Investment refers to a commitment of funds to one or more assets that will be held over some future time period
Investment planning begins after you have taken into account your current and expected income level and have laid down your financial goals.
There is a huge difference between savings and investments. Anything not consumed today and saved for future use can be considered as savings. Almost all of us save money.
It is important to channel these savings into productive investment avenues. The two elements in investments are generation of income on periodic basis and / or growth in value over a period of time.
Why invest?
We all work for money. It is equally important to ensure that money works for us. We should inculcate the habit of reliance on a secondary source of income. We invest to improve our future welfare
Investment Fundamentals:
START EARLY
INVEST REGULARY
ENSURE HIGHER RETURNS ON YOUR INVESTMENTS
Example If Rs 3000 is invested every month for a period of 25 years, you will have an amount Rs. 3699964/- at the end of the 25 years ; A return of over 300% !!!!
This is the power of compounding, starting early and investing early.
The important aspects of investment planning are:
Capital Appreciation or Regular Income: People aiming at long-term goals focus on capital growth. A long-term investment will allow you to tide over rough times without changing your plans. Stocks, mutual funds and real estate represent investment options for capital growth. On the other hand, if you're investing to meet a short-term goal or to give you a regular flow of funds to complement your present salary, you should opt for income investments. These investments generate a regular flow of income in the form of dividends and interest and include fixed income, such as bonds, FD’s etc. While making a selection, you should consider the tax implications and associated risks.
Risk: Every investment option has a risk-return trade-off. Riskier the investments higher the returns. Investment planning should take into account an investor’s risk appetite, which dependents on your current income level, savings, lifestyle and responsibilities.
Determine your investment profile: This can be done by considering your risk appetite. There are mainly four types of investment profiles:
1. Conservative (Low Risk Tolerance): Such Profile invests in mainly (about 70%) of income assets, such as fixed interest and cash.
2. Balanced (Average Risk Tolerance): This refers to investor profile which has an equal emphasis on growth and income assets.
3. Growth (High Risk Tolerance): Such investor profiles invest mainly (up to 80%) of such as stocks and foreign currencies.
4. High Growth or Aggressive (Very High Risk Tolerance): This refers to investor profiles with more than 90% of the funds in growth investments.
Review your investment plan regularly: This helps in fine-tuning a portfolio to suit your current financial situation and a change in risk preference.
Benefits of Investment Planning
Investment planning helps you:
• Generate income and/or capital gains.
• Enhance your future wealth.
• Strengthen your investment portfolio.
• Save on Taxes
Wednesday, November 24, 2010
Thursday, October 14, 2010
Tips for Tax Planning
There are numerous opportunities for minimizing the amount of income tax you pay.
In order to achieve that, you need intelligent income tax planning.
Some Tips:
• Combine your Tax Planning with your Financial Plan so that the products you invest in match your risk profile and your future goals
• A home loan is not necessarily a bad debt. Consider getting a loan while buying a home to claim deductions under section 24 (b) and 80 C
• Charity is good- not only for the receiver, but the giver as well; Check on the validity and receipts before you claim that deduction u/s 80G
• Take advantage of the tax breaks that the IT sections 80C, 80 CCF, 80D and 80DD offer.
• Insuring oneself makes sense- as the premium is exempt u/s 80C (upto 1 lakh) and the maturity amount is tax free
• By taking medical insurance, you not only insure your family against medical expenses, you also get a tax deduction u/s 80D- so take that cover today!
• Always maintain a Record of Your Investments
• File your taxes on time!
Following up with explanation of the above section
In order to achieve that, you need intelligent income tax planning.
Some Tips:
• Combine your Tax Planning with your Financial Plan so that the products you invest in match your risk profile and your future goals
• A home loan is not necessarily a bad debt. Consider getting a loan while buying a home to claim deductions under section 24 (b) and 80 C
• Charity is good- not only for the receiver, but the giver as well; Check on the validity and receipts before you claim that deduction u/s 80G
• Take advantage of the tax breaks that the IT sections 80C, 80 CCF, 80D and 80DD offer.
• Insuring oneself makes sense- as the premium is exempt u/s 80C (upto 1 lakh) and the maturity amount is tax free
• By taking medical insurance, you not only insure your family against medical expenses, you also get a tax deduction u/s 80D- so take that cover today!
• Always maintain a Record of Your Investments
• File your taxes on time!
