Cover Story

10 financial mistakes
Times of uncertainty are full of challenges; it gets tough to predict trends and a small mistake can turn deadly. We bring the 10 most likely financial mistakes you could make, and how to grapple with them.What’s your financial quotient? How the experts got it wrong

On shaky ground: Buying property blindly
Rakesh Mishra booked five flats in a single project near Delhi and planned to sell four. But for more than a year, there was no appreciation in prices and he couldn’t find any buyers.
Wanting too much too fast: Not comprehending risk
Gopal Krishna Murthy realised the downside of F&O when he lost Rs 18,000 on a margin call. “I was carried away by the possibility of making big gains on a small investment,” he says.
Returns cut by taxes: Not aligning with tax changes
A believer in frequent portfolio-churning and even quicker profit-booking, Rakesh Goyal has realised that his strategy isn’t working as well due to the higher tax on capital gains.
First buyer disadvantage: Rushing to make a purchase
Rajshekhar spent Rs 11,400 on an iPod Nano in February. “Had I waited a few more months, I could have bought a new mobile phone along with the iPod,” he says.
Problem of plenty: Multiple cards, multiple credit
Shash had 12 credit cards, on which he had revolved about Rs 1.5 lakh. When he realised his finances could not cover even one card, he cut down to six cards.
The real expenses: Neglecting running costs
Which bulb do you use at home? A lot of us still use bulbs, because at about Rs 25, they are cheaper than a CFL, which costs Rs 125, and a 2-Watt LED, which costs Rs 450-700. Never mind that the CFL lasts around four times longer, and an LED at least twice as much.
Old job, new skills: Not upgrading work profile
Ashwini Dhingra was a production engineer, then got a management degree and specialised in marketing in an IT firm. Unhappy, he learnt new skills and joined advertising.
Performance linked problem: Underestimating variable pay
Although 15% of Reetesh's annual package is variable, he takes the amount as a given and uses it for investments, while the fixed pay is used to meet regular expenses.
It's politics, stupid: Ignoring political trends
General elections in India have had an immediate impact on economic growth. You should be aware of such implications since elections are around the corner.
How the experts got it wrong
Forecasting is a science. But in uncertain times, it becomes an art. Unprecedented turn of events in the past 12 months has made experts look like tyros.

2008-10-02

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