Jagoinvestor
May 29, 2011
What is the worst advice that you have ever received?
Are free advises costly ? A lot of people in their early life get lots of advice from friends , family and relatives regarding money and other area’s of life . Some of those advises are great, but some are disastrous and you might have the “why did I take that advice ?” kind of feeling . Subra has done a post on worst investment advice and I really liked the sharing which happened there . I think a lot of readers here will relate to those worst advises, because the same thing might have happened to many of them . Lets look at some of the worst advises people have got (i am copying it from the comments section on his blog) . Please share your worst advice in comments section here , It would be worth reading and learning for others !
Ashok say –
Making me buy LICs Jeevan Shree in 2001 (36000 premium per year for 12 years). If I had invested the same 3000/- in a monthly SIP in HDFC Equity fund, I could have afforded a BMW now
Bigtimeloser says –
my worst investment advice was people asking me to do engineering. I had to take it up because i knew nothing about anything else.. Coming from a rural background with a good +2 score I had to do what everybody else was doing..
Iarab says
In 2004, I have been sold a ULIP (Rs. 10,000 annual premium), with an asset allocation of 50% each in ‘Liquid’ and ‘defensive’ schemes. I have been told that ‘liquid’ means ‘money is readily available’ & ‘defensive’ means ‘you will not incur any loss’. The result, after 7 years now, is that I am yet to recover my principal invested (Rs. 70,000), where as my ‘financial advisor(!)’ has graduated from a second hand Bajaj Chetak to Santro i10!
Krish says
One guy from the brokerage firm roped me into F&Os. Rosy picture was portrayed that I can earn thousand(s) a day. The lure was somuch that I borrowed money to trade in F&Os. After first three days I realised that it is gambling and addictive. My risk appetite graph was always up on each passing day to reduce loss and ever hopeful of making the kill. The reality dawn after a month into the trading and losing all the borrowed capital. More than losing money, the mental tension was too much to bear.
Jayant says
“Buy LIC, buy PPF. They are safe investments”. This is when I just started earning at age of 21. If I had started SIP that time, by this time I could have god good corpus. I did not know what seems safe is how badly it is being eaten by Inflation. How I rue !
Vimod says
I have been saddled with a lot of useless endowment policies and whole life plans from LIC of india. I pay a premium of Rs 1.4 lakhs per year as premium for the above insurance policies for a total coverage of Rs 18 lakhs. I will be surrendering
most of it in six months. I try to educate people about buying term insurance policies and not to trust these LIC agents blindly.
Rakesh says
My broker made me buy lokesh machines in Nov,2007. He said that the Big Bull RJ is going to buy/increase his stakes in this company. The price then was 140 and now its 40. I wonder will it even reach that levels ever again ?????????
SS Says
I got an advice to buy a ULIP from a so called friend-expert. What did I do…got rid of advice, got rid of friend (so-called) and got rid of ULIPs forver. i hate ULIps for personal reasons: I lost my friend (i dumped him), I realised he was an idiot and I was in no mood to take free financial advises from an idiot friend (most dangerous thing in finance).
Arpit 🙂 .. thanks for your comment , its a missed opportunity , you cant blame them for that , you could have said “Why didnt they advice to buy a property in Mumbai ! “
Hi Manish
This is a good blog I came across. I have read many articles in last few days. This post is very good.
sharing my worst advice I received.
I bought an endowment plan from SBI called Sudarshan in 2006. I did not know about term insurance then. I m planning to stop the policy from this year. I was paying premium of around 32000 every year.
The funny part is when I told this to the insurance agent first of all he has no clue about surrender procedure. Moreover, he is saying that endowment plans are best investment instrument in the market.
I explained him how it is bad and why didnt he told me about any term plan.
He didnt talk much..was just talking something non-sense.
Manav
Hmm.. as expected , the agents themselves are not clear of surrender process as its never in their list .
I am interested to know what non-sense did he talk on term insurance ?
