Posted tagged ‘financial adviser’

How much money do you need to retire?

July 2, 2008

Financial planners, mutual fund sellers, bank RMs, all of them have a knack of racking up a large number when it comes to your retirement corpus! Normally they do this so that they can galvanize the client to act. However, from what I have seen it normally has a negative effect!

When people look at a huge number – say Rs. 5 crores – the immediate thought is “Oh, my God!” I cannot do anything about this! However this is not true, nor desirable.

You as a customer (client) should understand that this is a nice round figure, but if you do reach Rs. 4 crores, it is not the end of the world. Also you need to understand that if you start to save, say 30 years in advance, you may need to invest only Rs. 80 a day to reach there. However if you start 5 years before retirement, you may need much, much, much more – say Rs. 6 Lakhs a month (or Rs. 20,000 a day!!).

So instead of killing your adviser, start, albeit with a small amount. Starting is more important than the amount with which you start. It is like getting a root canal treatment done – do not try doing 12 teeth at a time!

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Financial advisor or product salesman?

June 23, 2008

One newspaper in Mumbai has this headlined in one of their news items. It is an article on page 3 of the paper – telling people not to self medicate. It warns people of malaria, gastro, and generally saying if you have fever please go to a doctor.

However, a few pages later there is a chemist who runs a column on whether you should buy life insurance or no! Sorry I have no clue about the author. However, in India there is no clear line between a “financial planner”, “financial adviser” a “certified financial consultant” or a financial product salesman or what have you!

So you do not know whether you are dealing with a chemist or a doctor. At least medically speaking I know I am running the risk of going to a chemist (not recommended) instead of going to a doctor (recommended)! In case of a medical emergency at least my body will throw up some symptoms which will make me revisit my decision of going to a chemist.

In case of a financial decision my choice of going to a chemist maybe a bad decision, but I may not get the signals that it is a bad decision for a long time.

Say I find out that my decision to put money in a medical insurance or a pension plan was WRONG at the age of 55 years, maybe I cannot do anything about it. That would be a tragedy.