Height of Financial Stupidity

Photo by purplemattfish

Only two things are infinite; the universe and human stupidity, and I’m not sure about the former.

--Albert Einstein

Tenzing on Hillary and Hillary on Mount Everest is the height of heights; peeing through key hole of a glass door is the height of stupidity.

Now, what’s the height of financial stupidity…there’s a not one but many…most of us continue to violate some basic and simple financial truths and make stupid financial choices.

It is very amazing to see how people get sucked in by the financial traps set up the financial industry; banks, stock brokers, life insurance companies, wealth management firms continue to harness the financial stupidity of people to make money.

Human stupidity is the other name of irrationality, self deception and willful ignorance and is the single biggest contributor to human suffering. Let’s see some of the ways in which people act stupid to ruin their financially life:

Examples of Financial Stupidity


Real Estate is the best form of investment

1. Investing in property thinking that just because land is in short supply, property prices can only move skywards.

2. Buying a residential house just to save on rent without considering the opportunity cost of money.

3. Going for a home loan to save tax even if one has enough of spare money to invest forgetting that like tax, interest is a cost borne by the borrower.


Investing means trading stocks/ mutual funds

4. Either going 100% in stocks or 100% in bank fixed deposits.

5. Indulging in ‘market timing’ or ‘stock picking’ ignoring the fact that more than 80% returns of an investment portfolio are determined by ‘asset allocation’.

6. Investing in Mutual Funds solely on the basis of returns without considering the risk undertaken to earn those returns.

7. Investing in Mutual Funds based on short term returns and / or dividend declaration.

8. Investing in IPOs by borrowing money to make listing gains.

9. Investing in PMS considering it to be a wealth management product not understanding that it is a high cost ‘Portfolio Mismanagement Scheme’.

10. Getting lured by the fancy names of financial products.

11. Having an over-diversified investment portfolio with too many stocks/mutual funds leading to unnecessary duplication.

12. Buying jewellery for investing in gold instead of investing through gold ETFs.


Insurance is a tax savings and investment tool

13. Investing in life insurance not knowing that it can be lethal for financial health.

14. Not buying adequate insurance coverage.

15. Investing in life insurance policies from LIC thinking that money is safe.

16. Buying life insurance just to favor a relative, family friend or a neighbor.

17. Mistaking insurance agents––peddling life insurance––for financial advisors.

18. Buying / investing in multiple insurance policies.

19. Falling for guaranteed returns schemes.


Enjoy now, pay later

20. Considering fuel as the only cost of running a vehicle.

21. Buying /renting an expensive/unaffordable house by overstretching the finances.

22. Falling for zero interest rate schemes forgetting that processing charges is also a cost.

23. Spending to gain more points on loyalty cards and credit cards.

24. Not thinking twice before buying an expensive car or the latest gizmo, just to impress friends, relatives and neighbors.

25. Handing over a tip to a waiter even if not satisfied with the service…just to avoid the embarrassment.

26. Borrowing to finance a depreciating asset while own money is lying idle in bank accounts.

27. Borrowing money based on quoted ‘flat rates of interest’, not understanding that actual cost of borrowing is 2 to 3 times that of flat interest rates.

28. Choosing complexity over simplicity by mindlessly acquiring multiple credit cards, opening multiple bank accounts, investing in multiple mutual funds, buying multiple insurance policies.

Photo by ImageLink

29. Taking a casual approach towards managing money which has been earned the hard way, not understanding that managing money is as important as earning it. Put differently, working hard for money but not allowing the money to work hard.


Taxing the brains

30. At last, the height of financial stupidity: Standing in long queues to file tax return on the last date.


Is there any other financial stupidity I have left out? How do you handle your money? Judge yourself whether you’re a financially intelligent or a financial idiot?


The only way to comprehend what mathematicians mean by infinity is to contemplate the extent of human stupidity.

--Voltaire


Also see:

1.The reason behind increasing complexity
2. Hidden Flaws of Spending

How to survive in a corporate jungle

Photo by Rubén Díaz Alonso

We spend significant part of our life in office, so professional life is as important as personal life and it’s important to strike a balance between the two. First of all, let’s understand what the workplace reality is:

1. Why do we work? To make money, everything else is secondary.

2. A lot of work is boredom…doing repeated specialized tasks is nothing but boring…more particularly in case of BPO & IT Companies. It’s up to you to devise ways to make it fun.

3. Being intelligent and hard working is not enough; self-marketing i.e., making your boss and others aware of your contribution is also important; to get recognition you deserve, seeking attention and becoming visible to the power centers in the organization is necessary.

4. Peer pressure makes us constantly benchmark and compare ourselves with our peers; the resultant envy is self-destructive.

5. Modern day organizations are anything but rational. Rivalry, office politics, sycophancy, favoritism, manipulation, diplomacy, dog eat dog competition, rat race, gossiping, rumours, jealously, use of innuendos/snide remarks/expletives, sexual harassment, bullying, lobbying are all oddities of daily corporate life and essential part of modern day workplace.

