What is the worst advice that you have ever received?

POSTED BY manish ON May 29, 2011 COMMENTS (130)

Are free advises costly ? A lot of people in their early life get lots of advice from friends , family and relatives regarding money and other area’s of life . Some of those advises are great, but some are disastrous and you might have the “why did I take that advice ?” kind of feeling . Subra has done a post on worst investment advice and I really liked the sharing which happened there . I think a lot of readers here will relate to those worst advises, because the same thing might have happened to many of them . Lets look at some of the worst advises people have got (i am copying it from the comments section on his blog) . Please share your worst advice in comments section here , It would be worth reading and learning for others !

Worst advice in Personal finance

Ashok say –

Making me buy LICs Jeevan Shree in 2001 (36000 premium per year for 12 years). If I had invested the same 3000/- in a monthly SIP in HDFC Equity fund, I could have afforded a BMW now

Bigtimeloser says –

my worst investment advice was people asking me to do engineering. I had to take it up because i knew nothing about anything else..  Coming from a rural background with a good +2 score I had to do what everybody else was doing..

Iarab says

In 2004, I have been sold a ULIP (Rs. 10,000 annual premium), with an asset allocation of 50% each in ‘Liquid’ and ‘defensive’ schemes. I have been told that ‘liquid’ means ‘money is readily available’ & ‘defensive’ means ‘you will not incur any loss’. The result, after 7 years now, is that I am yet to recover my principal invested (Rs. 70,000), where as my ‘financial advisor(!)’ has graduated from a second hand Bajaj Chetak to Santro i10!

Krish says

One guy from the brokerage firm roped me into F&Os. Rosy picture was portrayed that I can earn thousand(s) a day. The lure was somuch that I borrowed money to trade in F&Os. After first three days I realised that it is gambling and addictive. My risk appetite graph was always up on each passing day to reduce loss and ever hopeful of making the kill. The reality dawn after a month into the trading and losing all the borrowed capital. More than losing money, the mental tension was too much to bear.

Jayant says

“Buy LIC, buy PPF. They are safe investments”. This is when I just started earning at age of 21. If I had started SIP that time, by this time I could have god good corpus. I did not know what seems safe is how badly it is being eaten by Inflation. How I rue !

Vimod says

I have been saddled with a lot of useless endowment policies and whole life plans from LIC of india. I pay a premium of Rs 1.4 lakhs per year as premium for the above insurance policies for a total coverage of Rs 18 lakhs. I will be surrendering
most of it in six months. I try to educate people about buying term insurance policies and not to trust these LIC agents blindly.

Rakesh says

My broker made me buy lokesh machines in Nov,2007. He said that the Big Bull RJ is going to buy/increase his stakes in this company. The price then was 140 and now its 40. I wonder will it even reach that levels ever again ?????????

SS Says

I got an advice to buy a ULIP from a so called friend-expert. What did I do…got rid of advice, got rid of friend (so-called) and got rid of ULIPs forver. i hate ULIps for personal reasons: I lost my friend (i dumped him), I realised he was an idiot and I was in no mood to take free financial advises from an idiot friend (most dangerous thing in finance).

Can you share your worst advice ever you got ?

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130 replies on this article “What is the worst advice that you have ever received?”

  1. Arpit Tolani says:

    Well, me & my parents worst advice will be to buy a property in ajmer (whereas we stay in Jaipur) in 1989 for 45K after advice from a colleague. After approx 22 years we sold that piece of land for 12 lacs, Very Happy that we made good money.

    When a friend pointed out that if you had bought a piece of land in jaipur for 45K in 1989 in vaishali or vidhyadhar nagar, You would have easily got 1 crore after 23 years, I felt almost cheated 🙁

    1. Arpit 🙂 .. thanks for your comment , its a missed opportunity , you cant blame them for that , you could have said “Why didnt they advice to buy a property in Mumbai ! “

  2. Manav says:

    Hi Manish

    This is a good blog I came across. I have read many articles in last few days. This post is very good.

    sharing my worst advice I received.
    I bought an endowment plan from SBI called Sudarshan in 2006. I did not know about term insurance then. I m planning to stop the policy from this year. I was paying premium of around 32000 every year.
    The funny part is when I told this to the insurance agent first of all he has no clue about surrender procedure. Moreover, he is saying that endowment plans are best investment instrument in the market.
    I explained him how it is bad and why didnt he told me about any term plan.
    He didnt talk much..was just talking something non-sense.

    1. Manav

      Hmm.. as expected , the agents themselves are not clear of surrender process as its never in their list .

      I am interested to know what non-sense did he talk on term insurance ?

      Manish

  3. AKP says:

    Why I did not read Manish’s blog at 20’s and did not realize the effect that ‘Time is Money’ is so true:)). Just acting NOW and no more wait. I can not digest that you loose ~50acs or even crore if you even late for 1 year.

    1. AKP

      Great . I can see you are energised right now and I would recommend you use that energy in taking actions soon ! . The best thing would be you become accoutable to this blog and every reader here and share what you did in next 15 days ! . That would be great idea !

