"Success is where preparation and opportunity meet."
- Bobby Unser
You love hearing success stories of the rich and the famous. Dhirubai Ambani the founder of Reliance Industries, a company worth more than $50 Billion today, was the son of a school teacher in rural Gujarat. Narayan Murthy the founder of Infosys, is a billionaire today. Did you know that he had to prematurely break his wife Sudha Murthy's fixed deposits of INR 10,000 in 1981, to start this Company? Dilip Shanghvi started Sun Pharmaceuticals, a leading drug maker in India in 1983, with just 5 products and 5 people. Today it's worth Billions of Dollars.
Even Millionaires and Billionaires have committed mistakes on the path to riches. Nobody is perfect. Not even financial advisors. Many financial advisors are always ready to give advice on how to grow rich fast. The real good financial advisors...They tell you the worst mistakes to avoid to grow rich.
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Financial success can be achieved through 3 simple letters. E-S-I...Earn, Save and Invest. Make these 3 letters part of your financial planning and you will soon be prosperous. Last but not the least, avoid these 6 financial pitfalls on your path to riches.
These are the 6 worst money mistakes you can make which = Rags to Riches...Sorry...Riches to Rags. Want to know more on investment planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.
6 Worst Money Mistakes Anyone Can Make
Do you step out of your house in a dark street without a torch? It would be really foolish. In much the same way, you cannot make a successful financial plan without an emergency fund. Your bike or car could fail or you might need money for house repairs. Don't have money for an emergency? You would be forced to borrow, which is an even bigger mistake.
Follow this thumb rule:
Unmarried? Have at least 3 months of living expenses in your emergency fund. Married? Make this 6 months of living expenses in that emergency fund.
2. You don't have Life Insurance
This is not a financial mistake. This is you, shirking responsibility. If you don't have life insurance, you are committing a crime against yourself and your family. What if something untoward happens and you leave your family with no money? Worse...What if you leave loan EMI's for your family to repay?
Term life insurance is a type of life insurance where you pay a fixed sum of money called a premium to a life insurer. You pay this amount for a fixed time period called term of the policy. If you/policyholder die within the tenure of the plan, the life insurer pays an amount called the death benefit/sum assured to your heirs. If you survive the term of the plan, nothing is paid. A term life insurance plan makes sure your family enjoys a quality life, even in your absence and also takes care of loans.
You can avail a term life insurance plan paying just INR 500-600 a month and get sum assured of a crore. Is this too much to pay for your family?
3. You marry the wrong person
Wondering what this topic has to do with marriage? Apparently, a lot. What if you are a careful spender and your spouse blows up all your money? Even if both you and spouse earn a moderate income and are frugal, you will soon be on the path to riches. Just imagine what would happen to your finances if one of you is a spendthrift? You would land in the loan trap. Worse, a costly divorce. If you divorce, chances are your wealth will shrink and not just because the assets are being split in half.
Always check for financial compatibility before marriage. Have the “money-talk”. Once married stay that way and move on the path to riches.
The Power of E-S-I
4. You don't maximize your career
You prefer to stay put in your job and leave your career in stagnant mode. This is a serious mistake. Invest in your career. It is the engine of your growth. Let's say you begin your career at 25 with a salary of INR 3,00,000 a year. You get an average pay hike of 10% across a 30 year career. You earn around INR 5 Crores across your working career.
Now, you make and execute a plan to grow your career real fast. You get an average pay hike of 15% across a 30 year career. You have now earned around INR 13 Crores across your working career. This is a good INR 8 Crores increase. Isn't this something worth striving for?
There are a couple of mistakes you must avoid:
5. You don't save
Keep this thumb rule in mind all your life.
You will soon be a rich man. Why? Simple...You're saving money.No Savings = No financial progress. The longer you wait to save, the harder it will be to catch up later.
Rule of thumb: Start by saving at least 10% of your income. Then, increase it over time. Why do you save? You just don't know when a major expense can catch you.
6. You keep waiting to invest
These 3 factors determine the power of your investments:
1. The amount you invest
2. The rate of return on your investment
3. The time you stay invested
Try answering this question. Is the rate of return on your investments more important or the time you stay invested. You may think it's the rate of return, but it's not. Let's say you invest INR 8,000 each month in an equity diversified mutual fund scheme via SIP.
You are 23 years and invest till 60. You get an average return of 9% across the 37 years of your investment (60 years - 23 years). You get close to INR 2.8 Crores at 60. Your friend invests INR 8,000 each month in the same equity diversified mutual fund scheme via SIP. He too gets an average return of 9%. The only difference: He starts investing at 33. At the age of 60 your friend will have just INR 1 Crore.
At 60 you are more than INR 1.5 Crores richer than your friend. Why? You have stayed invested for 10 years more than your friend.
You have the power of ESI in your hands. Use it wisely and move on the path to riches. Be Wise, Get Rich.
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