Behaviour

A man had to go on a long journey.

Before embarking on his journey, the man walked up to God and sought his blessings.

God offered him a choice.

“Take along with you 5 litres of water or 10 litres of ice”.

Greed nudged the man to choose the latter(10 litres of ice).

The journey commenced. The weather was cold. The man walked on and on with an air of contentment and joy that emerged from his choice; the 10 litres of ice that he had chosen.

Soon he grew thirsty. He looked at the ice block. It was rock solid.

He walked on with the conviction that the weather would soon them warmer and the ice block would start melting and he would be able to quench this thirst.

But the weather wouldn’t relent and the ice wouldn’t melt.

His thirst by now grew by gigantic proportions and he felt miserable and grew desperate.

His 10 litres of ice which had once made him feel comfortable was now seeming like a hard rock of solid weight ; a white elephant which instead of providing comfort was causing him severe stress.

How now wished he had chosen the 5 litres of water instead.

Realisation soon dawned upon him that although ice and water both had the same chemical formula they were not same.

What mattered most was the state of their matter ( liquid vs solid)

This story is the story of scores of people who have amassed huge amount of real estate and who believe they are wealthy.

But the fact is quite the contrary. Their wealth is just a mirage ; a state of mind and a false belief. Their wealth is like the ice that wouldn’t melt.

Unless and until you can liquidate the asset by converting its form into liquid cash what our the purpose of that wealth which you believe belongs to you?

If your asset cannot meet your immediate need of security, education, health, holiday, etc etc then what is its purpose?

Real estate is largely like this. It is illiquid.

Try selling your house in an emergency and you will realise how difficult it is to find a willing buyer.

By the time you can sell your house more often than not it is a little too late and your need would by then have transformed into a lost opportunity.

Use the Magic word & be Rich

Today, every single product is positioned as need based solution. Can you deny the need to save for child’s education, self retirement, safeguard family’s health & build wealth in long term? It is difficult to see the advantages of any investment when approached by a good salesman.

The world has evolved to a global state & so do any company or salesman. I would rather term them all as HAWKERS. They position the product so well that customers fall for sales pitch & buy it.

Game plan of HAWKERS: IF you have child, you require Child Plan. If you have family, you must have medical insurance. You also need Retirement Plan.

Result: You buy costly child Ulips & guaranteed plans, complex medical policies, inflexible pension plans. They push you to diversify across Stocks, gold, property, bonds, bank FD, PPF & other complex options. If you can’t afford a new home, bigger car, or foreign holiday, they will get you to leverage on future income.

You take a home loan, a car loan, a personal loan & you also collect few credit cards in bargain. This is sure shot recipe for financial worries. Use the magic word to safeguard your finances against such perils, make you rich & protect you from friends offering free advice, wealth managers, money quacks, banks, insurance companies, bank relationship managers, insurance agents who are trying to sell you something or other.

Magic word: No, Nahi, Nako, Na, Venda, Nahim, Illa, Illai.

NO’ is a very powerful word. Use it ruthlessly. Say ‘NO’ to the relative who wants to sell you an endowment insurance policy. Turn down bank executive who is pushing a pension plan. Refuse the offer of free add-on card from Credit Card Company. Don’t agree to buy child plan that costs a bomb.

Action Plan: Keep your financial life as simple as possible.

  • One term insurance plan to cover your life risk.
  • SIP’s in 4-5 well chosen diversified equity funds & debt.
  • A simple no frills medical insurance for your family.

Kaustubh Deole

Learn before it’s Late

When we see something unfamiliar we tend to stay away from it.

There was a time when computers were unfamiliar.

There was a time when One Day cricket was unfamiliar, later T-20 cricket was unfamiliar and Pro-Kabaddi was unfamiliar.

That which was unfamiliar, today has become mainstream.

The person who would have chosen to stay away from the unfamiliar, would have become extinct.

Likewise, for many people today mutual funds, SIP, Equity are all unfamiar whereas FD, Gold and real estate are all familiar.

So these people tend to gravitate towards the familiar and keep at bay the unfamiliar.

Can you even imagine how one would survive in today’s world without basic computer knowledge.

This will be the case with those who stay away from equity investing.

The only difference being, one can learn computers at any age but in Investing, if time passes by so does the opportunity.

If one does not understand this unfamiliar asset class, then talk to a Financial Advisor to get yourself educated.

Kaustubh Deole

Home Buyers, Beware of Festive Offers

A company manufacturing dog food was having a brainstorming session with the entire team of Management, CEO, Sales Director, Marketing Director, Advertising Head on how to revive the falling sales of their product.

The usual blame game started with the Sales pointing finger at Marketing, and Marketing doing the same at Sales. Both together blaming the Advertising and vice-versa.

Suddenly the Assistant of the MD, got up, called a dog, placed the food at the dog. The dog sniffed at the food, and walked away without even touching it.

Well the reality was the end consumer was not willing to bite and there in lied the problem.

Similarly for the Developers and the Real Estate Sector, you can have tremendous debates, blame demonetisation or interest rates, RBI for poor sales of their home units.

The fact is the prices of the houses are beyond the reach of the end users and the end users are not willing to bite.

Time to get the message straight.

You can fool some people all the times, all people some times,

But you Cannot Fool All the people, All the time.

Happy Gudi Padva to All & Happy New Year