Personal financial planning is a way of life. Financial Plan is a road map with strategies that defines your subjective financial goals. Unless you have defined goals you can hardly reach anywhere. It is a clear communication which makes your dreams tangible. A clear financial road map helps you to comprehend the “why”, the “how” and the “what” behind your actions.

Financial Planning

As Certified Financial Planner in Kolkata, while we write detailed financial plans for our clients, we profoundly address both technical and personal (wherever applicable) aspects. Sometimes management of both are required – management of money (technical) and management of aspirations, expectation, emotion etc. (personal). Personal issues are like ice-berg. It requires a unique focus.  Sense of self and sense of purpose are the two important areas to be questioned pre-eminently. Changes are inevitable. We all experience changes more often. During any change, one can experience both i.e. “financial” and “personal” turbulence. Where “financial” side means technical and “personal” side involves emotions, relationships, expectations of self and that of others, self confidence, self esteem, behavior, self protection and finally peace of mind. Therefore, addressing of both “financial” and “personal” factors become weighty while doing financial planning.

A detailed Financial Plan also puts appropriate strategies in place to work for your family and paves the way how your family will manage to meet the expenses and commitments without your earned or unearned income if you fall sick or die prematurely. It’s evident that it is difficult to manage money without owning a personalized plan. You can build a plan on your own, or if your needs are more complex, you may seek the professional help of a Certified Financial Planner.

Everybody needs a Financial Plan while they have dreams. A working student needs a Financial Plan, a newly married couple or a retiree needs Financial Plan. A widow or widower and even a divorcee needs Financial Plan and so on.

Those who want to make themselves financially certain among uncertainties, they require to go through personalized financial planning processes. Financial planning is meant for all those who want to systematically achieve their life goals with the help of proper financial planning processes. There is no specific age or stage in life to undergo financial planning processes. Financial Plan works fine for all of us. It is for anyone who is interested in looking at things in a structured format by sorting out their finances. It works for all those who are serious about getting a path laid out and following that path.

We first get a plan from an architect before we construct our dream home. Similarly, everyone should have a Financial Plan before they start investments or get insurance.

While dreams can inspire you, you need goals to make the vision of your dreams real. Simultaneously, you need to quantify the goals with both quantitative and qualitative inputs. Otherwise, your mind doesn’t identify the goals perfectly and becomes confused to fulfill it. Your mind needs specifications like target dates and amount. It’s never too late to bring things back in order.

Risk analysis & insurance planning, investment planning, retirement planning, tax planning, estate planning, cash flow management techniques, etc. are covered under financial plan. Customization will be done subjective wise. It is very unique in nature. Most important thing to note is that Mr. X’s financial plan will not match with Mr. Y’s financial plan. This in turn leads to the fact that recommendations will differ. What solution is working for Mr. X, may not work with Mr. Y. It’s like doctor’s prescription.

You can take informed decision based on your aspirations/goals through financial planning processes. Without a proper financial plan you’re like a rudderless boat and therefore, you’re unable to take any firm financial decision.

You need a Financial Plan first before you take any decision. either in investment or insurance or loan etc. You may have many options/choices. You may be ill-advised due to complexity. Lots of credit card options, several types of mortgages, different types of pension products, insurance, mutual funds, exchange traded funds, direct equities, small saving schemes and the ever-growing number of investment options further complicate financial decision making. All financial products are good but all financial products are not suitable for you. To determine product suitability, financial plan is a must.

Bank account holders regularly get calls from Bank Relationship Managers who are trying to convince to give the best investment plan, the best home loan, the best credit, and so on. They sell insurance (ULIP), mutual funds without knowing  much about the account holder’s requirements. Thus many end up buying these products, which are not at all suitable for the requirements.

While a person earns either salary or from business or profession, generally his income increases. He/she may ignore that his/her future income may not resemble the history and he/she needs passive income during irregular income phase or retirement (replacement of active income & restructure of asset allocation). Many people today are feeling a high level of financial uncertainty and are looking for answers of their unanswered questions like falling of interest rates, income tax & inflation, etc. Sadly, there are no easy answers at the eleventh hour. However, there are several solutions chalked out through Financial Plan and you may get relief from your financial anxiety.

Due to demographic change and change in macroeconomic factors, many companies have withdrawn defined benefit pension plans/traditional pension plans. Nevertheless, lot of money is flowing into debt funds & traditional guaranteed tools like bank fixed deposits, bank recurring deposits, post office small savings schemes & PPF. Where one can get hardly get appreciated value (increase in the value of an asset over time in terms of requirement).  When a large aged population is working and accumulating for retirement resources, naturally, the demand for wealth is high. This in turn raises the price of financial assets and other stores of wealth. Some analysts suggest that the rapidly increasing population of older people in India and around the world might lead to lower returns in financial markets in the decades ahead.

There is no social security, such as in case of premature death, illness, disability, maternity and old age. One needs a solid contingency plan in place.

We are living longer. So we must accumulate adequate funds before retirement to cover post retirement expenses over a longer time. Otherwise, we would become financially dependents to our earning family members. You would never want to depend financially on someone else.

Both macroeconomic and personal factors are to be considered while a Financial Advisor constructs a Financial Plan and its related strategies.

To begin with, one needs to understand that requirements/needs vary from one person to another. As your Financial Advisor in Kolkata, our way of writing Financial Plan will be attuned to your unique requirements/needs. Financial Plan will be fruitful when we are able to understand you and vice versa.

You have to follow certain processes as financial plan is very much subjective and process oriented.

Our financial planning process has following parts

As Arijit Sen is a SEBI Registered Investment Advisor in Kolkata, we constantly educate our clients regarding the processes we follow. This gives them a sense of security and they know where they are heading to in their quest of achieving financial independence. Significant implications on Financial Plan and recommendations depend on assumptions about the future performance of the economy. We always keep a track of economic factors to make reasonable assumptions. A clear understanding of economic environment helps in reviewing the existing financial plans with necessary corrections in the strategies. Your age, your health, your income, your expense and your family members etc are the personal factors. There may be any change in future which should be incorporated in your Financial Plan and consider the changed outcomes of your goals.