Page 83 - Life Insurance Today January-June 2020

registered investment adviser and their finances. Investments are made clear strategy. They chase fads and
founder, amitkukreja.com. randomly based on tips or for tax sav- products which give returns at a par-
ing, and are not properly thought out, ticular point and then switch to other
Even those who have a fund might be which is a major problem," said investments," said Sadagopan.
managing it wrong, said Sen. “They Sadagopan.
use it for monthly cost overruns when “Most people are uninformed when it
their budgeted expenses go haywire. This can have huge repercussions, said comes to mutual funds. Very few will be
Most have amounts equal to two Shilpi Johri, certified financial planner able to tell you whether they have
months’ expenses. Not having ad- and founder of Arthashastra Consult- large-caps or multi-caps in their port-
equate emergency fund leads them to ing. “They end up making mistakes like folios because they have invested based
borrow at high rates or break invest- buying a property as an investment on what they have heard from a friend
ments meant for long-term goals dur- when they require the money only a or colleague. The convenience of being
ing times of need," she added. year later," she said. able to invest through apps has only
compounded this issue," said Kukreja.
Planners advise having at least six Start by deciding what your short- and
months’ expenses stashed away in long-term goals are and then choose Choose mutual funds based on finan-
safe and easily accessible instruments investments products accordingly. For cial goals and risk appetite, as well as
like liquid funds and fixed deposits. But instance, if you have a short-term the fund’s performance relative to the
given the covid-induced situation, ex- goal, it makes sense to steer clear of benchmark. Mint’s list of top 50 mu-
perts now advise having 12 to 24 equity. tual funds is a good reference point.
months of expenses.
Mutual fund confusion Planners also cite issues like not hav-
Investing issues Indians have finally woken up to the ing proper nominations and a Will and
While most Indians are good savers, virtues of mutual funds and started mismanagement of financial docu-
investing is another story altogether. investing through systematic invest- ments as extremely common prob-
Waiting too long to start investing is a ment plans (SIPs). However, many of lems. In the unfortunate event of a
problem almost every financial planner them are not doing it right. While hav- sudden demise, these factors could
has encountered. Many only look into ing no exposure to equity is still a mis- escalate into a crisis.
financial planning and investing when take many conservative investors
they’re in their 30s or even 40s, but make, those who take the plunge may While most of these mistakes can be
the earlier you start, the more you can be jeopardizing their returns by not fixed, the longer you wait to do so, the
benefit from the power of compound- doing adequate research or consulting more your long-term finances will suf-
ing. a professional. fer. So start analysing your own money
life to see how many of these errors
Another issue is not tying financial “The most common mistake is invest- you might be committing unknow-
goals to investments. “Most people do ing based on who is approaching them ingly, and start making the necessary
not work to a plan when it comes to to sell a product rather than having a changes. (Source : Livemint)

LIC divestment could result devastating for Indian economy: MP Premachandran
MP from Kollam Lok Sabha constituency, N.K. Premachandran, has stated that the govern-ment's decision of offloading
its stake in LIC could result devastating for the country’s economy.
While attending an inauguration ceremony he termed the success story of the LIC as a model worth emulating for
other public-sector undertakings. Mr. Premachandran added that there is no logic in the Centre’s move to sell a part
of its holding in the LIC through initial public offering (IPO).
“The Centre is hell-bent on destroying a company that has been reaping huge profits with minimal government sup-
port since its inception in 1956. The government intended to privatise the company through its decision to sell off 10%
of its shares,” he said.

Life Insurance Today January - June 2020 83