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Common Money Mistakes

Common Money Mistakes

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Published by kirang gandhi
Common Money Mistakes by people in india
Common Money Mistakes by people in india

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Published by: kirang gandhi on Nov 18, 2013
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11/19/2013

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www.fpindia.in
COMMON MONEY MISTAKES THAT PEOPLE MAKE
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Most Indians have completely fo!otten the !eat Indian eal estate cash of "##$ and the s%&se'%ent l%ll fo seveal yeas %ntil ())*+()),- This is a vey dan!eo%s state!y to adopt as this can pove to &e lethal d%in! eal estate cashes. especially since eal estate is an illi'%id investment- In p%ne city eal estate ho/ /o0s A1TE2 2EAL ESTATE 3433LE IN "##$ "##$ " 3HK COST 2s- " Lacs And 2ent 2ec- is appo5- 3et/een (OOO+*OOO p-m- 2ent 2ec- min- (6 of the popety cost P-M- aea is "))) s'-ft- ())* " 3HK COST Appo5- 2s- , Lacs And 2ent 2ec- is ,)))7+ p-m- Home loan is 8 ate of 9-($ 6 2ent 2ec- min- "6 of the popety cost P-M-aea is :)) s'-ft ()"* " 3HK COST 2s- *$ + ,) LACS And ent 2ec- is 9)))7+ TO :)))7+ p-m- Home loan is 8 ate of ")-$)6 2ent 2ec- min- )-()6 of the popety cost P-M-Aea is less then ;)) s'-ft- Is this inceasin! 7 <ecasin! the popety cost = > 3y ent7aea7home loan ate 7 EMI ? <L1 AN< 4NITECH ae the top ( 2eal estate companies in sense5 Chec0 the pices stoc0 <L1 in ()): is 2s-"())7+ /hile in ()"* is nea to 2s- "*)7+ Stoc0 4nitech in ()), is )-,: paise . ()): is 2s-$,;7+ And in ()"* is 2s-"$7+ P2ICES AN< EMI A2E @OIN@ 4P 34T 2ENT 2EC- AN< COMPANIES AL4ATION IS @OIN@ <OBN <AY 3Y <AY <4E TO OE2 S4PPLY AN< LESS <EMAN< Indians ae amon! the &est in the /old in most pofessions and ae hi!hly espected in the !lo&al comm%nity
. However, when it comes to money management, most people are guilty of several mistakes. We list seven major, common money mistakes that most smart, intelligent people commit. Banking is a booming business in India as more and more people are continuously borrowing. At the same time, recovery agencies are also a booming business as more and more people continue to default on their loans. Although India has one of the best saving rates when compared with western nations, the same really cannot be said of the net generation. Although most people today have a high and stable income !than what their earlier generation earned", their epenses are e#ually high. $ne of the key reasons in that they have many epenses and loans. %here are too many temptations today and all one needs to do is call a bank or financial institution for a personal loan. In this process of keeping up with the net i&od, gadget or car, many young people end up paying a substantial amount of their income towards '(Is. Besides '(Is, insurance premiums and personal epenses eat into earning #uirt #uickly. Hence, I am sometimes surprised too see people having a seven ) figure monthly salary
 
www.fpindia.in
finding it difficult to save. %his is because they have other major epenses such as penthouses, bungalows, and so on. *ince these are big ) ticket items, surviving debt and maintaining these often result in a li#uidity crunch even for affluent families with very high incomes. *ome people, especially business owner and professionals, take on loans because their account ants advise them to do so from a ta planning perspective. %his is primarily to harness the advantages of depreciation and interest deduction. However , such ad+ hoc decision are considered without taking a holistic view of the familys li#uidity , present needs and future re#uirements , which often puts a family in severe cash flow problems. Although it sounds stereotypical most people hoard real estate like there is no tomorrow. $ne of the biggest reasons is our love for real estate, which many feel are great investments. Besides there is an abundance of black money in the system and many people have a lot of income in cash that can be comfortably cushioned in real estate investments. Additionally, they believe that not only is real estate insulated from market vagaries, but that it also gives stellar returns along with ta benefits. As a result, they borrow to invest in real estate and are leveraged !which means they take on debt"
Most people &%y life ins%ance as an investment and p%mp in a lot of money into life ins%ance as a !ate ta5 savin! tool and many people ae enamo%ed /ith ta5 savin! inst%ments- 3esides the fact that most people ae so &%sy /ith day to+ day activities. they often /a0e %p &et/een Dan%ay and Mach evey yea to do somethin! to save ta5
. %he answer is very simple. -ets buy a life insurance policy. In any case my friend, banker or family member has been after me to buy one./ 0ue to such adhoc purchase, most people end up with a plethora of irrelevant policies. %he best part is that most people pay high premiums and get a very low cover. 0espite paying high premiums, most people are under+ insured when it comes to life insurance in a big way. %here is no assessment of the actual financial risk their family will face, in case of their premature death, and most liabilities are not covered. At the same time, they have negligible or no critical illness cover, negligible disability cover, no income protection and no social security benefits. %his area must be ade#uately addressed to ensure lifestyle maintenance, wealth creation and wealth protection. %he portfolio of must people would probably look like this1 more than 23+43 5 in real estate investment , 63 ) 73 5 in debt !&&8, insurance policies , fied deposits , bonds and post office ", 2+93 5 in cash ! saving account , short term fied deposit and cash ", gold !primarily bought as jewellery " and very negligible e#uity . (ost people have just these investments1 :eal estate, &&8, '&8, !for employed people", gold and insurance policies. ;onsidering that people are getting busier by the, sometimes they do not even have time for their families. %he little precious time that is available is completely for the family and most of the time, financial planning takes a backseat. %his is when people end up taking decisions based on advice of different sets of people !chartered accountant, colleagues, banks, real estate agent, family members, insurance agents and financial advisors". %here is no co ) ordination between all the advices sought from these

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