Following up with explanation of the above section
Tuesday, October 5, 2010
When to Start Tax Planning
Many of us start looking for investment tax saving avenues only in February or March, just before the Financial Year is getting over. Huge mistake!
1. You would end up investing your money without putting proper thought to it.
2. Secondly, you would end up losing the interest / appreciation for the whole year.
Instead, decide where you want to make the investments, and start investing right from the beginning of the financial year – from April. This way, you would not only make informed decisions, but would also earn the interest for the full year from April to March.
Still not too late. You have 6 months to go.
START NOW
1. You would end up investing your money without putting proper thought to it.
2. Secondly, you would end up losing the interest / appreciation for the whole year.
Instead, decide where you want to make the investments, and start investing right from the beginning of the financial year – from April. This way, you would not only make informed decisions, but would also earn the interest for the full year from April to March.
Still not too late. You have 6 months to go.
START NOW
Tax Planning
Tax planning is an indispensable part of the financial planning process. Efficient tax planning enables you to reduce your tax liability to the minimum. This can be done by legitimately by taking advantage of all tax exemptions, deductions and allowances while ensuring that your investments are in line with your long term goals.
What tax planning is not...
• Tax Planning is NOT tax evasion. It involves sensible planning of your income sources and investments. It is not tax evasion which is illegal under Indian laws.
• Tax Planning is NOT just putting your money into any 80C investments.
• Tax Planning is NOT difficult.
Planning taxes this year:
a. You will have certain needs and goals to meet. Understand what those are and then figure out how to maximize tax efficiency in your effort to meet them. Tax planning should be a part of the overall financial planning that you must do.
For instance, you might be buying a house. In this situation you need to get a home loan. What should you prioritize and what do you have the capacity to afford? If you blindly put money into an insurance policy, it might not even be sufficient to give you adequate insurance cover. However, if you choose to pay off the principal on your home loan, that could be a better option in this situation.
b. Do not blindly invest money in Insurance. Understand your need understand the policy and then invest. Otherwise you might end up buying insurance which you don’t need with minimal insurance coverage or putting money in instruments where they cannot access the money when they need it.
c. Do not make last minute decisions just because the Accounts Department has reminded you that the internal deadline for submitting proofs is approaching. Tax planning involves planning in advance to avoid the last minute scramble.
Selecting tax saving investments
You should think about the following criteria, before selecting your tax saving investments for the year:
• Liquidity: How quickly will you need the money? Will you need to access the money within the next year or two years or over what duration?
None of the above instruments let you withdraw your money quickly, in fact there is a minimum three year lock in for all tax saving investments.
• Risk and Return: How much risk do you want to take? There is a trade off between the two, some instruments are very low risk, but as a result they give low returns which are capped.
• Inflation protection: The instruments that give you a low return typically are the worst type of investments regarding inflation. This is important because many of the instruments give you a fixed rate of interest, and lock in your money for a long period. This is not a good protection against inflation.
• Tax Exemption: All tax saving investments under Section 80C are alike in one respect that they are tax exempt when they are invested. But they differ with respect to the tax on the income you earn from such an investment as well as the tax on the maturity of the investment
Individuals in India are not fully aware of the tax planning exercise which is why they get a move on at the end of the tax-planning season and make investments. This has negative effect on tax payable by them and they eventually end up paying more taxes than they are required to.
What tax planning is not...
• Tax Planning is NOT tax evasion. It involves sensible planning of your income sources and investments. It is not tax evasion which is illegal under Indian laws.
• Tax Planning is NOT just putting your money into any 80C investments.
• Tax Planning is NOT difficult.
Planning taxes this year:
a. You will have certain needs and goals to meet. Understand what those are and then figure out how to maximize tax efficiency in your effort to meet them. Tax planning should be a part of the overall financial planning that you must do.
For instance, you might be buying a house. In this situation you need to get a home loan. What should you prioritize and what do you have the capacity to afford? If you blindly put money into an insurance policy, it might not even be sufficient to give you adequate insurance cover. However, if you choose to pay off the principal on your home loan, that could be a better option in this situation.
b. Do not blindly invest money in Insurance. Understand your need understand the policy and then invest. Otherwise you might end up buying insurance which you don’t need with minimal insurance coverage or putting money in instruments where they cannot access the money when they need it.
c. Do not make last minute decisions just because the Accounts Department has reminded you that the internal deadline for submitting proofs is approaching. Tax planning involves planning in advance to avoid the last minute scramble.
