Financial Planning

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Planning: Financial Planning is the process of meeting your life goals through the proper management of your finances. It involves the process of assessing your financial situation, determining your objectives and formulating a plan to achieve them. The objective of financial planning is to ensure that the right amount of money is available in the right hands at the right point in the future to achieve an individual's life goals.


Ideally you have to start creating your financial plan with Protection Planning. You need to first protect ‘What you have‘. It can be your Life, Health, Property, Vehicles etc., Plan for sufficient insurance coverage and buy right products to cover the risks associated with all these. Another important point is to ‘create and maintain an Emergency Fund.’ This can be to the extent of 3 to 6 months of your monthly living expenses. But, do not invest this fund in risky investment products. The main objective of maintaining this fund is to have ready cash to meet any unforeseen emergencies. Besides these two points, you can concentrate on maintaining a monthly Budget. Track monthly cash inflows and cash outflows. You can plug any leaks by doing this exercise.

Most of us concentrate more on ‘how to create wealth.’ Undoubtedly this is an important aspect of your financial plan. But, accumulation without having a proper protection plan may prove costly when you have to face bad times.

Once you have developed good Protection Plan then go ahead and create list of realistic Financial Goals. Examples of accumulation goals can be ‘creating corpus for your Retirement’, Children’s education goal, ‘purchasing a Property’ etc.,

Select suitable investment products based on the time-frame of your goals. You can invest some percentage in risk free instruments for your dear goals. Also invest in risk-oriented products like equity mutual funds or shares for your long term goals. Once you have allocated your savings towards each goal then continuously monitor your portfolio. If required change your asset allocation (Debt vs Equity) .

This is also known as Estate Planning. It is the most neglected aspects of Financial Planning. Let us assume you have created a good protection plan and good wealth accumulation strategies. But, what is the use of building assets and buying insurance policies if you have not mentioned proper nominations on your investments.

If the head of the family dies without leaving a Will or without mentioning the nominee names then it is an very difficult task for the legal heirs to access the investments/assets. We have lot of high profile examples for this, like Dhirubhai Ambani, M.P.Birla etc. who died without writing a Will.

Estate Planning is the process of making a plan in advance and naming whom you want to receive the things you own after you die. It is very easy to write a Will.