      Manish

  4. kumar says:

    probably this is first comment on this blog.
    worst financial advice is :
    bought LIC jeevan anand policy back in 2006 with annual premium of Rs. 63500. Paid first 4 premium and later surrendered it in 2010 with almost loss over Rs. 1,25,000.
    The LIC agent was in my relative friend. I had little idea about term insurance and I asked him about it initially. But he showed me some WRONG maths to prove how term insurance is waste of money. But later I got the truth.

    these agents are another avatar of Shaitan.

    many thanks to manish. Your work is gonna bring “Kranti” in the field of finance. You are ray of hope for people like us.
    God save Insurance agents…..!

    1. Kumar

      You should have done the maths yourself before buying the policy . I am sure you didnt had much time for “all these things” at that time ? The opportunity cost is very high here ! . think what those 1.25 lacs could have done in your life ?

      Manish

  5. paresh says:

    I am mutual fund agent and I travel through PLPML(Pune City Bus) for my work.
    While travelling through public transport I come across different kinds of human behaviours.I always found one common perception

    ” It WAS NOT MY MISTAKE,IT’s YOUR MISTAKE”

    Blaming others is a common perception.
    “I lost money as some agent asked me to invest in it”.
    “I lost money in commodities/Stocks because of dealers mistakes.”
    “I am investing in SIP and after 10 yrs if sensex is at 5000 levels It will not be my mistake but it is agent who will be responsible for my loss”

    1. haha .. Nice one 🙂

      Manish

  6. sanghmitra says:

    My mother has been advised by LIC agent into buying LIC Pension Plus at the age of 52 with regular premium of Rs. 1 lac for 10 years. Saying that she will get a regular pension. When i suggested it’s a big amount to be paid regularly at her age since she requires rather than giving that money. Also the mortality charges will be pretty high for her.
    Later that guy made it to Single premium of Rs. 1,50,000 for same policy.
    I still doubt the benefit of same…
    Please suggest..

    1. Sanghmitra

      Even this situation is not that great, check how much was the allocation charges and other charges ,the best part of agent is that he got all commissions in on go itself , I am not sure but I suspect that he made it single premium , because he sensed that you might not go ahead with policy because of the high premium

      Manish

      1. sanghmitra says:

        it’s a pity that people from our parent’s generation blindly trust LIC without considering need-based analysis and charges of said product..

        1. Sanghmitra

          I agree ! . Have you faced it ?

          Manish

          1. sanghmitra says:

            yup…my parents wanted to put excess corpus for investment purpose. Being from insurance industry, i had suggested plans of IPru, HDFC or better to go for MF SIP since life cover was not what they were looking for…however they said that private players are not trustworthy and went for LIC :p

            1. Sanghmitra

              Hmm.. Only you can understand how wrong they are . I dont disagree that LIC can be trusted a bit more than others when it comes to certain things, but its so wrong that Pvt companies cant be trusted !

              What do you do btw ?

              Manish

  7. Vish says:

    I have a huge list of bad advice received. Here are a few
    1. Buy whole life insurance. It is a good investment
    2. Invest in a mutual fund on IPO
    3. Buy sectoral funds like infrastructure, natural resources, power, etc – they are better than diversified funds
    4. Buy stocks like “GV films” during its hay days. Oh yeah.. lost all my money on that one

    1. Vish

      Good list . I am sure one can just ignore these advices and never do anything about it

      Manish

  8. Archana says:

    Hi Manish,

    I was overwhelmed with the advise I received from Investment advisors on changing the Portfolio again & again. “Everytime the broker would say, this ones is not looking good, please redeem and take this one or that one”. Before I knew you and your website, I would sometimes not change the portfolio (even if the advise was genuine) or change it ( even if the advise was wrong). And then I understood the concept of “ARN-XXX” and the commission that comes with the change (not a transfer) and realised that how it was easy get fooled.
    Coz I used to to look for advise from different advisors as I was new in Bangalore when I got married and did not know who was right.

    Your efforts to make everyone Personal financial proficient is commendable and I am obliged with all the support you have provided.

    I am looking forward to be part of your new awareness program soon.

    Regards Archana

    1. Archana

      beware about what others suggest you , question it and understand whats going on .

      Manish

  9. shyam says:

    Hi manish,

    Before this i was not aware @ this sight.

    I just prchased “Birla Sunlife Vision Plan”.

    Can you tell me how is this.

    Thanks

  10. shyam says:

    hi manish ,

    how is “SIP” investment.

    beacause my fear is that when market is high our money will grow.

    but at withdrawl time if market is crash,what @ my money.

    Thanks…..

  11. jitesh says:

    I really paid huge for the worst advice I received from insurance agent.

    Lately surrender 2 insurance policies of SBI Sudarshan endowment policy. Agent was in my relative and gave me big pictures of return amount. I incur loss of around 70,000 Rs. total.

    1. Jitesh

      Reading all the advices I can see that the best action one could have taken was “no-action”

      Manish

  12. Brett Anderson says:

    Hi,
    I got the worst advice in 1999 when I bought 2 Moneyback plans from LIC. Fortunately I was earning a lot less and so told my financial advisor cum friend that I can only take policies for 25k and 50k. Later some other agent convinced my father to buy a ICICI-Pru policy for me, luckily after paying premiums for 3 years, I withdrew and invested that, with other savings in real estate. That investment has actually paid off. Recently, after checking out Manish’s blog, I bought a term insurance for 25l, 30 years, single premium after a thorough study on several websites. I’m not sure if paying single premium is the right decision, but I believe its best to finish paying that premium in one shot rather than pay for a whole 30 years, though some say premiums might reduce as per company policies.
    Beware of IPOs and NFOs, I made the mistake of going for 2 such NFOs, and I made a loss of 25%. If its MFs, stick with HDFC Equity, start a SIP with as much you can invest per month, for as many years.
    Even these days, I get calls every few months from those dreaded insurance agents, and they always recommend some policy which is NOT a term plan, saying this is best for me. How long has that agent known me, and if I simply list my assets, does it mean I’m telling 100% truth, yet he thinks he can plan for my future. The best advice is check the blog at apnapaisa.com, jagoinvestor.com and the financial literates.

