Good Fi­nan­cial Ad­vice for Bad Times


India Today - - MONEY WISE - By Ashu Suyash, Chief Ex­ec­u­tive, L& T Mu­tual Fund

Iden­tify your goals

The first step to fi­nan­cial plan­ning is to de­ter­mine your ob­jec­tives: Be re­al­is­tic about where you are now, what you want to save for, how much each of your goals will cost and what steps you need to take to re­alise th­ese goals.

Ed­u­cate your­self

Keep your­self up­dated about key fi­nan­cial con­cepts and the types of in­vest­ment op­tions avail­able as each type works in a dif­fer­ent way. For ex­am­ple, eq­ui­ties of­fer po­ten­tial for both growth and in­come, while bonds would pro­vide sta­bil­ity and in­come and in­sur­ance pro­vides a life cover.

It’s Ok to ask for help

If you find fi­nan­cial jar­gon baf­fling then you should seek out a fi­nan­cial ad­vi­sor who can help you un­der­stand money bet­ter and chalk out a suit­able in­vest­ment plan.

Stick to a money plan

Be re­li­gious about mak­ing sys­tem­atic monthly in­vest­ments. This al­lows you to in­vest reg­u­larly, smoothen out mar­ket volatil­ity and ben­e­fit from the power of com­pound­ing to build up a size­able cor­pus with a cer­tain num­ber of years. Boost your con­tri­bu­tions in small, steady in­cre­ments and time the stepups to your an­nual in­cre­ments and bonus.

Start young

Sin­gle women in their twen­ties have the abil­ity to take on higher risk and can al­lo­cate a big­ger por­tion of funds into eq­uity and eq­uity re­lated in­vest­ments. More­over, the younger you are when you start sav­ing, the less you’ll need to in­vest given the power of com­pound­ing.

Save tax

In­clude tax- sav­ing strate­gies in your over­all fi­nan­cial plan. Many of us put our money in sav­ings ac­counts or fixed de­posits with­out real­is­ing that th­ese in­vest­ments yield low post tax re­turns. Even if you in­vest in cash, liq­uid or fixed ma­tu­rity plans, you could end up earn­ing bet­ter post tax re­turns than if you used com­mon sav­ing in­stru­ments.

Make in­de­pen­dent de­ci­sions

Non- work­ing mar­ried women in par­tic­u­lar have a ten­dency to be de­pen­dant on their hus­bands when it comes to mak­ing fi­nan­cial de­ci­sions. How­ever, in­vest­ing is not that dif­fi­cult and can be started with small amounts of money saved and in­vested on a reg­u­lar ba­sis.

Pre­pare for emer­gen­cies

An im­por­tant as­pect of fi­nan­cial fore­cast­ing is plan­ning for ac­ci­dents or crit­i­cal ill­ness. Peo­ple rarely plan for emer­gen­cies as they think such events only hap­pen to other peo­ple. Sign­ing up for long term in­sur­ance or a crit­i­cal ill­ness cover goes a long way to­wards pro­vid­ing fi­nan­cial sup­port to fam­i­lies dur­ing the worst of times.

Plan ahead

Suc­cess­ful fi­nan­cial plan­ning not only means in­vest­ing reg­u­larly but also know­ing how to an­a­lyse your in­vest­ments ev­ery few years as goals need to be re- pri­ori­tised with chang­ing life­styles and age. In­stead of look­ing at the end goal, take stock of how far you have come and what changes you need to make in the days ahead.

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