Few days back, I got a call from one of my acquaintances who asked me about a product which stated “Start a SIP and get an Insurance free”. Often it is believed that a lot needs to be done to manage the finances effectively and hence every time something new is launched in the market or is heard of or talked about, most of us get curious to know more about it and buy it irrespective of the fact whether we need it or not.
If I talk about the above mentioned product, it states that if you start a SIP with an X company it shall give you an insurance cover upto 10 times of the monthly SIP amount in the 1st year, 50 times in the 2nd year and 100 times in the 3rd year provided the maximum cover would be Rs.20 Lacs. Exciting; isn’t it???
Let’s explore more. For instance if someone were to start a SIP of Rs.3000 a month, he stands to get a sum assured of Rs.30000 in the first year, Rs.150000 in the second year and Rs.300000 in the third year. Now think about it, would Rs.300000 be enough for your family’s survival if something were to go wrong??? Can you risk your family’s future for just getting a free insurance ??
The biggest advantage of this product is that it inculcates the much needed discipline within you to save for your long term goals because if you stop the SIP you stand to lose out the life cover as well. And hence people don’t stop it.
Innovations – Are Just a Makeover
These innovations are nothing but they are manufacturer’s novice ways of selling the same things in a different manner again and again. As they know people want something new every time. But when it comes to personal finance, you can manage it well only if you make it boring. What people miss out is that “We don’t have to smartest from the rest but we have to be more disciplined from the rest” to manage our finances effectively.
In pursuit of high returns or better financial management many pile on a range of products hoping that something will work. But remember there are no products exclusively meant for planning for kids or retirement or wealth creation.
The Science does it all
Rather it’s the simple science which helps to manage it all. It says, “Save small but save regular. Invest in liquid assets for short term, debt for medium term and equities for long term needs. Have adequate insurance to make sure you have enough protection when needed. Do not mix Insurance with Investments”.
Simple isn’t it. This simple science can help you accomplish all your goals and can help you to manage your finances effectively. All you ought to do is to stay simple and stay foolish i.e. unperturbed by the innovations which are just a makeover of the science of investment. Remember, complex things are easy to do but simplicity is the real challenge.
