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Home >> Services >> Financial Planning

Financial planning in India

The Financial services industry in India is marked by two extremes - on the one end we have very wealthy individuals who receive sound financial planning advice for which they can afford to pay a steep price. On the other end, we have individuals who cannot afford the cost of such professional advice and hence either ignore the need for financial planning, or rely on ad-hoc advice from acquaintances.

Whether you are struggling to balance between maintaining the increased cost of your Lifestyle or not able to save enough for your retirement (Retirement) or your future financial goals; having a Financial Plan and prudently following it would make sure that you achieve your desired Financial Goals.

What is financial planning?

Financial Planning is comprehensive process; it begins with setting aside your long term and short term financial needs and preferences, analyzing your current resources available, establishing your incomes and expenses. Prioritizing these goals and preferences and allocating resources towards your goals and achieving them. Protecting these goals in case of uncertainties, tracking and reviewing the progress made on a regular basis.

Financial Planning Best Practices

  • Establish goals & preferences
  • Establish Financial Resources available
  • Establish incomes / Expenses
  • Prioritizing the goals
  • Allocating resources toward achieving the desired goals
  • Providing for uncertainties of life and other unforeseen events
  • Tracking an monitoring the progress made,

Goal based financial planning

Realizing and living your dreams is what you aspire for

  • Cash Flow based Financial Planning
  • Useful tips for Financial Planning
  • Detailing is important
  • Set realistic goals
  • Follow the plan
  • Resist the temptation to withdraw
  • Plan for the uncertainties

Financial planning Protection Solutions

You have planned fully well for your future financial goals like child education, marriage and your retirement. But there are uncertainties and tragedies which one cannot predict.  You want to protect your financial goals even when you are not there to support your family. Therefore it is important to buy a Life insurance policy like a term plan to protect your financial goals and buy a health insurance policy to protect your budgeting against unforeseen medical expenses.

Asset Allocation Strategies

Your investments portfolio performance is a key to the successful implementation of the financial plan. And not just one of the investment or asset class but a mix of asset classes that you choose to invest in. Besides the asset allocation to a particular asset class the asset allocation strategies play a vital role in performance of your investments portfolio and working towards the desired goal.

Asset allocation strategies try to balance risk versus return of a particular asset class in the investment portfolio by adjusting the percentage allocation to that asset class in the investment portfolio. This can be done on a fixed versus dynamic basis depending upon your financial goals and preferences.

Comprehensive financial planning

A comprehensive financial planning follows the following steps:

  1. It begins with understanding your current needs, preferences and future aspirations like buying a car, buying a house, Education / Marriage of your Children, comfortable retired life. Your needs are not only financial in nature, but there are emotional needs which occupy a higher priority.
  2. Based on understanding of your future aspirations determine the future goals and time frame to achieve them and prioritize them.
  3. Determine the current cost of the desired goals.
  4. Determine the future cost of the goals based on inflation and other cost factors.
  5. Calculate the current value of your assets savings and investments, project their future values. Calculate your obligations and timeframe. Starting point would be where you have already reached in terms of your goals and aspirations.
  6. Analyze your income and expenses, detailing is important.
  7. Decide upon an asset allocation strategy and Asset mix. Decide on an ideal asset allocation between Equity, Real Estate, Debt Gold and other Physical assets
  8. Allocate financial resources to desired goals
  9. Analyze your insurance needs
  10. Tracking, monitoring and Review of your financial plan

Why Financial Planning is required

There would hardly be a situation where the client either has either nothing to achieve the desired financial goal or have everything required to achieve a goal. You would have some resources already available or allocated towards meeting the desired objective. The need of financial planning arises when you sense there is a shortfall between but you desire to achieve and what you already have and have doubts about achieving your desired goals or aspirations.

Who needs Financial Planning

Many people confuse financial planning with investment planning and wealth management. For some people financial planning means only selling insurance products. Is it the wealthy individuals with a lot of money for investments? Financial Planning is very important for any individual to live a happy life. Financial planning should start at young and at a very early stage. Ideal age to start financial planning is 28 to 30 years when you are earning enough and can start planning for your future financial goals like Child Education, Marriage of your children, Happy retired life. And this is only possible if during your earning years you start allocating part of your income towards achievement of your objectives. Most of the young executive that I have met so far end up buying some Insurance policies in the name of financial planning. All of this is done on a very ad hoc basis. Whereas there is a strong need to have a financial plan in place and follow the same religiously. 

Financial Planning Case Study approach