TRPs of a TV serial of the same name indicate that it has captured the imagination of TV viewers. As all my friends in the TV industry would vouch, they would give a limb in exchange for having the credits to a program which can boast of such high ratings. What else to expect in an age of fickle loyalties!
Reality TV is the new thing on TV these days and not only in India. Globally audiences are hooked onto watching their favorite TV stars facing up to some challenge or the other, but, set to a scene devoid of any script…completely unrehearsed, unedited, WYSIWYG – What you see is What You get!
The attachment is largely based on our obsession with the lives of our TV stars. We try to know every detail about their lives and how they fare in the face of real life adversity & challenges. This curiosity is heightened because mostly, our awareness about our favorite stars’ lives (and of course their actual abilities) is limited to some creatively spun media bits & bytes.
What has this got to do with personal finances? Well everything! This world is also getting real!
Sweeping changes are underway in the financial regulatory environment. Mr. Swarup, chair-person of the Committee on Investor Protection and Financial Literacy, says - “CIPFL is looking at aspects of greater transparency, common disclosure norms of financial products, and attempts to bring all financial products to a level playing field. It will also regulate the advisors.” The committee is also looking at removing commissions that are embedded in financial products, where the agent gets a commission from the investment.
The upfront commission on mutual funds has been barred by SEBI w.e.f. 1st August 2009. But, the IRDA (the insurance regulator) allows commissions that are as high as 40 per cent in the first year. All these and more have been reported, discussed and pretty much highlighted by the media in a laudable effort to guide the investing public!
Having said so, let us see how you will fare under this new emerging reality. You are live on TV (or better still, stand in front of the mirror!) on the program Saach Ka Saamna – Your moment of truth! And, your questions are –
a. You choose investment & insurance products based on the latest fad (friends are buying)?
b. You buy a financial product and then forget all about it?
c. You feel asset allocation is a good theory but not for you?
d. You never review the performance of your investment portfolio and record the same every year?
e. You don’t know how much commission your agent/advisor gets for selling you any product?
f. You will not pay a transaction fee to your agent/advisor, even though mutual funds are now subject to ‘zero entry load’?
g. You have no idea of the name or the type of insurance policy that you own?
h. You last purchased a ULIP without verifying (from independent sources) the ‘expected return’, ‘promised’ by your agent?
i. You have bought 20 life insurance (endowment) policies of Rs 1 lakh each (sum assured) which will mature every year starting 25 years from now, because you were told that this is a ‘pension’ plan for your retirement?
j. You don’t like term insurance, because you do not get any money back on maturity?
k. You don’t want to buy a health cover on your own, because your company offers you a group cover?
l. Your banker is your advisor because you believe he is the best person to manage your money?
m. Your choice of agent for investments or insurance is based on his willingness to pass back (highest amount) commissions?
n. You refuse to pay a fee or offer a performance-linked-incentive to your financial advisor for his advice?
The above is a list of common mistakes made by investors who miss the big picture!
If your answer to any or all of the above questions is “Saach” - I’ll not be surprised if at the time of retirement, you feel you would have done much better in terms of your savings & investments; If, you had gone about the task in a more objective and methodical manner, based on sound principles and rationale!
We invite your feedback – constructive criticism, sharing of personal experiences, bouquets & brickbats…all of this. Without this, our efforts will be in-effective in making this platform, informative and interactive towards helping the layman achieve Financial Freedom.
Also, please take some time to cast your vote on what you think is the most important criteria for being a successful investor. Click on http://polls.linkedin.com/p/53641/jkbij
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