Wedding Finance

5 Biggest Money Mistakes Most Indians Make

Amazingly, this is the one area where we as Indians are failing and making big mistakes. From the money that lies under the mattress to buying most of the gold, we make countless mistakes when it comes to money.

Below are some big mistakes that Shruti’s dad has been making for years like many other Indian dads. In turn, Shruti, as a well-aware youngster, decided to suggest changes to conventional methods.

Put the money under the mattress

Shruti’s father continues to save money, but not in a way that will bring him income from his savings. Putting the money under the mattress, in the almirahs, in the kitchen dabbas and almost everywhere except in a high-yield account has been his approach for years.

Even though he uses the method of the “out of sight, out of mind” technique to get his money to reduce his family’s unnecessary expenses, the money remains unused. This way, his money doesn’t work for him but just gets lost in the process.

Shruti, on the other hand, suggested her father to deposit his savings in funds that offer an impressive interest rate. You would now be thinking “why not a savings account or a checking account?” »

The answer is that these two accounts can protect your money, but they offer very low interest rates, which is equivalent to keeping your money idle.

No plan or financial goals, just go with the flow

Most Indians have a standard approach of going with the flow and not planning their spending. Having a financial plan is essential because it protects your future as well as that of your family. Shruti’s father does not have a financial plan in place, which means he lacks short and long term goals.

If we can create a detailed plan for a relative’s wedding function or vacation, something that doesn’t even pay for us, why can’t we plan our expenses and financial goals for 60 to 80 years of our life ?

Shruti decided to sit down with her father and help him write a detailed financial plan with all the minor and major goals. This will ensure her a protected and independent life even after her retirement.

Not investing when they are young

The majority of Indian people are of the opinion that investing in bonds and funds is for the older generation with children. Young people just use all their money to make the most of it and party or just save it in their bank accounts. Well, that’s not true, financial experts believe that the younger you are, the greater your returns at retirement age.

For example, if an individual decides to invest Rs. 100 per month in mutual funds from the age of 25, he/she will have almost Rs. 1 crore at retirement age. This is how powerful composition can be if done perfectly.

Shruti feels that she should even start investing a very small part in mutual funds every month to grow her money raisers. His father would have to invest a considerably higher proportion to grow his money at retirement age since he is already 38 years old.

Not taking a serious approach to insurance

Most Indians regard insurance policies as a waste of money and a completely bogus means of fraud. Invest in life insurance, health insurance, etc. not only protects you but also ensures you get the best use of your money.

Also, if you are the breadwinner, make sure you are insured. It is an asset to your family and protects them in the long run.

Shruti has researched the best insurance companies and does not compare their premiums and returns. She decided to insure herself and her father and take out health insurance for the whole family.

Invest the entire corpus in a single basket

Most Indians have a habit of investing all their money in one type of asset, either real estate or gold. This stagnates the growth of your money.

Moreover, it entails a risk for the whole corpus, you might wonder “how? Well, it’s quite simple, if you’ve invested all your money in real estate and one morning real estate prices hit a rock bottom, your whole portfolio will suffer and the value of your whole money will depreciate.

It is best to invest equal or nearly equal proportions of your money in different assets. Invest one share in real estate, one in the stock market, one in the purchase of gold paper, stocks, etc.

A diversified portfolio means a diversity of returns and protects you against total losses. It is important to do a risk analysis of your portfolio from time to time and to keep moving money from one asset to another based on the analysis.

To sum up

Making mistakes in managing your finances can have a profound impact on you and your family. Make sure you know the finances and your tax returns.

In the event that you find yourself in difficulty, it is better to speak to a consultant who is both reliable and approved. Letting your money sit idle will only stagnate likely growth.

Ultimately, be sure to entrust all your financial goals and decisions to your partner or parents, this will prepare them for difficult times.

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