Myths & Facts
| Myths | Facts |
| Certified Financial Planner and Financial Advisor or Agent is one and the same. | Certified Financial Planner is one, who successfully completes the certification program from FPSB and has served in the financial industry for at least 3 years. |
| Financial planning is akin to buying policies and products from different institution and thereby seeking diversification across various asset classes. | Financial planning is chalking out a blueprint and wielding money keeping in mind your financial goals.
Financial products and policies are only tools which are harnessed for successful execution of the plan. |
| Financial planning is only available for HNI’s and not for middle class society. | If you have a financial goal and resources then you need financial planning.
In other words financial planning enables one to manage his money in a sagacious manner to accomplish all his goals. |
| Investing in direct equity and equity mutual fund is one and the same. | Fundamentally, there is no difference as your money is eventually invested across different companies represented by the indices.
However when you invest on your own in direct equity – o You have to do the research, analysis, assessment of balance sheet and profit & loss account of the company. Not just that you have to invariably monitor the performance of the stock. o When you invest in an equity mutual fund you entrust the responsibility of choosing stock/s to an adept fund manager. o Remember the value of stock can become zero but the NAV of mutual fund has miniscule chances of becoming zero. |
| An individual requires insurance cover which tantamount to 8 – 10 times of their annual income | This is just a thumb rule! and may not always be right. Insurance analysis is a convoluted process wherein one needs to ascertain person’s age, number of people financially dependent on him / her, liabilities, future financial goals etc.
After carrying out the above analysis one needs to opt for the right insurance policy which suits his / her needs. |
| Buy a pension policy to meet your retirement needs and buy a child policy to meet your child’s education needs. | This is a stratagem / gimmick which insurers carry out to allure customers to buy their financial products.
It is indispensable to carry out thorough analysis before marching out to do investment for these financial goals. |