1. Lack of time to handle your finances:
Something as basic as the lack of time can prevent a person from achieving his financial goals. We all have a lot of commitments and the meagre time left, is for our loved ones. The pace of society makes it harder for us to stick to long-term goals which are the base for substantial growth in one's life.
There are a lot of financial products in the market, and to choose the product which suits you and your future goals the most, is a time-consuming task. We all have a scarcity of time and hence need arises for someone who can invest his time and knowledge for doing this task, that is where a financial planner comes in.
2. Confusing a bank 'Relationship Manager' as your Financial Adviser:
A bank relationship manager is generally not a certified adviser. Banks high concentration on fee income leads Relationship managers to convince their clients into investments that might not be in their best interest.
They are more driven by their own targets rather than your growth. You need someone whose prime priority is your growth and goals so that he will provide complete focus on your portfolio rather than his targets. Engaging with a SEBI Registered Investment advisor generally takes care of this issue.
3. Underestimating the amount required for peaceful Retirement:
We all simply believe that some arbitrary corpus of 50 lakhs to 1 Crore, is sufficient for our retirement, without even considering the rate of inflation (5.7 % pa). Now do the math for yourself, subtract the rate of inflation from your yearly rate of growth and you will have a clear idea of the ‘peaceful’ retirement you were so sure of. In our experience, we have seen that Provident funds (EPF & PPF) will only help you achieve half of your retirement goals.
FinAtoZ retirement calculator will help you to calculate the amount corpus you need for your peaceful retirement.
4. FD's and insurance products form the bulk of our investments:
Most of us are averse to taking risks when it comes to our investment and our safest bet is FD’s. But is FD really safe?
The return on FD bearing 7% interest provides 4.9% of returns after taxation, which when compared to the rate of inflation of 5.7% is actually a negative return. This means you are effectively losing money every year when you are investing in FD's.
5. Lack of knowledge to decide about requirements of our goals:
Some of us are aware of the benefits of monthly SIP's. But we are not conscious of the amount which we require to meet our financial goal. We just invest our part of surplus like 15000-20000 and feel that this much amount will help us to achieve our financial goal. This is an ad-hoc way of investing. And one must seriously look into Goal-Based Planning approach to take care of his financial goals.
So what should I do know?
If you think more than 2 points mentioned above are applicable to you, then you should seriously consider engaging with a financial advisor. However, if you only lack in one or two points then you can consider taking steps to plug the gap. Financial growth needs clear facts, time and proper awareness of financial products. You are a better judge when you have all your facts straight so decide for yourself.
The result is peace of mind and a financially empowered “YOU”.