6. The most harsh reality about survival in the corporate jungle is getting along well with your immediate boss because he is the one who can make or mar your career

Here are a few practical management lessons to survive in corporate jungle without losing sanity:


Elders of the tribe eat first

1. There is no need to feel bad if your boss takes credit for your ideas because according to David F. D’ Alessandro you simply cannot fight the power structure. In his book Career Warfare, he writes that, “Within the world of people who can actually advance your career, your image is almost entirely in your boss’s hand”.

2. There are plenty of ‘pointed headed bosses’ —a character made famous by the comic strip Dilbert by Scott Adams —roaming in the corporate corridors; nothing to feel ashamed of in playing the game of fool to satisfy their inflated egos. Again, David F.D’ Alessandro says that you’ve to manage the relationship intelligently, even if your boss is an idiot.

3. If you’re stuck with a bully boss, never fight back or confront him; it’s no use fighting a loosing battle. On the other hand, enduring him for long can do a lot of harm to your confidence and self-esteem. The best and the most practical solution is not to complain, stay calm and find a new job at the earliest. Don’t fool yourself by remaining under a delusion that he will have a change of heart or things might otherwise improve in the future…expecting a scorpion not to sting is simply foolish. Understand that bullying is the worst form of power abuse and even HR is of no help in such cases.

4. Know the difference between a Mentor and a Godfather and if you’re competent avoid the latter.

5. Under promise and over deliver.

6. Never say “yes”, when you- want to say “no”.

7. Finally, the golden rule of managing bosses, in the words of Devdutt Pattanaik, “be like Draupadi, but always behave like Sita".


FISH Philosophy

8. Don’t take your work too seriously; take it as a game and have fun. In fact, life itself is nothing more than a game.

9. It’s important that you love the work you do even if it is not your calling…to make it enjoyable, practice FISH Philosophy.

10. Work smarter and harder; distinguish between important and urgent; apply Pareto’s 80:20 rule; prioritize; have a time limit for every task—as per Parkinson’s law, work expands as per availability of time.

11. Never marry your job; workaholism can ruin your professional life as well as personal life.

12. There’s always a better way of doing things; be creative, clear mental blocks, continuously challenge present practices / set ups.


One-Minute Manager

13. Don’t be afraid to delegate because no individual can run the whole show.

14. Never pinpoint the errors; even if you know. Rather ask the person doing the task to find out himself.

15. Be a One-Minute Manager—according to Kenneth Blanchard, there are 3 secrets behind effective management: one minute goals, one minute praising and one minute reprimand.

16. Focus on strengths instead of wasting time on fixing the weaknesses; recognize the unique talent of each individual. In the words of Marcus Buckingham & Curt Coffman, the writers of the book, First, Break All the Rules: Bad Managers play checkers, good managers play chess.


Personal Branding: Packaging is more important than the product

17. Take responsibility for yourself. Don’t wait to get noticed.

18. Be yourself – genuine/authentic.

19. Have a sense of humor. It is the most valuable quality and can alleviate boredom, relieve the work place stress, help ride the difficult situation and establishing rapport with others.

20. Be ethical, never compromise on integrity.

21. Be wiser than others, but don’t tell them so.

22. Be cool & patient. Don’t get ruffled if heckled.

23. Everything matters but looks / appearance matter more than the real stuff.

24. Don’t be too good in whatever you do, rather diversify your knowledge & skills; Over specialization has both upsides as well as downsides.

25. Run your own race, at your own pace.

26. Take time out for yourself. From time to time keep on enriching and re-energizing your professional life by playing, exercising, reading, vacationing and learning something new.

27. Constantly update your resume; if there is nothing new to add for a period of six months, it’s time to look for a change.


Networking in the corridor

28. Networking is a necessary evil; don’t consider it a waste of time. However, it is better to build and nurture only genuine relationships.

29. Know the difference between casual office friendship and personal friendship; be cautious. about revealing too much personal information. In other words, familiarity breeds contempt, so keep your secrets.

30. Never try to please everybody. One cannot keep everyone happy.

31. Never underestimate anybody.


Finally,

32. Accept the reality; don’t flow against the tide.

33. Anticipate the change and embrace it.

34. Don’t be afraid of failures or admitting your mistakes.

35. Don’t judge anybody; just observe.

36. Opportunity never knocks twice, so keep your doors open.

37. Don’t unnecessary worry about little things; work is just one aspect of your life.

38. In case of physical and mental burnout, apply the brakes; diversion/cooling-off helps.

39. Don’t run so fast in life that anybody has to throw a stone at you to get noticed.


The final truth is that nobody owes us a living and life is rarely the way we want it to be. We’re solely responsible for our professional life; difficulties & hardships are always encountered while climbing the corporate ladder.Have faith! Do not postpone living; enjoy every moment.

At last, some things are within our control and some things not, so let’s not forget the Serenity Prayer:

God grant me the serenity
To accept the things I cannot change;
Courage to change the things I can;
And wisdom to know the difference.


Also see:

1. How to live a purposeful life
2. 4 other ways to live a simple life