People often asked me questions like, “I have Rs10,000 to invest. What do you recommend I invest in?” And my standard reply is, “Do you have a plan?” Last week, I encountered with a decent man who wanted some investment advice.

He described himself as:

“I am 40 years old. I have a good job, but I have no money. My father has a house with a lot of fixed deposits in it. His home is worth about Rs80 lakh and he owes only Rs10 lakh on it. He said he would let me borrow some of the fixed deposits so I could begin investing. What do you think I should invest in? Should it be stocks or real estate?”

Again my reply was, “Do you have a plan?”

“I don’t need a plan,” was the reply. “I just want you to tell me what to invest in. I want to know if you think the real estate market is better or the stock market.”

“I again asked as politely as possible. “I know that is what you want to know, but do you have a plan?”

“I told you I don’t need a plan,” said the man. “I told you my father will give me the money. So I have money. That’s why I don’t need a plan. I’m ready to invest. I just want to know which market you think is better, the stock market or the real estate market. I also want to know how much of my dad’s money I should spend on my own home. Prices are going up so fast here in the Bay Area that I don’t want to wait any longer.”

Deciding to use another approach, I asked, “If you’re 40 years old and having a good job, why is that you have had no money? And if you lose your father’s fixed deposits money from his home, can he continue to afford the home with the added debt? And if you lose your job or the market crashes, can you continue to afford a new house if you can’t sell it for what you paid for it?”

Then, he arrogantly replied, “That is none of your business. I thought you were an investor. You don’t need to dig into my private life to give me tips on investing. And leave my father out of this. All I want is investment advice, not personal advice.”

Hence, one of the most important lessons I learned from this man was this:

Indeed Yes, “Investing is a very much personal plan than Investment Plan.”

FinPlanImage Courtesy: FreeDigitalPhotos.net

Planning to be poor or Rich?

After this lesson learned with this man, I have observed that why most people are unconsciously planning to be poor. I often say to people, “Be sure you have a plan. First, ask yourself if you are planning to be rich or if you are planning to be poor. If you are planning to be poor, the older you get, the more difficult you will find the financial world.” The problem with being young is that you don’t know what it feels like to be old. If you knew what being old felt like, you would plan your financial life differently.

Today, I often hear people say, “When I retire, my income will go down.” And it does. They also often say, “My needs will go down after I retire, so that is why I will need less income.” But what they often fail to realize is that while some expenses do go down, other expenses go up. And often these expenses such as full-time health care when they are getting very old, if they are fortunate enough to become very old. An average health care for the elderly can cost more than many people’s monthly incomes today.

Other people say, “I don’t need to plan. I have a retirement and medical plan from my job.” The problem with such thinking is that there is more to an investment plan than simply investments and money. A financial plan is important before someone begins to invest because it needs to take into consideration many different financial needs. These needs include college education, retirement, medical costs, and long-term health care. Many of these often large and pressing needs can be provided for by investing in products other than stocks and bonds or real estate such as insurance products and different investment vehicles.

Investment Products are just Vehicles

There are so many different types of vehicles such as cars, buses and trucks, and why they are so called as ‘vehicles?” All vehicles are used, because to get you from point A to point B safely and within a desired time frame. Likewise an investment simply takes you from where you are financially to where you want to be sometime in the future, financially. Having different types of people and have different needs. So, a single person may not need a large nine-passenger station wagon, but a family with five kids would need one. And a farmer would rather have a pickup truck than a two-seater sports car. And that is why investment products are often called ‘investment vehicles’.

Conclusion

Many people focus on a product such as stocks, mutual funds, gold, real estate and then a procedure such as trading, but they don’t really have a plan. When people are not clear on their own personal financial plans, all these different products and procedures become overwhelming, confusing and get attached to the investment vehicle. They think they have to like stocks or like real estate to use them as investment vehicles. So they look for investments they like and fail to put together a plan. These are the investors who wind up traveling in circles, never getting from financial point A to financial point B. Hence, they do fall in love with your stocks, bonds, or commercial buildings. It’s just that they often focus on the vehicle rather than their plan. So even though they may make a lot of money buying, holding, and selling investment products, that money may not take them to where they want to go.

Before a person builds a house, he or she usually calls in an architect to draw up the maps. Could you imagine what could happen if someone just called in some people and began to build a house without a map? Well, that is what happens to many people’s financial houses. A true and savvy investor should not be attached to the vehicles or the procedures. He should have plan and has multiple options for different investment vehicles and procedures.

The article is complied from one of the best-selling books of ‘Rich Dad and Poor Dad community’  run by Robert Kiyosaki.

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Suresh Kumar Narula

SEBI Investment Advisor, Founder & Principal Financial Planner at Prudent Financial Planners
Suresh K Narula is founder and Principal Financial Planner at Prudent Financial Planners. He has earned the professional CERITIFIED FINANCIAL PLANNER and got registered with SEBI as Investment Advisor. He writes on personal and financial planning articles and got published in Dainik Bhaskar, Business Bhaskar and The Financial Planner's Guild, India. He is also a member of Financial Planner's Guild India ( An association of practicing SEBI registered Investment advisers) to create awareness about Financial Planning in general public, promote professional excellence and ensure high quality practice standards. Suresh received his an M.com from Himachal Pardesh University and an MFC from Punjab University, Chandigarh. He can be reached at info@prudentfp.in
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