Everyone is taught about earning money — the whole construct of education is geared towards working to ‘earn’. In a few cases, inputs about being an ‘entrepreneur’ are given and a few explore the avenues of entrepreneurship. However, even entrepreneurs focus more on earning, than managing the money they earn.
It is definitely required that everyone should focus on earning, considering it is the main source of financial inflow. But what happens after the money comes in? Who manages that? Who ensures that these funds are not only used productively but also efficiently?
Personal wealth managers
The common response to the above questions from various people has been interesting and quite a revelation, as to the approach they have towards finances and wealth creation.
The majority expects someone else to help them manage their money, or they outsource the whole activity to someone else. Terms like ‘personal wealth managers’ and ‘wealth management services’ help create this expectation, which is totally incorrect.
The fundamental reality that everyone must internalise at the earliest, is that the money is theirs and therefore, the responsibility towards managing the same is also their own. Expecting someone else to do it is not only foolish but also risky.
Horror story
Let me share an example to explain the point. A young business management graduate got placed in a good career option, which offered a substantial salary and a very generous incentive plan. Suddenly, he realised that his account held a few lakhs. The idea of investing the same took root in his mind. A few of his batch mates had joined a financial organisation and he reached out to them for advice.
His batch-mates responded to his call positively and laid out several options, such as investments in stocks, mutual funds and so on. Since this became a topic of conversation with his friends and close relatives, he started getting advice and suggestions from several of them, which included purchasing real estate, opening a fixed deposit account and so on.
Because of work pressures, this young executive did not have enough time to do his own research and decided to follow the suggestion of a batch mate, who was working in a leading financial organisation. He went ahead with the investment suggestions and felt happy that his money will start multiplying, as per the various marketing brochures he had been given.
Imagine his shock when the value of his investment actually went down and he lost the money! When he angrily confronted his friend about this, the investment adviser pointed out the term “Past performance is not a guarantee for future results” in the terms and conditions column, which had been signed as part of the investment application.
Not one off
This situation is not limited to someone who has started their career. I have heard horror stories of even senior professionals losing money in investments. When they subsequently put in some effort to find out more about such investments, the fact emerges that such options are aggressively sold because of the commission paid to the person selling such investments.
The common theme of such instances is the reality that people expect someone else to take care of their money. This is practically impossible. If you cannot expend effort to safeguard and properly invest your money, why should someone else do it for you?
But does this mean that one should not trust financial advisers? No, that is not true. Financial advisers play an important role — they are advisers and one should never forget that. Take their advice, but do enough research before investing. After all, it is your money.
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