    1. Brett

      Paying with single premium is ok , the point that premiums can come down later is not a big deal , as it wont reduce for existing customers who are paying yearly .

      I hope you know that you can terminate the term plan and are eligible for some surrender value as you have paid in one go

      Manish

  13. kunals says:

    Worst advise recieved from parents, teachers and many many many friends: “Grow Up”.

    1. nandish says:

      They may be trying to say something that can make a difference in your life, dont miss on why they are saying what they are saying. Some people are careful with their customers or clients but not with parents, teachers and friends.

      Keep growing , keep learning

      TEAM JI

  14. Ujjwal says:

    Purushottam,

    I also work in IT thus I’ll just give a IT example. Suppose you work in Java , you have spent at least 2 years in learning Java and now after 5 years you are a good Java programmer. Now if I want to put you in a SAP Project , you will tell me that you cannot do it as you do not know SAP.

    Thus you understand that you need skill to do that job. However, your friends etc have told you that you can pick stocks . do day trading , do F&O without any formal training and without any effort. This is the biggest lie. Please ask yourself why do you think you can beat the market where professionals are spending their full day doing that as their day job. Do you believe a share broker can write better code than you in your field? If not then how can you do his job without a formal training and spending only 2-3 hours a day.

    My advice is as follows for you and all other young Turks working in the Hot skill areas

    1. Seek professional help from firms like Jagoinvestor etc.
    2. Start learning the basics and keep your goals reasonable.
    3. Expect 12-15 return in Equity over the next 10 year period and do not think you can earn crores of rupees just by doing day trading in one year.
    4. Talk to your seniors who have actually have money, do not get advises from 27 year olds whose networth is less than 10 lacs .
    5. Have a balanced life and control your costs. You have to save money to invest.

    You can become rich, it is possible but the most important requirement is you need the temperament to become rich. You have to be patient and stick to the plan without wavering mid way through the course when the market becomes bearish.

    Ujjwal

    1. srinivasu says:

      smiling at point no4.
      good work

  15. Saurav says:

    hi all, I’s told by my agent to invest in 2 ELSS Schemes of Reliance & SBI MF… I lost money n after maturity redeemed entirely… now I called tat guy back n asked him why he dint advice me any HDFC tax saver he cudnt answer… thanks 2 JI team 4 educating us any the basics of investment…

    1. nandish says:

      Hey Saurav,

      Good to see you growing as an informed investor. http://www.moneysights.com is good for picking good ELSS funds when planning for your taxes.

      all the best
      Team JI

  16. Kranti Goyal says:

    Hi,

    Worst advice received from my friend to buy ICICI Prudential life time super ULIP. They didn’t tell me about any charges. They show me complete good picture of scheme and worst part of it is they handed policy document after 15 days. So at that time I am unable to dump this policy. After that i have decided no to ULIP.

    Kranti

    1. Kranti

      Your case is rank 1 “bad advice” , as its a wide spread problem .

      Manish

  17. amol says:

    the worst advice in 2005 => buy an Endowment policy from SBI. The advice became action then and I bought it. Paid 1,50,000 in total 5 premium and lately surrendered the policy(after knowing how worst is that).

    Now a days also I keep getting advice from every other person that “buy real estate, buy, buy, buy…its hot investment”

    1. nandish says:

      Thanks for sharing Amol.
      nandish- team jagoinvestor

  18. Asif Icbal says:

    Worst advice in 2007: To take LIC Endowment policy (Table No. 14) with annual premium 14k.
    Corrective Measure in 2011: Stopped paying premiums further and surrendered the policy, waiting for refund of maturity value.

    1. nandish says:

      Thanks for sharing. It is actually not about the mistakes we make but what we do after the mistake is made matters in our financial life. Mistakes are the best teachers when it comes to personal finance . I like the word corrective measures that you took.
      nandish
      team jagoinvestor

  19. Harpreet says:

    I asked my LIC agent that I want to go for “Term Insurance”. He showed me some other LIC policies and showed me things which looked rosy. He even called one of his seniors (may be because me and my wife are from US) to let me know the advantages. I remember the words from his senior “Term Insurance is a waste of money”. But I did my research before I went to these guys. I ended up buying only “Term Insurance” for me and my wife (as we both are in our 20’s). and now, my wife is more impressed with the way I handle financial decisions. 🙂

    1. nandish says:

      Happy to hear how you handled, thanks for sharing your experience. The lesson to learn for all is never see insurance as investment and always buy pure term plan.

      I guess Research is one thing that can save us from such experiences. Listen to all but only trust your own research. If we cant attract good advice we can always attract good information by our own research.

      1. Harpreet says:

        You bet. and thanks to you guys. This blog was something which drive me for insurance else I would have not thought about it (and many other things) this early.

