Home Business & Economy Understanding The Importance Of Financial Planning

Understanding The Importance Of Financial Planning

273
0
BLOG-1dc976ab

Financial planning is the process that helps the individual to accomplish his personal and financial goals. It helps to develop and implement a comprehensive financial plan. It helps the individual to grow and accumulate a decent corpus to meet his immediate or future financial goals. 

No two individuals are identical; similarly, their finances are different too. Financial planning depends upon various factors such as individual’s background, income, expenses, risk taking ability, future outlook, assets, needs, financial situation, knowledge, responsibilities, etc. 

 

 

Working with a financial advisor can help you build a foundation so that life doesn’t take you – or at least your finances – by surprise. A financial advisor can advise you when there are changes in the markets, tax legislation or the economy, and can help you adjust accordingly. An advisor you trust, and a financial plan you create together, will help guide you through the ups and downs to stay on track toward your goals. 

 

For example, saving for wedding is a short term goal. You may consider a savings account or other low-risk accounts. Similarly, saving for a down payment for a home is considered as a mid-term goal. You can adopt a more conservative approach and invest in debt funds with appropriate maturities. If you are investing for retirement your portfolio has more time to weather the ups and downs of the markets, making riskier investments more suitable. ELSS can be considered as tax-deferred instruments. They provide significant advantages when saving for retirement. 

Depending on your circumstances, your plan may focus on a single objective or a more complex strategy. Your plan could be as singular as saving for retirement or a child’s education, monetizing a concentrated equity position, or establishing a trust to benefit a child with special needs. But, perhaps, you may require a complex strategy that includes help with positioning and selling your business, then deploying the proceeds, together with other investable assets, to deliver the income you need to retire comfortably. 

Financial planning provides direction to your goals. Good financial planning can help you beat inflation. It helps you to remain in control of your income and expenses. It is impossible to predict the future, but good financial planning will help you and your family tide over good and bad times. The first step in financial planning is to have a good financial advisor. They are experts in researching the marketplace and recommend the most appropriate products to their clients.