Want to stay wealthy - Things you shouldn't ignore

In the last two months I have met a young pilot, an established model, and a doctor in his thirties. They had approached me for investment advice. Professionally I do not accept any investment advisory assignments but only accept comprehensive financial planning assignments. Obviously, they did not know the difference between the two and most people don't; I don't blame anyone. In fact these three individuals didn't know many more things. While their ignorance did not surprise me, but it certainly did upset me. I have met many highly qualified/talented financially illiterate individuals.

Let me list down few things they were ignorant about. Pilot didn't know the type of bank account she has, whether it is a Savings bank account or Current account. She also didn't know the difference between the two. Model did not know whether his account is joint or single. When I asked him whether his account is joint or single, he said "I am still single." Doctor is working for a hospital. His monthly salary gets credited in bank account directly. When I asked him why he has not added his wife's name in bank account, his reply was "I am told that there cannot be second account holder in case of salary account." His banker advised him to nominate someone instead of having joint holder. Obviously banker was in a hurry to complete the account opening formalities at the earliest.

Few years ago, I was training a few college students for short summer assignment in a foreign bank. They were expected to help customers complete account opening formalities. At the beginning of my training, to gauge their level of knowledge, I asked them what is current account. One of the students replied current account is the existing account.

I know many senior managers of corporate world who are not aware of the fact that the Income Tax Act requires assesses to keep relevant financial documents for six year - though it is prudent to retain for it for ten years.

Also there are few more shocking experiences. Housewives not knowing how to write a cheque or fill up bank's slip-book, investors not knowing how to read mutual fund statement, demat account statement, or important details in insurance policies.

Shock is not because they did not know. Shock is because they did not think it is relevant to ask someone.

Apart from being aware of the basics, it is also important to methodically store all important papers and documents. Small things like wrap your important legal documents like agreement for sale of house, power of attorneys etc. in butter paper. Most of us keep important documents in plastic folders. Many a times, documents stick to plastic folder. Wrapping in butter paper will ensure document do not stick to plastic folder. Another benefit is that the document will not wear out soon.

Similarly, it is prudent to take photographs of jewelry. We usually keep our jewelry in a bank locker; however we should have color pictures of it. This will help in maintaining records, assist our family members (particularly husbands) to recognize and also in case of theft, the police will ask for photographs.

If you ever have strong desire of becoming wealthy, ensure you understand the basic of banking, is able to read financial documents and also get habituated to store/file them in appropriate manner. Otherwise you may earn and invest lot of money but you will not become wealthy.

There isn't any place which will teach you these things. Your financial planner will only be able to guide you. Ideally your parents and elders can give you brilliant tips. Listen to them!

-Gaurav Mashruwala

The author is a Certified Financial Planner. He may be reached at gmashruwala@gmail.com