Top Financial Mistakes

What are some of the mistakes of Indians that are destroying their financial lives?

*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 amout 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.

*Buying stocks at the peak and selling on fall:*
Most of the retail investors get over excited with a rising market and invest when the market is at its peak. Eventually, the market corrects and they sell the stocks at a loss.

*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!!

Why we must not invest in sinking ship in Stock Market?

Today i want to guide you that we must not invest in sinking ship kind of shares,because eventually they become zero or penny shares one day,and we keep on averaging to reduce our buying cost by thinking that in future, Share prize will rise,but it is seen mostly in cases, they money has been eroded completely.So we must control our emotions in Stock Market,and behave rationally in the same,and accept our Mistake if any done. Let us see with some Examples:

                    SUZLON ENERGY

It was well renowned company in 2005 to 2008 era in alternative sources of Energy, and it was traded@ 1500rs per share kind of, it started falling Since 2008 and have never recovered till date and people who get averaged in this stock,have eroded all money.Suppose one has invested 1 lakh in Suzlon@ 1000, he got 100 shares in 2007, in 2008 he invested 1 lakh more @ 500, he got 200 shares,in 2010 he invested again 1 lakh@ 200  he got 500 shares, now he invested 1 lakh @ 100 in 2012, he got 1000 shares, he again invested 3 lakh in 2015 @ 40 by expecting that from there it will not fall again, that is why he invested 3 lakh this time and got 7500 shares, but stock did not stop falling here, in 2017 He again invested 5 lakh @ 15 ,he got appx 33000 shares.

Now he has Total Shares 42300 shares
Average cost                     29 per share

TOTAL INVESTMENT APPX 12 LAKH

Current share prize is 3.70 paise

NET LOSS @ 25 RS PER SHARE 

42300*25 APPX 10.5 LAKH

90% Wealth has been eroded by Averaging this Stock

                   JP ASSOCIATES 

Same has happened in this stock, i will elaborate its prizes yoy as explained in Suzlon case, Now you can understand the same.


In 2007@ Share Prize @ 1000 per Share

Now @ 6 per Share.

Same money has been eroded who did averaging in this stock in last 10 years


                                               HDIL

In 2007 @ Share Prize of 1500

Now @ 22

Many companies became Zero like KINGFISHER AIRLINES, GITANJALI JEMS VIDEOCON,SKUMARS NATIONWIDE  and thousands of 


So we must invest in Stock Market by Taking Proper Advise if we are not able to do Research by own and if it share fall regularly, never average it, in Market everybody does mistakes, so just accept it as LARSEN AND TOUBRO accepted by holding shares of SATYAM IN 2008, ICICI BANK accepted their mistake by holding KINGFISHER AIRLINES.

BE RATIONAL IN MARKET, THERE IS NO PLACE OF EMOTIONS HERE 

Thanks.

8 Reasons You Need an Emergency Fund

01

 You Are Trying to Get Out of Debt:

Your emergency fund can help you stop adding to your debt with each bump in the road. An emergency fund can help cover the things you don’t budget for like car repairs or medical costs. You can use your emergency fund to handle these stressful events and make it easier for you to stay focused on getting out of debt.

• It is easier to pay extra money on debt right away when you have a cushion for unexpected expenses.
• Include your emergency in your budget until it is fully funded.

02

 You Have Just Started Budgeting:

When you first start budgeting, you may be leaving out some of the expenses that you need to plan for. Your emergency fund can cover some of these expenses the first year, and then you can add those expenses into your budget as they come up. This could be annual expenses like taxes or other items like gifts or fees for organizations. Your emergency fund can help you as you adjust to your budget. 

• As unplanned expenses come up, write them down and adjust your budget to include them in the future.
• After a few months, you should not have any unexpected expenses.

03

 You Only Have One Income

If you only have one source of income, it is essential to have a substantial emergency fund. This can help you get through an unexpected job loss or illness that keeps you from working. If you are single or if you the sole income provider in your family, you should work on having a year’s worth of expenses saved up. You can build up the larger emergency fund after you get out of debt

• 04

   You Are Self-Employed or a Contractor

  If you are self-employed, an independent contractor or if you work a job that does not allow you to claim unemployment benefits, it is important to have a good emergency fund saved up. It is also important to have multiple income streams as the amount of work goes up and down. If you know that your contract may end soon, you should work on building up more money in your emergency fund. 

