Are you an investor and also lazy at the same time? Avoiding various actions in financial life which are often suggested as the “right decisions”? You will get countless articles and videos these days which tells you that it’s important to have sufficient life insurance and health insurance. Without any delay one should start investing very early in life so that they can create some good wealth to take care of their future.
Well there are various things which are mostly the building blocks of a good financial life. But investors avoid taking those decisions. One of the biggest reasons why it happens is that we are all lazy investors who focus on NOW rather than FUTURE.
We keep postponing things if it doesn’t create trouble for us right now at this moment. So, in short the future trouble or problems we will face is imaginary at this moment. India’s First Free Online Financial Advisory, MoneyMindz thought of talking about the impact of these decisions and how it can trouble you in future.
Mistake #1 – Not buying a health Insurance
We will not talk about what will happen if you buy health insurance, but we will talk about what CAN happen if you do not buy health insurance.
At some point in our life, when we start our career, we have ZERO wealth. As there will be no money in bank account and we struggle too much to start saving. The salaries will be very less as we have just started our career.
Obviously, our salaries are not much when we start our jobs, but our expenses start building up. After few years, suddenly we realize that we are just living pay check to pay check and we are not saving any money. Even years pass but you have nothing worth calling “Portfolio”.
Mistake #2 – Not saving enough money for future
Next is not saving enough money for future. You own a nice car, you eat out often and you are able to take care of all your house hold expenses right now. You go for short vacation often. This is fine, if you are saving enough for future. If your expenses are almost equal to your expenses, remember that one day will come when your income is going to stop permanently.
If you do not have enough wealth created by that time, the journey ahead will not be filled with fun. Imagine you retire with just 5 yrs worth of expenses in your bank account.
A little financial planning will help
People who come to us for financial planning are already late in investing. But we try to make sure that whatever suggestions we make to them for their wealth creation aligns with what they want in life ahead. We try planning their goals and create a decent strategy to reaching those goals.
Mistake #3 – Not having a term plan
A bitter truth, accidents are called accidents because they are not planned nor they are expected to happen. But why are we so over confident that nothing can happen to us and bad things happens only to others?
Life is LONG
You should remember that life is very long and your loved one needs a lot of money to live comfortably. You need to make sure that you cover this risk by taking sufficient term plan for which we need to pay a very small premium. Leaving behind a family who is weak financially, you are leaving them with the risk of being dependent on others for their survival. You can’t prevent the emotional loss, neither can you minimize it. But you can surely take action today to minimize the financial impact.
Mistake #4 – Taking too much debt in your life
You will find two kinds of investors: first who buy things in life mostly with their saved money, and second who buys most of the things with their future income – i.e. LOAN
At the starting of our career e have no idea what a devil is this credit card or a personal loan. Basically it’s as simple as BUY NOW and PAY LATER.
What we feel is we are in control of our self and we will take rational decisions when it will come to money. We think we won’t make stupid decisions and only after years, we realize that the game is not so simple. If you depend too much on loans and credit cards, it becomes you way of life. You are seen shopping and buying things you desire on debt, thinking that you will pay it later. It’s about falling for instant gratification and there are millions of people in India who are deep into debt. You will find a person who has bought cars which does not justify their pay package, and many people have home loans which are much bigger that what they can truly afford.
Mistake #5 – Over investing in Fixed Deposits/PPF
For some people, a fixed deposit is the only way to invest their money. It’s safe and secure way of investing. Our parents did it and there is visible problem when you invest all your money in fixed deposits or saving bank account (or PPF or Post office schemes)
After all, you park your money in FD/saving bank and it grows in value over time. What’s the issue in that?
The biggest problem is that your investments do not beat and outgrow inflation over long term. You get a feeling that your investments are increasing, but your purchasing power does not increase. Its goes hand in hand with inflation.
For more information visit: www.moneymindz.com or give a missed call to 022-62116588.