Never assume that what is delivered in the past from the asset will continue in future
Classic example in todays age is Snap Deal story , investors lost tons of money and these are seasoned investors and the who’s who in the investment banking & startup funding , not every investment works the way the prior investment decisions worked , taking cues from this we see umpteen number of decisions being taken which have been on the same principle past is the guarantee for future performance .
Asset Allocation therefore plays pivotal role in money management , there are always two sides to the coin when you take a concentrated asset exposure . Avoid this mistake and you will sail through .
Never undermine risk management when managing investment
Investment Decisions in stock look fashionable from outside but there is no gain without pain this holds in every facet of life and Investment is not different .
Often stock market success is seen as a heroic event , look at telecom industry once this industry was termed as a sunshine industry , imagine your portfolio having major exposure in telecom stocks today , you know the answer , risk management is more about spreading the exposure in a manner which does not allow one single investment or industry to pre-dominate the portfolio return .
Never think Insurance as an Investment
Insurance is only meant to come in force on a contingency , look at your car insurance , have you heard that the car company pays your premium back plus accrued profits if you don’t hit the car .
Often people fall prey to relationship managers from the bank who work on targets to sell insurance , all the creativity in making it look fancy goes into it .
Keep it simple just avoid these mistakes and you are good to go . Get a plain vanilla term insurance and your job is done .
Never keep tax saving at the core of every decision you make for Investment
Classic example is the housing decision , more houses are bought to save tax than to stay , and government knows about it .
laws changed and the attractiveness is lost in a second
Deemed income on rent if owning more than one house in your name
Max 2 lacs allowable as deduction , rest keep carry forwarding
Capital gains is 2 years from 3 years
What to do now
put your house on rent
sell your house if rental yield is not attractive so is in most cases
over supply restricts future growth in this asset , everything revolved around growth
Never copy paste solutions what others have adopted make it work for you
Look at your life situation , don’t copy paste , ask yourself a question , do you ever buy a clothing without looking at the size , colour , shape , style , appeal . Then why investments or any money managing decision , you are unique and you require a unique solution , each case is different , avoid falling prey of salesmen out there who pretty much bucket you in a life stage and tell you the solution without paying attention to factors required to be analysed before an investment advice is given and before you take and consume .
Avoid this mistake , always ask why before you take a leap
Life is simple and uncluttered, thoughts make it complex and cluttered, ability to take a high level view is important in life our blog is to make a small attempt to make life simple decisions easier than before .
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