        1. Ramakant says:

          I am not exactly sure if buying term insurance for both you and your wife makes sense (if both of you are working and earning). It makes sense to have term insurance for only one who is probably earning more. If you alone are working then it does not make sense to buy term insurance (or any insurance) for your wife because if she is no more tommorow u will have gr8 personal loss which is impossible to recover but u will not have any personal loss. Please consider this from practical point of view 🙂

          1. Ramakant says:

            Correction in the last sentences:
            If you alone are working then it does not make sense to buy term insurance (or any insurance) for your wife because if she is no more tommorow u will have gr8 personal loss which is impossible to recover but u will not have any financial loss. Please consider this from practical point of view 🙂

            1. Harpreet says:

              Thanks Ramakant for your inputs. We both are working at this stage. I earlier thought about this. and even, checked with Manish on this (I mean I commented on one of his post asking question if both husband and wife should go for insurance and he suggested that its not husband/wife specific). As we both were working, I took for both of us.

            2. Harpreet

              Just because both husbad and wife are working does not mean , they both should not take insurnace , at the end , insurance is a tool for arranging for money for your loved one;s which you want them to get . Even if both husband and wife are working , it might happen that husband wants her wife to do “arraam” later and not work and live her life without working , so he can take insurnace , in the same way , the wife might want her husband to get a lumpsum and have a better and easy path in life later and she can take insurnace .

              Lets not act just on what is known in industry and lets use our thinking

              Manish

  20. nandish says:

    Hi Purushottam,

    You may would like to visit http://www.jagoinvestor.org, you can read about various services we as a team offer and drop in your inquiry to schedule a call. With us or with any person you choose to move ahead you have taken the first step and now dont get stopped till you achieve all that you mentioned. Personal finance is not about numbers it is about YOU. Have someone and map out your finances in a professional way.

    nandish- team jagoinvestor

  21. Sandy says:

    I have a query regarding insurance.

    If I buy a Term insurance of 50 lacs for 25 years, will my premium remain the same for each of those years or it will keep on increasing progressively. Supposing I have being paying my premiums for five years. Will the premium charged to me be same as that paid by a new customer buying a fresh policy, assuming our age is same.

    1. nandish says:

      Sandy,
      opt for a level term plan in which the premiums remain the same for the entire tenure of policy. Any Term Plan you buy read the policy document and any conditions regarding increasing premium in future. Term Plans are yearly contracts but you can also pay one time premium for the entire tenure of policy

    2. Pankaj says:

      Hi Sandy,

      Your premium will remain same for each of the year and it wont increase.
      Now, for your second query, Suppose you take insurance at age 30 years and you pay premium X rs. After 5 years your age will be 35, premium will still be X rs. per year, however since there is a chance that term insurance premium might come down in those 5 years, so the person of age 30 years taking insurance might be paying premium less than X rs.
      However, the person taking term insurance at age 35 years (your age after 5 years) will in most likelihood be paying amount Y which would be greater than X.
      If any query, please tell, i will try to solve.
      For buying a term plan, go with Nandish’s advice.

      Thanks & Regards
      Pankaj

    3. Sandy

      Your premium will remain same , but it wont be same for a new customer after a few year , mortality rates keep going down and premiums come down . You can see many people who have take the plans 2-3 yrs before and are paying much higher premiums compared to new premiums these days

      Manish

  22. Deepak K Rao says:

    Hi All,

    “Invest your time before Investing your Money”

    “An Educated Investor is a Successful Investor”

    ” The Investor’s chief problem, and even his worst enemy, is likely to be himself”. – Benjamin Graham

    ” Never expect an investment adviser to take greater interest in your money, than you yourself have duty to take”

    ” A fool and his money are soon parted”

    ” If you leap into a well, providence is not bound to fetch you out.” – Thomas Fuller

    ” It is better to prepare and prevent, rather than repair and repent.”

    All the best for your investing life.

    Regards.

    Deepak

    1. nandish says:

      Deepak thanks for sharing what people should do, can you share something that you found as worst advice as an experience

  23. Vinay Sarda says:

    @ All,

    What happens to the SIP’s if we are in Japan and US like equity markets where in last 2 Decades there is hardly any gains. Solely dependent on Equity is not good must have little more diversified portfolio. !!!

    1. Ujjwal says:

      Vinay,

      If you were in Japan then you have almost zero inflation, less than 1 % fixed deposit rate and falling housing Prices. So there is no respite. You just keep in your money under the mattress.

      When the country is in decline like Japan then you have no chance of winning. But in India next 30 years is likely to show growth. If this does not happen then your and my job will also go. So there is a bigger problem if that happens.

      You only invest in Indian Equity if you believe India’s best days lie ahead and not in the past.

      Please read the latest Blog by Deepa in Economic Times where she shows the inflation and returns of various asset classes in the last 30 years which will give you some indication.

      You can always tell me that the past trend is not an adequate indicator of the future and that is true to some extent.

      Ujjwal

    2. Vinay

      The strategy will change if we are US or Japan , thats a different story and that might happen in few decades , but its tough to happen in next 20-30 yrs .

      Manish

  24. Sushil says:

    My worst advice was investment in F&O…when my broker told me that i can earn unlimited with this and he arranged a tutorial for me to learn the F&O….i traded on his advice and lost 134000 7 years back….which could have been saved and invested in real estate now valued at 1340000 ….that was my worst investment advice

    1. Sushil

      F&O is tricky . Even I lost money in F&O . But I had knowledge and huge passion , even then i lost money because I thought its too easy and that killed me .

