Holistic Investment

“The early bird catches the worm”

The earlier you start planning your expenses and savings, the easier it would be for you to reach your financial goals. Take the goal of retirement at age 60 for example.

Suppose you want a corpus of Rs.1 crore at age 60, you would need to save about Rs.7, 500 per month at an assumed growth rate of 8% if you are 30 years old.

Your monthly saving would have to go up to about Rs.18,000 if you are 40 years old to achieve the same goal at age 60 at the same growth rate and to about Rs.Rs.58,000 if you are 50 years old when you would be left with just 10 years to invest.

5-Questions you MUST ask yourself before creating your financial plan!

It requires a good understanding of the financial need of yourself and your family and you must be a man of vision to create your unshakable financial plan.

To help you simplify your financial planning process, we are giving you 5 questions. Answer them with utmost clarity in order to arrive at your consistent and fool-proof financial plan.

1. What are your financial goals?

What are your short-term, mid-term or long-term financial goals?

What would be the financial needs, you and your family may experience in the future?

For our helping hand regarding financial goal setting, you can read this article on a Targeted strategy to achieve financial goals.

2. What is your current net worth?

Net-Worth is defined as the difference between the value of your assets and liabilities?

Do you have a list of assets, so far? Or, you are starting-off right now?

Whatever be your case, always keep working on your net worth to make it higher. It will help you determine your financial course of action at every step.

3. How much amount do you expect to achieve your financial goals?

While determining your amount, it is suggested to keep in mind the ever-growing rate of inflation. The inflation rate is 7%-8% per annum.

Add this amount of inflation to all your short, mid and long term financial goals.

4. What amount of risk can you take?

Up and down is the everlasting nature of the market. You should be ready for the situation when the market would go down. And, you should decide your investment in accordance with your risk-taking appetite.

If you are not willing to take the risk, then you should consider investing in debt funds, fixed deposits or other government securities by toning down your goals, as the returns will be less in these investment options.

5. What investment options are suitable for you?

Your investment option depends on 2 factors:

    (i) Span of investment, and
    (ii) Risk-taking ability.
  • If your investment horizon is that is 5-10 years, then you should consider investing in equity funds.
  • However, if your risk appetite is low, then you should consider investing in debt funds, RDs or other government security funds.

Having answered the above questions, now have a look at the 5-Steps to Financial Planning and take a Financial Planning Quiz to test your knowledge on every bit of Financial Planning process.

Also, read this article and find out the various Myths and Truths about Financial Planning before we dive into the advantages of Financial Planning!

If you have made any of these mistakes during the COVID-19 crisis, its high time you hire a financial planner.

  • Liquidity

If you had a job loss or a salary cut, and if you had to dip into your savings, then having no emergency funds is a huge mistake
How would a financial planner help you?
The first thing a planner would have done on hiring is to create an emergency reserve for you, thus not letting you dip into the savings account.

To know more read: All you need to know about Emergency fund planning.

  • EMI moratorium

Even despite having the funds to pay off your loans, if you have availed of the EMI moratorium, you had made a big mistake. It was meant for only people who had job losses or had a salary cut.
How would a financial planner help you?
Your financial planner would not have suggested you choose the moratorium, because it’s just a temporary relief, as the EMI gets extended, you will be paying additional interest for it and it becomes an extra burden for you in the future.

To know more read: Why not opt EMI moratorium?

  • Withdrew from equity when the market crashed

With the stock market crash, many would have withdrawn from equity due to fear and panic, this is a mistake.
How would a financial planner help you?
Your financial planner wouldn’t have let you sell at a loss, rather he would have counseled you to continue your investments and would have averted massive losses.

To know more read: how to recover faster from the stock market crash.

  • Shifted from FD to equity or bought real estate at discount

If you shifted from FD to equity or bought real estate at discount, then you made a mistake.
How would a financial planner help you?
He would have let you stick to the original asset allocation and would have advised about rebalancing your portfolio.

To know more read: How portfolio rebalance is done.

  • Insurance lapse

If you missed paying your premiums, it is also a mistake as it could have disturbed your savings. In the case of hospitalization, you would have to spend from your savings.
How would a financial planner help you?
He would have helped you by alerting you about your insurance premium dues in advance and saved the policy from lapsing.

