Mistakes Customer Make – as per Financial Advisors survey

financial mistakes
  1. Mixing Insurance, Tax plan & Investments
  2. Being Under insured
  3. Excessive or expensive Loans
  4. Excessive property & physical investments
  5. Lure of IPO’s
  6. No estate planning

Recently I found this survey in one of the leading newspapers (Mint), where financial advisors were asked to list down investment mistakes, they found with their customers. I thought of writing, not on these mistakes, but on specific asset class and how one should look at.

Insurance; my favourite topic 😉

Insurance as word means “protection from financial loss”. Whereas, most of us pick Insurance on investment philosophy or tax planning, and on actual cover value we never get into calculation or even ask questions.

What one should do:

  • Desist Insurance as Investment or money back or even as a tax break instruments.
  • Insurance is for eventuality, better known as “Term Plan”, calculate your cover value first
  • More on Insurance, please read – “Insurance data – an eye opener

Buying Home & home loans

Home is every one’s dream, and having ownership is the ultimate high, if you are from outstation. But buying home or property needs to be done with care & calculations. First & foremost, understand that home loan comes with a huge interest cost, which is spread over the entire tenure. One needs to calculate spin-off between rented house or ownership here. Secondly, buying house is simple, selling is not that easy, liquidity is always an issue.

What one should do:

  • Buy house in case you want to stay upward of 5-7 years at the same place, else rent.
  • Don’t get swayed by the recent surge in property prices; as gains can be only realised, if you would have bought without loan, else interest will eat into your gains.
  • Property as an asset class has given 7%-9% returns (based on last 20 years & it varies from city to metro & highly unstructured market)

Where & how do I Invest my savings?

Investments or savings, should follow Goal based, asset allocation strategy. One should not get carried away by equity market surge, or even the lure of IPO’s, which is the current theme today. Define your Goals with target date & amount, allocate investments, arrive at inflation adjusted values & finally asset allocation strategy, with shortfall plan. Sounds complicated 😉

What one should do:

  • Yourself (DIY): if you are good at excel, calculations, and research…. I don’t have to explain.
  • Take help from Advisors: Moneyfrog.in is one such advisor, which offers a hybrid model of personal & online advisory, such that you have access to speak/ meet an advisor and online access to portal/ mobile app.

Happy Investing!!!

Manoj Chahar
Founder & Storyteller at Moneyfrog.in
Manoj is the founder of Moneyfrog.in, with 15 years of corporate experience & expertise in financial markets. Manoj has corporate stints with Kotak Securities, IIFL group & Philips India. He holds an MBA (PGDM) degree from Symbiosis (SIMS) Pune.
His interests include birding & adventure activities.

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