Manish
Why I did not read Manish’s blog at 20’s and did not realize the effect that ‘Time is Money’ is so true:)). Just acting NOW and no more wait. I can not digest that you loose ~50acs or even crore if you even late for 1 year.
AKP
Great . I can see you are energised right now and I would recommend you use that energy in taking actions soon ! . The best thing would be you become accoutable to this blog and every reader here and share what you did in next 15 days ! . That would be great idea !
Manish
probably this is first comment on this blog.
worst financial advice is :
bought LIC jeevan anand policy back in 2006 with annual premium of Rs. 63500. Paid first 4 premium and later surrendered it in 2010 with almost loss over Rs. 1,25,000.
The LIC agent was in my relative friend. I had little idea about term insurance and I asked him about it initially. But he showed me some WRONG maths to prove how term insurance is waste of money. But later I got the truth.
these agents are another avatar of Shaitan.
many thanks to manish. Your work is gonna bring “Kranti” in the field of finance. You are ray of hope for people like us.
God save Insurance agents…..!
Kumar
You should have done the maths yourself before buying the policy . I am sure you didnt had much time for “all these things” at that time ? The opportunity cost is very high here ! . think what those 1.25 lacs could have done in your life ?
Manish
I am mutual fund agent and I travel through PLPML(Pune City Bus) for my work.
While travelling through public transport I come across different kinds of human behaviours.I always found one common perception
” It WAS NOT MY MISTAKE,IT’s YOUR MISTAKE”
Blaming others is a common perception.
“I lost money as some agent asked me to invest in it”.
“I lost money in commodities/Stocks because of dealers mistakes.”
“I am investing in SIP and after 10 yrs if sensex is at 5000 levels It will not be my mistake but it is agent who will be responsible for my loss”
haha .. Nice one 🙂
Manish
My mother has been advised by LIC agent into buying LIC Pension Plus at the age of 52 with regular premium of Rs. 1 lac for 10 years. Saying that she will get a regular pension. When i suggested it’s a big amount to be paid regularly at her age since she requires rather than giving that money. Also the mortality charges will be pretty high for her.
Later that guy made it to Single premium of Rs. 1,50,000 for same policy.
I still doubt the benefit of same…
Please suggest..
Sanghmitra
Even this situation is not that great, check how much was the allocation charges and other charges ,the best part of agent is that he got all commissions in on go itself , I am not sure but I suspect that he made it single premium , because he sensed that you might not go ahead with policy because of the high premium
Manish
it’s a pity that people from our parent’s generation blindly trust LIC without considering need-based analysis and charges of said product..
Sanghmitra
I agree ! . Have you faced it ?
Manish
yup…my parents wanted to put excess corpus for investment purpose. Being from insurance industry, i had suggested plans of IPru, HDFC or better to go for MF SIP since life cover was not what they were looking for…however they said that private players are not trustworthy and went for LIC :p
Sanghmitra
Hmm.. Only you can understand how wrong they are . I dont disagree that LIC can be trusted a bit more than others when it comes to certain things, but its so wrong that Pvt companies cant be trusted !
What do you do btw ?
Manish
I have a huge list of bad advice received. Here are a few
1. Buy whole life insurance. It is a good investment
2. Invest in a mutual fund on IPO
3. Buy sectoral funds like infrastructure, natural resources, power, etc – they are better than diversified funds
4. Buy stocks like “GV films” during its hay days. Oh yeah.. lost all my money on that one
Vish
Good list . I am sure one can just ignore these advices and never do anything about it
Manish
Hi Manish,
I was overwhelmed with the advise I received from Investment advisors on changing the Portfolio again & again. “Everytime the broker would say, this ones is not looking good, please redeem and take this one or that one”. Before I knew you and your website, I would sometimes not change the portfolio (even if the advise was genuine) or change it ( even if the advise was wrong). And then I understood the concept of “ARN-XXX” and the commission that comes with the change (not a transfer) and realised that how it was easy get fooled.
Coz I used to to look for advise from different advisors as I was new in Bangalore when I got married and did not know who was right.
Your efforts to make everyone Personal financial proficient is commendable and I am obliged with all the support you have provided.
