People knowingly / unknowingly lie to themselves in a lot of areas concerned with personal finance such as investments, savings, insurance, expenditure, etc. The top 5 of them are as under:
Term insurance is a waste of money
Term insurance has been ignored for years since it does not give back anything in return. However, it is the only form of insurance which actually addresses your need & protection to your family.
Retirement planning still has lot of time
We somehow strongly feel that retirement planning can be done at later stages of life rather than starting now. It is a common tendency to ignore things which occur after a long time. With rising inflation, medical costs and uncertainties revolving around, retirement life is going to be a costly affair. By delaying the investments we lose the benefits of compounding.
Except LIC, other insurers don’t settle my insurance claims
Yes, LIC has the highest claim settlement ration of 97.73%. But, what about others? Let’s see
- ICICI Prudential – 96.29%
- HDFC Life – 95.76%
- SBI Life – 94.41%
- Max Life – 94.25%
The Term plan of LIC is costlier compared to the online plans of private insurers, which provide greater sum assured at a cheaper price.
I will lose my money in mutual funds
Whenever we talk about mutual funds, this is the most common thing that we get to hear. However, we still fail to convince people on this. You don’t stop driving a scooter just because you fell from it once or twice when you were trying to learn. Doesn’t the same principle apply to investments as well? Though mutual fund is a single name, it comes in different varieties such as equity, balanced and debt. They have different objectives and strategies. You need to pick the one which suits your risk appetite and time frame of your goal. Not all mutual funds will eat away your money in bad situations.
I don’t need a financial advisor
This is probably the most said financial lie. We have a gut feeling in our hearts that managing personal finance is a child’s play. Financial planner or advisor only works for his advantage and we don’t need such people to advise us. EPF contribution, tax deduction and a couple of FD’s – that’s it. We are done with our financial plan.
We visit a doctor when there is a health issue; we visit a lawyer when there is a law related issue. But, why not a financial planner when there is a financial issue? The problem is that we don’t recognize financial issues till they have actually happened. We suggest you seek a financial planner’s help if you do not have time for your finances.