A thread in Quora asked for a list of worst financial mistakes that a person in 20’s can make. The brief answer lists 4 such mistakes. The source of the list is the classic article in ValueResearch Online.
- Buying products only for “saving tax”
- Waiting for the “right time” to invest
- Getting high on debt, early in life
- Over relying on relatives, friends and parents for your financial decisions
In this short article we would look at how these mistakes get made and possible ways to avoid them.
|Errors||Why they happen||How to avoid|
|Tax Saving Bias||Focus on tax-savings without a proper plan||Choose investments aligned to your plan
From that, choose tax-saving options
|Market Timing||Focusing on short term volatility
|Develop a long horizon for investments
Ignore short term volatility and build discipline in investing
|Excessive Debt||Desire for immediate gratification
Aggressive selling of loan products
|Avoid loans for depreciating assets
Build up savings to purchase gadgets, take trips, etc
|Biased/Incorrect advice||Relying on ‘free’ advice
Inability to detect bias in advice
|Don’t take advice from sellers/agents
Invest in professional advice
- Why does one need a Financial Plan
- How does a financial advisor help you succeed?
- Saving Tax – What Not To Do