Money is a means, not an end!

Money is a means, not an end!

I can recollect hundreds of people who have amassed a lot of wealth and still are not able to enjoy the benefits. They do not use it for any constructive purpose, not even for improvement of their standard of living, or for their family. Their corpus is beyond what they require and may last several generations but still they follow their pursuit of money passionately. For them, it seems that money is an end and not a means to an end.

As of now, about  ₹1,56,539 crore is lying with various financial institutions as unclaimed money with small savings plans, Employees’ Provident Fund Organisation (EPFO) and banks leading the list; was reported in a news report in 2015. 

Over ₹ 15,000 crore of unclaimed insurance money is lying with 23 life insurers, according to latest data from insurance regulator IRDAI. India’s biggest life insurer LIC or Life Insurance Corporation of India is sitting on over two-third of that unclaimed money. 

A sum of  ₹ 27,000 crore is lying as unclaimed amount in the Employee Provident Fund accounts as per a report in 2015.
One unconfirmed estimate has pegged the unclaimed amount and inoperative accounts in the Public Provident Fund (PPF) at Rs 22,000 crore. 
As much as  ₹ 11,302 crore belonging to over three crore-account holders is lying unclaimed with 64 banks. The largest amount — ₹ 1,262 crore — is lying with the State Bank of India.

There are several reasons why the money does not get claimed. As mentioned earlier, you might have lost track of the funds owed to you. Or a company/financial institution might have failed to locate you for payment as contact details change over the years but are not updated on a regular basis. Even nominees and legal heirs may fail to stake a claim if they are not aware of such assets – it is often the case if one dies without making a will. 

As per another report, 70% of the PPF money goes to the nominee, i.e. the account holder doesn’t use it himself.

All of the above cases are of hard earned money of hard working people but somehow they have not gone to the investors or legal heirs. 

What is the purpose of this investment made by investors, after compromising on their current needs, just to invest money?

Why are you investing? It’s OK if you have many different answers to this question, but there is a big problem if you have no answer at all. 

Investing is like driving—it is best done with your eyes open! Without purpose, investing is like taking out your car and going for a drive without actually knowing the destination you want to reach and when you want to reach.

Like training in a gym, investing can become difficult, tedious and even dangerous if you lack focus.

Having clear reasons or purposes for investing is critical to investing successfully. 

You don’t always have to think long-term. Investing is as much a tool for shaping your present financial situation as it is for forming your future one. 

Do you want to buy a BMW next year? 

Do you want to go on a cruise? 

Wouldn’t a vacation that was paid for with dividends feel nice?

Investing can be used as a way to enhance your employment income, helping you to buy the things you want. Because investing changes along with the investor’s desired goals, this type of investing is not like retirement investing. Investing to achieve financial goals involves a blend of long-term and short-terminvestments. If you are investing in the hope of buying a house, you will almost certainly be looking at longer-term instruments. If you are investing to buy a new computer in the New Year, you may want short-term investments or some high-yield bonds.

The caveat here is that you need to pinpoint your goals first. If you want to go on a vacation in a year, you have to sit down and figure out the cost of the vacation and then come up with an investing strategy to meet that goal. If you don’t have a set goal, the money that should be going into that investment will doubtless be used for other purposes that seem more pressing at the time.

Your reasons for investing are bound to change, as you go through the ups and downs of life. This is an important process, because the only alternative is to invest with no purpose, which will likely result in investing practice that reflect your uncertainty and cause your returns to suffer. Your reasons and goals will have to be reviewed and adjusted as your circumstances change.

Always think and decide on the Why of Investing before you start on the investment journey. This will not only help you to decide the best route and the speed with which you need to travel but also the risk that you need to take and what you will do at the end of the journey when you achieve your goals.

Happy Investing!

Stay Blessed Forever!

Sandeep Sahni

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Note: All information provided in this blog is for educational purposes only. They don’t constitute any professional advise or service. Readers are requested to consult a financial advisor before investing as investments are subject to Market Risks.

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