What if you have invested 50-60% of your income for a decade and also achieved 12% CAGR, but your father’s Health Deteriorated and had to hospitalized and you don’t have medical insurance for him?

What if you have created your financial plan and been saving and investing a greater portion of your money and also generated healthy returns over a period of time but you (god forbid) died of a sudden Accident?

What if you have been investing in a diversified portfolio for your financial goals such as child education and Marriage goals, suddenly the industry you are working in hit by severe slowdown and you lost your job for almost 6 months and had to survive using a portion of the money you created for your child’s future?

What if you have invested in the shares of the company where you are working as you had the confidence of company is doing well for long and suddenly the entire industry suffered a slowdown and you lost your job and to add to your problem your shares’ value that was concentrated with the same company shares went southwards?

Above are classing fall out of wrong prioritization of Wealth Creation over and above Wealth Protection.

If you would have bought Medical Insurance for your dependent parents, all medical expenditure would have been paid from the policy and the wealth generated by you so far could have been protected, Right?

Same Way if you would have covered yourself with adequate life insurance then your family’s Financial Life could have been adequately provided for, even if you died ( God Forbid) from an Accident.

If you could have diversified your portfolio either by investing into 1-2 companies for each of  10 different sectors or via mutual funds investing as also done an asset allocation exercise to diversify your investments into weakly correlated asset classes such as equity and debt to contain the downside of your portfolio and manage investments risk arising out of the market conditions.

And before starting your investment journey, if you could have parked an emergency fund separately into either a liquid fund or Bank FD, you would not have to eat into your child’s future Investments.

So above examples are quite common and it clearly emphasizes Prioritizing ‘Wealth Preservation Strategy’ Over and above ‘Wealth Creation

As a personal Finance Coach, while dealing with my clients I see them committing the following mistakes which you should save from committing as the reader of this note ;

1.       Buying Traditional Policy and losing on both front

a.       As Investment: You Hardly earn 4-5% per annum which is far less than last 20-year average inflation of 7.5% thereby losing the purchasing power of your investments.

b.       As Insurance: You are inadequately insured as a small portion of your premium provides very low-Risk Cover.

2.       The best way to avoid the above is to buy Term Insurance

3.       Inadequate Medical Insurance: In India, people still perceive insurance as expenses rather than peace of mind from future financial challenges. So while buying Medical Insurance think about where you would like yourself and your loved ones to be treated. If you want them to be treated in a metro like Mumbai then you need to buy medical insurance cover that provides for Costly Medical Facilities in a city like Mumbai.

So I hope I made amply clear why protecting wealth is more important than creating wealth. Pls, note that I am in no way teaching you not to invest to create wealth but before starting or parallel also protect your wealth.

PlanetWealth Financial Advisors
Email: care@planetwealth.in
Phone: +919328190022
First Floor, Modh Mahodaya Bhavan, Opp Chandreshwer Mahadev Temple, Nr. Meghani Circle
Bhavnagar, Gujarat 364001