Selecting tax saving investments
You should think about the following criteria, before selecting your tax saving investments for the year:
• Liquidity: How quickly will you need the money? Will you need to access the money within the next year or two years or over what duration?
None of the above instruments let you withdraw your money quickly, in fact there is a minimum three year lock in for all tax saving investments.
• Risk and Return: How much risk do you want to take? There is a trade off between the two, some instruments are very low risk, but as a result they give low returns which are capped.
• Inflation protection: The instruments that give you a low return typically are the worst type of investments regarding inflation. This is important because many of the instruments give you a fixed rate of interest, and lock in your money for a long period. This is not a good protection against inflation.
• Tax Exemption: All tax saving investments under Section 80C are alike in one respect that they are tax exempt when they are invested. But they differ with respect to the tax on the income you earn from such an investment as well as the tax on the maturity of the investment
Individuals in India are not fully aware of the tax planning exercise which is why they get a move on at the end of the tax-planning season and make investments. This has negative effect on tax payable by them and they eventually end up paying more taxes than they are required to.
Wednesday, August 18, 2010
Importance of Personal Financial Statements
Month after month, many individuals look at their bank and credit statements and are surprised that they spent more than they thought they did. To avoid this problem, one simple method of accounting for income and expenditures is to have personal financial statements.
Just like the ones used by corporations, financial statements provide you with an indication of your financial condition and can help with budget planning. There are four types of personal financial statements:
1. The Net Worth Statement
2. The Income and Expense Statement
3. The Cash Flow Statement
4. The Balance Sheet
The Net worth Statement:
The first step in assessing ones current wealth is determining ones net worth. It is the beginning of financial planning. It provides an indication of your capacity to achieve your financial goals. The process consists of 3 steps:
1. List the items of value that you own – these are your assets
2. List the amounts that you owe to others
3. Subtract your liabilities from your assets
4. The Difference being your NET WORTH
Net worth is a tool for comparing the changes in your financial position over a period of time. An increase in the net worth is a favorable trend, and a decrease is net worth is a reduction in wealth.
There are a number of good practical reasons for preparation of the Net Worth statement:
• Money Management
• Incentive for Saving
• Estate Planning
• Insurance Planning
• Helps in case one needs to borrow
The Income and Expense statement:
The Income and Expense statement helps in understanding how much one has earned and spent during a particular period.
1. List all income received during the time period
2. List all expenditures made during the time period
3. Determine the surplus / deficit of income over expenditure
The Cash Flow Statement:
Controlling your financial affairs requires a cash flow statement. A cash flow statement allows one to know exactly how much, money you have. The statement shows how the funds are allocated, how they are working for you, what are your plans for them, how far one has reached in achieving the goals set.
While the net worth statement is a great way of assessing your financial well being, it captures only a frame of your financial position at one time.
Unlike your net worth statement, the cash flow statement tracks your income/expense on a regular basis. And because you are recording all your transactions, coming in or going out, this makes your cash flow statement dynamic, allowing you to review your financial route from time to time.
The statement will also:
• Indicates the ability to save and invest
• Helps analyse the Standard of Living
• Indicates whether one is living within or beyond one’s means
• Highlights any problem areas
The Balance Sheet:
A balance sheet is the fourth type of personal financial statement. A personal balance sheet provides an overall snapshot of your wealth at a specific period in time. It is a summary of your Assets (what you own), your Liabilities (what you owe) and your Net Worth (assets minus liabilities).
Just like the ones used by corporations, financial statements provide you with an indication of your financial condition and can help with budget planning. There are four types of personal financial statements:
1. The Net Worth Statement
2. The Income and Expense Statement
3. The Cash Flow Statement
4. The Balance Sheet
The Net worth Statement:
The first step in assessing ones current wealth is determining ones net worth. It is the beginning of financial planning. It provides an indication of your capacity to achieve your financial goals. The process consists of 3 steps:
1. List the items of value that you own – these are your assets
2. List the amounts that you owe to others
3. Subtract your liabilities from your assets
4. The Difference being your NET WORTH
Net worth is a tool for comparing the changes in your financial position over a period of time. An increase in the net worth is a favorable trend, and a decrease is net worth is a reduction in wealth.
There are a number of good practical reasons for preparation of the Net Worth statement:
• Money Management
• Incentive for Saving
• Estate Planning
• Insurance Planning
• Helps in case one needs to borrow
The Income and Expense statement:
The Income and Expense statement helps in understanding how much one has earned and spent during a particular period.