      Manish

  25. Sahil Bhatia says:

    Hello Manish,

    Firstly, My heartiest congratulations to you on your marriage.

    The worst advice I had ever received in terms of financial life was close to a year ago, to buy LIC’s Jeevan Anand, but thanks to Google Baba… I landed up reading your blogs which simply blew my mind and I never bought that.
    I understood insurance and investment should not be mixed and also learnt a lot about other things from our blog. Keep posting.

    Thanks
    Sahil

    1. nandish says:

      sahil happy to see your participation on blog. It has been wonderful working with you as an investor

      nandish

    2. Sahil

      Thanks . Keep reading and use the knowledge to take right decisions

      Manish

  26. Vinaya H S says:

    Here’s mine:

    “Warren Buffett is the world’s most successful investor. If you had invested in Mr. Buffett’s company when he started off over 40 years ago, he would have grown your money by 400,863%!”

    http://www.vinayahs.com/archives/2008/11/25/tip-tuesdays-avoid-the-we-can-help-you-mimic-warren-buffetts-style-of-investing-trap/

    1. Ram says:

      It is always easy to look back and say if you had done that you would have got this. If we could travel the time and know what’s going to happen then every one of us could have been more successful that Buffett. I am sure in next 40yrs also there would be some new Gates & Buffetts. May be they are kids or newbees in investment/bussiness today. Can you identify them today and trust your money with them? I doubt!

      So it make no sense to say that …”if you had done so you would have got so”… by seeing the past 🙂

      1. Nitin Gupta says:

        agree with Ram,
        even for a particular time period, u can say that sip were poor than lumpsome, but it does not mean that the advice of a sip was incorrect advice. it all depends an how market goes.

  27. Vishnu says:

    Hi Manish,

    Good that you have got time to post at this time 🙂

    At the start of the ULIP regime, I was advised by one of the close family friends to invest in Bajaj ULIP showcasing only PLUSes. It had 80% allocation charges in first year, 20% in second year (1 year premium gone already).

    Without knowing what it is, without doing homework, I signed up for it. That was the worst investment I did. And, before I realized how bad it is, I recommended it to one of my close friends and he too invested. This is the worst advice I have given to any one.

    1. Vishnu

      The worst part of this was that you also suggested it to your friend , loosing own money is fine , but your friend might yell on you for years for losing his money .

      Manish

  28. ajay says:

    nice insight manish

    1. Ajay

      Thanks . Why dont you also share some bad advice you got from some one

      Manish

  29. Ujjwal says:

    Manish,

    Thanks a lot for sharing this post. I have been investing for the last 20 years and naturally I have received all sorts of bad advices.

    I’ll not blame the advisors , I’ll rather blame myself for listening to them. Here is my list.
    1. Buy penny stocks they will rise faster than the bluechips. ( Was never told that they will crash even faster!)
    2. Buy ULIP as they will give great returns.
    3. Buy Money back Insurance plans as your money will be returned in 6 years and you can roll your money.
    4. Invest in our PMS scheme.
    5. Invest in our PMS for Film Financing. I am not joking I was offered this in ABAN Amro 3 years back.
    6. Buy apartments as house prices always rises. Nobody told me that they rise but at a lower rate in many locations and the total cost after factoring stamp duty, maintenance and tax the return can be less than 7% which I could get in a FD.

    Ujjwal

    1. nandish says:

      Ujjwal,

      Two factors that are used for selling in financial world are FEAR and GREED. The possibility of going wrong increases when the decisions are taken from fear and greed.

      Every new financial opportunity or product when it comes in front of you all that needs to done is slow-down and get to the root cause of why do I want to have this product in my financial life.

      I like the way you took 100% responsibility of all the decisions you took. No one ever mis sold us anything we allowed them to do so with us. The more responsibility we take the higher we get in our financial world- No more Blame game it has to be pure responsibility

      nandish
      team jagoinvestor

  30. varghese says:

    Dear Manish,

    Many readers ( even young people) are expressing that ULIP policies are so bad.Pls give your comments

    1. nandish says:

      Hey varghese,

      For a common investor ulips turns out to be a complex product where insurance is mixed with investments and they are linked with market. If you have proper understanding of the cost involved in a ulip and can take advantage of switching option (changing debt to equity from time to time) it may work for you. You have a lock-in of 5 years as well.

      If you stop in between you sometimes have to pay surrender charges which can be heavy on your pocket.

      The powers are less with investors and more with the company. To keep your financial life simple you can avoid investing in ulips.

      Nandish- team jagoinvestor

      1. Ujjwal says:

        Nandish,

        I agree to what you are saying. But I see one positive aspect of ULIP for people who gets swayed by the market movements too easily. If they do SIP they close the SIPs when the market falls and restart when the market has risen. However, with the lock in ULIPs can save them and allow them grater cost averaging. However, if they had already learnt about switching then they are doomed as they will switch to Debt when market falls and to equity when the market rises.
        But in general I have seen the activities tend to be much higher in MF than in ULIPs. As activities cost money an average investor may be better off in a ULIP situation.

        However, I am not suggesting people should buy ULIP for this reason. I’ll rather suggest people should learn basics of investing and take the right decision.

