eight habits

8/9/2019 Eight Habits

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BUSINESS PROBLEM FRAMINGEight habits of financially successful people e

shoul! i"bibe

GROUP # $Sec % A&

RO'I( G'OS'

SU)'*IN+ER SING'+EOGAN

ARPI( )ULS'RES'('A

PEE,US' MI((AL

RIS'I MAL'O(RA


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1/ Unless e 7no ou- cu--ent location2 e ill ne0e- un!e-stan! he-e e

a-e hea!e!

P-oble" :

!ot putting intime, effort andmone- intoresearch.

./ Unless e ha0e -un into a biginhe-itance2 the-e is a sli" chancethat e ill ea-n ou- fo-tune by beingin an i!le o- static "o!e/

1/ Riches a-e chu-ne! out by people ho put in ti"e2 effo-t an! "oney into-esea-ch/

P-oble" #

"eactingimpulsivel-

)nee9;e-7 -eactions a-e not goo! eithe- fo-ou- e"otional o- financial ell9being/ So2 be

it buying stoc7s that ha0e su!!enly shot up2-e!ee"ing "utual fun! units at the fi-st hintof a "a-7et co--ection2 o- changing ou- ;ob ;ust because e a-e offe-e! a highe- paypac7age a-e all i"pulsi0e -eactions/

P-oble

"

!ot diversif-ingtheir investments

+i0e-sification is a 7ey to a healthy po-tfoliobecause it not only helps p-otect you-assets but also ensu-es thei- g-o th/ Sinceall asset classes !o not "o0e in the sa"e!i-ection at all ti"es an! you can ne0e-p-e!ict ho a pa-ticula- asset ill pe-fo-"2!i0e-sifying "itigates the -is7 by sp-ea!ingit/

P-oble" ?

!ot avoiding baddebts

./ @hile so"e loans2 such as those fo-ho"e an! ca-2 a-e 0i-tually ine0itable2the financially p-u!ent p-efe- to be -i!of these at the ea-liest/

1/ 5E0en the so9calle! goo! loans "aybe a ba! i!ea if you can t affo-!the"/ Besi!e2 st-etching loan tenu-esis not a!0isable as it balloons theinte-est cost !espite the ta6a!0antage that so"e of the" offe-25

says ayant Pai/ 5So2 it is best top-epay at the ea-liest an! a0oi!unsecu-e! loans at all cost25 he a!!s/

P-oble" C

!ot covering risks@e "ay not be able to p-e!ict "isfo-tune2but e ha0e the -ight toolsDinsu-ance an!

contingency co-pusDin place to counte- it/


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$ Give the proper framing of such problems .

!o. P"#$%&' F" 'I!G () *IFI+ *I#!

P-oble" .

treamlining behavioralandemotionalpatterns tosecurefinancialfuture

Frame / 0 Shoul!"a7e ou- goals on

ti"e2 lea-n not to-eact i"pulsi0ely an!a0oi! to!ay spleasu-es fo- futu-egains/

Frame 1 2 Eight

habits of financiallysuccessful people"entione! in thea-ticle/

./ (he affluent an! successfulpeople ha0e a co""onth-ea! -unning th-ough thei-

financial eft= goo! fiscalhabits/

1/ If you !o nee! to inculcatethese habits2 t-y toun!e-stan! theconse3uences of you-

actions/ @e hope ti"e fliesas you t-y to i"bibe thegoo! habits2 but hol!s stillas you achie0e financialsuccess/

P-oble" 1 Postponing

importantfinancialdecisions

Frame / 2 (he cost ofp-oc-astination can!ent ou- financialfutu-e by significantly-e!ucing ou- co-pusfo- long9te-" goals/

Frame 1 2Postponingi"po-tant financial

!ecisions can

./ Fo- instance2 if you sta-tsa0ing Rs . 2 a "onthin an e3uity inst-u"ent thatg-o s at .1 pe- cent henyou a-e 1# yea-s ol!2 you ill ha0e a co-pus of Rs #/#c-o-e hen you -eti-e at < /'o e0e-2 this a"ount illbe p-une! to only Rs C./C


