Are you managing or mis-managing your personal wealth?

In my two decades-plus experience as a practicing financial planner, I have come across numerous individuals who self-manage—or, sometimes, mis-manage—their personal wealth.

Interestingly, many of them are highly qualified professionals: doctors, senior executives, entrepreneurs and business owners.

And when it comes to youngsters, the problem can be even more pronounced.

The common belief is that easy access to information has made us better at managing our finances.

Finfluencers. YouTube channels. Instagram posts. Financial websites. Market data. And, sometimes, a broker, distributor or banker.

But access to information does not make you an expert.

The ability to process information, understand context and make the right decisions for your circumstances is what makes someone an expert.

Let me give you an analogy.

I am not a medical professional. But I have access to the same books, Google searches, YouTube videos and social media posts on medicine as a qualified doctor.

Does that make me a doctor?

Would I diagnose and treat myself based on what I have read online?

Would you want to be treated by a so-called social media doctor?

Obviously not.

So why do otherwise highly qualified people assume that they can automatically become experts at managing their personal finances simply because financial information is easily available?

Over the years, I have come across situations such as:

1. Large amounts invested in tax-inefficient banking products.
2. A collection of savings-linked insurance policies that provide inadequate life cover while being expensive investment products.
3. More than 25 mutual fund schemes—a diversified portfolio becoming a financial zoo.
4. A stock portfolio of 50+ companies, which even many professional fund managers would find challenging to monitor properly.
5. Multiple real estate investments bought without clarity on who will eventually use them or what purpose they serve.
6. Large bank deposits while simultaneously having expensive loans from the same bank.
7. Health insurance that is so inadequate that a serious hospitalization could exhaust the entire cover within days.
8. Life insurance cover so inadequate that it almost assumes the person will live forever and never have financial dependents.
9. Multiple bank accounts, demat accounts, mutual fund accounts, postal savings and other investments—almost like a financial collection hobby.
10. NRIs holding excessive INR deposits despite understanding the long-term currency risk between the rupee and their home currency.

The problem is not lack of information.

The problem is often poor decision-making.

A professional in any field does not merely give you information. A professional helps you make the right decisions considering your circumstances.

And personal finance is no different.

So, how do you know whether you are doing a good job?

My take is simple.

Create a passive benchmark appropriate to your risk profile—perhaps a combination of equity, debt and gold indices.

Then compare your actual wealth performance against that benchmark over the last 5–10 years, or since you started actively managing your portfolio.

If you have consistently underperformed, perhaps it is time to sack yourself as the manager of your own wealth.

And if you have outperformed?

Congratulations.

But don't forget to account for opportunity cost.

The hours spent researching stocks, funds, taxation, insurance and markets could perhaps have been spent becoming better at your own profession, increasing your earning potential, spending time with your family or pursuing your passions.

After all, your time is your most valuable asset.

Many times, the biggest enemy of our financial wealth is ourselves.

So, protect your wealth from yourself.

At Naveen Rego Capital, we are a fee-only wealth management firm and SEBI Registered Investment Adviser. We work on a pure-fee, conflict-free model, without commissions or product-related incentives.

Our philosophy is simple:

Once we become part of a client's financial life, our objective is to deliver better outcomes, even after our fees, than what the client would have achieved on their own.

Better outcomes may mean:

• Lower taxation
• Better risk-adjusted returns
• Better compounding of wealth
• Appropriate protection
• Greater simplicity
• Better financial decisions
• And, perhaps most importantly, peace of mind and a good night's sleep.

It's time for a change.

Don't be your own financial enemy.

If you have missed any of our previous articles, please visit https://naveenrego.com/blog-grid.php?aW5pdGlhdGl2ZXNfdHlwZV9pZA=MQ

Happy Financial Planning!

Naveen Julian Rego – CFP®

MD & Principal Officer

Naveen Rego Capital

SEBI Registered Investment Adviser

Reg No: INA000019211

BSE Enlistment No: 2178

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