        Ujjwal

        1. nandish says:

          Well said (the last line)

  31. Nilesh says:

    Dear Manish

    Good post, where atleast young people starting their career can benefit and learn from others mistakes…i too was sold LIC endowment policies worth 36000 a year…in 2003…i hav made them paid up and bought a term insurance last year….

    Rgds

    Nilesh

    1. nandish says:

      Nilesh it is good that you stopped seeing insurance as an investment. Thanks for sharing I am sure many will learn from the step you took.

      Nandish (Replying on behalf of Manish)

  32. Sankhdeep says:

    By luck before making any financial decision i collide with Jagoinvestor. It saves me. I am tremendously benefited by Manish and his team. Now, before making any decision i dig Jagoinvestor.

    Though i think my worst decision was to take 30 lakh term policy from Aegon, which were very new at that time. I should split that amount with LIC.

    1. nandish says:

      Hey sankhdeep,

      Mistakes are nothing but errors in judgement and decisions we take in our personal finance. It is good that you have become an informed investor and you always study before making your financial decisions.

      Insurance is a yearly contract you can always split and buy new term plan (split with LIC jeevan amulya) . Even the premiums are become more and more competitive with each year passing.

      All the best

      Nandish( Team jagoinvestor)

      1. mukul says:

        nandish,
        i agree.i did a similar thing for my family member.told them to split the term amount.one was lic amulya and other was there preference.thanks to efforts of you guys, i started financially literacy with a new zeal.now atleast I dont get sold ULIPs and LICs plans.
        Manish,
        i started thinking even on retirement planning.I am figuring out the numbers.i will implement my plan.(going by my track record,if i start it,i will finish it.that too without losing time.)
        thank you team Jagoinvestor.

        1. Mukul

          Nice to hear that , you can use our retirment calculator for help .

          Manish

  33. S S says:

    Since you have already posted my comment there, no need to post it again, though if given a chance I would have written the same thing.

    1. nandish says:

      SS.

      Blog is all about group dynamics, we all have learnt a lot from your sharing. I am sure many people can relate with what you have shared.

      nandish

  34. Jitendra Solanki says:

    Hi Manish,

    Very nice compilation.

    And we can see its being present highly in insurance sector.
    Agents are always on Roll and customers are taken for a ride.

    Jitendra

    1. nandish says:

      Hey Jitendra,

      In india 90% of people see insurance as investment and only 10% people see it from protection point of view.

      The world is full of good and bad advice the more informed you the better you are able to protect your wealth

      nandsih

  35. Sidharth says:

    Manish,
    nice post.
    5yrs back an agent make me buy icici fusion fund.
    And now one of my friend trying to sell ulip(lic) from last 6 month.

    1. nandish says:

      Buy only things things that you have the understanding about, each investment has to be with a clear purpose and intention

      nandish

  36. Sundar says:

    Dear Manish,
    Good post on most important point.
    As u know I am in the market since 1979. I have ups and downs. What I have learnt will hopefully be useful to young investors in the Market.

    1. Do not believe in Brokers or Friends. Talking with them for timepass and mental feel good factor is OK. But when it comes to making decisions with your hard earned money, nobody can help you. You only have to make informed decision based on your family situation and the amount of risk you can take. Your friend and Broker will not know your true risk tolerance. Most of us try to boast before them that you can take high risk and that is bad.

    2. In all market conditions there are stocks which are deeply undervalued or deeply overvalued. Even in the top 200 stocks of Nifty it is available. So one should only invest in those stocks which are undervalued so that you will loose less in case of market downturn. On the contrary you should short those stocks which are overvalued, if you want to play short game.

    3. Always keep your long term goal in sight and do not overindulge in risky assets like stocks or real estate loan offerings or even Gold at high prices. Always rebalance your assets allocation periodically.

    1. nandish says:

      Thanks for sharing your life lessons with all of us. I can see your stand for young investors being happy and informed investors

      nandish

    2. Sundar

      Thanks for sharing your experience 🙂

      “Do not believe in Brokers or Friends” , that kind of wisdom can come to a person only after being in market for atleast 10 yrs and experiencing it from all angles 🙂 .

      Thanks for valuable points you have given in your comment, its really useful for newcomers .

      Manish

  37. Vidyasagar says:

    The worst advice I got was, when the so called “Financial Planner” I consulted asked me to take ROP insurance from AVIVA, saying that term insurance is waste of money.
    But after basic calculation I found that, if I had taken part of the premium of ROP insurance and took a term insurance and put the rest in an basic FD, the returns were higher and the SA too.
    Luckily I just read an article on blog the day before I got the advice. It made me take the right decision. I smiled at him and said, never call me back.

    A big “THANK YOU” to all the bloggers educating the common investors.

    1. Shiva says:

      Superlike! I was saved in a similar way!

      1. Jig says:

        Well ,i saved with taking ROP plan of Aviva.
        I have done calculation with the mentioned in a same format of term plan +PPF.

        well my case was is different where NRI is not eligible to get Online Term plan, in this case ROP of Aviva Lifeshield is best option available in market. Also with 30 lac term plan, No medical required too.

        1. Jig

          Thats some good information . So what you are saying is that ROP premium term insurers does not require its policy holder to give medical exam ? Thats very strange ! . It should only be true with small cover (less than 50 lacs) . If you take more than 50 lacs , then medical exam must be there for sure .

          Manish

    2. Vidyasagar

      Good to know you got saved by bloggers 🙂 .