Don’t you think these would have helped you during the corona crisis? Now let’s see what are the other ways in which a financial planner could help you.

How can Financial Planners help you during this COVID- 19?

What kind of help can you look forward to?

They can help you by:

1. Creating a coronavirus financial contingency plan

True prevention is not waiting for bad things to happen, it’s preventing things from happening in the first place. – Don McPherson

Thus have your health protection as the priority, i.e.

  • Listing all your mediclaim policies,
  • Ensuring family coverage and COVID 19 coverage,
  • Preparing for emergencies and
  • Creating an information vault.

To know more read: coronavirus financial contingency plan.

2. Guiding on your investments

The immediate solutions you may think of during the corona crisis are

    i. Withdrawing to avoid further losses
    ii. Timing the market bottom.

But do not do these as you have to be invested. Do not rush and come out of your equities. If you require money, use your debt investments, emergency funds, and as a last resort, you can use the EMI moratorium.

For more info read: How to take advantage of the coronavirus crash.

3. Showing ways and means to a faster recovery from the Stock market crash.

a) Doing a portfolio revamp

It is moving your funds from poor-performing investments into better-performing. This is also called portfolio optimization. Analysis of portfolio revamp on past data worked. Do you think it is a need to redeem and reinvest now?

To know more read: How to revamp for faster and better results.

b) Doing a portfolio rebalance

After the stock market crash, the asset allocation will change, then you will have to bring it back to the original asset allocation. This is portfolio rebalance done to reduce the risk factor.

For more, read: How portfolio rebalance is done.

c) By choosing the right option on SIP

You can either stop, continue, or increase SIP. Two experiments with three investor categories were held, each of them who chose one among the following options. One to stop, one to continue and another to increase SIP (all during the market fall).

In both the experiments, the one who increased his SIP during the market fall, earned the highest portfolio value.

Hence increasing your SIP will help with faster recovery.

For more, read: How to play smart with your SIP.

Act quickly and do them before the market recovery. An average investor may not prefer a financial planner but a successful investor will choose a financial planner and get all the benefits from him. Who are you willing to follow?

On a rating of 10, how would you rate yourself and a financial planner?
By now you would know if financial planning is advantageous or not during an economic crisis.

Advantages and key features of Financial Planning

1. Financial Planning provides the Security to your family

Human life doesn’t always follow a smooth straight-line path; there are a lot of irregularities and hiccups along the way. Do you know, the majority of the newbie investors never consider the risk factor in their lives. Their focus is primarily on the asset-building and the craving of high returns.

Don’t be in that category. Being a learned investor you must consider the real-life risks given below:

  • Early Death
  • Medical expenses
  • Loss of income due to disability or accident

For the unfortunate incident of early death, there are some good term-insurance available. You must choose them according to your specific need.

Also, you must have a suitable medical insurance plan for yourself and your family.

Accident or disability insurance covers the risk of losing livelihood in case of grievous injury.

Take advise from a certified financial planner for choosing the insurance schemes customized for your needs.

2. The Financial Planning process will enhance your Financial IQ:

The first step to financial planning is to define your financial goals for short, mid and long term. For each financial goal, you make a suitable investment. This process of creating and achieving your financial goals will significantly enhance your financial understanding.

Financial planning will give you a wide perspective to live a better financial lifestyle and will finetune your habit of effectively managing your budget on a regular basis.

So, it is your turn to start your financial planning process now and experience the development of your financial IQ steadily which will, in turn, result in a better financial outcome.

3. Financial Planning will manage your Cashflow effectively:

As your financial IQ increase, your awareness of saving and spending will also improve magically. You will gain a natural tendency to avoid all the extra expenses.

As a result, your cash flow will automatically be monitored effectively.

4. Financial Planning can make it possible to live your dream Retirement Life:

Retirement planning is one of the major key factors in your financial planning. Still, it is the most neglected among various newbie investors. A dedicated retirement planning will help you live your dream post-retirement life.

Read this article to take a Retirement Planning quiz and also discover the effective ways to plan your retirement.

In short, a single key toward the most effective retirement planning is to start investing as early as possible so that your investment will go for a long time and you will experience the magic of compounding in your investment.

