Last week I was speaking to a cousin who has just retired – and is likely to get a few million in retirement proceeds. Make no mistake she is rich and not really dependent on this amount of money. Her husband earns very well and they are what can be called “upper middle class” by Indian standards.

However, what she said was a little worrying. She wanted to invest in the equity markets, because the markets have “now” come down. Of course if she had hit these millions a year back she ago she would have said the same thing – and justifying that after all everybody is investing. That is the worry.

Trying to time the market, not understanding asset allocation and to think of your self as a stock market expert just because you have hit some money. And the problem with the equity master is it is a very good trainer – where the fees is paid in advance, and very expensively too!

I realized that not only my cousin, but also for many of us, the root cause of all financial problems (some of us could argue, all problems) lies in our dishonesty!

What kind of lies do we tell ourselves?

I will not die! – Those of us who refuse to get ourselves insured believe that we do not need life insurance. I will not elaborate on this.

Not planning ahead for the future If you tell yourself that you’ll always be employed, always be young, your health will always hold out, and things will take care of themselves, you’re lying to yourself. For your goals you need to save and invest. For your illness and other misfortunes you need to insure – medical, critical care and life.

Arguing with your spouse about money: I have been stunned at the number of spousal fights I have seen over money. Whether it is a wife spending Rs. 12k on a name plate (and the husband saying that is the price my Dad paid for his house!!) or a husband lending Rs. 50k to a “friend” who is an alcoholic. First the denials, then the finding out, then the fights, and then, even worse, hiding the facts. After all this, lying to each other. Sometimes white, sometimes black. Kids watch this, and get confused about money.

Self confidence is substituted by buying things you do not need: If you just go out and spend money, hoping to “feel good” you are again lying to yourself. Many people think by spending money – could even be “dyeing” your hair or buying some things you do not need, again you are lying to yourself, are you not? Most people who are confident of themselves do not have to “fool” themselves by buying expensive gifts for themselves.

Making poor investment choices Even poor investment decisions are a form of dishonesty. If you don’t adequately research your investment choices and invest the time to come up with a plan, you’re investing blindly and convincing yourself that blind investing decisions are good ones. The only way to invest honestly is to do the footwork – know what you’re buying and why, not just following everyone else.