You need your Financial Plan & Investment Strategy at every stage of life

Investment strategies are naturally linked to your Financial Plan. Investment covers wide range of activities (investment vehicles) like investing money in certificates of deposit, bonds, equity shares or mutual funds, tangible assets, such as gold or other precious metals, real estate etc. All investment vehicles are good but not identical. You need to choose those instruments which are associated with your needs and matches your risk profile.

Many times, we see investors invest in products without knowing the basics. Ultimately the products don’t match with their risk tolerances, objectives and time horizons of investments. Either their investments are too conservative in order to reach their goals on time, or they take too much of risk, beyond their appetite. As a consequence, while there is a market correction, the latter investors sell off their holdings out of fear. Thus, they can’t reach their financial destinations. On the other hand, being too much conservative, will make you create a corpus which falls short of your requirement. It happens while your risk profile was not properly assessed. It is advisable to hire a SEBI Registered Investment Advisor for professional and unbiased guidance.

Usefulness of Financial Plan

Your Financial Plan is your road-map. If you have a clear road-map, you can visualize your aspirations of life. Your  mind clearly registers your dreams and motivates you to act. Sometimes you fail as you don’t have a clear road-map. As Fee Only Financial Planner in Kolkata, we keep advocating the fact that Financial Plan provides the opportunities to articulate the solutions at different life stages. If you have specific and realistic financial goals, you’re going to achieve them with periodical reviews. Your life stages are like life cycle phases and unlike a circle. If you’re reluctant to face it, you’ll lose the battle.

Financial Planning processes pave your way towards financial wellness.

“The greatest blunder of personal finance is to act before financial planning.” – Uttam Kumar Sen

While clients meet us for the first time for interviews, we have experienced most of them didn’t make any plan. They have bought ornamental financial solutions, like life insurance, health insurance, mutual funds, shares, fixed deposits and even real estates. Either they have bought them due to sales pitches from sales persons, banks or they were influenced by relatives, friends and office colleagues out of obligation.

Bad decisions are costlier. It takes away both your hard-earned money and  your time. You can’t offset those financial losses due to time constraints. You have limited time with unlimited commitments and responsibilities. You may not be able to defer your financial goals like retirement, child’s education and other commitments.

“Time slips through our hands like grains of sand, never to return again.”
―Robin Sharma

Any bad decision is like cancer. Thus, early detection may save you from financial disasters. As SEBI Registered Investment Advisor in Kolkata, we consider risk profiling process and tool as the cornerstone of financial planning. This ultimately helps us in carrying product suitability analysis for our clients.

Let us ask you few questions:

• Do you have life insurance? Your answer will be ‘Yes.’ But if we ask you,  do you know how much you require? Probably your answer will be ‘No.’
• Do you have contingency fund? Your answer will be ‘Yes.’ But if we ask you, do you know how much do you need in case of contingency? Probably your answer will be ‘No.’
• Do you save for retirement? Your answer will be ‘Yes.’ But if we ask you, do you know how much do you need in case of normal retirement, or if you pre-pone your retirement? Probably your answer will be ‘No.’
• Do you save for holidays? Your answer will be ‘Yes.’ But if we ask you, do you know how much do you want for domestic holidays and/or international holidays? Probably your answer will be ‘No.’
• Do you save for your child’s higher education/post-graduation? Your answer will be ‘Yes.’ But if we ask you, do you know how much do you need at his/her desired age? Probably your answer will be ‘No.’
• Do you know your net worth? Do you have at least projected cash flow for next five years? Your answers will be a big ‘No.’
• Do you know the difference between Personal Assets vs. Investment Assets? Your answer can be a ‘No.’
• Do you have will? Do you know, what is a nominee and the differences between nominee and legal heirs? Your answer will be ‘No.’ Nominee only acts as a trustee. By mere nomination, one can’t be the owner of your assets in your absence. You may not be the end user of your assets; your beneficiaries are part of it.

Now if all or one of the answers are/is ‘No’, then how did you buy financial products?

Appropriate solutions in your financial plan will pave your path towards financial wellness

For the sake of better understanding, as Financial Advisor in Kolkata, our next questions are:

• Why (objectives) did you buy  your insurances, all savings and investments?
• Are they aligned with your desired time horizons, needs and risk profile?
• Do you review all of your financial assets and physical assets at predefined intervals?
• Are you seeking to improve your money management skill?

You may understand how much you earn but you don’t understand how you spend. Expense management tools may sound good for you. You need a specific understating about your income & expenses by identifying your weak areas.

Procrastination is one of your great enemies. Sometimes you feel that you’ll be able to fulfill one requirement at later stage of your life. All of a sudden you may notice that you have no time left to fulfill it. Then you’ll be in a situation where you’ll think-

“How did it get so late so soon?” ― Dr. Seuss

Financial planning is a process and not a one time feature

Your future never resembles the past. It helps you to answer three concerns:

1. Where are you today?
2. What’s your current net worth?
3. What’s your cash flow?

As Certified Financial Planner in Kolkata, we believe that by considering the three key questions, you can introspect about your current status. Thereafter you can move towards your future goals in a realistic manner. Your investment strategies depend on your financial road map/Financial Plan. Haphazard insurances, savings and investments are injurious for your financial health. Bad or unnecessary loans can choke your journey towards financial wellness. Often it appears like vicious circle.  You may not come out from such graves so easily.

“Facts do not cease to exist because they are ignored.” ― Aldous Huxley,

Always make a plan since it’s your how-to book.

But be sure with whom you’re dealing. Is s/he is a qualified SEBI Registered Investment Advisor? Your financial aspirations are unique in nature and it’s better not follow any rule of thumb. You can’t achieve any of your aspirations by chance. But, it can be achieved by choice. A Financial Planner always respects your aspirations.