Friends day by day expenses of living are increasing but salary growth are not happening proportionately. In times of recession not only salaries are cut people also suffer job losses. Inflation also adds fuel to fire. We all have dreams (like buying a house, car, foreign visit and so on) such dreams can be fulfilled by having proper financial planning and budgeting. In such crises times financial planning becomes more important as people face financial constraints

India is country which has one of the highest GDP to saving ratio. Indians do save a lot but don’t know where to deploy their savings. Majority of the public are unaware of concept allocation. Asset allocation in simple terms means allocating your money into assets based on your risk profile. It is said that 90% of the returns are generated as per target if asset allocation is right. Aggressive investors have more equity weight age in their portfolio while conservative investor will have portfolio more loaded with debt.

As the financial year comes to an end people do their financial planning and that to in haphazard manner. They end up buying things like ULIPS plans (Unit linked insurance plans) or ELSS. Some conservative investors end up putting their savings in PPF or NSE. Debt instrument give on an average return of 8-10%. While we have average inflation of 6-7% which eats into our return so end of the year we end earning very less returns. So in such a scenario one should opt for Direct equity or equity related instruments ,that to in a systematic way. If Investors are not comfortable with Direct investing once should take mutual funds route. Once should make habit of keeping aside certain some of money based on person saving capacity for each goal one has to achieve our the period of years. For Investing in Mfs once should select fund house and fund manager which has decent track record.

The sooner the person starts saving more comfortable his retirement will be as now days people only have to funds their own retirement. For eg a person of age 20 saves 1000 per month at 8% interest till he retires at 60, he will end with corpus of RS 34.90 Lakhs while if person starts saving at 30 the same amount of Rs1000 at 8% interest,he will end up with a corpus Of just Rs14.90 thousand. So just by starting to invest early one can make huge difference in retirement corpus. This happens because of power of compounding. So its in personal interest once should start investing and that to at young age to accomplish majority of their goals.

At any point of time once should have liquid cash which can be used to meet 6-8 months expenditure. It is also advisable to have at least floater mediclaim policy of family and Term insurance of sum assured equivalent which can meet family needs till bread winner intends to work (58-60). Term policy usually come at low-cost compared to other policies and provides necessary relief if some thing happens to bread winner.

So I would like to summarize. It’s better to plan your finance today for better tomorrow. In case you have any queries and doubts. Do reach me at bhavin007@gmail.com