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.
Wealth is accumulation of resources or as on date value of assets a person own. Commonly Net worth is the measure of Wealth of an individual.
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. 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
Future is an illusion that does not exist in certainty. As an investor, you design your present with a financial plan. 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
What is the financial plan meant for? To make us learn how to get in control of our financial lives. Therefore, lengthy plans will do nothing else than just confusing the clients. So, going for tedious financial plans stuffed with complex calculations, heavy graphs and pie charts will only lead to the increasing frustration of the investors.
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
In financial planning, exchanging ideas and advice is just the 20% of the work, rest 80% is about taking actions. 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. It 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
Wealth creation is all about exploring with experimenting. Most investors are thus unable to build wealth as they fail to understand this principle. A good and efficient planner will always encourage and motivate their clients to try and explore new things, in a way educating him in the financial journey. And, one’s financial journey should be always about exploring opportunities in unknown territories.
6. Never lay your focus solely on bringing certainty
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. Many a times, 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
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.
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.