Financial Mistakes Defence Personnel Must Avoid
Taking about personal finance is not welcomed in defence, but unfortunately people join defence from society and that demands financial status. When it comes to financial planning people should avoid these common mistakes generally spread across defence personnel.
Financial Planning is not for us
Financial planning is important for everyone. Families of defence personnel are part of society and like every other family; your family also has different milestones like Home, Kids Professional Education, Vacation, Repayment of loans and wealth creation. By following the simple principles of planning you can create wealth and achieve most of the milestones of your life. Ask yourself a question; how rich people earn? They earn from their investments and every one of us can become prosperous with the process of financial planning. You can plan your life on Planyourworld.
Group Life Insurance is sufficient
Every personnel in defence is covered with group insurance based on his/her designation. Initially it sounds great but when it comes to numbers the numbers are less, if an officer is covered for Rs. 40 lacs of insurance, this amount is very less seeing the responsibilities of kids, home loans. Since your family gets family pension, most of the regular expenses will be covered with pension. So you need to protect your family for the other goals and milestones. You can plan on Planyourworld with convenience.
DSOP is the best investment
Most of the people think that they make better returns in DSOP, this is a myth you need to make more returns than inflation. If your returns are lower than inflation you are not losing the purchasing power of your money, this means if your 1 lac can buy a certain thing today, this amount cannot buy that same thing after a year with inflation. People can become prosperous with return on investment over the period. By investing in DSOP more than the compulsory limits doesnt help you in making returns. Even difference of just 2% annual return on the investment of Rs. 1 lac every year can give you Extra Rs. 25 lacs with the fund in DSOP.
Believe Share Equity Trading is good
I have observed that many of the defence personnel trade shares; share trading is not profitable for investors. Investing in shares is profitable when you behave like promoter of the company and invest in the business of company. Trading is meant for brokerage of share brokers, you make profit or loss; they earn the brokerage on every trade made by you. Be an investor not a trader. More over investing directly in shares demands lots of time.
High returns with low risk
When it comes to investing, everyone wants high returns with low risk, this is a common myth of investing. Reality is Higher the risk higher the return. Risk and returns go hand in hand. Safer the investment more the risk of losing purchasing power. If you feel that there is a golden opportunity waiting for you only, always have doubt and check thoroughly. The market of anything like real estate, shares is efficient, when the picture is so rosy, it may be a alert signal for you.
My buddy has also invested, so its good
Its not always necessary, most of the time we buy products through our near and dear ones because we trust them. Known people may not have the proper knowledge or expertise of the domain. When it comes to investing, rely on your analytical skills. If your logical reasoning proves that the investment opportunity is good and it will give you money at the time you require it most, you can invest. You can also check on Planyourworld.