How to Manage Personal Wealth & Investments in Current Scenario

Some of the mistakes people generally make, are destroying their financial freedom and peace of Life.......

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 ! Procrastinating investment decisions and say “I will invest from tomorrow”......and the problem is that, tomorrow never comes.

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.

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, risk coverage 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 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.

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 and wasting out time to earn money for Facebook and Instagram companies.

No diversified Investments: 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 wedding, ends in next 2 days, but waste money earned during your lifetime.

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.

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.

Root Cause: Lack of knowledge about personal financial management thru proven professional Advisors !!

Written in public interest, to keep people guided in difficult COVID times, Author has tried to summarise his 22 years of experience of Financial Investment & Wealth Advisory.

contributed by :

CA Yogesh Birla

Director
Birla WP Management
read my blogs on : www.YogeshBirlaCA.Blogspot.com