Wealthy celebs of the financial world may not be your best guides on money matters

How we love to follow successful people, even in personal finance matters! Recently, I was part of a panel discussion of a company that had corporate and internal participants (CXO level employees), who spoke about their financial journeys. I spoke about what needs to be done for individual financial well-being. The company is well-known and employees have made windfall gains through their stock options, vested over the years.

While the panellists concurred on the mistakes of their early financial life, some of the suggestions on managing money were really off target. The sad part was that employees were veering towards their seniors’ advice over thinking practically. For example, one of the panellists exhorted beginners to buy any stock from the Nifty through a zero-brokerage platform, as their first investment, adding that Nifty was risk-free!

Varying risk profiles

The problem with taking advice from wealthier people is that they have much more funds and, hence, the ability and buffer to take more risks. Twenty years back, wealth gained from employee stock ownership plans (ESOPs) was used to build financial security and the focus was on conserving your corpus. Now, however, ESOP wealth is used to invest in start-ups or stocks and, while this sounds exciting, it is certainly very risky. These exclusive investments are not available to the average investor. So, there is no point in tracking them.

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