Yes this post is inspired by Shah Rukh Khan’s movie “Dear Zindagi”. For those of you who have not seen the movie, Shah Rukh Khan plays a the role of a life coach (“Jug”) who just listens to people and gives them simple advise on how to go about living life. When I saw the movie, I found some of his key dialogues to be very interesting and immensely applicable in the Financial Planning and Execution journey for all of us. In this post, I will sharing some of such dialogues with my take on them. But before I do that wish all the readers the very best for the coming year.
“Hum kitni kursiyan dekhte hai koi ek lene se pehle…” – There’s nothing bad in comparing, evaluating and making a decision.
We evaluate a lots of options before buying anything so why is there a hurry to make decisions about your financial investments. It makes sense to evaluate different products, validate which are applicable in your particular situation and then make a decision. It is a good practice if this decision-making process can be documented so that when you review the performance of the product you can validate the factors & assumptions based on which you had made a certain investment. Of course if you are not able to make such a comparison you should use the help of professionals who can help you make such an informed decision.
“Hum hamesha mushkil raasta hi kyun chunte hain zaroori kaam ke liye? Kya pata, aasan raaste se bhi kaam ho jaaye!” – Why choose difficult options, maybe the simpler option is good enough for reaching the goal.
While evaluating financial products there is no need to look for exotic products that you do not understand. We all see a lot of investments being made without understanding their risk profile, fee charged etc. For example ULIP as a product was not understood well and even till today people struggle to understand how basic mutual funds work. If you have a financial goal a few months or a year away maybe the best bet is the just park the funds in a Bank FD. There is no need of trying to invest in an instrument which can marginally increase the returns at the cost of loosing liquidity or increasing risk. Remember, the goal of investment is not to maximize the returns but to have the funds available at the right time for your financial goal.
“Genius wo nahi hota jiske paas sab sawaal ke jawaab hon. Genius wo hota hai jiske pass jawaab tak pahunchne ka patience ho…” – Geniuses have patience to get to the answer
Once you have made an informed decision after comparing products you need to give it time to perform. Have patience. Do not check its performance on a daily basis. And even while reviewing the performance of the products review your notes (refer the point 1 above) to check why you made a certain decision and for what duration. Have the assumptions changed significantly that require you to re-look at the decision. If not, be patient and let the product do its job.
“Paagal woh hota hai jo roz roz same kaam karta hai, magar chahta hai ke nateeja alag ho” – the definition of insanity is doing something over and over again and expecting a different result.
We all make mistakes; however the key is to learn from them. If you have burnt your hands in real estate or hot stock tips hoping for huge returns it is better to learn from the experience and not repeat the same mistakes. The results will not be very different if you do the same mistakes again.
None of these are complicated strategies to follow – just simple rules that will come up in different forms whenever there is a blog about Personal Financial Planning.
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Hope all you have a wonderful 2017.