Top 5 traditional money myths busted! How they stop you from becoming rich
If you have accepted this belief and are not making efforts to grow your money, take this as a wake-up call. You can create right growth opportunities for your money by identifying the right investment options based on your goals. Chalk down your goals and consult a financial planner to ensure that your savings are channelised in growth options.
Based on the experience of our elders, we blindly adhere to certain beliefs, even if they are not ideal for us. Let us see how few traditional money myths are actually detrimental to your financial well-being.
1. Your will only get what is in your fate
If you have accepted this belief and are not making efforts to grow your money, take this as a wake-up call. You can create right growth opportunities for your money by identifying the right investment options based on your goals. Chalk down your goals and consult a financial planner to ensure that your savings are channelised in growth options. Smart financial planning will bust this widely held myth by empowering you to write your own financial fate now, rather than waiting for it to unfold in future.
2. Money is the root cause of all evil
This thought process, which has been ingrained in our psyche, almost makes us apologetic about making money. We are taught to be satisfied with the money that we have, as chasing more may adversely affect our life and our relationship with our loved ones. Hence, people seldom discuss their finances with others and avoid talking openly about the desire to earn more money. Understand that you cannot truly discharge your responsibility towards your family and loved ones unless you earn enough money. Since we earn a limited sum of money, it is only through smart financial planning that we can accumulate enough resources to take care of all our financial needs. Seek advice from experts to find effective ways of making your money grow and never be apologetic about harbouring the desire to make more money.
3. Gold coins bring good luck
It is a commonly held belief that gold attracts divine blessings, ushering prosperity in the home. Gold offers no income, other than value appreciation. This value appreciation, in itself, is uncertain as the local gold price is determined cumulatively by global gold prices and currency movement. The global price of gold is based on inflation trends in developed economies and geopolitical risks, while the currency exchange rate is a factor of local political, economic and financial stability of the concerned economy. Gold is regarded as a security in case of emergencies, but with so many unpredictable components, it is difficult to ascertain appreciation in the value of gold. If you are still keen on buying gold, a smart alternative would be gold Exchange Traded Funds. They offer returns as per the price of physical gold and also save the cost incurred to keep gold jewellery in safe custody.
4. Real estate is the best investment option
After gold, real estate is regarded as the best option for investment, the logic being its value never goes down. Real estate is an income generating asset, but the yield differs from location to location. The appreciation and rentals vary in different cities and different parts of the same city. It requires periodical maintenance and entails huge upfront investment. Exorbitant EMIs in many cases make a rented house look a more attractive option. With better investment options available to earn higher returns, affinity to physical assets like property may make financial prosperity a distant dream.
5. Stock market is for gamblers
This belief is strongly perpetuated because many investors have burnt their fingers in the stock market. Equities are crucial to an investment portfolio for generating inflation beating results. You can generate long-term wealth by identifying the right equity investment options. To make sound equity investments conduct a thorough research of the sector, management quality, growth opportunities and longevity of the business.
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Equities have historically offered long-term returns of 15-16% CAGR over 15-20 years, which is far higher than the average inflation of 5%. People lose money in the stock market when they invest indiscriminately without researching the stocks under consideration.
By: Arun Thukral
(The writer is MD & CEO, Axis Securities)
Source: DNA Money