1. List all income received during the time period
2. List all expenditures made during the time period
3. Determine the surplus / deficit of income over expenditure
The Cash Flow Statement:
Controlling your financial affairs requires a cash flow statement. A cash flow statement allows one to know exactly how much, money you have. The statement shows how the funds are allocated, how they are working for you, what are your plans for them, how far one has reached in achieving the goals set.
While the net worth statement is a great way of assessing your financial well being, it captures only a frame of your financial position at one time.
Unlike your net worth statement, the cash flow statement tracks your income/expense on a regular basis. And because you are recording all your transactions, coming in or going out, this makes your cash flow statement dynamic, allowing you to review your financial route from time to time.
The statement will also:
• Indicates the ability to save and invest
• Helps analyse the Standard of Living
• Indicates whether one is living within or beyond one’s means
• Highlights any problem areas
The Balance Sheet:
A balance sheet is the fourth type of personal financial statement. A personal balance sheet provides an overall snapshot of your wealth at a specific period in time. It is a summary of your Assets (what you own), your Liabilities (what you owe) and your Net Worth (assets minus liabilities).
Monday, June 21, 2010
The Process
Financial Planning is a highly personalized service. It in no way is the marketing of a “product”. Preparation and the implementation of a Financial Plan is a long term plan and not a one off exercise.
The preparation of the Financial Plan is a multi dimensional process. It requires the planner to collect as much information as possible about the current resources, assets, liabilities of the client.
One of the first steps is to
1. Establish the client –planner relationship: The role of the Financial Planner is not to suggest get rich quick schemes. Rather it is to evaluate and study the clients needs, gather and analyse data and prepare a financial plan for now and for the future. A Financial Planner preparing a plan helps in
• Organizing cash flows
• Improving cash flows
• Lower income tax – our bane
• Plan retirement
• Improve investment performance
• Lower investment risk
• Risk reduction
• Minimize estate settlement costs
The planner seeks to answer the following questions:
• What is the most immediate concern of the client?
• What is the client’s current financial situation?
• What are the client’s immediate and long term needs?
• What is the gap between the client’s needs and the current financial situation?
• What services can you apply to the clients needs?
• How would the client benefit from the service portfolio?
• What is the estimated time frame to complete the plan and accomplish goals?
• Is the role likely to be of an advisor, motivator, teacher or director?
2. Analyze and evaluate the client’s current financial status: The financial planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.
3. Develop and present financial planning recommendations and/or alternatives : The financial planner offers financial planning recommendations that address your goals, based on the information provided. The planner goes over the recommendations with you to help you understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate. The strategies are developed in the following areas:
• Cash Flow Management
• Insurance Planning
• Investment Planning
• Retirement Planning
• Income Tax Planning
• Estate Planning
Developing alternatives is crucial for making good decisions. Although many factors will influence the available alternatives, possible courses of action usually fall into these categories:
a. Continue the same course of action.
b. Expand the current situation.
c. Change the current situation.
d. Take a new course of action.
Not all of these categories will apply to every decision situation; however, they do represent possible courses of action.
Creativity in decision making is vital to effective choices. Considering all of the possible alternatives will help you make more effective and satisfying decisions.
4. Evaluate Alternatives
a. The alternatives need to evaluated for all possible courses of action, taking into consideration your life situation, personal values, and current economic conditions.
b. Decision making will be an ongoing part of your personal and financial situation. Thus, you will need to consider the lost opportunities that will result from your decisions.
Evaluating Risk
a. Uncertainty is a part of every decision..
b. In many financial decisions, identifying and evaluating risk is difficult. The best way to consider risk is to gather information based on experience and the experiences of others and to use financial planning.
5. Implement the financial planning recommendations.
You and the financial planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your coach, coordinating the process with you and other professionals such as attorneys, accountants or stockbrokers.
6. Monitor and review the financial planning recommendations.
You and the financial planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, he or she will report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes. Financial planning is a dynamic process that does not end when you take a particular action. You need to regularly assess your financial decisions. Changing personal, social, and economic factors may require more frequent assessments. When life events affect your financial needs, this financial planning process will provide a vehicle for adapting to those changes. Regularly reviewing this decision-making process will help you make priority adjustments that will bring your financial goals and activities in line with your current life situation
The preparation of the Financial Plan is a multi dimensional process. It requires the planner to collect as much information as possible about the current resources, assets, liabilities of the client.
