There are two ways you can deal with FINANCE in your life:
Without Planning: wherein at some point in time in the future, you will have money and then you will decide how to use that for your goals.
With Planning: you decide well in advance what are your goals and how you will achieve them.
Obviously, anyone would like to go with a proper planning way, however, 90% of the people prefer to invest on adhoc basis and not systematically planned way.
Financial Planning is the process of meeting LIFE GOALS through proper management of finances. It gives us a clear idea about:
- How long to go on investing
- How much amount to invest
- How & where to invest
- When to withdraw
A process to ensure that the right amount of money is available in the right hands at the right point in time. To ensure this one has to create four following pillars to achieve whatever you want in your financial life.
A) Protection: Every financial planning has to starts with creating a strong base for the foundation through insurance. How much you are well planned with asset allocation, if adequate protection is not available whenever required, all go in vain.
B) Creation: The second objective of financial planning is wealth creation & protection. This already been discussed in previous blogs on how to fix goals, risk profiling, time horizon, asset allocation & rebalancing.
C) Taxation: Insurance or investment should not be done to avail only tax benefit. It is not their primary objective. Rather, once you are done with insurance need & investment goal then only fine-tune to take benefit of tax relief.
D) Succession: In India, more than 95% of people do not plan for their succession because of two reasons. One, they know that they are going to die someday, however, they fail to think (plan) after their death. Second, they want to retain their ownership/power/position till the end and don't want the next generation to intervene in their work.
No comments:
Post a Comment