I often conduct a simple experiment during my financial literacy sessions.

Question 1: What is 2 + 2 in Bangalore? Mumbai? Chandigarh?

The answer is an unequivocal 4.

Question 2: What happens if someone jumps from a four-story building in Bangalore, Mumbai or Chandigarh?

Again, the answer is the same. They fall to the ground, governed by Newton's law of gravity.

Now let me make it a little more interesting.

Suppose three people—one each from Bangalore, Mumbai and Chandigarh—who have never handled significant wealth suddenly win a lottery of ₹5 crore. Will they all behave in the same way? Will they manage their wealth similarly?

The answer is a resounding no.

Mathematics and physics are exact sciences. Money management is not. It is part science, but largely driven by human emotions and behavior. That is what makes our relationship with money so complicated.

A person may excel in mathematics and science, yet make poor financial decisions.

Our relationship with money is shaped over a lifetime—by our parents, upbringing, education, life experiences, peers and social environment. As a result, many of us make financial decisions emotionally rather than logically.

That is why:

1. We choose guaranteed-return products without realizing that inflation quietly erodes purchasing power.
2. We buy savings-linked insurance plans without understanding how expensive they are.
3. We stop SIPs or redeem investments during market declines, believing we are protecting our wealth, when in reality we may be hurting our long-term returns.
4. We chase unregulated, high-return investments without fully appreciating the risks involved.
5. We sell our winning investments too early while holding on to losing ones for far too long, even though a more rational approach is often the opposite.
6. We depend on brokers, bankers or agents for financial planning without recognizing that their recommendations may be influenced by commissions or sales targets.

Unfortunately, these emotional biases are often exploited by finfluencers, brokers and even financial institutions.

The challenge is that those who know they need help are relatively easy to guide. The more difficult group comprises those who believe they already know enough, but whose understanding is incomplete. Overconfidence is one of the biggest obstacles to good financial decision-making.

This is why professional success does not always translate into financial success. Highly educated professionals, including many teachers, engineers, doctors and professors, may excel in their fields yet struggle to build long-term wealth because financial behavior is driven as much by psychology as by knowledge.

At Naveen Rego Capital, a fee-only wealth management firm and SEBI-Registered Investment Adviser, we help clients bring logic and discipline to what is often an emotional subject. Good financial planning is not about predicting markets—it is about making better decisions.

“How much of your financial decisions are based on logic, and how much are driven by emotions?”

Happy Financial Planning!

Naveen Julian Rego – CFP®

MD & Principal Officer

Naveen Rego Capital

SEBI Registered Investment Adviser

Reg No: INA000019211

BSE Membership ID: 2178

Disclaimers:

1. Investment in the securities market is subject to market risks. Read all related documents before investing.

2. Registration granted by SEBI, enlistment as IA with Exchange, and certification from National Institute of Securities Market (NISM) in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

3. Financial products recommended by us that are under the jurisdiction of other regulators are beyond the scope of SEBI’s grievance redressal mechanism.