One of the first steps is to
1. Establish the client –planner relationship: The role of the Financial Planner is not to suggest get rich quick schemes. Rather it is to evaluate and study the clients needs, gather and analyse data and prepare a financial plan for now and for the future. A Financial Planner preparing a plan helps in
• Organizing cash flows
• Improving cash flows
• Lower income tax – our bane
• Plan retirement
• Improve investment performance
• Lower investment risk
• Risk reduction
• Minimize estate settlement costs
The planner seeks to answer the following questions:
• What is the most immediate concern of the client?
• What is the client’s current financial situation?
• What are the client’s immediate and long term needs?
• What is the gap between the client’s needs and the current financial situation?
• What services can you apply to the clients needs?
• How would the client benefit from the service portfolio?
• What is the estimated time frame to complete the plan and accomplish goals?
• Is the role likely to be of an advisor, motivator, teacher or director?
2. Analyze and evaluate the client’s current financial status: The financial planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.
3. Develop and present financial planning recommendations and/or alternatives : The financial planner offers financial planning recommendations that address your goals, based on the information provided. The planner goes over the recommendations with you to help you understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate. The strategies are developed in the following areas:
• Cash Flow Management
• Insurance Planning
• Investment Planning
• Retirement Planning
• Income Tax Planning
• Estate Planning
Developing alternatives is crucial for making good decisions. Although many factors will influence the available alternatives, possible courses of action usually fall into these categories:
a. Continue the same course of action.
b. Expand the current situation.
c. Change the current situation.
d. Take a new course of action.
Not all of these categories will apply to every decision situation; however, they do represent possible courses of action.
Creativity in decision making is vital to effective choices. Considering all of the possible alternatives will help you make more effective and satisfying decisions.
4. Evaluate Alternatives
a. The alternatives need to evaluated for all possible courses of action, taking into consideration your life situation, personal values, and current economic conditions.
b. Decision making will be an ongoing part of your personal and financial situation. Thus, you will need to consider the lost opportunities that will result from your decisions.
Evaluating Risk
a. Uncertainty is a part of every decision..
b. In many financial decisions, identifying and evaluating risk is difficult. The best way to consider risk is to gather information based on experience and the experiences of others and to use financial planning.
5. Implement the financial planning recommendations.
You and the financial planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your coach, coordinating the process with you and other professionals such as attorneys, accountants or stockbrokers.
6. Monitor and review the financial planning recommendations.
You and the financial planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, he or she will report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes. Financial planning is a dynamic process that does not end when you take a particular action. You need to regularly assess your financial decisions. Changing personal, social, and economic factors may require more frequent assessments. When life events affect your financial needs, this financial planning process will provide a vehicle for adapting to those changes. Regularly reviewing this decision-making process will help you make priority adjustments that will bring your financial goals and activities in line with your current life situation
Wednesday, June 2, 2010
The Benefits
A Big Part of Financial Freedom Is Having Your Heart And Mind Free From Worry About the What –Ifs Of Life.
Can u imagine a life without planning? – Many do to their regret in the sunset years.
Why do we need a Financial Plan?
All of us have a dream for the future – some of us want a luxury car, some want a bigger home, those among us married dream for their kids too. – For their education, marriage, dream holidays. These are some of the dreams and then there are the daily nitty gritty’s.
However most of these decisions are made in a slapdash manner. There is normally lack of direction, the result being the goal not being achieved or delay in achieving the goal most importantly there is a complete lack of interest towards planning for retirement, or a casual attitude towards it.
Today an average person lives for at least 15 -20 years post retirement. How do you maintain the lifestyle you are accustomed to if there is no planning for income generation?
Financial Planning is one of the things that not many people think about; but the day to day concerns take over.
But Remember: A goal without a plan is just a WISH
While we cannot predict the future, you can certainly be better prepared for it.
A written plan is designed to make sure that you are financially prepared to deal with whatever happens in your life. And this is not just dealing with the unexpected events, but basic things like buying a car or taking a loan, funding your children’s education or marriage, or taking care of your loved ones.
You don’t have to be wealthy to have a financial plan. Neither do you have to be very old and approaching retirement. In fact the earlier the better.
It does not matter how much you earn or what your age is. All of us have something to plan for.
In fact, our financial situation influences almost every aspect of your lives….from the type of house we live in, to the type of car we drive, to how many vacations we can take.
That’s why it becomes all the more imperative to plan from an early age.
