Hi Bob. Here is my non-certified financial mis-advisor. Glad to see you.
Hi Gogi. Thank you for the compliment.While it is true that I don’t have a certificate and it is also true that I don’t advice as of now about financial investments, it is also true that I tell about my observations in the financial lives of people. It is not a crime. But you made me a villain . And this villain has written today about the “Ten Financial Mistakes To Avoid In Your Life”.How about that. I think he has done a heroic job.(HA HA HA!)
Hey Bob. Don’t make yourself a hero. You keep telling us about savings. How boring! You are a financial warrior, if anyone.
You have given me another name. I have seen many financial warriors in my life. They fight not to save anything. And they are good at it. They are an expert in the field of financial suicide and they are on a mission. The mission is not to save money and not to acquire any asset. And to come up with a reason not to save, they work hard.
Anyways, Gogi, the financial warriors and I present in front of you “Ten Financial Mistakes To Avoid In Your Life” based on my observations and the first one in the series is:
I Am Not Retiring Tomorrow:
Have you started to save for your retirement. But I am not retiring tomorrow. And by the way, I am young now. It is time for some fun. I have to enjoy my life. I can save later. And hello! No one knows about the future. So there is no requirement of saving anything. So, let’s party.I have like zillion years before I need to save. And my pay cheque can cover up till then.
You got the point. Don’t make this mistake. Read ” Ten Financial Mistakes To Avoid In Your Life” and get some sense in your financial life.Start saving as early as you can and whatever you can. Saving for retirement is not avoidable as after you retire, your pay cheques will stop. You will no longer keep receiving your salary. Surely,you may have your pension, but still your pension may not be enough.An uncertain event may make you want more to spend. You may not be in a position to work at that time. Your supposedly golden years will turn into your worst nightmare. Don’t let that happen. Save as much as possible. Save for retirement.
I Will Save Later:
This comes as a subset of the previous paragraph. The general thinking is that there is enough time and we can save later. It may be true that saving can be done later, but the return on investment is generally better over the longer period of time.Due to the effect of compound interest , we earn more if we invest for a longer time period. And the best part of saving is that you don’t have to save a very large percentage of your income. Start small and slowly increase your saving percentage. Start with what you are comfortable with.You can start with five percent or ten percent of your take home salary. Then after a few months, increase it by a few percentage.Slowly, you will make a habit and these savings will grow into a big pool of money.Think of a reason to save, if you can.It will give you some motivation.
Not Investing In Equity In Ten Financial Mistakes To Avoid In Your Life:
But I have heard that investing in stock market is very risky.It’s like gambling. You sure don’t want to gamble. It is a bad habit.You loose everything in gambling. Odds of winning is very low. Avoid it.Greed is not good.
You must have heard it somewhere. But let me tell you one thing. Investing in equity is actually investing in a business. If the business makes money, it pays you too in the form of dividend. Plus there is appreciation of prices of stock.You have to understand the business before investing in it. Otherwise it becomes a gamble. Then you loose money. Don’t gamble. Invest for a longer time period and you will be amazed with the returns it fetches you. As with the investment advice, consult a financial adviser. He may be in a better position to suggest stocks.
All Eggs In One Basket In Ten Financial Mistakes To Avoid In Your Life:
Many of us do this. We keep all of our investments in one place. It is not a good habit. We need diversification. Diversification is required in order to remain afloat during uncertain market conditions. If some of our investments go sour or provide sub par return, the others may cover up for that. Don’t keep all your eggs in one basket.
Not Saving Enough In Ten Financial Mistakes To Avoid In Your Life:
Have you ever heard about a topic named “Inflation”. What …? You don’t care? But you should. In fact, everyone should keep inflation in perspective while thinking about savings. Every year the price of goods increase by a certain percentage point. Depending upon the economic condition of the country and the international environment, prices vary.The more is the demand, more is there increase in prices of goods. The lesser is the demand, lesser the price. So, if you don’t save enough, and the prices of your favorite food increases, you will have lesser amount left as indispensable income. So save as much as you can. It will help you in maintaining your lifestyle, as mentioned earlier.
Not reviewing your investments In Ten Financial Mistakes To Avoid In Your Life:
So you started saving and you started saving about thirty percent of your take home salary. You honored your commitment. You have accomplished what others merely think of doing. What now?
Now, review your investments. It is your hard earned money.Only you are responsible for it. You may not be financial wizard.Still, you can slowly calculate the difference between your investments and the value they hold now. This way , it will help you understand the position of investments in your portfolio and their performance. You may then ask your financial adviser to analyse it for you. You may also make adequate changes in the portfolio. This way you are aware about which one is doing good and which one needs to change.
Life Insurance As An Investment In Ten Financial Mistakes To Avoid In Your Life:
Please remember it very carefully. Your life insurance is not your investment. Please don’t expect a return on it. Your insurance is a protection cover. Life saver of your family. Many people use it as a means to get return on investment. In my personal opinion, it is a bad choice. Take a term plan and protect your family. Calculate your total liability and then research on the settlement history of various insurance companies. Then choose accordingly. You may take advice from an insurance expert.
Acquiring Liability In Ten Financial Mistakes To Avoid In Your Life:
Most of us want to get rich. And to get rich, we try to acquire assets. But what if we don’t have clear understanding of what an asset is.Learn to differentiate between an asset and a liability.
An asset is anything that Earns us money and/or appreciates in value. It can be material or non material. Examples include real estate, stocks, bonds, rental income, mutual funds, profitable business and many others.
But what if you buy a brand new car. Is it an asset? Many think of it as one. And it can be one of the assets if there is some sort of earning from it. But many a times, it is used for personal reasons. And the value of a car depreciates every year. So, it may turn into a liability. Losing money year after year. So differentiate between an asset and a liability and then acquire assets. It increases the value of your asset and Earns you money. So as you keep acquiring assets, you keep pocketing more. Then you can buy more cars (Ha Ha Ha!).
Buying what you don’t need:
Buying what we don’t need is something we all do. We all buy things we don’t use.It is a common habit. There is a saying that:
If you keep buying what you don’t need, you may soon have to sell what you need.
And it is a truth. If we audit seriously in our personal and professional life, we will see that we have many and many such stuffs that we seldom use.Although many of us use our dispensable income to buy things, it is still a bad habit. We should refrain from buying what we don’t need.
Not Managing What You Own In Ten Financial Mistakes To Avoid In Your Life:
Many a times we hear about a person who was once wealthy. Later, he just couldn’t manage his assets. Sometimes, person fell for the habit of spendthrift. Sometimes people don’t review their assets. Then another times people simply don’t take measures to protect what they have. We should take measures to protect what we have. After all we have toiled a lot to build our wealth.Spending less than what you make is equally important. Saving a good portion of your take home salary is great. And investing in potential assets is a great blessing. Protecting and managing what you have takes a huge work though. It is not as easy as it looks.
Health is Wealth In Ten Financial Mistakes To Avoid In Your Life :
Last but not the least, health is wealth. Think Gogi. You worked hard and amassed a huge fortune. Then you take measures to pick profitable investments. You protect your wealth and you review them at regular interval of time. But you don’t take care of your health. You are sick most of the time.Now, who is going to enjoy the wealth you have amassed.
So, remember it. Health is wealth.
So Gogi, here we come at the end of this report. Hope you remember it and take some valuable lessons from it.
Here We have listed down the “Ten financial mistakes to avoid in your life”. Take advantage of it and if you have some more mistakes that need to be avoided, please do tell me in comment section.