Financial planning, a term that is basically taken as a strategy to put your money life in order by ensuring that you invest right. When we talk to people about financial planning, generally they talk about investing, however, that is not the fact, investing is a part of your financial planning and not all about investing. In fact, to get to the right investment, you must focus on some other parts of your money life.
How much you invest, how long you invest, and how risk plays a key role in your investment depends on how financially secure you already are. A financial plan for someone who is just starting out organizing money would be different from those who already accumulated wealth.
Let us see how people should prepare their financial plan including investment in it!!
If You Are Just Starting!
There is a lot that must be done before you start to plan and understand no example better than the current pandemic situation. Experts say before you plan to invest for your future goals, prepare yourself for any kind of medical or financial emergency.
Firstly, you must have adequate health insurance cover to take care of those large, unforeseen, medical expenses that can sneak up on you. Secondly, if you have dependents, think of protecting their interests by getting a life insurance plan for a policy amount that matches the loss of financial stability in case of your untimely death.
The third important fund that must be prepared before you start to invest in an emergency fund, to take care of other emergencies like job loss or disability. Your investment plan will fall through if the above is not done first, that’s why a comprehensive financial plan is important.
On the last point, you must ensure that you are paying your bank loans and EMI’s at right time and will get rid of these burdens soon.
Basically, you have to understand that a financial plan doesn’t mean investing only, in fact, financial planning is a journey whose midway step is investing, and before this, you have to take some important steps, so that you can carry out your investment step conveniently, without any hassle.
If You Have Enough Accumulated Wealth!
Now let us assume you are in a situation where you have health insurance protection, life insurance protection, and above all this, you have also there is a pile of investments you are already sitting on. That means you are now at a stage where you can take part in exclusive and more risky investments!
Well, you could go that way but you will end up making investment choices based solely on the expected return. So, what I advise here is, go with exclusive investments, but must perform your part of the research.
The latest international fund, the next PMS or AIF idea, the venture fund that everyone else is investing in, doesn’t have to be your choice too. You may want to diversify your investments, but it is also important to keep the selection simple so that risk is not escalated and more importantly, risk matches your own life’s circumstances. Just because you have a good amount of savings in place, doesn’t mean you should put the rest, at risk.
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For any kind of query you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).