5. Financial Planning can help you choose the right mix of Asset Allocation:

As defined earlier, the first step toward the effective financial planning process is to set all your short, mid and long term financial goals. In order to achieve those financial goals, you need to have the right mix of assets.

Therefore, a focused asset allocation comes into play, so that you can achieve all your financial goals within your specified time-frame.

Dedicated financial planning will provide you with the right mix of asset allocation customized for you and your family needs.

Download your free asset allocation calculator here

6. Through Financial Planning you can Manage your debts efficiently:

In your busy life, you have every chance to miss the deadline for your major debts, such as home/car loan or credit card debt.

The interest on credit cards and other loans is a hidden cost that may increase its interest over time if they are not tracked with time.

A dedicated financial plan will address your monthly interest payments, by putting them into your budget.

7. Financial Planning can help you Plan your Taxes in the best ways:

Taxes can be planned in different ways, customized to your needs:

If you are a salaried employee, you have some good tax saving schemes available for you under Section 80C, such as PPF, NSC (National Saving Certificate), tax-saving term deposits, tax saving government bond, Life insurance, etc. here you can have the annual tax benefit up to Rs. 1.5 Lacs.

You can read this article on Ways to plan your Taxes for better understanding of tax-planning.

As you grow in your life and career, you will experience different sort of financial needs such as the construction of a new home, child education, child marriage, retirement planning and so on. When you invest for all these financial goals, you can choose investments in such a way that you pay legitimately lesser tax when you withdraw these investments to meet your financial goals.

Therefore, instead of doing all tax planning by yourself, it is highly advisable to consult a financial advisor. They have a complete picture of such financial needs of the various different people from all size of the family.

They will guide you with the best tax saving schemes, that fits best with your investment schemes.

Read this article to understand the role of a Financial Planner, in greater detail; also watch the below video for better clarity:

There are many more advantages of Financial Planning but in a nutshell, it will give you the magical ability to predict your financial future for the next 20-30 years. It will keep you away from the financial anxieties of all sorts.

Understanding Real-World Financial Planning process

Imagine your neighborhood uncle who is also an agent offering advice which you think is free of cost. That is mostly not the case. The advice may not really suit your situation even if the intentions are genuine.

Often these people sell products that may have high charges and without understanding the full client situation. I have found that people pay tens of thousands of rupees on such wrongly bought products over the years.

Real Financial planners are professionals that can help you plan for your future. A financial expert typically has the knowledge to do far more for you than you could do on your own.

Benefits of hiring a Financial Planner for your Financial Planning
  • Financial planner has in-depth knowledge of a particular area, so they can offer you expert advice. For example, what kind of investment schemes to be selected when investing for short term and what other schemes for long term.
  • Financial Planner will have thorough understanding about the general and specific financial issues and are also well acquainted with different ways of resolving any kind of financial issues.
  • We can’t plan for every eventuality in life, but an experienced financial planner can help you in planning for the unforeseen good or bad probabilities. The advantage of this is that you will be financially well prepared for the future.
  • We are very busy in our daily activities like managing office work , rearing up kids, taking care of our parents , etc. and amidst all this the planning of finance is overlooked. But if we have a financial planner with us, there is somebody who is always planning for our better tomorrow and this can help us in reducing our anxiety.
  • Are we saving enough? Can we achieve our financial goals with our saving potential or do we need to make some compromises? These kinds of analysis will be done only during a professional financial planning.
  • Understanding the different elements of risk in a person’s life situation and managing it with proper risk management tools like life insurance, health insurance, property insurance and creating emergency reserve becomes easier once you have a detailed financial plan.
  • Another advantage of financial planning is you can easily decide what investments to keep and what investments to withdraw. Any investment which is not supporting your financial plan can be withdrawn.
  • One more advantage of financial planning is whenever there is a change in your financial situation, you can go back to your financial plan and do a review and within no time you will be able to accommodate the change. As a result you will be able to control your finances better.

Saving money is usually a case of self-discipline. It may be hard, but having a savings cushion can provide financial peace of mind and a source of funds if you need them.

Also, it is necessary to inspire yourself with the teachings of legendary investors. Read these quotes from financially successful people to live your better financial life.

To create a financial plan for a better prosperity, you may want to check our financial planning process. If you want to check our own distinctive complete and comprehensive financial planning process will be suitable to you or not, then you may register for



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