      Manish

  38. caribou says:

    The only advice I got from insurance agent is to buy anyone insurance plan especially from ULIP. They say the returns is around 30% and can be withdrawn after 3 years when the return is highest.

    1. caribou

      ya , its a commom complaint from ulip buyers , they are missold with the same trick as u mentioned . I would say u are partly responsible for this issue . What do u say ?

      Manish

      1. caribou says:

        He he he…. Whenever they ask me to buy, I listened carefully and I say that they were very good to buy, but I don’t like to buy it. I told them that taking term insurance and buying SIP is a better option.

        1. Nice

          So eventually you didnt buy it 🙂 . Smart 🙂

          Manish

  39. sarath says:

    Hi Manish,
    Good post. My worst investment decision was buying a bunch of Jeevan anand policies of 50K each. I paid them for 3 years and after some research and reading your blog I surrendered them.

    Sarath

    1. Sarath

      Ok , good to know that , I hope you had some a comparitive analysis on both the cases of “if you surrender” and “if you dont surrender” . Over the long term you must benefit .

      Manish

    2. dipen says:

      hi sarath…
      i did the same too!… i paid 88K / yr for 4 yrs and then after reading manish’s blog, i surrendred those policies…

  40. Rakesh says:

    Manish,

    Good post. My worst investment decision was buying Endowment and Pension plans in 2004. JagoInvestor was not there then to alert/advise me.
    However now, I have made them paid up…..

    Rakesh

    1. Sharan says:

      i have a question on how to make LIC policies paid up,I too made the mistake of having bought such LIC policies from my relatives who were LIC agents in 2004 or so and deeply regret that decision how,how can i make LIC policies as paid up,I called up LIC call center and they are not aware of such a process !!!

      1. Rakesh says:

        Sharan,

        What i did was wrote an application letter to LIC that due to financial constraint i am not able to pay the premiums hence make the policy paid-up and gave it to my agent. He then submitted to LIC and got an acknowledgement from then.
        Since then i have not been paying the premiums.

        Rakesh

      2. Sharan

        You can just stop paying the premiums and it will be converted into paid up policy, as simple as that .

        Manish

    2. Rakesh

      Good to know that you made them paid up now . I would suggest look at pension plans once again and see if you can switch in correct way to make hte best use of those pension plans (assuming that they are ULPP)

      Manish

  41. Dilip says:

    I have taken two ULIPS and costing me 20% of my salary and not allowing me to get into more mutual funds as i wish

    1. Dilip

      Review these ULIPs and see if they really make sense in your financial life or not . Have you completed 3 yrs ?

      Manish

  42. anil nakra says:

    wrost advice i ever got and loose money of 26000 in one marisous countary ,9forgetten name and it is good that i forgeten the company name) just like recent well know froud company like speak asia . i was assured by my cose friend to get 20% return per month . website closed of said company and every thing close , in punjab so many person invested in it

    1. Anil

      Many companies like this appear out of the blue . Dont look beyond 20% return yearly ! , that too with risk .

      Manish

  43. Anuj Joshi says:

    Worst and most misleading advice in financial world according to me is…

    Buying Options is a limited risk and unlimited profit strategy

    The truth is that when one buys an option the “limited risk” often leads to a loss of 100% capital specially in case of OTM options.

    1. Anuj

      I like this one . I have seen this happeneing with me too . When I traded options , I used to loose all my captial at times and then I also realised this hard fact that we have to look at options this way as you mentioned .

      Have you traded options a lot ? What was your experience ? It seems to good , but its not that easy 🙂 . Right ?

      Manish

  44. Mayank Gupta says:

    The worst advice one can ever get is to buy ULIPs instead of Mutual funds for a investor having a investment horizon of 3-5 years

    Hope you all agree to the same!!!

    1. Mayank

      Yes , that was a bad mistake . I hope you will do your study next time before getting into something which involves hard earned money

      Manish

  45. Sandeep says:

    The worst advise i ever got was from a friend in mutual fund industry. It was in dec 2007…markets were going up unabated. He asked me to take a personal loan and invest in mutual funds as the PL was at 13% and i would definitely get 20-25% from good MFs. I got greedy and bought MF/share worth 5 Lakhs on 31st Dec ’07.
    In 4 months i had lost close to 20% of my invested corpus. It was then i decided to face the reality, accept the loss and get out of the investments at whatever loss i had incurred. I also lost on interest on PL, foreclosure charges for PL. At the end of the ordeal i had lost close to 3 months of my salary then & i learned an invaluable lesson…

    1. T.S.ASHOK says:

      Oh God!! I thought i was fooled very much.. But when i see your case, i found there are many money eaters are eagerly waiting… My case is similar like yours..In 2006, i came to know about MFs and one of my friend introduced one broker and he told that invest in NFOs and that will be a good option for big growth..He told that it is easy for the growth of NAV of Rs.10 into Rs.20 instead of Rs.130..into 160..I invested in JM Agri & infra fund, JM Contra fund..I faced huge loss after two years of monitoring it…Broker told that when it NAV decreased, you should invest more(!)..But i did not do it anyway. Then finally i came out when NAV went less than Rs.3..Nice na!!!

      1. TS Ashok

        So you helped the broker earn 6% out of your Investment 🙂 . Hope you know that 🙂

        Manish

      2. srinivasu says:

        yes, as a mutualfund agent i really believed what those laptop, english speeking good looking people from HEAD OFFICE(?) told about growing opportunities /income in agri realated business.
        many innocent clints lost their hard earned money !Today the NAV is 2 rs.
        2.franklin templeton indoasain equity fund 11 rs after 3 years !
        thanks for this good work.