  • Additionally, you may want to plan extra savings for months when business is slow.
  • Keep track of your invoices to make sure that you do not miss collecting on money to avoid needing to use your emergency fund.

• 05

   You Own Your Home

  When you own your home, you will have to pay for all of your repairs and upkeep. Although you should set up a sinking fund to cover remodeling and most repairs, you may have unexpected costs like a plumbing repair or air conditioning repairs. Your emergency fund can help you handle these costs and make owning your home just a bit less stressful.  

  • Home repairs can be expensive, as is replacing an air conditioner or furnace. Try setting up funds to save for these expenses before they occur.
  • Be sure to plan for your taxes in your budget.

• 06

   You Live Far Away from Family

  It can be expensive to travel home, and the costs go up if you need to travel at the last minute for an emergency. It helps to have a good emergency fund saved up to cover the cost of last minute tickets to home or other family members in the event of an medical emergency or a funeral.  

  • Price the cost of an airline ticket and other expenses and start saving up for that.
  • Remember that last-minute bookings are often more expensive.

• 07

   You Have Medical Issues

  A serious medical condition can cause you to max out your deductible each year. You may have routine tests that add up quickly. You may also use all of your sick leave and end up taking days off with no pay. A well-funded emergency fund can help you deal with these costs and make it easier to get through these challenging times.  

  • Medical issues can be expensive and insurance companies may not pay everything that you expect them to pay.
  • You may also miss work and run out of sick pay which can lead to bigger issues. Your emergency fund can help offset this.

• 08

   You Are Saving for a Goal

  If you are working toward a goal like owning a home or starting a business, your emergency job can stop you from dipping into those savings  when unexpected expenses crop up. This can prevent you from moving backward with these goals. Although your progress forward may slow a bit as you rebuild your emergency fund, you will be able to leave the money that you are saving for you.  This is a great way to protect your savings

  
  

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Financial Tips

Financial Tips:

1. Avoid buying property on loans as it eats most of your earnings unless you have a clear plan for its repayment. It's important to monitor cash flow. Though, the house will be your asset, your liability will be much more.

2. Start a SIP at a very young age. Try to save atleast 15–25 % of your earnings.

3. Avoid buying a car unless you use it everyday.
.
4. Do not let this sentence scare you. “Mutual fund investment are subject to market risk. Please read the offer documents carefully before investing”. Most people avoid investing in mutual funds just because of this one warning. Yes, there is a market risk, but look at the history and growth of mutual funds.

5. Try having a simple wedding.

6. Atleast 20% of your wealth should be liquid so you can utilize it when necessary.

7. Considering inflation, you are actually losing money if it is in savings bank account. Do not keep huge money in savings bank account.

8. If you invest in stocks, pay due attention.

9. If you invest in stocks have a separate account for delivery investment and Intraday investment. It is easy to monitor this way and also makes tax calculation easy

10. Do not have a belief that property and car make you rich. Its what you save and invest, that is important.

11. *Never invest in insurance for returns. Insurance is not an investment option. It is a risk management tool.*

12. Never use credit cards for lavish spending. Use credit cards intelligently and for needs not for wants.

13. Cancel all credit cards before you die. Or inform family about all your accounts, credit cards, loans and saving now itself.  Even a small residue will cost your family much.

14. Invest on yourself and then on other investments.

15. Always try to balance your earnings with your savings first, then on  spending and loans. Never take unnecessary loans. Always have reserve and utilise them and unless no other go never take loan.

16. Always have a plan for future events on your career, life, spending and finance.

17. Always have a reserve on your savings for contingency and urgent situations.

18. Your personal life and health are the most important investment. Do have a regular health check and do healthy workout every day. Stay healthy and live happily.

19. Always remember death can come anytime.....so please do buy adequate term Insurance if you have dependents.

20. Prepare a Will. It may avoid unnecessary fights after you die.

Correction is Temporary, Growth is Permanent.