I am looking forward to be part of your new awareness program soon.
Regards Archana
Archana
beware about what others suggest you , question it and understand whats going on .
Manish
Hi manish,
Before this i was not aware @ this sight.
I just prchased “Birla Sunlife Vision Plan”.
Can you tell me how is this.
Thanks
hi manish ,
how is “SIP” investment.
beacause my fear is that when market is high our money will grow.
but at withdrawl time if market is crash,what @ my money.
Thanks…..
I really paid huge for the worst advice I received from insurance agent.
Lately surrender 2 insurance policies of SBI Sudarshan endowment policy. Agent was in my relative and gave me big pictures of return amount. I incur loss of around 70,000 Rs. total.
Jitesh
Reading all the advices I can see that the best action one could have taken was “no-action”
Manish
Hi,
I got the worst advice in 1999 when I bought 2 Moneyback plans from LIC. Fortunately I was earning a lot less and so told my financial advisor cum friend that I can only take policies for 25k and 50k. Later some other agent convinced my father to buy a ICICI-Pru policy for me, luckily after paying premiums for 3 years, I withdrew and invested that, with other savings in real estate. That investment has actually paid off. Recently, after checking out Manish’s blog, I bought a term insurance for 25l, 30 years, single premium after a thorough study on several websites. I’m not sure if paying single premium is the right decision, but I believe its best to finish paying that premium in one shot rather than pay for a whole 30 years, though some say premiums might reduce as per company policies.
Beware of IPOs and NFOs, I made the mistake of going for 2 such NFOs, and I made a loss of 25%. If its MFs, stick with HDFC Equity, start a SIP with as much you can invest per month, for as many years.
Even these days, I get calls every few months from those dreaded insurance agents, and they always recommend some policy which is NOT a term plan, saying this is best for me. How long has that agent known me, and if I simply list my assets, does it mean I’m telling 100% truth, yet he thinks he can plan for my future. The best advice is check the blog at apnapaisa.com, jagoinvestor.com and the financial literates.
Brett
Paying with single premium is ok , the point that premiums can come down later is not a big deal , as it wont reduce for existing customers who are paying yearly .
I hope you know that you can terminate the term plan and are eligible for some surrender value as you have paid in one go
Manish
Worst advise recieved from parents, teachers and many many many friends: “Grow Up”.
They may be trying to say something that can make a difference in your life, dont miss on why they are saying what they are saying. Some people are careful with their customers or clients but not with parents, teachers and friends.
Keep growing , keep learning
TEAM JI
Purushottam,
I also work in IT thus I’ll just give a IT example. Suppose you work in Java , you have spent at least 2 years in learning Java and now after 5 years you are a good Java programmer. Now if I want to put you in a SAP Project , you will tell me that you cannot do it as you do not know SAP.
Thus you understand that you need skill to do that job. However, your friends etc have told you that you can pick stocks . do day trading , do F&O without any formal training and without any effort. This is the biggest lie. Please ask yourself why do you think you can beat the market where professionals are spending their full day doing that as their day job. Do you believe a share broker can write better code than you in your field? If not then how can you do his job without a formal training and spending only 2-3 hours a day.
My advice is as follows for you and all other young Turks working in the Hot skill areas
1. Seek professional help from firms like Jagoinvestor etc.
2. Start learning the basics and keep your goals reasonable.
3. Expect 12-15 return in Equity over the next 10 year period and do not think you can earn crores of rupees just by doing day trading in one year.
4. Talk to your seniors who have actually have money, do not get advises from 27 year olds whose networth is less than 10 lacs .
5. Have a balanced life and control your costs. You have to save money to invest.
You can become rich, it is possible but the most important requirement is you need the temperament to become rich. You have to be patient and stick to the plan without wavering mid way through the course when the market becomes bearish.
