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
JagoInvestor
- 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
Indecisiveness |
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 |
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