InvestorQ : What are those habits that could ruin my financial life?
Archita Jajjoo made post

What are those habits that could ruin my financial life?

Answer
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sarah Leo answered.
9 months ago


Well, it is not easy to quote a list of such habits, as the financial life of a person depends upon various factors that are different for every individual. Avoiding bad financial decisions is as important as making good ones, but what influences you to make such good or bad financial decisions?

Your decisions are a reflection of your financial habits i.e. a reflection of who you are as an investor and as a person.
Here are a few habits that one should avoid to make their financial life better:

Ignore the risk in investment: As they say, more risk means more returns. So if you keep on bragging about the risk something involves, you won’t be able to see the returns it might fetch to you. You can’t always prevent bad things from happening in life. However, you can take measures to mitigate risk to your financial life. And this is where insurance comes into the picture. It is well said that great asset bubbles are made when many investors collectively ignore risk.

Not follow simple Math: There are many people out there who do not invest because they think that they do not have sufficient money to invest, ignoring the most common trait of investment which is – Compounding. People make mistakes without considering their impact. Some people take a loan at 12%, while they have a fixed deposit going on which fetch only 8%, just to save the fixed deposit. That’s not only wrong but stupid.

Think more and act less: Very common trait among investors. We often think a lot and when it comes to acting, we resist or do very little. This is because we are too comfortable doing what we do and doing extra means getting out of that comfort zone. This could make you believe that you are playing safe; however, let me break it for you that you are not playing at all if you do this. Let me quote an example, it takes many of us 5 minutes to sign up for a traditional life insurance plan but we want to do unlimited research when we want to invest in equity MFs. Which is the best mutual fund will probably be one of the most popular financial queries on Google in India. Well, if we are so skeptical of mutual funds, why can’t we apply the same rules to other financial products too? Or this research is only meant for mutual funds?

So these are not just poor financial habits that affect your financial life, these habits can also affect your personal life. If the right decisions are not taken at the right time, the impact would be long-lasting.