*Sensex up inspite of not very encouraging news in last couple of days* 😱

Maulesh : I am wondering Dr. AAA, why this market is going up n up in spite of RBI governor Urjit Patel resigned and BJP lost 3 states? 🤔 

Dr. AAA : You cannot predict SENSEX. Not even analysts. I always tell you, don't do market timing, time in the market is important for Wealth Creation. 😋

Maulesh : Ya, true but why did this happen? 😱

Dr. AAA : Tell me how many vehicles were there in your society before 10 years and today?

Maulesh : more than double. 😋

Maulesh : Have u upgraded your vehicle?

Maulesh : Yes.

Dr. AAA : How was your salary before 10 years and today?

Maulesh : more than Double 😀

Dr. AAA : Are u using same mobile which was used before 10 years?

Maulesh : No way.

Dr. AAA : Then how can you expect degrowth in SENSEX. It is made up of companies. And those companies are growing and so you. And so SENSEX is growing.

Maulesh : But????

Dr. AAA : Understand one thing.... UPA came and went, BJP came and will go, another government will come and will go, but your growth (meaning INDIANS) is permanent and India is made up of people like you. So India's growth is permanent and so Companies growth and so SENSEX's growth is permenant.

But yes..many corrections will come but they are temporary.

Maulesh : Oh..your quote..

*Correction is temporary and growth is permanent*

Invest in equity mutual funds for the long term to create *WEALTH.*

FINANCIAL FREEDOM

Invest in Stories, If you want to be Wealthy.

Everybody wants to be Rich or Wealthy, But How? But there is lot of difference between in The Rich and in The Wealthy.Being Rich and being Wealthy seems to be synonymous as both involves having a lot of money. However, there's a big difference between the two. ... The main difference between being Rich and being Wealthy is knowledge. Wealthy people know how to make money while rich people only have money.So today I am sharing with you some ideas that how to make money.

 Invest in Stories.  We should always invest in business stories,not just in shares etc by identifying just prices only, means you think that Stock price is Cheap, One should buy,and as Stock price go up, one should book profit.By applying only this price theory, you might be rich but cannot be wealthy.Here we are talking about, How to be Wealthy. Let us understand with some previous stories.

IT story:

Infosys made an initial public offer in February 1993 and its shares were listed on stock exchanges in India in June 1993. Trading opened at Rs. 145 per share, compared to the IPO price of Rs. 95 per share
.
If you had invested 8000rs in Infosys (@ Rs 95 per share), it will be worth Rs 4crore as on today.

Now you can see How to be Wealthy if you invest in Stories, not in Infosys Stock

Who has just  bought shares of Infosys, he would have been Rich for sure if he had booked profit at any point, but Who had invested in Story of IT industry, He has Become Wealthy.

Because in 1993 IT industry has just started its phase in India


CONSUMPTION STORY:   

PAGE INDUSTRIES  which came out with an initial public offer of 28.04 lakh equity shares in the price band of Rs. 360-395, has fixed the issue price at Rs. 360 per share of Rs. 10 in 2007.After 11 years now its price is appx 30000 per share. 10000 invested amount has become 800000 in just 11 years and story is going on. Because in India, there is great Consumption story. JOCKEY its flagship brand.

BRITANNIA,NESTLE,GILLETTE are all consumption stories Which has made investors Millionaire in just 10 to 15 years.

PHARMA STORY

India has already become the capital of Diabetes, and so many diseases also. So who had invested in pharma story during 2000 to 2003, they have also already become Millionaire.

Examples: Sun pharma"s founder Mr Dilip Sanghvi had started business from its Home and Many More like LUPIN, CIPLA, DR REDDY, AJANTA.

I have 100 of examples, i just want to say that invest in stories so nobody cannot  stop  you to become a Wealthy.

"EARN MONEY AND INVEST IN STORIES IF YOU WANT TO BE WEALTHY" OR JUST BE SATISFIED WITH YOUR SAVINGS .

IN SHORT INDIA IS A GREAT STORY,THAT IS WHY WHOLE WORLD IS INVESTING IN INDIA.


BEST REGARDS:
MOHIT JAGGA 
FINANCIAL ADVISOR.
9466787277