*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.
*Not able to crack the credit card
mystery:*
Are you paying the minimum amount due on your credit
card payment? If yes, you are trapped in credit card mystery. On the other
side, very few people really enjoy the benefits like free lounge access, buy
one get one movie ticket, etc.
*No idea about the power of
compounding:*
Everyone has come across the formula of compounding
but very few people really understand its power. 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.
*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!
*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.
*Buying things just because they are
on discount*:
From Amazon’s “Great Indian Sale” to Flipkart’s
“The Big Billion Days”, everyone is encashing 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.
*Getting tempted to go for an exotic
vacation*
just because someone put a post on Facebook and
Instagram: Instagram and Facebook are introduced as Social Media Platform but
they are actually destroying the entire social fabric. Friends are jealous of
each other. Most of them are just social media friends. Facebook and Instagram
are more of a marketing platform where people post stuff just to get some likes
and companies promote their product and services.
*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 drinks. By the end of the month, they are left with no money.
*No track of cash flow:*
Very few people keep a track of their expenses.
Most of them just don’t know where the money is gone.
*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.
*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.
*No financial plan:*
People do not know why they need to save money
because they don’t know their financial goals.
*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.
*Spending all the hard earned money
on children marriage:*
Thanks to our hypocritic society! People save their
entire life just to spend all the money on random relatives who only bother
about the food and arrangements. What is the topic of discussion at weddings?
“Sharma ji ne to unki beti ko car gift kari. (Mr Sharma has gifted a car to his
daughter)”. “Mehta ji ne unki beti ko 50 tola sona diya” (Mr Mehta has gifted
500-gram gold to his daughter.)
*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.
*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.
*Lack of clarity between asset and
liability:*
Having a car is not an asset because it consumes
fuel and has a maintenance cost. Its price will only depreciate in the future.
Car is a necessity but people spend a lot of money and even take the loan to
buy a luxury car over and above their budget.
*Considering frugal as cheap:*
A lot of people confuse economic spending with
being cheap. An economic spender does not compromise with quality but does his
research well enough to buy the product or service at the lowest rate.
*Procrastinating investment decisions:*
“I will invest from tomorrow”. But the problem is
that tomorrow never comes.
*Spending a lot of money on fancy
stuff:*
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.
*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.
*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.
*Not discussing the money matters in
the family:*
Discussions related to money are considered as a
taboo in Indian families. Nobody really discusses money matters.
*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
*Wasting time on unproductive things:*
Rather than learning new stuff and growing the
skillset, people end up wasting time on social media and YouTube.
*Lack of disciplined
investment:*
Instead of spending what is left after investing,
people invest what is left after spending. This results in indisciplined
investment.
*Root Cause*
Lack of knowledge about personal
financial management!!
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