Everyone is focused on generating money in the modern world. The world is fuelled by money. The race is long and winding. The consequence is unknown to everyone. So, it’s critical to maximise efforts in order to create a joyful and tranquil living. And to do that, a solid financial foundation must be built.
There are a few tips that may be followed to ensure a seamless financial journey since financial well-being requires appropriate planning:
Invest with a purpose:
Everyone needs to understand that life is limited and that chasing one’s goals is also futile. It’s important to assign a value to your goal. One has to put in writing how much they wish to spend on their goals such as retirement, a car, their children’s education, and a foreign trip.
If we don’t determine the conditions, duration, and amounts needed, we can’t develop a plan to achieve any of our life goals. And as precisely stated in the book “The Power of your Subconscious Mind,” it is undeniably true that if you want to do anything positively with all of your heart and soul, your surroundings will automatically support you in doing it. Wish with all your heart, and your effort will one day be successful.
Maintain a separate bucket for each of your life’s financial objectives, and develop plans to fill it with different types of investments and savings. The manner of investing for this might be either a lump sum contribution or a monthly or quarterly SIP (Systematic Investment Plan). Furthermore, it’s critical to regularly evaluate your progression towards the objective (at the least an annual review is preferable).
Create a ‘Will’:
Let’s first define what a “Will” is. A Will is a written document that expresses your specific preferences about your assets and property. A vital part of financial planning is having a will. Furthermore, individuals shouldn’t put off establishing their “Will” because no one can anticipate when the D-day will occur.
Some individuals believe that only extremely wealthy individuals or those with complex asset holdings require wills. However there are many solid reasons to having a will, like:
- You may specify exactly who will get your assets. Its up to you to decide w ho gets what and how much.
- You can prevent anyone you don’t want to own your assets from getting their hands on them (like an alienated relative).
- Your assets will be accessible to your heirs more quickly and easily.
Hence, when you register an asset in your name, you must name a legal successor who will receive it after you.
Ensure that you and the family are adequately insured:
It is essential to get medical insurance for you and all of your dependents. Otherwise, it can wipe out all of your hard-earned money that you had set up for other goals. Having life insurance that pays out at least 100 months’ worth of your salary is also essential; else, the protection won’t be enough in case of any untoward incident.
If you would like to know more about the various types of insurance, then you can go through my another article in this link.
Evaluate and adjust your portfolio:
Monitoring your portfolio is a crucial component of investing. Reviewing a portfolio effectively enables an investor to make significant adjustments to assets as required. An investor might also use it to maintain progress towards their financial objectives. So, it is imperative that you set aside some actual time each year to analyse your investment with your asset manager or financial planner (or sit down yourself to review your portfolio if you do not have a financial planner or an advisor). As the portfolio is created to assist you in achieving your long-term goals, reorient the portfolio to reflect your current salary position and risk tolerance.
In addition to the returns that your portfolio is producing, there are other important elements that you must consider while evaluating a portfolio holdings. And these are:
- Monitoring investment costs – Over time, expensive investment products can cause a portfolio to lose hundreds of thousands of rupees (depending on your capital quantum).
- Portfolio Asset Allocation – Even if we had a flawless strategy, our asset allocation will fluctuate as markets send certain assets up and others down. Thus, while we review our portfolio, we also need to assess our allocation as well.
- Financial Objectives – It’s crucial to assess a portfolio in the context of our financial goals. While monitoring performance, costs, and asset allocation is critical, it’s also vital to make sure that the portfolio is still on pace to achieve our original investment objectives.
To sum up, financial planning that guarantees ‘we are in a position to take care of our family’s basic requirements and accomplish our own ambitions’ is the key to a fulfilled life. An effective savings and investment strategy can guarantee that one can live comfortably and independently till the very end.
