While we know this line holds true in all aspects of our existence, whether it comes to buying clothes, a car , jewellery etc, but we tend to forget it when we invest. You may face situations where you hope for the best while the reality can be very different.
|My friend’s mother is an insurance agent and she wanted to sell me this policy and I obliged.||The friend’s mother doesn’t actually analyze your goals, requirements, age and risk profile before selling you the policy. Next year she will be back with a new policy that is PERFECT for you.|
|My uncle is a stock broker and he recommended I buy XYZ stock to make 20% returns.||The uncle is one who is investing in stocks with a lot of money i.e. a couple of lakhs and is backed with the appetite to take the risk. This uncle will talk to you about the 20% returns he made on a stock but will surely not tell you of the 45% he lost on an investment.|
|My cousin has started a recurring deposit and asked me to invest into.||The recurring deposit is an excellent tool to
create discipline. The cousin had started it for a requirement he has that is a few months away, but maybe yours is a couple of years away.
There is a reason anything to do with your money is called “PERSONAL FINANCE”, it is “PERSONAL”. Your financial requirement may vary on many grounds such as:
• Age – At the same age , two people may have different kinds of commitments , while one at 28 maybe married and supporting two people , another at the same age may be on the path to his post graduate education. These two people have completely different requirements of their investments.
• Risk Profile – The Risk Profile of a husband and wife also varies, so as for a parent and child. So how can two people at ages 28 and 55 be making an investment into a similar investment without any risk profiling in place?
• Goals – While I may wish to go on a domestic holiday every year my brother may wish to go on an international vacation once in a year. Even in such a close environment two people want completely different things out of their money. We cannot base our investment decisions on someone else’s goals. It is extremely crucial to consider your own financial goals before making any investment.
Always remember, that in case any of those investments go wrong, the onus is not on the one who recommended it to you, but you, yourself. Be wise with your money!