In the financial world, transparency is the key. However, when it comes to handling your own finances, there are certain details and financial secrets that best remain confidential.
In the financial world, transparency is the key. That is what we look for when it comes to investing in equities. However, when it comes to handling your own finances, there are certain details and financial secrets that best remain confidential. It is your financial statement and only you and your family are entitled to know the finer details. In your own interest and the larger interests of your family, it is always advisable to keep certain financial aspects of your life totally confidential. Here are 5 such aspects:
1. Value of your portfolio and how you built it
The worth of your portfolio is the number of securities you hold multiplied by the market price. Obviously, if you have started saving and investing early, you are certain to have accumulated a tidy sum by the time you have crossed your forties. Your portfolio, whether inherited by you or created by you, is entirely your own business. Whether you are worth Rs 1 crore or worth Rs 10 crore is not for the world to know. Especially, be careful not to make such statements in public places when you are with friends and especially when you are with total strangers. At best, you can discuss these things with your financial advisor after signing the confidentiality agreement.
2. Your total debt and the cost of servicing
Most people today have loans to finance their homes, cars and a host of other items of personal use. With the proliferation of personal loans and credit cards in India, there has been a surge in borrowing by Indian households. Be particular not to talk about the details of your loans with anybody. Today any bank can easily screen your total liability by tracking your credit history with agencies like CIBIL. These issues are OK to be discussed in confidence with your banker or your financial advisor. But never talk about the extent of your loans or your monthly loan servicing costs in a public place, informal gatherings, and friends or outside the immediate family.
3. Credit and Debit Card numbers
Many people have the habit of writing down their credit numbers on a piece of paper or even giving their credit card numbers over the phone. Such practices are best avoided. In case of debit cards and credit cards, the onus is on you to maintain the utmost confidentiality. For example, there are many sites that will permit you to pay just with the card number. By disclosing your card number, you are opening yourself up to unnecessary problems. Never share photocopies of your card with the airlines when you book tickets. Even if you blank out the CVV number on the back side of the card, sharing your card with the actual name and expiry is good enough for your card to be hacked into. More importantly, confidential access codes like passwords, PIN numbers and OTP for transactions must never be disclosed to anyone nor written down on a piece of paper for records.
4. Confidential transaction details
This is a slightly more complicated point and many actions that appear to be harmless may actually end up creating a problem for you. We have already discussed about maintaining confidentiality of your card details, CVV number, password, OTP etc. Confidential transactions here are much bigger. Never leave signed cheques or signed debit instruction slips (DIS) with your friends or brokers. This is a recipe for trouble. Similarly, your PAN number, Aadhaar number, bank account number, insurance policy number, your UTR number when you transfer money online are all confidential transaction details. They must neither be shared with unknown people nor must the details be shared through SMS, WhatsApp and even by email.
5. Specifics of your tax returns
In the era of over enthusiastic salesmen and saleswomen, it is quite common to get calls asking for your total taxable income, your total tax paid etc. You can only share these details with your financial advisor and, of course, with the tax authorities. Remember, sharing confidential tax information can be the base for mischief. You are not obliged to share these details with anybody, especially with unknown people. Your tax returns are a top secret document and the details should be kept absolutely confidential. Your income is your business and therefore even your income tax is your business.
As a prudent individual, these are some basic financial facts that you should not share with anyone; not even to your closest of friends.
(By Vaibhav Agrawal, Head of Research and ARQ, Angel Broking)