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In this video by @HDFCMF you will learn why you must plan your finances at a young age. Do let us know in the comments section if you need any help in planning your financial goals.
For instance, if you want to build up a corpus of Rs. 10 lakh for your daughter's college education, you need to achieve this before she turns 18. Not one year later.
How does financial planning benefit you?
There are several practical benefits to financial planning. It helps you to:
Save Money:
While you can save money without having a financial plan, it's not an efficient or disciplined approach. Once you create a financial plan, you can understand your income and expenses in a better way. You can consciously track and reduce your costs, thus increasing your long-term savings.
Enjoy a better standard of living:
To pay off their monthly bills and EMIs, most people assume they will have to sacrifice their standard of living. In contrast, you would not have to compromise your lifestyle with an excellent financial plan. You can achieve your goals while living in relative comfort.
Be prepared for emergencies:
Creating an emergency fund is an essential element of financial planning. Here, you must ensure that you have a fund equal to six months of your monthly salary. If something unexpected happens to you, such as a family emergency or a job loss, you will not have to worry about the lack of resources. An emergency fund will help you pay for these expenses till your situation normalizes.
Attain peace of mind:
The right amount of funds allows you to meet your monthly expenses, invest in your plans, and splurge a little for yourself and your family without worrying. Financial planning helps you manage your finances.
What’s financial planning for life goals?
Financial planning is mandatory to survive anywhere, especially in India. It's not simply about boosting your savings and cutting back on expenses. Financial planning encompasses so much more than that. It includes working towards your future goals, such as:
1.Retirement planning
You don't have to wait until you're about to retire to start planning for it. The earlier you start, the better off you'll be. By beginning planning right now, you can set yourself up for a comfortable retirement later. Investing early gives you the advantage of compounding, which can help you grow your savings over time.
2. Child's education
The time to start planning for your child's education is when they are born. By calculating how much you wish to earn and selecting long-term investment avenues, you can be successful. If you're uncertain of how to proceed, seek out the advice of a financial advisor.
3. Saving tax
Do you know that there are legal ways to reduce the amount of taxes you pay every year? By taking advantage of the Indian Income Tax Act provisions, you can minimize your tax liability and retain a significant portion of your hard-earned money.
How to create a successful financial plan?
The first step to financial planning is identifying your current finances, including your income, expenses, debt, savings, and investments. Doing so offers you a good idea of the state of your finances and ways you can improve them.
Prepare a written financial plan:
Think about what financial goals you wish to achieve in life and write them down. No goal is too big or too small, so write them down. Make your goals specific, however. Here are some achievable goals: 'I want to purchase an SUV worth Rs. 15 lakh within the next 20 months, or 'I want to buy a flat worth Rs 80 lakh within the next five years.
Look at the different investment options.
There are many options available to investors. Almost 2,000 mutual funds are available on the market alone. Different investment avenues allow investors to accomplish different goals.
Implement the right plan:
Choosing the right investment option based on your goals, age, risk appetite, and investment amount is essential. If you need help selecting the funds for your portfolio, you use Kuvera’s goal planning platform.
Monitor your financial plan regularly:
Investing your money does not complete the process of financial planning. It is also essential to monitor the performance of the funds regularly. The funds may need to be replaced if they don't perform as expected.
Final Words:
You may have several financial goals you wish to pursue, but to achieve these goals at the right time, you need to put a financial plan into action at a very young age. Benjamin Franklin said it very well: "If you fail to plan, you plan to fail."
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