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ine0itably lea! tolosses an! c-ises/

la7h if you sta-t at : / If youpa-7 you- fun!s in alac7lust-e !ebt option that

g-o s at ? pe- cent2 you illba-ely "uste- Rs #> la7h/

1/ 5Sa0ing in the ta6 season isone of the o-st habits/ +onot loo7 at e0e-ything f-o"the ta6 pe-specti0e25 (his isbecause e not only suffe-losses in te-"s of theoppo-tunity cost2 but alsoen! up ith e6pensi0ein0est"ents that !o nothingto help -each ou- goals/

P-oble" 4

PlanningIncorrectl- Frame / 2 @-ite !o n

all you- goals2splitting the" intosho-t9te-" "e!iu"9te-" an! long9te-"/

Frame 1 2 8oncent-ate "o-e onsho-t te-" goals asthey pa0e a ay fo-achie0ing long te-"goals/

./ One of the c-itical steps isf-a"ing of goals/ +on t ;ustthin7 about the" ithoutspecifying the e6act ti"ef-a"e an! a"ount nee!e!to acco"plish each goal/(his is e6actly hat 4C pe-

cent of the su-0ey-espon!ents !o/

1/ @e pe-cei0e !istant an!sho-t9te-" e0ents in a!iffe-ent ay/ (he long9te-"goals a-e seen as abst-act

an! ith "o-e opti"is"than the close- ones/ So2


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you ha0e a 0ague i"age of2say2 -eti-e"ent o- chil!-en s"a--iage 1 94 yea-s f-o"

no 2 hile close- p-oble"sget "o-e attention/

P-oble" :

!ot puttingin time,effort and

mone- intoresearch.

Frame / 2 (he-e is asli" chance that e ill ea-n ou- fo-tuneby being in an i!le o-static "o!e .

Frame 1 2Spen!ti"e to un!e-stan!not ;ust the featu-esof the p-o!uct o-se-0ice2 but also itso0e-all i"pact onyou- finances/

./ Riches a-e chu-ne! out bypeople ho put in ti"e2effo-t an! "oney into-esea-ch/ (hey a-e notsatisfie! ith beingsatisfie!2 an! so they see7out the best in0estingoption2 the best ca-ee-a0enue2 the best ay toachie0e a goal/

1/ 5Since I ante! to buy ahouse2 I too7 a huge loanthat ate up nea-ly ? pe-cent of "y inco"e/ Myfinancial planning collapse!co"pletely an! I ha! to hol!up "y othe- in0est"entsbecause of it25 says 4#9yea-9ol! Piyush +i6it/

P-oble" #

"eactingimpulsivel- Frame / 2 Stic7 to

you- !ecision2 st-ictlyfollo you- bu!get2

an! !on t !ig-ess

./ >1 pe- cent of the-espon!ents clai" that ifthei- in0est"ent is not fa-ing ell2 they !on t !u"p it

out-ight2 but ait an!


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f-o" you- assetallocation/

Frame 1 0 +on t letyou- feelings !ictateyou- financial!ecisions instea! oflogic

analy e the -eason befo-eta7ing any action/

1/ ,ou ant to ta7e a 3uic7!ecision an! analysis ta7esti"e2 so you fall bac7 on thep-e0ailing e"otionD;oy2fea-2 shoc7/ Ine0itably2 youli0e to -eg-et it/

P-oble

"

!otdiversif-ingtheirinvestments

Frame / 2un"itigate!obsession of In!iansfo- -eal estate an!gol!/

./ So fa-2 these in0est"entsha0e stoo! the" in goo!stea!2 but the !e0elop"entsof the past fe yea-s ha0etu-ne! "any of these intoshibboleths/


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Frame 1 2 +i0e-sifyas it not only p-otectsou- assets but ensu-ethei- g-o th also/

1/ Since all asset classes !onot "o0e in the sa"e!i-ection at all ti"es an!

you can ne0e- p-e!ict ho apa-ticula- asset ill pe-fo-"2!i0e-sifying "itigates the-is7 by sp-ea!ing it/Besi!es2 g-o th is essentialfo- achie0ing goals an!in0esting only in fi6e!

inco"e inst-u"ents li7efi6e! !eposits o- the PPF2"ay not help you beatinflation2 letting you-pu-chasing po e- fall o0e-the long te-"/

