Portfolio : A collection of investments owned by the same individual or organization.
Will : legal declaration of how a person wish his/her possession to be disposed after their death
Return : Profit or loss derived from an investment
Investor : An investor is any party that makes an investment.
Unit Linked Insurance Plans are the type of insurance where part of your money is invested in units that represent Shares and debt instruments and the remaining is used for your premium.
A set of assets which an investor holds. This may contain equities, mutual funds, insurance and other cash equivalents.
Liquidity or marketability is the ability to convert an asset in to cash quickly.
Whenever you hear the word financial planning , what comes to your mind?
Money and math are the two very common concepts that most people will relate to the process of financial management. Watch this demo to review the fundamentals of Financial Planning
But managing money involves a lot more.Traditionally financial planning was all about securing one’s future, or saving for the retirement, but let us now observe a different angle of managing finances . Let us understand this new perspective in detail, supported with the help of the following 7 observations.
1. A Financial Plan is not just about your future, but about your present as well
If you have read the international bestseller book called “The Power of NOW” by Eckart Tolle, you might have understood that the future is an imaginary concept. Everything happens in the present and for the present. It sounds a bit philosophical, but it is true!
Let’s take an example, if someone wants to become a good sportsperson, s/he has to work very hard on developing their skills every single present moment, only then it is possible for that sportsperson to gain the top skills along the way for playing in national or international level. Achieving of any target is possible by working on present, not future.
Future is an illusion that does not exist in certainty. As an investor, you design your present with a financial plan.
Planning your finance is similar to planning your life.
Most investors might think that financial planning will help them secure their future, however in reality it is something that will help you learn about playing fully in this very moment. Therefore, rather than worrying all time about future security, look at what best you can do in present with your financial resources.
2. A long and lengthy financial plan document is just a myth
Rather, why not consider getting a financial plan that you as an investor can yourself hold and implement? This may be like a one page document or summary, short and simple to understand.
A brief plan is more precise containing only that matter, which is significant and useful to the clients. Such a plan will also make it easy to understand our financial lives.
3. Look for an agile financial plan
The agile financial plan follows the financial planning process systematically. After getting the personalized financial plan from the financial planner, as high as 80% people follow their plan only partially, without any enthusiasm or belief on their financial plan!
Only 20% are able to successfully implement the advice and suggestions regarding their financial planning and as a result their family enjoys a great financial life.
In financial planning, exchanging ideas and advice is just the 20% of the work, rest 80% is about taking actions.
Without action, it is difficult to pass a verdict on any plan, whether it is good or bad!!
But for large majority of 80% group, financial planning becomes a burden when it comes to taking action. Don’t let this hack affect your financial life!
Investors trust a planning tool, only when it takes some action. After all, what matters in the end is only those activities that produce result. Nothing more than that.
4. Remember that your financial plan is about nothing else, but YOU
What does an investor think of, when looking for a financial advisor? To find a person who can advise for fetching the maximal returns out of an investment. Always remember that financial planning is not about calculations on products and returns. Rather, it is solely about you.
Financial plan is customized suitably for the needs and desired lifestyle of different people. For example, a perfect financial plan for a 50 year old will not make any sense for 30 year old person. Also the financial requirements and desired lifestyle differs for every individual even for the same age group; for details you can read the article on “Best performing Mutual Funds” for you.
Your financial plan demonstrates your way of living life, and speak aloud your financial future!
Financial Plan is an opportunity to be completely truthful in terms of money. This will help you get disciplined as an investor, and fix your earlier mistakes.
5. Financial Planning is not an exercise for selecting the ideal financial product
Are you doing financial planning as an exercise to get more returns by choosing the best financial product?
If yes, then, you have a very wrong expectation from a financial planner.
Financial planner will help you get more clarity on your financial life. Financial Planner will give you the right direction for your financial journey.
Financial Planner will help you choose regret free investments. I have seen clients regretting for investing in ULIPS, regretting for buying a second property when they realize they don’t have liquidity. Such regrets will not be there if you do your financial plan with a professional financial planner.
So, financial planning is not an exercise for selecting the ideal financial product. Financial planning is an exercise for selecting a ideal solution that can take you from where you are and where you want to go (financial goals).
6. Never lay your focus solely on bringing certainty
The expectation of certainty is often a result of insecurity or fear. And, the expectation of more benefits is often a result of greed.
Financial Planning is not about to get certainty into your lives. It is about building your financial muscle that helps you face all kinds of situations. Moreover, a financial plan brings more completeness into financial life, and helps you have an external point of view on the same.
Certainty to portfolio isn’t possible in short term investments or trading. However, for long term certainty can be planned to some extent.
It’s not about Certainty, it is about Consistency in taking one financial step at a time! It is the KEY of securing a good financial life for you and your family.
More details on understanding the key financial steps, you can read this “5-step Financial Planning Guide” and start taking action on your financial steps.
Many a time, you may observe many plans not turning out the way they should have been. However, that does not mean you stop to plan at all. Keep planning no matter what happens.
7. Be committed to your financial plan
Based on the above discussion, here is a question for you, “How committed are you towards achieving your financial goals and living a victorious financial life?”
Napoleon Hill says, “Nothing worthwhile could ever be achieved without a firm commitment”.
Don’t be among 80% majority who are not committed to their financial goals, and causing their financial life to degrade.
Be among top 20% who are fully committed to accomplish their financial goals and develop a sound financial lives for their family, whatever it takes!
So, Your financial plan is definitely only about setting your goal and finding a direction to achieve the goal. Setting goals and getting a direction is a very simple task, but sticking to your commitment will exhibit how serious you are towards attaining your goal. Commitment will let you focus onto what is required to achieve your goals, as well as not get distracted by anything else coming in the way.
Therefore, make a decision now to be committed to all your financial goals.
For more details on financial goal setting, you can read this article on “How committed are you towards your financial goals!” and also find out the “SMART way to achieve Financial Goals” by reading this article.
Let us now conclude this discussion with a belief that it was useful in helping you look at an entirely new perspective of what financial planning is all about. Hope it also helps broaden your view of a financial plan.
To get this financial stability and security, to understand our unique Holistic Financial Planning Process we offer