I would like to know how many of you understand and feel that we should do our financial planning now i.e. immediately from today, Please ask yourself, some of you can think, maybe it can come to mind “yeh company mujhe kya sikhaayege, poori zindagi ho gayi, yeh kaam to hum khud kar lete hain aur isme naya kya hai sab log yehi to aakar bataate hain, tv kholo yehi chalta hai, roz koi na koi agent aa kar mujhe yehi batata hai, main yeh sab sun sun kar bore ho gaya hoon, ismein kuch maza nahin hai is se zyaada to mein apne business mein kamaa loonga ya khud kar loonga”, youtube par free videos online available wha se dekh lunga/lungi.
Please ask yourself, do you feel the same?
So why this has happened and why people do not enjoy saving or investing and prepare financial plans and find it boring or feel it is least important?
Research shows that by investing themselves or those who takes decisions with the help of unprofessional mates, 95% of people earn only a 2% Compound annual growth rate (CAGR) in their active life of investing so as discussed earlier people find saving or investing worthless.
The reason for this low earned CAGR is that people who do financial planning by themselves or with the help of a person who is not professional enough to understand the dynamics of money and are not able to generate maximum value and wealth from their investments which satisfies them. Now I am going to tell you something very interesting which will help you to distinguish between people with ordinary and professional, which will be an eye-opener for you, and will change your thought process when you will read this article carefully.
Now, come to the point, when an unprofessional or ordinary person takes a decision related to investment or saving, they have certain biases in their decision about which they are not aware of themselves. To explain it easily, I am going to play certain games and exercises with you and I expect that you will participate and in turn, we again promise it is going to be one of the magical and fantastic days of your investment life.
Bat and ball puzzle (Diagnose mental accounting)
A bat and a ball costs Rs. 120
The bat costs Rs. 100 more than the ball
What is the cost of the ball?
investor’s Feature positive effects
123, 931, 308, 137, 893, 399, 432. What do these numbers have in common? Until you answer this question don’t proceed further.
Now look at another series. 129, 584, 266, 936, 845, 329, 168, 689. What is common to these numbers.
Anchoring Bias
1 x 2 x 3 x 4 x 5 x 6 x 7 x 8
Please answer without calculator
8 x 7 x 6 x 5 x 4 x 3 x 2 x 1
Answering an easier question
29 x 83 = ?
Cause and Chance
T T T H H H
H H H H H H
T H T T H T
Good looking people Bias
Primacy Effect and Recency Effect
Please choose between two persons
Ram is hard-working, intelligent, critical, obstinate, and envious.
Shyam is envious, obstinate, critical, intelligent, and hard-working.
If you have understood above exercises and knows the answer, then you can do at your own else you require advisor.
(For getting right answer, you should confirm with us)
Overconfidence
How many of you think that you know each and everything about finance, if the answer is NO then why do you do it yourself why don’t you hire professionals? People tend to believe that the more information they have, the more knowledgeable they are and the more accurate their forecasts are. But it is not true as to what is the procedure of interpreting information is, how to segregate irrelevant information, and lastly, interpreting information shouldn’t be used to confirm prior beliefs.
Even in our ancient times, wise people keep advisors with themselves, For example:- In Mahabharta, Pandav chose Shri Krishna to be their advisor and chariot for Arjun instead of Lord Krishna’s army.
So In nutshell Advisor zaroori hai.