P-oble" ? !otavoidingbad debts

Frame / 9 St-etchingloan tenu-es is nota!0isable/

Frame 1 0 Ba! !ebtscan e-o!e ou-financial o-th in the

guise of instantg-atification/

./ HAs it balloons the inte-estcost !espite the ta6a!0antage that so"e ofthe" offe-25 says ayantPai/ 5So2 it is best to p-epayat the ea-liest an! a0oi!

unsecu-e! loans at all cost25he a!!s/

1/ Because of thei- highinte-est -ates an! cha-gesD4


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e6cessi0ely on you- c-e!itca-! o- o0e-loo7 the longte-" goals in fa0ou- of you-

cu--ent nee!s an!pleasu-es/

P-oble" C

!otcoveringrisks

Frame / 2 8o0e- you--is7s a!e3uately/

Frame 1 0 So"epeople "a7e the"ista7e ofo0e-lappinginsu-ance ithin0est"ent/

./


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P-oble" .

treamliningbehavioral andemotional patternsto secure financialfuture

./ ,ou "ay nee! to "a7e goals onti"e2 lea-n not to -eact i"pulsi0ely

an! a0oi! to!ay s pleasu-es fo-futu-e gains/

1/ 5Financial beha0io- is pa-t of no-"albeha0io- an! it is !ifficult to -eo-ientco"pletely in one 0e-tical/ So if younee! to unlea-n a ba! habit2 gi0e itti"e25

P-oble" 1

Postponingimportant financialdecisions

./ Ma7e a list of i"po-tant tas7s an! fi6a ti"e f-a"e fo- each/

1/ Set ala-"s fo- -e"in!e-s/4/ +o the "ost unpleasant an! !ifficult

tas7 fi-st an! lea0e the easie- ones

fo- late-/:/ As an incenti0e2 p-o"ise you-self a-e a-! fo- co"pleting the tas7/

P-oble" 4

PlanningIncorrectl-

./ @-ite !o n2 not only you- bu!get2but also the goals/

1/ Specify the e6act ti"e pe-io! fo-achie0ing these an! the inflation9a!;uste! futu-e 0alue of goals

4/ (o stic7 to these2 follo t o -ules= a&Sa0e fi-st2 spen! late-/ b& Auto"ateyou- sa0ings/

P-oble

" :

!ot putting in time,

effort and mone- ./ In so"e in0esting options2 it isbette- to app-oach a financial


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into research.

planne- since he ill ta7e anob;ecti0e an! opti"al !ecision fo-you/

1/ Alte-nately2 assess younee!s in a"o-e -ational "anne- befo-e ta7inga !ecision/

P-oble" # "eactingimpulsivel-

./ Instea! of ta7ing a !ecision !u-ingan e"otional high o- lo 2 -ite it!o n an! 7eep it a ay/

1/ Retu-n to the sc-ap of pape- afte- acouple of !ays o- a ee72 analy ethe p-os an! cons2 an! then !eci!e/

4/ Bette- still2 -esea-ch/

P-oble"

!ot diversif-ingtheir investments ./ A "etho!ical an! holistic app-oach

to you- finances is possibly the only

ay to get o0e- this bias/1/ F-a"e you- goals an! in0est in

assets that help you -each these/4/ (al7 to a planne- about the options

in the "a-7et an! calculate theopti"al allocation to each/


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P-oble" ?

!ot avoiding baddebts

./ (he best ay to con3ue- this bias isto ta7e the !ecision out of you-

han!s/1/ So if c-e!it ca-! is you- ea7ness2get -i! of it/

4/ If you cannot sa0e fo- long9te-"goals2 auto"ate pay"ents so thatyou sa0e befo-e spen!ing/

:/ It ill also help to st-ictly follo abu!get by -iting !o n you-e6penses2 sa0ings as ell asin0est"ents/

P-oble" C

!ot covering risks

./ (he only solution is to po-e th-oughthe e6isting !ata2 -esea-ch ell an!con!uct an analysis about the

financial se-0ice o- p-o!uct in3uestion in o-!e- to a--i0e at a t-uepictu-e/

1/ 8onsult a planne- an! ta7ep-e0enti0e "easu-es/

6 6o -ou find an- framing +hallenges?

