What is Financial Planning?
All of us have some dreams in life – be it buying a dream home, a car, children’s education, their marriage, travelling abroad for leisure, retirement, amongst host of others. In parlance to personal finance, all these are financial goals; because after all, along with emotions they carry a monetary value.
You see, for your dreams to convert into reality there’s no other alternative to effective planning.
Our experience narrates that many people often have infinite financial goals with limited income. They don’t know where to start from for achieving these goals and which path to follow. While being ambitious is good, it is vital that you know the path you’re travelling to, for you to reach the desired destination.
So, here comes financial planning which will help you to:
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Define and Prioritize your financial goals;
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Analyze where do you stand currently with respect to your current financial situation; and
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Provide a clear road map of how to achieve your financial goals.
Some myths about Financial Planning
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I am too young for Financial Planning:
Just remember it’s never too early to start a good habit. Good habit here includes budgeting your expenses, defining your financial goals and start investing in the right financial products which can help you to achieve your goals. In fact, there is an advantage of Financial Planning at an early age; you can take the benefit of power of compounding on your investments because of longer investment horizon at your recourse.
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Financial Planning is only for Wealthy Individuals:
Financial Planning is not only for wealthy individuals but for you to become wealthy. It is for all those individuals who have aspirations and want to achieve them without a compromise. Financial Planning will bring the required discipline for you to be in sight of your financial goals.
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Financial Plan is just another way to Sell me products:
You are not wrong if you think this way; because all these years investment advisors or agents may have been just pushing you financial products on the pretext of ‘financial planning’. This indeed calls for caution while selecting an investment advisor or financial planner. You see, financial planning is challenging task and takes utmost pains and precision for a financial planner to design a financial plan, and which is why they charge a Fee. Remember, there aren’t any FREE lunches and that’s why, as any other professional fees to be paid.
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Financial Planning is just about investments:
Financial Planning is just not about tax planning or investments, but it is a more comprehensive exercise. It includes reviewing your existing investment portfolio, planning for your contingency requirement, planning for insurance requirement, planning for your financial goals, Asset Allocation, building an investment portfolio that suits your risk appetite and much more!