GOLDEN RULES OF FINANCIAL PLANNING
The Beginners Guide
Managing one’s money and growing it needs to show a bit of commitment and in-depth study. Deciding to invest is the first step toward money management. Investing money can be a powerful tool towards greater financial independence.
You may have many financial goals in your mind like buying a vehicle or buying the latest smartphone or wealth accumulation for your child’s education or marriage. In all these situations, you need sufficient money.
Ever imagined, where it’ll come from? You got to have savings! You got to have investments! Investments can help you avoid falling into debt traps and it can help you to multiply your wealth. You may achieve your financial goals on the determined timeframe.
Wondering how to save and how much to invest in order to meet your financial goals? Well, the percent varies individual to individual.
When I say investment, I nowhere mean deposit your money in saving or current bank account. A bank account may not fetch higher returns. Instead, you may invest this amount in an investment vehicle that ensures better returns and at the same time is each to liquidate.
Golden Rule of Financial Planning #1
Regulate Your Expenses
Don’t live way beyond your means. Cut down on unplanned expenses. Expenses might leave you with no money for the necessities. Try making a budget. A budget before your eyes will help you to control your cash flows. A budget gives you a fair idea of how much money you have coming in and how those funds are spent.
Once you are done with budgeting, create a hierarchy of your needs and decide its priority.
Golden Rule of Financial Planning #2
Create Your Personal Investment Portfolio
Constructing a personal investment portfolio is the first step toward wealth accumulation. Building an investment portfolio involves the distribution of your investment amongst equity, mutual funds, FD’s, bonds, LIC, and cash. Creating an investment portfolio is also known as asset allocation. Diversify your portfolio as per your investment goals. It is always wiser to have a long-term investment, it helps to accumulate greater corpus.
Once you have constructed a portfolio, rebalance it periodically. It will help you to keep up with the market fluctuations.
Golden Rule of Financial Planning #3
Plan for Every Stage of Your Life
Determine important stages of your life, and plan for it, well in advance. As one of the golden rules of investment – the early you start, the safer you reach. Once you have listed the stages of your life or important financial goals, define the amount you need to accomplish each goal. This will give you a fair idea of how much you need to invest today, to enjoy every stage of your life.
Golden Rule of Financial Planning #4
Get Your Risks Covered
You need to realize that our life, our wealth, and our estate everything is vulnerable to risks. These risks can put you and your dependents in financial peril. And hence, the way investing is essential for wealth accumulation, getting your risks covered is essential for wealth preservation.
Investments and insurance are two separate things, which people don’t understand. They buy equity and feel themselves at ease or financially secured. They end up paying more, just to remain inadequately insured.
Ideally, the sum assured should be at least 10 times your annual income. Apart from life insurance, buy health insurance and a term plan as well.
Golden Rule of Financial Planning #5
Plan Your Will
Each one of us has an estate. Every asset constitutes an estate, whether it’s your vehicle or your home; or the cash lying in your saving account. It’s your responsibility to decide what happens to your estate after you leave this world.
Make a will, which can be the best favour for your loved ones. It will ensure that your successions do not have to face any challenges in order to get the ownership of assets you have passed on to them.
If you don’t know where to begin from, then take advice from a reliable source. You can even reach out to us for assistance on financial planning. We are just a call away.
Deepak Dhabalia
Wealth Coach