F" '& +7 %%&!G&

tart investing as earl- as

possible

One can easily be "anipulate! hen

he is young an! the-e is lac7 of

a0ailability of fun!s an! e6pe-ience


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eek &8pert3Professional help

An e6pe-t can be "anipulati0e an! can

o-7 on thei- inte-est -athe- than ou-s/

6on9t put all -our eggs in onebasket

It -e3ui-es !eep 7no le!ge of e0e-y

fiel!2 nee!s lots of -esea-ch an!

analysis/ One has to !epen! on othe-s

gui!ance fo- in0est"ents that can lea!to f-au! o- huge losses/ Also2 lot of

st-ess is in0ol0e! in in0esting in

!iffe-ent option as one has to 7eep

t-ac7 of each an! e0e-y in0est"ent/

6on9t be sentimental while

making investment decisions

Most of the In!ians a-e 0e-y e"otional

!u-ing thei- in0est"ent !ecision2 li7e

one ho a-e e"otionally attache! to

Reliance ill possibly in0est in its each

an! e0e-y p-o;ect e0en ithout-e0ie ing each an! e0e-y aspect since

they a-e e"otionally attache! to that

co"pany

tart investing "s/:::: from

the age 1; then -ou will have (his 7in! of stats !epen!s upon the


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"s


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(he a-ticle p-o0i!es so"e useful tips fo- the beginne-s but ho "uch-e a-!ing !epen!s on to hat e6ten! one stic7s to it/ Reco""en!e!to young age g-oup2 especially ho ill be "o0ing into ea-ning0entu-es afte- stu!ies/

No !oubt that -ea!ing an a-ticle su-e is helpful but the-e is a 0ast!iffe-ence hen you -ea! it by you-self an! hen so"eone $Of cou-se2so"eone e6pe-ience an! p-ofessional& e6plains it to you/ I a" ta7ingabout those ho a-e beginne-s an! !o not 7no "uch about it/

'ence E( can post a 0i!eo online of M-/ Ri;u +e0 Mehta in hich ecan see hi" e6plaining these habits by gi0ing 0a-ious e6a"ples an!ha0ing chats ith so"e of the successful financial planne-s/

(hey can also o-gani e 0a-ious se"ina-s ith the" so that thestu!ents ho ill be "o0ing into 0entu-es can inte-act ith the"2 cancla-ify thei- !oubts an! "o-eo0e-2 they can as7 fo- 0a-ious useful tipsan! e0en thei- e"ail i! so that they can 7eep on inte-acting ith the"an! a-e able to as7 fo- help hene0e- -e3ui-e!/

*a-ious o-7shops2 acti0ities an! 3ui es can also be o-gani e! tohelp the stu!ents p-epa-e bette- fo- the futu-e an! to basically gi0ethe" "o-e e6posu-e in this a-ea/

Most people belie0e that "ost people ho a-e ealthy ha0e ealthypa-ents/ It is o0e- hel"ingly the "ost co""on ay to beco"e ealthy/ *i-tually nobo!y "a7es it to the top solely th-ough ha-! o-7/@ealthy people al ays e6tol the 0i-tues of ha-! o-72 but the t-uth isthat the-e is no a"ount of ha-! o-7 hich ill necessa-ily "a7e yousuccessful/ (he-e a-e too "any people aiting ith outst-etche! han!sto ta7e a!0antage of you2 o- feet aiting to t-ip you "ostly to assu-ethat you !on t th-eaten thei- success in this negati0e9su" ga"e/

But e belie0e that if e can "a7e goals on ti"e2 lea-n not to -eacti"pulsi0ely an! a0oi! to!ay s pleasu-es fo- futu-e gains an! abo0e all2Work 7ard, e can not only beco"e ealthy but also financiallysecu-e/


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We learned following things from this project>

Any lea-ning nee!s to be e6a"ine!2 also to be -e9e6a"ine!/Nee! to collect "any up!ates to f-a"e it up/Assu"ptions nee! to be teste!/(he-e shoul! be "o-e than one p-oble" to settle at -ight

p-oble"/

Also the-e shoul! be "o-e f-a"es to ;ustify one f-a"e/@hile f-a"ing a p-oble"2 challenges nee! to be un!e-stoo!/

eight habits

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