Financial Planning tips 2019
Everyone of us has dreams and the only best way to achieve those is to have a proper financial planning. Based on our commitments, we can start investing so as to have a future that is secured. Let us get to know the top 5 tips for investing in 2019. One has to invest in a wide array of assets such as FDs, stock market, etc. that will help in reducing the risks involved. Each and every individual has to know his or her risk tolerance and carry out a plan in accordance to this.
Basic financial planning tips 2019:
How to do financial planning? Firstly, understand your income and expenses and then find how much you can allocate for investment purpose. The other major thing is a contingency fund i.e. setting aside a portion of money for emergency purpose. In these uncertain financial times, it is necessary to have some part of money dedicated entirely for unpredictable events in life. Many of us give priority to our children’s education or other needs but we should also allocate specific amount for our post retirement needs as well. Our goals may have different time horizons and we have to choose investment avenues accordingly. Tax saving is also an important factor that has to be considered while we do our financial planning. We should choose those investment avenues that would serve us dual purpose i.e. wherein we get returns and can save as well. Let us learn more about top financial planning tips for 2019 here.
Here are the steps involved in financial planning:
- Know your current financial condition
- Fix long term and short term goals
- Identify suitable investment avenues and make a plan
- Implement the financial plan
- Revise your plan
1. Know your current financial condition
You should know what percentage of your income you can afford to invest besides your already existing commitments. Investing has to be done on a regular and timely basis. In case of SIP Investment, you have to invest on a periodic basis and it’s not like you do it one time and forget. So calculate your income and expenses to find out how much you can invest. The portion you set aside for investment also depends on what kind of commitments you have. You may have a bank loan or you may have to take care of aged parents, etc. One has to decide about allocation of amount for the purpose of investment after taking into consideration many factors.
2. Fix long term and short term goals:
Some of your goals may need a long time whereas some other goals need to be completed within a short period of time. Have clarity on the time period which will help in choosing the suitable investment product. A goal like child’s marriage or education or retirement plan are long term goals and your investment for this purpose should begin at a very early stage itself that would give the necessary time for your investments to grow. According to time horizon, the investment asset also varies. A person who is interested in short term gains can do trading whereas a person who has long term goals can be a long term investor.
3. Identify suitable investment avenues:
As risk profile varies among individuals, investment products too vary. It is the duty of each investor to analyze his or her risks and invest accordingly. A high risk investor can invest in equities whereas a person with low risk appetite and who wants safety of capital can invest in debt products. Depending on age too, the selection of assets vary. A person who is young can invest more in equities whereas a person who is old can invest more percentage of his savings in debt and less percentage in equities.
4. Implement the financial plan:
Planning alone is not sufficient; One should not just build castles in air and hence following the plan and implementing it is essential. Like one of the investment mantra, investments should be done on a regular basis without fail. Laziness and procrastination have never been good friends to investors. If you keep delaying the implementation of your plan, you will not get the desired returns as the time horizon gets reduced.
5. Review your plan:
Regular monitoring of the plan is very important so as to know if the performance of the chosen asset is in sync with one’s needs and goals. Periodic review of plan gives a clear idea to an investor about the performance of his assets. One should take the right investment strategy based on the performance of assets. If some stocks which you hold are underperforming, you have to exit the stocks. If some stocks are outperforming, one has to add more of such stocks to one’s portfolio.
Financial planning tips India 2019 should be known by all investors for smarter investment journey that will help one to achieve one’s financial goals. One can also take the help of financial planners and research experts to devise a financial plan. Constant monitoring of your investment portfolio has to be done. Investment decisions should never be taken in a hurry. Each and every person’s needs and objectives vary and hence there are personalized investment solutions offered by stock broking firms. To achieve one’s dreams, systematic investing has to be done since young age on a continuous basis.