Let us play a game – in school and college we used to call it True or False.
Q1. If a person is well educated he will be good at managing money.
Ans. FALSE. Completely false. Why do you expect a doctor or an engineer to be suddenly good (or bad) at managing money? No, there is no connection between education and money management skills. No co-relationship has been observed at all.
Q2. If the person is a CA or an MBA (finance), he or she will be good at understanding personal finance.
Ans. FALSE. A degree is normally obtained during your young age when you are seriously wondering what you will do in life. Most degrees including CA and MBA finance do not equip you with personal finance knowledge.
Q3. If a person works in financial services he or she will be good at understanding personal finance.
Ans. Absolutely untrue. If a person works in Marketing or Sales he/she says so many things about their own products, that they start believing it themselves. If they are in HR, Accounts, Operations they normally do not understand compounding, SIP, long term, patience, etc. so they keep their money in bank fixed deposits. So again not true at all.
Q4. If a person is a Wealth Manager he can understand markets so they can manage their own wealth.
Ans. Not at all. Being a WM in a bank means you have sales targets, NOT WEALTH targets. So he/she is used to churning, selling products with the highest margins…if they end up buying what they are pushed to sell the chances are it will be financially ruinous for himself/herself.
Clearly personal finance is no rocket science. The fact that it is simple does not mean it gets done. Many people who do it themselves also ruin themselves because of overconfidence or choosing the wrong adviser. I know people in all the categories mentioned above, but will not name them – some of them may even be reading the blog.
more to follow…………
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