Top 10 Biggest / Worst Personal Finance / Money Mistakes Young People Make in India
Investment product depends on the time frame and the financial target.
5. Investing in Debt Investments heavily:
Mistake-4
Most of the young generation investing in Gold, Insurance policies, Bank FDs or Postal insurance products. All these are safest products, no doubt in that. However, these products will not yield inflation-beat returns also not that much tax efficient investment products. Finally, you will end up insufficient returns for your targets.
How to handle this mistake? You need to invest in Stock market directly or indirectly. If you have sufficient knowledge on stocks or if you have any financial adviser, you can directly invest into good stocks for long term. Otherwise, you can go for Mutual funds and invest through SIP approach for a long period. This will surely returns Inflation-beat returns in a tax efficient manner.
6. Maintaining many Credit cards and Over spending:
Mistake-5
Now-a-days, young generation feel great to maintain more Credit cards and swipe them left-and-right. This is one of the Biggest financial mistake which leads to your financial journey in a bad condition. I know many people (especially Young software engineers) are using major portion of their earnings towards paying credit card dues and heavy interests.
How to overcome this mistake? You should keep only 1 or 2 Credit cards. Use them prudently and better pay cash payments that will reduce your unnecessary spending s.
7. Investing at Later stage:
Mistake-2
Many youngsters feel investing is a senior people’s concept and do not think about investments or savings at their early stage. Suppose a 25 year person keep investing Rs. 100 per month in a good Mutual funds, can you imagine how much he can have by his retirement age? Just
1 CRORE!!!!!! That is the power of investing at early stage. Investing at early stage will have Power of Compounding and would lead to higher returns.
8. Investments are not Diversified:
Personal+Budget-4
You should not put all your eggs in one bucket. Many people investing their entire savings into one savings products like FDs, Gold, Real estate etc. This is not at all a wise idea and will not yield good returns over a period of time. During 2007 – 2008 times, many young people invested heavily in Real estate or Stock market. Post to 2008, the real-estate boom and stock market busted, and all these people lost their entire savings.
How to overcome this? Investment Diversification is the best medicine for this. You allocate your investment amounts into different Investment products. This would not only average your losses but also maximize your returns over a long period.
9. Financial Illiterate / Not having knowledge on Taxes:
Budget2
How many of you know that Section 80C limit is increased to 1.5 lakhs? How many of you know the Section 24B (Home loan) limit increased to 2 Lakhs? I bet, only few people know these amendments in the recent Budget-2014. Saving Tax is equal to saving your money. Hence, every young person should be well aware of the current financial situation and the knowledge on the Taxes imposing on their income. Then only then can manage their taxes efficiently.
10. No revision on Financial planning:
Buying+A+Property+-+3
This is last but not least Biggest mistake by young people. Many of you are just invest into one product and will not look back about the progress of the returns from this investment product. That is not at all advisable. Every person should review their investment portfolio at least twice in a year and should do modifications accordingly. It is better to take advises from an experience financial advisers.
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