Some of the benefits of Financial Planning are:
1. It helps in knowing the net worth (All your assets less the Liabilities)
2. One has an idea of the cash flows – All the sources of Income and Outflows that is the expenses)
3. Plans for Goals you want to achieve
4. Helps to monitor investments
5. Helps in increasing savings
6. Helps in reducing taxes
7. Most importantly it helps in planning for retirement
8. Helps in providing for dependents in case of unfortunate incidents
9. Helps in creation of wealth
10. Helps in protection of wealth
11. Protects the family financially in the event of a death
12. Helps in distribution of assets to heirs
Can u imagine a life without planning? – Many do to their regret in the sunset years.
Why do we need a Financial Plan?
All of us have a dream for the future – some of us want a luxury car, some want a bigger home, those among us married dream for their kids too. – For their education, marriage, dream holidays. These are some of the dreams and then there are the daily nitty gritty’s.
However most of these decisions are made in a slapdash manner. There is normally lack of direction, the result being the goal not being achieved or delay in achieving the goal most importantly there is a complete lack of interest towards planning for retirement, or a casual attitude towards it.
Today an average person lives for at least 15 -20 years post retirement. How do you maintain the lifestyle you are accustomed to if there is no planning for income generation?
Financial Planning is one of the things that not many people think about; but the day to day concerns take over.
But Remember: A goal without a plan is just a WISH
While we cannot predict the future, you can certainly be better prepared for it.
A written plan is designed to make sure that you are financially prepared to deal with whatever happens in your life. And this is not just dealing with the unexpected events, but basic things like buying a car or taking a loan, funding your children’s education or marriage, or taking care of your loved ones.
You don’t have to be wealthy to have a financial plan. Neither do you have to be very old and approaching retirement. In fact the earlier the better.
It does not matter how much you earn or what your age is. All of us have something to plan for.
In fact, our financial situation influences almost every aspect of your lives….from the type of house we live in, to the type of car we drive, to how many vacations we can take.
That’s why it becomes all the more imperative to plan from an early age.
Some of the benefits of Financial Planning are:
1. It helps in knowing the net worth (All your assets less the Liabilities)
2. One has an idea of the cash flows – All the sources of Income and Outflows that is the expenses)
3. Plans for Goals you want to achieve
4. Helps to monitor investments
5. Helps in increasing savings
6. Helps in reducing taxes
7. Most importantly it helps in planning for retirement
8. Helps in providing for dependents in case of unfortunate incidents
9. Helps in creation of wealth
10. Helps in protection of wealth
11. Protects the family financially in the event of a death
12. Helps in distribution of assets to heirs
Wednesday, May 19, 2010
The Introduction
“I work all night I work all day, to pay the bills I have to pay
Ain’t it sad
And still there never seems to be a single penny left for me,
That’s too bad,
In my dreams I have a plan
If I got me a wealthy man
I wouldn’t have to work at all, I’d fool around and have a ball…
Money, money, money,
Must be funny,
In the rich man’s world…
All the things that I could do,
If I had a little money.”
We all remember the Swedish pop group Abba, who recorded and sang this way back in 1976. It is still a song so many of us are singing today!
Just as a map helps even the most spatially oriented people to find their way around the globe, Money Mapping is all about planning your finances and making sure you know where it is all headed.
Financial Planning and Management is just not for the wealthy. In fact it is more important for the salaried to have a good financial plan in place. We always remember to file our tax returns, encash due cheques, schedule doctor visits and make sure we run on a timetable of life, we have to make room for financial planning in that calendar.
If you want to create, grow accumulate and utilize wealth to fulfill your personal goals, family goals and other lifestyle objectives, My Money Mapping will be your guide. You can make a much larger contribution in every area of your life when your personal finances, investments and taxation are properly planned.
You may have heard salaried people complain of not having enough money like entrepreneurs? Well, financial planning is the way to accumulate and expand this growth.
Personal financial planning is one of the most important aspects of your personal finance. It is the process of developing a personal roadmap for your financial well-being. It involves Risk and Insurance Management, Investment Planning, Tax Planning and Retirement Planning. The inputs to the financial planning process are:
- Your finances, i.e., your income, assets, and liabilities,
- Your goals, i.e., your current and future financial needs and
- Your appetite for risk.
The final result of the planning process is a personal financial plan that tells you how to use your money to achieve your goals, keeping in mind inflation, real returns, and taxes.
In short, financial planning is the process of systematically planning your finances towards achieving your short-term and long-term life goals.
Hopefully this is a start for you to accelerate your financial gears! I will follow it up with the benefits and the process of Financial Planning.
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