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COMMON MONEY MISTAKES THAT PEOPLE MAKE. 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 investmentIn 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-mHome loan is 8 ate of ")-$)6 2ent 2ec- min- )-()6 of the p ope ty cost P-M-A ea is less then ;)) s'-ftIs this inc easin! 7 <ec asin! the p ope ty cost = > 3y ent7a ea7home loan ate 7 EMI ? <L1 AN< 4NITECH a e the top ( 2eal estate companies in sense5 Chec0 the p ices stoc0 <L1 in ()): is 2s-"())7+ /hile in ()"* is nea to 2s"*)7+ Stoc0 4nitech in ()), is )-,: paise . ()): is 2s-$,;7+ And in ()"* is 2s-"$7+ P2ICES AN< EMI A2E @OIN@ 4P 34T 2ENT 2EC- AN< COMPANIES AAL4ATION IS @OIN@ <OBN <AY 3Y <AY <4E TO OAE2 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
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 Cto+ 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
different sets of people and hence actions are e tremely hapha<ard in nature. Hence if you see the finances of most people !even the most sophisticated", you will clearly see that it is a hodgepodge of products accumulated over time. I take life as it comes .I don,t plan for it,/ said a leading Bollwood actress. It,s very easy to say this but nothing meaningful can be achieved in life without setting. =oals and planning. >es, life will happen as you plan and sometimes you will need to course ) correct but there are certainties in life that will happen for e.g. death, retirement !everyone will grow old and will stop working or slow down at some point of time", and paying ta es and so on. I am sometimes appalled /hen people plan fo thei vacation fo seve al months o disc%ss as family on the ne5t &i! ca to &e &o%!ht . &%t /hen it comes to financial plannin! and !oal settin! they say . EI /ill do it afte a fe/ months o I donFt have time i!ht no/- E (ost people do not understand the concept of financial goal setting cash flow and debt management , insurance planning asset allocation , ma imi<ation of post ) ta income , retirement and estate planning !will, power of attorney and trusts ", for the simple reason that there is no formal education in personal finance or financial planning . It is because of this limited knowledge that they end up making costly mistakes. %heir reali<ation of the importance of a financial plan is reactive rather than proactive, in that it is only when an event happens that they reali<e the need for a financial plan or the need to take a holistic view of their financial situation. (ost people generally believe that the objective of ta planning is to minimi<e ta es and often do things that are not in their best interest. %hey takes several loans , buy real estate and life insurance in unplanned fashion and indulge in tricks to fool the ta man such as showing limited income or a weak balance sheet with the only objective of not paying ta . However, the right goal of ta planning is to ma imi<e post ta + income.
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8or 8urther 0etails kindly ;ontact 1 %hanks and :egards, ?irang =andhi &ersonal 8inancial &lanner http1@@www.fpindia.in (+A3BC97B922
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