Tuesday, January 22, 2013

A Guide to Financial Planning

Time is a powerful quantity and when the tide is high, it bears swift gains in any market. Sometimes, it is ruthless, when losses are suffered. For a young trader, time is slow and for a saver, it can be an irksome competitor.

The point is that time is a quantity, which is changeable and loyal to none.

Easier investing

Sometimes, the investments people make are complex and not completely understood by them. They are unaware of their insurance policies and its ins and outs. Prior to investing, a person must fully comprehend, how a product works and what does he stand to gain from it.

Calculating your net worth

  • