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Excuses for not Investing

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Anil Das (36), like several of us, does not spend any time to look at his finances nor does he intend to. His standard excuse, again like it is for most of us, is that he does not have the time for it. As a result, few lakhs of rupees have got accumulated in his savings account, which attracts the attention of his bank relationship executive. The bank executive meets up with Das and convinces Das to invest money in the best possible scheme.

Das, who again, does not have the time to understand nor read the details of the scheme being offered, signs the proposal form trusting his relationship executive. The product eventually turns out to be a Unit Linked Insurance Plan (Ulip) sold in the name of investment.

Scores of such gullible investors like Das fall prey to the rampant mis- selling just because of their ignorance and paucity of time. By the time they realise what they have got themselves into, it's often too late and a sizeable amount by way of premium has already gone into those insurance policies without yielding the desired result.

Some investors end up piling up a huge amount of surplus in their savings account, waiting for divine intervention to tell them that now they need to invest that money elsewhere lest they end up losing on the interest or higher returns that could have been earned by investing in better avenues.

Today, thanks to technology one can open a fixed deposit either through online or mobile banking, buy stocks, mutual funds and even insurance policies online. But most investors dont do it because either they don't understand personal finance or because they have no access to an advisor who can guide them. The first step is to acknowledge that financial planning is very essential for the welfare of the family. Here are a few tips that can help investors to take control of their financial life. Take responsibility: In most families, there are endless duels between the spouses about who will take the responsibility of taking care of transacting and managing investments. Most spouse and on the contrary they want them to take care of all the paperwork and filing of statements, and so on. A better way out is to share this responsibility equally. Both should learn a few basic things on personal finance by reading up. Today, there is plenty of information available in and even by product monitor monthly budget: This is the most critical part of your financial life.

time constraints, can simply key in the data on their smart phones which can be easily compiled and analysed at the month end. Initially you may find it cumbersome and unnecessary to do this exercise, but this brings in a lot of discipline in the way you manage your money. You will start spending your money more responsibly than before. Monitoring the budget will also tell you how much surplus is there for you to invest regularly.

Write down your financial goals: If you are not serious now regarding your financial goals, by the time you realise, it may be too late to do any course correction. Take some time off from work if you feel that you do not have the time for this important activity. Involve your spouse and take his or her help in writing down important financial milestones that you want to achieve in life. Once the goals are clear, the vigor to pursue those goals follows.

Contingency fund: Before one can start investing, keep aside three months of your monthly expense in a savings account or a liquid fund to take care of any emergencies which might demand the instant requirement of cash. In case there are dependent parents without any health insurance cover, then maintaining additional amounts for their medical emergency can be beneficial. Decide your asset allocation: This will define where you will need to invest to achieve your financial goals. If you do not have the knowledge or the ability to understand various asset classes then take the services of an advisor or planner who can handhold you and guide you on the various aspects of your investments that are aligned to your financial goals. Ideally, don't completely leave it on the advisor, but try and understand why the recommendations have been done in the first place.

Remember, "Failing to plan is planning to fail". In spite of having the financial resources at their disposal, most people fail to build a substantial corpus as they don't take the initiative to put their financial life in order. It is your responsibility to create a financially secure future for your near and dear ones.

Happy Investing!!

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