Financial Planning- 6 Thumb-rule in 2017

Financial planning:  An Introduction 

Have you ever imagined, How many financial responsibilities a human performs in his entire life cycle?

Basically, real financial planning starts with your earnings.  You must have an investment plan ready with you to tackle the needs of tomorrow. A trend has been noticed in our country, that most investments are made for tax saving. Let me remind you that, please don’t count them in your financial investments. Financial planning is a comprehensive approach to perfectly analyze your needs of today and needs of future.

Steps in achieving financial goals.



So, come let’s discuss how to decide your financial investments:

#1.Compute your net worth:

Before you start, first figure out what is your net worth as of now. To get a concrete result, subtract all your debt and liabilities from your asset and investments. For example-  Your per month earning right now is 20k and you have few installments with you to pay every month, your monthly living expenses etc. Once you are done with calculating your net worth, now you know how much amount is left with you to invest.

#2.Decide your financial need/goals:   

Always remember don’t try jumble up your financial needs. Try to differentiate them as short, medium and long term. Understand it with table below:

Getting marriedBuying a homeEducation of child
Buying a carHealth Marriage of child
Health provisionsAny foreign vacation tripRetirement planning
Financial need in different phases of life


#3.Decide an amount which you need and when: 

You require funds phase wise in your life. Take inflation factor into consideration. May be education cost of a child right now is 5 lakhs, and your education need for child will come in next 15 years. Do you really think that cost of educating your child will be same. So plan wisely for an correct figure you need in each and every phase of life.

#4.Risk factor: 

In investments there is a saying “Higher the risk and higher the return”.  I have a simple guiding steps to decide how much risk you can take.

  1. Age Factor- If you are planning for investments in early age, your risk bearing capacity is high and you can invest in equity and stay for longer to get higher returns. If your age is above 40-50, risk bearing capacity will obviously will be low as you have less time to remain in the market.
  2. Income: This is also an important factor as you will invest according to your income.
  3. Dependents: How many dependents you have with you will also play a crucial role.
  4. Current investments: What all are your current investments and how much risky they are. You always have to keep a blend of risky and non risky investments.
Right Investment = Successful Financial Planning

#5.Decide Investment plan “Where to invest”: 

This will be crucial step, so I will go little bit deep into it. Let me suggest one important thing first. If you have different financial need then your investments must be separate for separate financial need. Never put entire amount together to meet all financial goals. Financial need time frame will also differ. It means you must have separate investment for your marriage, educating child, Buying home etc. If you have a sound knowledge or basic knowledge of financial market you can opt to open a De-mat account with bank with self monitoring in progress of your fund.

If you don’t have broader idea, you can go for mutual funds, where your all funds is managed by professional fund managers, even if you invest in equity market. Do not ponder that equity investments leads to losses. But yes, I always recommend investors to stay long, if they can stay long. I suggest to put money money in equity investments for long term need because it will never incur loss in long run.  There will also a need of insurance plan in your investments, in case of miss-happening within your family.

#6.Monitor your funds regularly: 

Even if you have invested in mutual fund where your fund is managed by fund managers. You need to stay informed about your stock performances. Companies do sends mailers regarding your stock performances, Don’t ignore them Read it carefully. There is an option in mutual fund to invest in liquid funds and after earning few returns you can partially shift your money to equity. This process will safeguard your investments. Another saying in investments market ” Stay alert – stay safe”.  Always remember Sound “financial planning”  will lead your life at ease.

Hope this post helped you to enhance your knowledge base. A must read for you all, If you wan’t to know more on Mutual funds and how it works. 

In a nutshell

Kumar Prashirsh

An avid reader and blogger, Prashirsh is a digital marketer and also following his interest for blogging and turned blogger who writes contents for enhancement of knowledge for his reader. He truly believes in self which boosts his confidence towards life.

Kumar Prashirsh has 16 posts and counting. See all posts by Kumar Prashirsh

One thought on “Financial Planning- 6 Thumb-rule in 2017

  • November 5, 2017 at 8:27 AM

    Great article on financial planning…


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