Should you bother about GST so much?

Few days back in a party hosted by a client, I got introduced to a person who was keenly interested in stock markets. Nothing unusual given current bullish times.

Before introducing me to him, my client had already hinted about this guy’s newfound interest in stocks when there were other important things to take care off. (Thank God…my client knew what’s actually important).

I will spare the details of our talks…

But this person was ‘over’ interested in knowing which stocks would benefit from GST implementation. I told him that I was not discussing specific stocks with him but that, I believed GST does seem to be a net positive for India in long term – a general statement. 🙂

Sensing my lack of knowledge about GST, this gentleman kept talking about certain stocks that could benefit from the new tax regime. Many times during the conversation, I was reminded of Benjamin Graham’s beautiful quote –

“Obvious prospects for physical growth in a business do not translate into obvious profits for investors.”

🙂

After a while, I felt that I had had enough of GST (a thing beyond my control) for the party.

So to unsettle him and bring him out of his self-created GST cocoon, I tried asking some tough questions. And as expected, he became uncomfortable.

Totally underinsured. No health cover. Most savings in bank FDs and some in provident funds (which he depleted everytime he switched jobs). Less than 5-10% of financial assets invested in equity, treating credit cards as a source of easy funding and what not…luckily no home loans as he was living in ancestral house.

And here he was trying to find the next GST multibagger.

My client had rightly hinted towards this guy’s wrong priorities. 🙂

Now there is nothing wrong in finding the next multibagger. But I could easily sense that this person’s interest in stocks was due to the recent bull market and that he was under the impression that stock market is a place to make some easy money.

Unfortunately, its not…

It’s rather a place where wealth is transferred from the impatient to the patient.

Now I have asked my client to put some sense into this person’s head so that he doesn’t commit big mistakes in future. Or if he can’t, then maybe introduce me to a new client. 😉

But jokes apart, what I am trying to highlight here is – priorities.

This person’s situation was not as bad as that of many others – who are just one unplanned expenditure away from a financial disaster.

For such people, putting their personal finances in order is more important than finding the right stock.

Many people might not agree to this view upfront. But if you understand how money really works, you will know that I am right.

One right stock pick here and other there won’t take you anywhere. You can’t eat relative over-performance. Saving for your financial goals, getting out of high-cost debt, smartly managing your other loans, etc. are far more important.

So if you know people around you who are focusing on the wrong things, then do them a favor by helping them focus on the bigger questions. God will bless you. One day, these people too will thank you when they realize what big a favor you did to them.

As for GST, I know a few things but I am no tax expert. GST seems to have more positives to offer than negatives.

But expecting GST to change your personal financial life dramatically would be wrong.

How exactly GST will impact the wallet of common man depends on the actual basket of goods and services one consumes. And this varies from one person to other.

Though it would have been better to ‘really’ have ‘one rate GST’, its still a big step forward. If GST can be simplified further in few years, I think it would yield better results for the economy as a whole.

So that was about GST. To increase your GST knowledge, I suggest you talk to your tax friends. But don’t forget to take actions for things you can control. These things will help you more than increasing your GST knowledge.