Economic Times, ET Wealth, July 28-August 3, 2014:

'No': One word that can make you rich and protect your finances

By ET Bureau | 28 Jul, 2014, 08.00AM IST
By P V Subramanyam

It is difficult not to see the advantages of an investment when approached by a good salesman. Who can deny the need to save for his child's education and retirement, or to safeguard his family's health and build wealth in the long term? Or have a credit card that allows you to purchase at will and offers reward points when you splurge?

Position the financial product well and the retail customer will fall for the sales pitch. Focus on the need and the customer will buy. After all, if you have teeth, you do need toothpaste, right? So, if you have a child, you certainly need a child plan. If you have a family, you must have medical insurance. You also need a retirement plan. The result: you end up buying costly child Ulips, confusing medical policies and inflexible pension plans.

Then there are hawkers of complex investment strategies. They push you to diversify across stocks, gold, property, bonds, bank fixed deposits, post office savings, PPF and a host of other instruments. Even if you can't afford a new home, a bigger car or a foreign holiday, they will get you to leverage on future income. So you take a home loan, a car loan and a personal loan for the foreign tour. Of course, you also pick up a few credit cards in the bargain.

Trust me, all this is a sureshot recipe for financial worries. However, one word can safeguard your finances against such perils, protect your money and make you rich. It is simply, 'no'. Nahi. Naa. Nako. Vendam. This two-letter locution will act as a shield against financial planners, wealth managers, money quacks, banks, insurance companies, mutual funds and portfolio advisers who are trying to sell you something or the other.

'No' is a powerful word. Use it ruthlessly. Say 'no' to the relative who wants to sell you an endowment insurance policy. Turn down the bank executive who is pushing a pension plan. Refuse the offer of a free add-on card from the credit card company. Don't agree to buy the child plan that costs a bomb. Just keep your financial life as simple as possible. One term insurance plan to cover your life, SIPs in 2-3 well chosen diversified equity funds, a gold ETF if required, and a simple nofrills medical insurance for your family. Pick one credit card as well—not as an ATM for easy money, but as a convenience to replace cash.

P V Subramanyam is a CA & Financial Trainer


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