Ujjwal
smiling at point no4.
good work
hi all, I’s told by my agent to invest in 2 ELSS Schemes of Reliance & SBI MF… I lost money n after maturity redeemed entirely… now I called tat guy back n asked him why he dint advice me any HDFC tax saver he cudnt answer… thanks 2 JI team 4 educating us any the basics of investment…
Hey Saurav,
Good to see you growing as an informed investor. http://www.moneysights.com is good for picking good ELSS funds when planning for your taxes.
all the best
Team JI
Hi,
Worst advice received from my friend to buy ICICI Prudential life time super ULIP. They didn’t tell me about any charges. They show me complete good picture of scheme and worst part of it is they handed policy document after 15 days. So at that time I am unable to dump this policy. After that i have decided no to ULIP.
Kranti
Kranti
Your case is rank 1 “bad advice” , as its a wide spread problem .
Manish
the worst advice in 2005 => buy an Endowment policy from SBI. The advice became action then and I bought it. Paid 1,50,000 in total 5 premium and lately surrendered the policy(after knowing how worst is that).
Now a days also I keep getting advice from every other person that “buy real estate, buy, buy, buy…its hot investment”
Thanks for sharing Amol.
nandish- team jagoinvestor
Worst advice in 2007: To take LIC Endowment policy (Table No. 14) with annual premium 14k.
Corrective Measure in 2011: Stopped paying premiums further and surrendered the policy, waiting for refund of maturity value.
Thanks for sharing. It is actually not about the mistakes we make but what we do after the mistake is made matters in our financial life. Mistakes are the best teachers when it comes to personal finance . I like the word corrective measures that you took.
nandish
team jagoinvestor
I asked my LIC agent that I want to go for “Term Insurance”. He showed me some other LIC policies and showed me things which looked rosy. He even called one of his seniors (may be because me and my wife are from US) to let me know the advantages. I remember the words from his senior “Term Insurance is a waste of money”. But I did my research before I went to these guys. I ended up buying only “Term Insurance” for me and my wife (as we both are in our 20’s). and now, my wife is more impressed with the way I handle financial decisions. 🙂
Happy to hear how you handled, thanks for sharing your experience. The lesson to learn for all is never see insurance as investment and always buy pure term plan.
I guess Research is one thing that can save us from such experiences. Listen to all but only trust your own research. If we cant attract good advice we can always attract good information by our own research.
You bet. and thanks to you guys. This blog was something which drive me for insurance else I would have not thought about it (and many other things) this early.
I am not exactly sure if buying term insurance for both you and your wife makes sense (if both of you are working and earning). It makes sense to have term insurance for only one who is probably earning more. If you alone are working then it does not make sense to buy term insurance (or any insurance) for your wife because if she is no more tommorow u will have gr8 personal loss which is impossible to recover but u will not have any personal loss. Please consider this from practical point of view 🙂
Correction in the last sentences:
If you alone are working then it does not make sense to buy term insurance (or any insurance) for your wife because if she is no more tommorow u will have gr8 personal loss which is impossible to recover but u will not have any financial loss. Please consider this from practical point of view 🙂
Thanks Ramakant for your inputs. We both are working at this stage. I earlier thought about this. and even, checked with Manish on this (I mean I commented on one of his post asking question if both husband and wife should go for insurance and he suggested that its not husband/wife specific). As we both were working, I took for both of us.
Harpreet
Just because both husbad and wife are working does not mean , they both should not take insurnace , at the end , insurance is a tool for arranging for money for your loved one;s which you want them to get . Even if both husband and wife are working , it might happen that husband wants her wife to do “arraam” later and not work and live her life without working , so he can take insurnace , in the same way , the wife might want her husband to get a lumpsum and have a better and easy path in life later and she can take insurnace .
Lets not act just on what is known in industry and lets use our thinking
Manish
Hi Purushottam,
You may would like to visit http://www.jagoinvestor.org, you can read about various services we as a team offer and drop in your inquiry to schedule a call. With us or with any person you choose to move ahead you have taken the first step and now dont get stopped till you achieve all that you mentioned. Personal finance is not about numbers it is about YOU. Have someone and map out your finances in a professional way.
nandish- team jagoinvestor