Life Changing Investment MistakesDecember 3, 2019
Investment is one of the ways of generating income with the money people do save. Money is the most critical thing in an individual’s life. Without money, no one can survive. Therefore an individual should start saving money and start investing. Financial Planning is the first step to take. Financial Planning helps people to set long term and short term goals, and according to these goals, we can create a plan and spend our money accordingly. If financial planning is not adequately devised then one can make many mistakes that can affect our lives tremendously. Some of the mistakes people do form in the line of investment are discussed as follows.
First, Wealth is Health
In the modern world, not buying health insurance is the biggest mistake one can ever make. Due to pollution and unhealthy lifestyle, people are getting infected by so many diseases at the early stage of their life. Health is one of the most crucial and essential factors in an individual’s life, and it should not be ignored. There is a saying that Health is Wealth and people are so busy earning for their life, that they often neglect their wealth. Therefore, this crucial factor of life should be backed up by insurance.
Nowadays life striking diseases like carcinogenic diseases are prevalent. The treatment of these diseases is costly. A common man cannot afford to pay for these diseases by himself. Health insurance plays a significant role in this case. Health insurance can cover the expenses of the treatment of this disease.
Making financial planning from the day you start earning is very important and buying health insurance should be included in this financial planning.
Your best gambling has a Term Insurance
There are many families around, where there is only one person who works and the whole family is dependent on that person. If that person dies, then what would happen to the financial requirements of the family?
Most people do not plan to fail, and they fail to plan
Therefore, the earning member should buy a term plan to secure the financial requirement of his/her family. A term plan is a kind of life insurance which provides coverage during a given period of time. If the person dies during that period, then the amount insured will be given to the other member of his/her family. The term insurance plan is less expensive than the other life insurances. One should include buying a term plan in his financial planning.
Save Money, and Money will Save You
The youth generation of India has this mindset of spending all the money they earn rather than saving it. They believe in this philosophy that whatever happens, they will see afterward, let us enjoy life now. They do not do financial planning. But this is the biggest mistake they make of not thinking about the future.
We live in a world where there are varieties of financial instruments available in which we can invest. People are fond of spending in Fixed Deposits and Public Provision Fund because the working of these instruments could be easily understood. But there are many other financial instruments are available which give us a higher rate of return than fixed deposit like equity, mutual funds, and Government securities. We should diversify our portfolio in order to gain more and also reduce risk.
Taking one step away from freedom
Debt is the amount of money that we borrow from other people when we are not able to meet our financial obligations. When we acquire debt, then we also have to pay interest on it. There are many types of debts such as bank loans, mortgage loan, vehicle loan, student loans and so on. Companies take loans to run their business. Individuals take the loan to fulfill their needs. We have seen that many times companies become bankrupt as they are not able to pay their debts.
Borrowed money is the most common way that smart guys go broke.
On individuals, there is always the burden of paying interest and returning back the loan. There are many borrowers who are trying to attract individuals by introducing a different types of schemes and individuals get stuck in these schemes. If we do financial planning correctly, then we will not be in the condition of taking so much debt. We will not be in the stress of paying back those debts and we will able to live life financially secure if financial planning is done in the early stage of life.
Control your impulses, when you are broke
In this modern world, we get attracted to things that we do not need. We buy branded clothes, get excited about gadgets, hang out with friends at expensive cafes, etc. We compete with other people in society to show how well off we are. But instead of doing unnecessarily expenses we should start investing in financial instruments.
Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.
There are many schemes with low-interest rate credit cards, cheap loans, etc. which get trapped. We should be cautious where we should spend our money. This should also be included in our financial planning. We should never overspend our money as it will lead to borrowing debt in the future which further leads to stress. We should spend our money wisely. Therefore financial planning at an early stage is very important.
The Bottom line
The wrong decisions we take in our life can affect us drastically or dramatically. Therefore it is very important to start financial planning as soon as we start earning. No individual has the same set goals.
So financial planning will differ from one person to the other. According to business requirements, one must set their goals. If we do not know about investment products, we can take help of the financial advisors. They help us in doing financial planning.
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