I want to go to Las Vegas one day ...just for the sake of it . Not having any false hope that i will return a millionaire by gambling there . But this blog is about a Las Vegas trip many of us unknowingly do near March end and some of us throughout the year . Let me explain ...
Financial year ending is rush-hour for all . For the people who work hard , its the time to "invest " in good financial products to save tax . Be it in the name of "money-back " policy , tax saving mutual fund everyone rushes to invest their money before the gates close on march 31st . In addition to this throughout the year people with surplus funds look around to "invest "their money .
It is here that the high achieving professional makes the biggest mistake . He relys on a "financial advisor " for his investment decisions . The word meaning is simple financial advisor advises on financial matters . Though it is told that the cheapest thing in the world is advice here the "advice" often turns out not cheap for you . Just check out your number of lapsed policies and the pension fund which never keeps growing . Many of these were promised 100 percent , 200 percent or 1000 percent returns in 3 years or maybe 15 years . These things were sold to you by young, energetic financial advisors long ago and many of these investments which promised "Las Vegas "returns ultimately landed up as lapsed insurance policies and mutual funds which gave negative returns. Long ago i was also like you , good in my field , but absolute zero in financial matters . But many years ago , out of curiosity , i started reading a financial magazine by Karvy and later over the years monthly magazines like Outlook money . I never became rich by all these books but soon became immune to these advisors . By reading these magazines i learnt that finance --mutual funds, shares , life insurance policies etc --was not rocket science . And since our hard earned money is at stake it is better to spend a little time learning this simple science by a little reading .
Recently i looked at the return of a pension fund i invested around 5 years ago . (one dynamic youngster sold another youngster this great pension plan ). I invested rs 10000 and after 5 years the corpus is 11000 rs ... whats wrong with that ? 1000 rs gain . Be happy . Simple maths (i wont go into CAGR and all that stuff ) says the return is 1000 rs per 10000 rs invested . that is 10 percent . so 1 year return is a whopping 2 percent . Now is the key factor , always include inflation in your calculation . so the effective return (assuming 10 percent inflation every year ) is -8 % per year .. Or a loss of -40 % . In financial terms your money has shrunk by almost 40 percent .
My dynamic youngster friend knew about inflation , fund management fees etc but he never lied to me . He simply didnt tell about these information as he wanted to grow . Is it called white lie ? I dont know .
Whenever someone tells you invest in gold , invest in real estate , invest in shares be wise and read financial magazines for 3 months at least . You will become a lot wiser and invest with knowledge . And for the Las Vegas trip . After you have made real money with the knowledge you have made maybe we can plan a trip together ...
haroonkerala@gmail.com
Financial year ending is rush-hour for all . For the people who work hard , its the time to "invest " in good financial products to save tax . Be it in the name of "money-back " policy , tax saving mutual fund everyone rushes to invest their money before the gates close on march 31st . In addition to this throughout the year people with surplus funds look around to "invest "their money .
It is here that the high achieving professional makes the biggest mistake . He relys on a "financial advisor " for his investment decisions . The word meaning is simple financial advisor advises on financial matters . Though it is told that the cheapest thing in the world is advice here the "advice" often turns out not cheap for you . Just check out your number of lapsed policies and the pension fund which never keeps growing . Many of these were promised 100 percent , 200 percent or 1000 percent returns in 3 years or maybe 15 years . These things were sold to you by young, energetic financial advisors long ago and many of these investments which promised "Las Vegas "returns ultimately landed up as lapsed insurance policies and mutual funds which gave negative returns. Long ago i was also like you , good in my field , but absolute zero in financial matters . But many years ago , out of curiosity , i started reading a financial magazine by Karvy and later over the years monthly magazines like Outlook money . I never became rich by all these books but soon became immune to these advisors . By reading these magazines i learnt that finance --mutual funds, shares , life insurance policies etc --was not rocket science . And since our hard earned money is at stake it is better to spend a little time learning this simple science by a little reading .
Recently i looked at the return of a pension fund i invested around 5 years ago . (one dynamic youngster sold another youngster this great pension plan ). I invested rs 10000 and after 5 years the corpus is 11000 rs ... whats wrong with that ? 1000 rs gain . Be happy . Simple maths (i wont go into CAGR and all that stuff ) says the return is 1000 rs per 10000 rs invested . that is 10 percent . so 1 year return is a whopping 2 percent . Now is the key factor , always include inflation in your calculation . so the effective return (assuming 10 percent inflation every year ) is -8 % per year .. Or a loss of -40 % . In financial terms your money has shrunk by almost 40 percent .
My dynamic youngster friend knew about inflation , fund management fees etc but he never lied to me . He simply didnt tell about these information as he wanted to grow . Is it called white lie ? I dont know .
Whenever someone tells you invest in gold , invest in real estate , invest in shares be wise and read financial magazines for 3 months at least . You will become a lot wiser and invest with knowledge . And for the Las Vegas trip . After you have made real money with the knowledge you have made maybe we can plan a trip together ...
haroonkerala@gmail.com
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