There is a famous quote on planning by the Father of Time Management – Benjamin Franklin. He says, “Failing to plan is planning to fail”. On close notice, one would understand the depth in these powerful words. The same goes true for your personal finance too. If you can plan your needs and wants before time, then mapping money into the respective buckets will help you pre-visualize things.
In this article, we will enlighten you with five quick tips on Personal Finance Planning:
1. Current Scenario
How much is your current net worth? Do you have any debts pending? If you have any such liabilities, then make sure to clear them out to the earliest. Make a summation of total assets. Deduct the liabilities and figure out the net cash. This would be your amount called your Net Worth.
Now, you know how much you already possess in-hand. Let’s move to the next step.
2. Sketch out your Financial goals
Financial goals can be categorized into three main categories – Short-term (buying a bike/car, getting married), Medium-term (planning family/friends’ foreign trips), and Long-term (educational and marriage planning for your kids, retirement)
Possessing clarity is key. You should know where you want to go. If you know where you want to go, then you can find the easiest path towards it. By setting concrete goals, one has already completed half of the work.
3. Money requirement for the goals
Calculate the exact amount for each of your goals. Write it down on a well-maintained notepad. Figures needed for your purposes must be inflation-adjusted. So in order to do that, make some estimates, forecasting the inflation figures. Add them to your current goal requirement figure.
Now that you have the total amount required for your goal fulfillment, it’s time to look for some possible risks that might act as a hurdle ahead.
4. What risks does one need to consider?
Downfalls in life are inevitable. No one can stop that from happening except your karmas. So be prepared for some unexpected events. Securing the lives of the dependants even in our non-existence must be looked upon. Calculate and keep some money requirements pinned for such events too.
Now, as you know, the attainment level, scale your saving period and packet amount depending on your age. Start saving and investing as early as possible. For example, if you are at your mid-20s, start saving a minimum of 5k per month, depending upon your monthly expenses.
The real turning point is not in the act of deciding to save for the next years but is in the act of choosing where to invest in the next years.
5. Investment Options
Considering the present situation of the Indian banking sector, it seems people have lost their faith in banks and their financial products. Latest PMC Bank Scam, Lakshmi Vilas Bank issues, and many other fraud cases have spoiled the bright face of the banks.
Anyhow, a smart person who wants to invest his money for the rest of his life won’t prefer – Bank savings account and fixed deposits.
The best option for investment for all classes of people in the society is – Stock Market. One can argue that real estates are better ones. But, my friend, in that case, please also note the entailed vast piles of capital requirement for real estate trading. However, equities and various other stock market-related asset classes could be easily accessed by ordinary people like we all.
The next question would be – I don’t know anything about markets. And, finding time for the same would also be difficult amidst my full-time work schedule. What shall I do?
Some would say go for Mutual Funds. But the professionals in the Mutual Fund won’t approach the way you want them to manage your money. It’s all automated and process-based. However, the risk is less and hence returns.
If you are really serious about your financial life, approaching a SEBI registered Investment Advisor like us would be the greatest decision of your life. We want to listen to you. And, we want to provide the best service available in the market at the lowest fees, which are almost negligible as compared to the returns you will achieve.
Mr. Nikhil Khandelwal, CEO & Chief Options Strategist at IntrinsicOne Investment Advisory, ensures a one-on-one meet with each of his clients to know him/her completely.
At the end of the day, the choice is yours. And we know that you will make the right decision in your life. If you wish to have a brief talk with our SEBI Registered Advisor, you are free to make a call @ 022-2261 8099 or +91-77698 76666.