Finance

Wooow... what a topic to pakao all your heads. What had I been doing all this time not bringing up this topic till now. I know, most of you would be going “aaaaah...., NO not this one”.

Friends, ‘Finance’ or rather personal finance related topics have always been close to my heart since the days I started earning. I always used to think of an optimum way of keeping my finances, making plans in line with what all the financial pundits tell.... insurance, taxes, debt-equity ratio, blah blah.... However, over the years I have learnt that there are two fundamental differences between what we are told in all the financial stuff and the reality. Firstly, the plan not only depends on person to person but also on condition he/she is into at the point of time. Secondly, even if you plan it up completely to the minutest level as suggested by your financial agent, you will still repent some decision thinking what if I had done this and that. However, don’t worry. It is basic human nature to get worried at anything that goes wrong. The point is to keep it in mind for planning next time. This is known as “Kaizen” in Japanese meaning constant improvement (I like throwing off these fun facts).

One of the very basic lesson in finance (or anything in life) is “Don’t ask the barber if you need a haircut”. One needs to see if the person has any vested interest in you going through with the transaction as advised to you. Many a times I have heard that people have invested in things like Insurance Plan with is also a mutual fund and all sorts of such products. Dear Friends, they are called ULIPs (Unit Linked Insurance Plans) and I don’t have anything personal against these plans except that they take away a large chunk of your investment in the first three years after which “you need not keep investing” meaning “your financial advisor will not get a sizable chunk of your investment as his commission after 3 yrs are over”.

Other similar myths are one should keep a lot of money in savings account for contingency (NO, not if you do have a cashless medicare facility, keeping 3-6 months of expenses is fine, not beyond that), one should never invest in stocks (don’t if u don’t understand them or can’t track them regularly. However, Mutual Funds are not stocks. They are people paid to take care of your stocks), taking endowment plans for life insurance is enough (I liked the ad showing KILB Kam Insurance Lene ki Bimari, see youtube for further details), and the list goes on and on.... including some totally outrageous ones like the world will end in 2012 and thus, withdraw all your money and keep all of it at home in form of cash.

If you take a bet on something, remember that you are taking a bet and the chances are 50-50. However, if you keep investing systematically through thick and thin, you are bound to do good (assuming whatever you are investing in is well researched and found to be fundamentally sound).

Finally, let me share a news article: “Recent studies done in an university in the US suggest that counting currency notes reduces any kind of pain you might be having in your body.” J J