India is one of the fastest developing economies in the world. However, there are a few glaring yet common financial mistakes that Indians make.
#1 – Investing in Gold
Traditionally, Indians have considered gold to be a super valuable asset. Some continue to purchase gold as a liquid investment. You can sell gold jewelry and get cash-in-hand right away. Indians see gold as the safest and secure form of investing money. But, you’ll see that it yields comparatively low returns in the long-run. That’s why investing in gold can now be considered a mistake. Rather, gold symbolizes a way to protect one’s future. It has turned into a form of insurance for the investor, especially during emergency situations. These circumstances could be due to unforeseen personal matters or even geopolitical upheavals.
One of the greatest investors of all time, Mr. Warren Buffet also believes that investing in gold is a mistake. A quote from his interview with CNBC in 2009 explains the reason behind his belief:
“I have no views as to where it (gold) will be, but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know, Coca-Cola will be making money, and I think Wells Fargo will be making a lot of money, and there will be a lot — and it’s a lot — it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.”
#2 – Not investing
Most Indians are great at saving. Stashing away a part of their earnings with a particular goal in mind is a fundamental financial ritual for many. Indians believe that saving helps in securing future objectives such as children’s education, owning property and so on. Thanks to inflation, it is rather impractical to believe that saved money will support them completely, regardless of the amount spared. A more viable option is to invest that money in places that yield greater returns.
Money lying inactive in banks: Indians regularly put a ton of money in their savings accounts or fixed deposits. The returns offered by banks are generally between 4%-7%. Invest it in a different platform which can yield higher returns – like P2P Lending. P2P Lending platforms such as i-LEND offer returns from 12% to 30%!
This quote from American Businessman Robert G. Allen’s might motivate you to step out of your comfort zone and invest more:
“How many millionaires do you know who have become wealthy by investing in savings accounts?…………. I rest my case.”
#3 – Unwilling to take risks
A great number of people know that they must invest. The issue is a common belief that investing is dangerous. It’s not—on the off chance that you are educated in finance, have experience in this matter and guided by someone.
In the present economy, it’s significantly more unsafe to depend on your employer for your prosperity than it is to be financially informed and to invest your money astutely. It’s likewise hazardous to put your money in the bank and gather premium that scarcely covers inflation, and if inflation does take place, you’ll really lose money. It’s dangerous to put all your expectation in an expert for your retirement investments. Today, if you need to be monetarily secure and free, you should learn how to invest. Diversify your portfolio – with a healthy mix of all sorts of investments varying by risk.
#4 – Not taking loans to expand a business
Taking a loan can be frowned upon in India. Having absolutely no debt at any point in life is a way of financial aspiration among Indians. A good number of Indians draw themselves away from taking a loan due to this demeanor. All the while, they unwittingly neglect to construct themselves a credit record.
When they do at long last apply for a loan – they confront the probability of being turned down only because the moneylenders/banks have no record of their past repayment conduct. Lenders have no way of assessing their credit value. A credit portfolio that shows you are a dependable borrower is critical for a person to qualify for a loan.
Fortunately, many are now able to bypass the strict requirements for a credit score by taking a loan on P2P Lending platforms – which offer competitive rates to a larger variety of borrowers.
#5 – Saving without understanding its nuances
A typical misinterpretation that individuals have is that savings include what is left after accounting for one’s monthly expenditure. Successful investors, however, do the exact opposite! They say it’s smarter to first decide on a realistic sum that you wish to spare each month and plan your expenses around your savings rather than the other way round. This not only assists in removing the danger of exorbitant spendings that are bound to burn through your funds but also helps center your savings on an objective and in turn accomplishes them within a certain time period.
“Every time you delay savings by even a year, you’re making a huge difference on the corpus you eventually want to build,” says Pushkar Sharma, an independent consultant at Add Wealth Financial Services
While building savings is an awesome initial step, the usual way to deal with savings frequently includes just aggregating cash into a savings account. A better approach is to save in a way that your cash doesn’t simply construct, yet in addition, develops. Making speculations secures our future and guarantees enough cash for retirement or in any case of an emergency.