I have seen a lot of people hoarding a lot of cash in their Savings bank account. The act of hoarding such amount of cash in savings makes no sense.
And the most surprising thing is that most of these people are those who are having stable jobs and a steady source of high income.
I feel that these people lack the necessary financial know-how to make the better use of the money that they are making. So, here are few things that I want to tell those people.
You are losing the value of your money in your Savings bank account:
The amount of money you parked in your Savings bank might appear to be a huge amount to you. But that the myth that you are living with.
“Money loses it’s value due to inflation”
Inflation is the rise in prices of commodities and services that we use the money to buy for ourselves. Inflation is always on an upward movement. You can check the inflation rate in India by simply googling for it.
Just write down “what is the inflation rate in India” in the google search console and you will be provided with the most precise and relevant answer right at the top:
As you can see that the inflation rate is 4.91 at present, ask yourself the next question, “How much am I getting paid the interest on my Savings bank?”
In simple words, if you are not making a minimum of 4.91 % p.a. you are not even keeping up with the value of your money. Overtime, the huge pile of funds that appear to be BIG and GREAT will start to look like too small!
If you are making anything less than 4.91% p.a. you are already on negative by that proportion.
You are too scared to risk your hard earned money
You may have been called upon by the various kinds of investors to invest your money. Some of these may have been mutual funds, some stock market advisors or even some of them asking to put some money in some businesses.
But, you feel that it’s your hard earned money that requires you to be safe. But you unfortunately don’t realise what I told you in the first point. Even if you are not seeing the loss directly reflect in your overall bank balance, your money is losing it’s value!
You like it or dislike it, money does not follow any emotions!
You are not equipped with the knowledge and the experience to seek adventures in the capital markets
Once you have saved a fair amount of money, you need to find a financial planner who can tell you how to do fund allocation. A good financial planner tells you much more than where all to park your money. But, he can certainly help you to build a good portfolio.
So, either find a good financial advisor who can help you manage your funds better than you or else, find the knowledge and gain some wholesome experience in the capital markets.
This is quite unfortunate but true that the schools and colleges lack the financial matters or even financial literacy on their syllabus. it surprises me and pains me at the same time that the highly commercial education system of today forgets to tell us the know-how of money.
You tried to invest or explore but you met with bad experiences.
Imagine if you played cricket with a cork ball and without helmet. If you did so, you may get injured. The chances are very high. You have exposed yourself to a huge amount of risk without even knowing about it.
And that’s what exactly you need to understand with respect to your money. Learn and equip yourself with the knowledge first before you test the waters. This will help you to move with caution.
I have seen some grave days in my own journey to learn personal finance. I have made a lot of mistakes. And what I learned is that you need to learn and keep learning to grow rich and prosperous.
I remember how I lost 50k plus in a single day of trading once. I also remember and feel the pain when I see some stocks that I have bought years ago and still lying 90% below their invested value.
But at the same time, I have seen growth. I have stocks in my kitty that have grown more than 4 fold in less than 4 years. I have the mutual funds portfolio that’s steadily growing and beating the inflation comfortably.
Losing is part of the game! If you don’t learn to lose in the short term, you will lose big time in the long term game.
You don’t know yet what kind of returns you can make if you learned the various types of investments
You are still away from the data that can clearly tell you that you can make a lot of money. You are really not aware that better options than a Savings bank account exist that can bring you much more returns.
And this could be lack of time on your part. This could be due to the business that you have with your day to day struggle of life. But let me tell you that the most of the struggle that you have or I have in life is for putting the food on the table.
So, don’t you think that learning how to make more money should be part of your life too? Shouldn’t you invest some time to learn the basics of investing?
You still don’t have a guy in your peer group who is smarter than you.
What I mean to say is that your social or work circle does not have people who think otherwise. And so the world ends there for you.
You need to encounter people in your day to day life who can utter something about money and investing. May be they do but the money talks are not part of your conversations. May be money that’s too sensitive or too personal a thing to talk public about.
But, hey you are losing the game there! Not talking about money is like not knowing about puberty and youth while you pass through it. You are losing a beautiful chapter of life while you could have made it BIG. Hush-hush does not help in either cases.
You still running your life on the old school ways
The capital markets are not a thing of the past. They have started in India only a while ago in a BIG way. Mutual funds did not exist in the pre-liberalized era the way they do at present.
But you are clinging to the old school of thought being passed on to you from your parents, uncles and the oldies. It’s good to respect them but you need to understand that you need to grow your money.
In the olden days, such good investing options in an organized way did not existed. People were duped when they invested in Ponzi schemes. People either believed that they could make a lot of money by way of lotteries or they simply stayed away from buying them. There was no third option.
The economy opened up in 1992. And since then the economic scenario in the country has changed for better. You have so many companies to pick your products from. You have all the brands in India that your parents would struggle to get from “foreign“.
I often heard my classmates tell in the school, “My mamaji got it from foreign“. Now you just need to open an online shopping app and place the order for your favorite merchandise. What do you think this prosperity is the result of?
Now, it’s your turn to open up your mind and become a part of this ever growing prosperity. You can afford to lose it at your own risk.
Conclusion
So, it is not a good thing to park your excess cash and see it go down the drain without you ever realizing it.
Learn, seek and share your thoughts on money. You will grow with investing in knowledge and experience. Open up like our economy did to welcome the positive change in your personal finance balance sheet.
