Most people who file tax returns with the help of CAs are clueless and don’t have a balance sheet of their assets
Madhu T TNN
Ganesh is a veteran of sorts when it comes to investing. He has been investing in stocks and mutual funds in the last seven years. However, ask him how his portfolio is faring and you would get a blank stare in return. Actually, he is not being rude; in fact, he would confess later, has been making a mental note to make neat file of all his investments in the next few days. “Stocks, I have some vague ideas, but when it comes to mutual fund schemes I am really clueless. I must have invested in more than 20 mutual fund schemes, including tax-saving schemes, the other equity schemes and debt schemes, in the last six or seven years. It is very difficult to remember all of them,’’ he says. But then how does he track the performance of these schemes? In other words, has he ever sold any of those schemes based on their performance? “That is the trouble. I have been thinking about getting my papers in order ever since the market has started going through a rough patch recently. Otherwise, almost every scheme was performing well in the past few years,’’ he says. Well, good luck. Financial advisors say Ganesh has a large company of people out there. “It is a common thing among a majority of them. When they come for a financial plan, we normally give them forms to fill, which would require them to fill up their investments, insurance, and so on,’’ says Mukesh Dedhia, director, Ghalla & Bhansali, an investment advisory firm. “Some people fare okay when it comes to investment, but most people go completely wrong on insurance. When you ask them how much cover they have, they would reply that they have five or six policies or that they pay a premium of Rs 50,000. They have absolutely no clue about the cover,’’ he adds. Another financial advisor who doesn’t want to be identified adds that the lack of details as one of the reasons why many clients fail to show up again with the filled up form. “They think it is embarrassing. So, they decide to give up their attempt to get financial plan drawn and go their own way. My only advice to such people would be don’t make that mistake again, just go back with whatever you have. Let us just start the process,’’ she says. Are you wondering why are we making such a big fuss about some forgetful people and their lack of filing papers? Well, there are many reasons. One, losing track of your investment is as good as not having any investment. Two, you may be actually losing money in some of your investments, but have no clue about that. “I have come across people earning around Rs 5 lakh per annum, but have a portfolio of a few crores they didn’t have any clue about,’’ says Dedhia. He says only if they knew it, they could have used the portfolio to generate additional income or restructure in a way that would suit their future financial goals. But why do people fail to keep a record of their investment. Dedhia blames it on the lack of financial education in the country. “From the level of 3,000 in 2003, the sensex has climbed to 21,000. But how many people made money from it? Mostly it was the FIIs which made money from it,’’ he says. The way out of the mess? Well, just like you go for a health check up once or twice a year, do a financial health check-up as well. “Most people who file tax returns with the help of chartered accountants also don’t have a balance sheet of their finances. So, the first thing for them to do is to draw up a balance sheet of their financial assets and liabilities,’’ says Dedhia. Don’t let the phrase balance sheet scare you. It is just a simple process of listing all your financial assets on the one side of the paper and liabilities on the other. Once you finish the process, you have all your investments (they will be on the asset aside) for your ready reference. You would also come to know about your liabilities like housing loans or personal loans. Financial planners claim that once their clients get to know about their investments and liabilities and begin to understand the process financial planning, they really get involved in the process. “Just get the ball rolling. Everything will happen after that,’’ says Dedhia. “I have clients who started enjoying finances, more that they have even enrolled themselves for the certified financial planners programme,’’ he claims.
Madhu T TNN
Ganesh is a veteran of sorts when it comes to investing. He has been investing in stocks and mutual funds in the last seven years. However, ask him how his portfolio is faring and you would get a blank stare in return. Actually, he is not being rude; in fact, he would confess later, has been making a mental note to make neat file of all his investments in the next few days. “Stocks, I have some vague ideas, but when it comes to mutual fund schemes I am really clueless. I must have invested in more than 20 mutual fund schemes, including tax-saving schemes, the other equity schemes and debt schemes, in the last six or seven years. It is very difficult to remember all of them,’’ he says. But then how does he track the performance of these schemes? In other words, has he ever sold any of those schemes based on their performance? “That is the trouble. I have been thinking about getting my papers in order ever since the market has started going through a rough patch recently. Otherwise, almost every scheme was performing well in the past few years,’’ he says. Well, good luck. Financial advisors say Ganesh has a large company of people out there. “It is a common thing among a majority of them. When they come for a financial plan, we normally give them forms to fill, which would require them to fill up their investments, insurance, and so on,’’ says Mukesh Dedhia, director, Ghalla & Bhansali, an investment advisory firm. “Some people fare okay when it comes to investment, but most people go completely wrong on insurance. When you ask them how much cover they have, they would reply that they have five or six policies or that they pay a premium of Rs 50,000. They have absolutely no clue about the cover,’’ he adds. Another financial advisor who doesn’t want to be identified adds that the lack of details as one of the reasons why many clients fail to show up again with the filled up form. “They think it is embarrassing. So, they decide to give up their attempt to get financial plan drawn and go their own way. My only advice to such people would be don’t make that mistake again, just go back with whatever you have. Let us just start the process,’’ she says. Are you wondering why are we making such a big fuss about some forgetful people and their lack of filing papers? Well, there are many reasons. One, losing track of your investment is as good as not having any investment. Two, you may be actually losing money in some of your investments, but have no clue about that. “I have come across people earning around Rs 5 lakh per annum, but have a portfolio of a few crores they didn’t have any clue about,’’ says Dedhia. He says only if they knew it, they could have used the portfolio to generate additional income or restructure in a way that would suit their future financial goals. But why do people fail to keep a record of their investment. Dedhia blames it on the lack of financial education in the country. “From the level of 3,000 in 2003, the sensex has climbed to 21,000. But how many people made money from it? Mostly it was the FIIs which made money from it,’’ he says. The way out of the mess? Well, just like you go for a health check up once or twice a year, do a financial health check-up as well. “Most people who file tax returns with the help of chartered accountants also don’t have a balance sheet of their finances. So, the first thing for them to do is to draw up a balance sheet of their financial assets and liabilities,’’ says Dedhia. Don’t let the phrase balance sheet scare you. It is just a simple process of listing all your financial assets on the one side of the paper and liabilities on the other. Once you finish the process, you have all your investments (they will be on the asset aside) for your ready reference. You would also come to know about your liabilities like housing loans or personal loans. Financial planners claim that once their clients get to know about their investments and liabilities and begin to understand the process financial planning, they really get involved in the process. “Just get the ball rolling. Everything will happen after that,’’ says Dedhia. “I have clients who started enjoying finances, more that they have even enrolled themselves for the certified financial planners programme,’’ he claims.
No comments:
Post a Comment