Money: A Blessing or Curse?

Who is happier, someone with abundant wealth or someone with scarce?

Person with less or no wealth will opine that the wealthy are happier, and the wealthy will opine that people with less or no wealth are happier. In this case who is right?

To answer this lets understand the reasons behind such opinions. People with less or no wealth have lots of unaccomplished and unachievable goals and desires. They are worried because they do not have enough money. They may not have sufficient liquidity and contingency fund in case of medical or other emergencies. Due to job insecurity, in-case they lose their source of income, the family’s monthly survival could be at risk. They might not have a shelter of their own and need to depend on rented apartments. People with low income have many more such issues. Hence, they believe the wealthy are happier as they have abundance of wealth for survival as well as to enjoy life.

The less wealthy think that money solves all problems, whereas the wealthy believe that more wealth brings more problems along. It is true to an extent that if you have something valuable then its security is a major concern. Having wealth today doesn’t guarantee equal or more wealth in the future. The wealthy have concerns like; what will happen if my house or shop is looted or damaged due to a major fire; how do I save on taxes as a considerable part of the income goes towards tax; how can I grow my wealth to beat inflation, or at least maintain its value post inflation; will I be able to maintain the same standard of living in the future? They may have sleepless nights due to the worries and they believe that the poor get sound sleep. The poor, of course, have worries of their own. Both are correct in their own place.

No one in the world is worry-free, particularly financially. Let’s take the example of physical health where you may not see any one who is worry-free. The fittest is worried about how to stay fit, and someone unwell is worried about how to improve his/her health. A fit person tries to remain fit by maintaining good habits such as a healthy diet, regular exercise etc. On the other hand someone who is unwell may try to recover using medication and other treatment.

Whether one needs to stay fit or needs to get some treatment, it is always a good idea to approach a Professional. To maintain fitness one might consult a professional like a Dietician or a sports coach or a yoga instructor. If someone is unwell they would want to consult a Doctor. If someone has fever, for instance, what are his options? First option is to do nothing, second is to take a Paracetamol, third is to ask the chemist who has little knowledge of diagnosis but may advise you, and the forth option is to consult a Doctor. Which option would you like to choose? If you are prudent enough I am sure you would prefer consulting a Doctor rather than self medication or experimentation. Diagnosing the problem is very important before prescribing any treatment. And that can only be done by a professional who is certified, namely a Doctor. The other three options may prove to be rather disastrous.

Just like physical health should you take a chance with your financial health? You may be facing various challenges with your finance. Every problem has a solution. One has to devise a unique solution as every problem is unique. There are a lot of questions people have related to finance, which can be answered by a Professional Financial Planner.

Questions like-

·         I have money but I don’t know how and where to invest it.

·         How much balance I should maintain between risk and return?

·         What should be my right asset allocation?

·         How do I save on taxes to the maximum possible limit?

·         I have life insurance cover for myself, but is it sufficient?

·         What will happen to my family if I happen to become disabled?

·         Will I be able to accumulate sufficient funds for my children’s future?

·         Will I have a comfortable retirement life?

·         Can I buy a house for myself now or later?

·         Should I go for loans & liabilities?

·         How is my current financial health? & many more

There is no problem without a solution. All the above queries have a solution. The question is, are people consulting a professional or doing it themselves. Most people manage their finances on their own, or with tips from friends and family. Some may even take advice from product sellers like investment brokers, stockbrokers or banks. This is just like taking advice from a chemist for a fever. So, who do you turn to for advice? There is a general lack of awareness about who this Financial Doctor is.

CFP^CM (Certified Financial Planner^CM) is the professional who is certified to advise individuals on their personal finance. In other words you can say CFP’s are Financial Doctors. These professionals will guide you throughout your life and answer all your questions about finance. It is the most reputed designation across the world as 24 countries recognize CFP^CM giving it global recognition. It is one of the most respectable professions in the western world. People in the West have understood the value of a Financial Planner for their financial wellbeing. Unfortunately, India has only 1800+ CFP^CM whereas we need more than 50000 CFP^CM as per market analysis. Due to the less numbers and ever increasing demand, CFP’s are gaining utmost importance.

It is important and very interesting to note that a CFP works for the client and not for any company to sell any product. Since they do not earn any commission, their advice is completely genuine and unbiased. CFPs generally charge fees for their services. A few things which distinguish a CFP from other so-called advisors in the industry are, firstly they are well qualified and oriented in Financial Planning, passed a very competitive exam conducted at NSE centres across India through FPSB India (Financial Planning Standards India) affiliated to (FPSB USA). A CFP has to undergo intensive training, needs to acquire required experience and abide by Code of Ethics and Professional Conduct. This ensures continuous professional development and the highest quality.

I would recommend and encourage you to be prudent and make your hard-earned money work and secure your future. A professional financial planner can help you achieve your goals. Lastly, if you feel you have the acumen and aptitude for finance, consider a rewarding career as a CFP.   

               

By Karim Lakhani - CFP CM Chief Financial Planner & Managing Partner 3rd EYE Financial Planners LLP