or twice a year. This is resulting in the money
getting blocked and hence not getting any returns on it.
11.
An
extremely conservative approach with investment: Traditionally, people have
been risk-averse. They would just have an FD and live on 6–7% annual interest.
Some would just keep the cash at home.
12.
Procrastinating
investment decisions: “I will invest from tomorrow”. But the problem is
that tomorrow never comes.
13.
Lack of
patience: “I can’t wait for my wealth to grow. I want to double my
investments in 6 months. I need to invest in the stock market.” A lot of people
lose their lifetime of savings because they don’t have the patience to
understand the investment option and would blindly trust anyone with their
investment.
14.
Depending
upon others for investment decisions: “I don’t know anything about
investment. Please manage my money.” Unfortunately, a lot of people are
dependent upon others with their hard earned money. This is the reason we have
a lot of self-proclaimed experts giving stock market tips. Consult Financial
Advisor Who Have Experience and can Work on Your Financial Planning as Per Your
Risk Taking capacity and Financial goals.
15. Getting too greedy with investment:
People blindly invest their money in penny stocks, day trading, futures and
options. They eventually lose all their hard earned money. What is the root
cause? GREED
