Yes you read it RIGHT. The title says every solution creates a problem.

Let us go back to the 1970s and 1980s when our gen was in college. We were told “if you were in the USA the day you graduate 4 banks will be chasing you to give you a credit card and a car loan”. We thought “Wow…how great would that be”.

In the 1960s to buy a house you needed to get 7 people along with you, identify some land, take a loan and build a building. INDIVIDUAL home loans was not considered at all. It was always a group.

Take the situation now. When you are in college banks start chasing you. A home loan is so easily available.

Once the banks finish lending or giving credit cards to people, their greed increases. They need 30% growth. So the second card, the second car loan, the second home loan, the loans to people who do not deserve it. The risk of loan giving increases. More money is pumped into the business. Suddenly you realise that Rs. 400,000 crores has been pumped into the construction / housing business.

WHAT DOES THIS DO? It raises prices of houses.

What does car loan do? Everybody buys a car, and the public transport suffers.

Not at all sure whether the Western and American way of destroying public transport to grow private transport is A SENSIBLE way to grow!

Now in the BFSI space, the term plan goes out, the ULIPs come in. Banks want 30% yoy growth. So life insurance which was a nice product is padded up so bad that you have no clue what you are buying.

New professions are born. One of them is called “Financial Planning”. If you see the kind of people in that ‘profession’ YOU WILL BE SHOCKED. They have no clue of markets, law, personal finance, but have some cookie cutter solutions.

The buyer in many cases would have been much better off without the services of a financial planner. Now this profession has to grow at 40% – so soon you will find ‘specialists’. They will tell you how to plan for your life, for your education, for marriage, death, ….etc.

Seriously, we do need a decent financial planner, but when I hear the charges, I keep wondering…..

So ask yourself one question: Is Rs. 35,000 better spent elsewhere?

The professional of course justifies it saying “when there is a willing buyer am I wrong in charging that much?”

I do not need to answer both these questions. YOU need to.

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  1. I agree with you about the quality of so called financial planners. Two years back, on advise of a friend, decided to avail services of a “reputed” company in Mumbai…

    Paid a ton for their “professional” services before the plan was even written, and walked away totally frustrated after wasting months trying to get them rectify their assumptions, just to give examples, making financial plans considering an inflation rate of 6%, clubbing the bonus amount along with monthly pay packet and making plans accordingly, etc. etc.

    To rub salt to the wounds, their employees were caught making unauthorized transactions with 3rd parties with client’s personnel data.

    Now, I use Pattu’s excel files and feel like kicking myself for not believing in my ability to chart my own destiny.

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