Assumptions in planning your investment and finances

Often one is sold (or at least made an attempt to!) products/ schemes/ investments which seem great, and sometimes too good to be true. But these great things are usually built upon some assumptions, some seemingly credible, some seemingly shady.

Are all these premises true or there is more to it than what meets eye?

Let’s consider few instances –

financial planning and investment planning

– An insurance/ ULIP agent selling us policy which gives x % returns (but assures nothing, so you may be exposed to more risk than what you think)

– SIP returns calculator letting you calculate based upon “assumed” 15% rate of returns (reality can be different on either side – so, be aware of both scenarios unless you are an incorrigible optimist!)

– Bank FDs giving assured rate of returns, assume that banks will be able to return money (or the government, partly, if the bank goes bust!)

– Assumption that real estate will grow @ x% and give “assured returns”? Or your will earn rent equivalent of EMI (don’t understand how!)

– Retirement planning & corpus needed work upon assumption of you needing X amount per month & a buffer of Y amount and assuming a lifespan of Z years.

– Assumption that debt fund always give more than FD returns! (they also have bad years too!)

Few of the above seem quite obvious. Few may not be so.
Is it time you need to rethink about any of these assumptions? Or more of similar assumptions?

Maybe, if we do, we can plan out things a bit more differently.

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As we talk about assumptions, sharing one of my facvourite quotes about importance of checking your assumptions/ premises
“Contradictions do not exist. Whenever you think you are facing a contradiction, check your premises. You will find that one of them is wrong.”

– Ayn Rand (Atlas Shrugged)

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Originally published here

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