    2. Sandeep

      The first big mistake you did was to take a loan for buying equity at high point . If markets have run for 2-3 yrs and then you buy it with a loan , its a idiotic thing . However if you would have taken a loan to buy equity after a crash, I would have said you made a smart move.

      Note that its not a recommendation to take a loan after a crash , but i am saying that would be a better situation and made some sense “logically” 🙂

      So are you planning it next time when there is a crash ?

      Manish

  46. Vikram says:

    Is there any good advice or good companies available in the money sector??

    It appears to be a fish market full of semi literate crooks out to fool you. It is best to just invest in simple instruments that these crooked ‘agents’ don’t even talk about. Instruments like F.D.s are simple and they dont give you a headache.

    The headache – just not worth it at all. You have to run to these finance company offices so often, for this, for that….its sheer nonsense. Like ICICI. You have to go to their office many times, things just keep happening in such a manner. Their policies are full of spelling mistakes and other errors and you have to run to their office to get these fixed.

    When they want to sell you their ‘policies’, they run after you. But after that, if there is any work, any mis spellings, policy lapse etc, you have to run to their office, they will not come to you.

    Some of the misselling I have suffered because I did not have time to investigate the talk of these policy selling ‘agents’ and fly by night advisors.

    1. LIC endowment policies. They don’t suit me.

    2. ULIPS I never needed. Reliance ULIPS especially. Their customer care is a nightmare. Their online fund switching system is full of errors.

    3. Birla sunlife ULIPS, yet another nightmare. Their customer care is horrible. Their paperwork is horrible. My Birla Sunlife policies lapsed many times in one year, but they did not even inform me. When I noticed, they don’t care to compensate me for the loss that their own paperwork has caused. (Internal communication error in Birla Sunlife caused my policies to lapse.)

    3. Pure equity mutual funds sold by some fly by night crook who kept insisting ‘market has to go up only. There is no other direction for it in the long run, it will touch 30,000 by 2011’. And now I’m hearing that IDFC mutual fund has harassed many people (at consumercomplaints.in) due to their shabby paperwork.

    1. Jagadees says:

      My worst experience is of my dad who invested in LIC endowment policy. He duly paid the premium amount to LIC agent for 2 years. But the LIC agent paid only the 1st year premium to the office and pocketed the 2nd year premium for his own expenses.
      @Vikram
      The question you asked is wrong, “Is there any good advice or good companies available in the money sector??”…the correct question is “Is people doing their due diligence and seek good advice/companies before investing their hard earned money??” There are plenty of good and honest companies & web sources to help common people to invest your hard-earned money. Dont seek free lunch because there isnt any in financial services. Its upto the individual to increase their financial literacy and perform due diligence before investing.
      P.S: You mentioned that FDs are safer instrument. But it is only partially true. If the bank you invested goes belly up, only upto 1 lac of your FDs is insured. So its better to keep money under the mattress.

      1. Jagadees says:

        The best way is to learn from the past mistakes and performing the task correctly rather than the avoiding/ignoring the task.

        Regards
        Jagadees

    2. Vkram

      Thanks for your detailed comment and sharing your case . I know there are so many cases of misselling and unprofessional behaviour from big firms too . Recently there was some case with Canara Robeco too .

      Manish

  47. Hi Manish,

    Nice compilation.

    List of worst advice is longer than good or right advice – even on my blog people daily confess one or other such thing. 🙁

    We know about agents who are taking there investors for ride but heart brakes when some of friend or family member do it. And in case of insurance this is very normal due to selling system called natural market.

    1. Hemant

      True , close friends and so called “Uncles” top the list of missellers and bad advice providers . The big problem is that at times , even the advisor does not know that he/she is giving wrong advice, because of wrong perceptions and knowledge

      Manish

    2. Smita says:

      It is true but doing nothing is better than doing some thing. Everybody is critising LIC but many families have suffer only because the man who was leading the family is not having any type of insurance cover! All the advice given by you is not for him it is for well settaled & financially diciplined persons. 90% of common man is not part of your advice. So lets say.. Jindagi k Sath Bhi. Jindagi K baad bhi

      1. jayant says:

        Smita

        Looks like LIC agents have hardly hurted(are you one of them ? ) but please accept the reality that agents have truly screwed up the matter in insurance industry. 99% of the people in india don’t understand difference between insurance and investment. LIC and its agents have failed to do their duty and truly cheated many people.

        1. srinivasu says:

          yes, every word is true.

        2. dipen says:

          veryyy true… even i was duped by a so-called-uncle who sold me LIC policies… i paid yearly premium of 88000 rs and after 4 yrs , i gathered the courage to close thse LIC policies.. now i cant even tell u how much i hate lic agents!…

        3. pravin says:

          exact and true words jayant!
          Myself and lacs of others have suffered a big loss bcoz of all those crappy LIC policies that were miss-sold to us by these LIC agents(or cheaters).
          These agents deserves a place in HELL.
          I had loss of Rs. 82,000 when I surrendered the policies last year(of course, after reading this useful blog…Thanks manish) . Thank god, I got saved for the future.

          1. Pravin

            Thanks for updating us about your case ! .

            Manish

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