“College graduates spent 16 years gaining skills that will help them command a higher salary; yet little or no time is spent helping them save, invest and grow their money.” Vince Shorb, CEO of the National Financial Educators Council
Karvy is pledging customers’ shares, PMC bank joining hands with the fraudulent borrower, DHFL lending recklessly to builders. Many such companies in the financial system thrive and defraud every now and then. Regulators are doing their job and sometimes they also fail in preventing such frauds.
The onus of protecting your money is on you not only on the regulators. Financial Literacy is extremely important if you are in the race to earn money.
Your earning money through your job and business is just one part of it. How to use the earned money i.e. spend, save, invest. donate, and gifts are all part of the complete gamut of your financial wisdom.
We are smart at short term bargain but fools ourselves when it comes to long-term safety.
We bargain better brokerage from a stockbroker and a higher rate of interest on FDs from banks, but oblivion of their strength. We assume they would be around forever. We justify our decision with all kinds of illogical logic when someone cautions you.
No to the Weak Companies:
HDFC Bank shares are in the list of almost all mutual funds. Yet many investors have not invested in it. When a better investment option is available yet we want to take a risk and invest in weak companies. I am not saying HDFC bank is the only investible company.
The point is when we have better options we should not go for the weaker options. Whether it’s your bank, shares, mutual funds, fixed deposits, stockbroker, deal with the best or the top 5 companies.
Handpicked important post: Why You Need to Make a Will?
No to the Dubious Companies:
Company ratings, national presence, stock performance, prominent people on the board of directors, customer reviews all are indicators of the quality of a company. Background check of the company you wish to park with your money/shares is very important.
Do not get persuaded by the skills of the salesperson. Do your homework as your negligence could be hugely costly. If you are busy involve your spouse. This way both of you are in sync with the financial decisions.
Handpicked related post: 9 Online Frauds You Need to Know to Avoid Losing Money
Don’t Decide Only on the Basis of Immediate Benefit:
Cheap brokerage, high rate of interest, high return commitments, all should ring a bell in your head. The famous Sunil Shetty scene of the film Hera Pheri: Golmaal hai bhai sab Golmaal. Do not get lured by these kinds of offers. You might consider yourself smart by getting a better deal but ultimately, in the long run, you may repent on your short-sighted decision.
Why would you pay more for a better hotel? Be prepared to pay more or receive less but ensure the safety of your money. A company may promise to pay you a 2% return per month but chances are high that you may lose all money after 2 years.
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Don’t Decide Only on the Basis of Proximity
Many people take financial decisions based on their proximity. They prefer their stockbroker who is near, their bank which is near, their investment advisor near. This could be good but do not discount safety factor when you rely on proximity.
In the tech-enabled world, you need not go with what is near but what is safer should be your goal.
All in all, you must be careful about your financial decisions. Whom you choose as an advisor, bank, stockbroker. Where you invest and what kind of products you invest in. The post: When Secured Investment Becomes Unsecured & Risky would be an interesting read.
In times like this when every now & then we read about financial scams, the only option for the investors to remain protected is to remain agile not only about your saving and investments but also about the partners/ service providers you choose.
“The only way you will ever permanently take control of your financial life is to dig deep and fix the root problem.” Suze Orman, author, financial advisor, motivational speaker, and television host.
Don’t be gullible, be smart and alert.