Page 27 - 15NOV2019E

money matters

Money is a terrible master looks at 8 such common financial habits
This fortnight’s Tehelka Special Story
that need to be changed for the better to
but an excellent servant keep our financial stability in the pink of
health.
Buying insurance policies for
investment purpose
CA Govind M Chandak pointed out that
illiam Shakespeare, in What are some mistakes money is losing value with every pass- the “big mistake is that out of 100 people,
his masterpiece, dealt ing day as inflation is eroding its pur- 95 have made this mistake because very
with the struggle with Indians make that are chasing power. Similar is the case with few people understand the difference
procrastination that destroying their financial lives? spending too much on needless items, between term plan, endowment plan,
W brings the downfall of tehelka bureau finds out buying life insurance policies to save etc.”. Many people lured by marketing
the main character Hamlet. It is a fact tax or investing in risky stocks to make and sales professionals invest their hard-
that no brilliant intellect is worth its quick money because there are ru- earned money insurance plans they
value if it withdraws from the action. There are millions of people who mours that a friend has made money by don’t need. Most of them are lured by the
Procrastination or delay or indecisive- have six-figure balances lying idle in investing in a particular stock. These are hefty benefits of tax deduction at the time
ness is the root cause of many bad fi- savings bank accounts of banks and some of the blunders that Indians make of investment. Buying insurance poli-
nancial decisions. post offices without realizing that their that is affecting their financial health. cies to save on tax liability is a poor idea.
These plans look promising but once you

There are millions of • only assurance Traditional insurance plans uncertain and there are fears of losing a
• Losing strength Rising inflation is fast rarely offer sufficient cover or very good returns job, helping a near and dear one in case
eroding purchasing power of the people individuals who have of emergency. Little doubt that everyone
six-figure balances lying sApp, and TV. Unfortunately, a lot of peo- should have an emergency or contin-
ple fall in the trap of these people and
gency budget for the rainy days. Very few
idle in savings bank invest money without any knowledge. people keep track of their expenses. Most
accounts of banks and What is the end result? They lose eve- of them just don’t know where the mon-
ey is gone. People do not know why they
rything! Often the sharp fall in the stock
post offices without markets shakes investors and so is the need to save money because they don’t
realising that their sudden rise. know their financial goals. Thanks to our
Even blue-chip companies and their
Hippocratic society! People save their
money is losing value stocks and index stocks have not re- entire life just to spend all the money on
random relatives who only bother about
with every passing day mained unaffected. Choosing mutual the food and arrangements.
funds as an investment option will not
cut the risk entirely, but risks are mini-
dig deeper, you find that the returns are mal. Ideally, investment in diversified Buying things just because they
no more than 5% or a little more or less. equity funds focused on different seg- are on discount
Traditional insurance plans neither ments gives the portfolio all the diversi- From Amazon’s “Great Indian Sale” to
offer sufficient insurance cover nor give fication it needs and reduces the risk. The Flipkart’s “The Big Billion Days”, every-
very good returns. The real objective of golden principle is never to keep all your one is encashing on the weakness of
the insurance plan is the insurance cover eggs in one basket. Indians buying things just because it is
offered in case of death but the primary on discount. Funny thing is now you will
focus of investors in the majority of cases No emergency budget find such sales every other month. Ins-
is the tax deduction under Section 80C. Not having any extra money in the case tagram and Facebook are introduced as
For a senior citizen, the ideal situation of emergency results in embarrassing Social Media Platform but they are actu-
is to invest in the Senior Citizens’ Sav- situations of borrowing money from ally destroying the entire social fabric.
ing Scheme to save tax and get a regular friends and relatives. Some people even Facebook and Instagram are more of a
periodical income. break their investments and make a big marketing platform where people post
mistake. One should save enough for the stuff just to get some likes and companies
Buying stocks based on tips without basic necessities of life. promote their products and services.
any knowledge Keeping a contingency budget for any Then spending a fortune on a party
You will find every Tom, Dick, and Harry future eventuality should always be kept too is a bad idea because it could jeop-
giving stock tips over Facebook, What- in mind. Life in metros is becoming most ardize your total budget. This is the new

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