FINANCIAL PLANNING PROCESS

Create an Emergency Fund

Keep money for at least three months’ expenses

Pay Off Debts

Credit card/personal loans are the worst due to high interest rates

Buy Health Insurance

Medical inflation in India is 12.5%, much higher than the global average of 9.15%. Critical illness cover is a must if any illness runs in the family Buy family floater if you are married Buy a separate cover for older members Use a top-up plan to recharge the insurance cover

Buy Life Insurance

Not required if you do not have dependants Buy personal accident insurance as well

Plan your Retirement PPF/ EPF are guaranteed return schemes but higher returns from equities help you in your later years

A 25-year-old needs to invest Rs 3,900 a month but a 45-year-old will have to save Rs 85,000 to reach Rs 5.80 crore at retirement (assuming 15% returns) Equities are needed post retirement as well. Keep money for short-term expenses in a savings account or liquid funds and the remaining in hybrid funds. Post Office MIS & SCSS can be used for regular income

Save for Other Goals — Child’s education/wedding, car/house purchase Divide these into long- and short-term goals and earmark separate investments for each

Save and invest regularly. Mutual fund SIP is the most convenient and best route to invest into equities Review your portfolio once a year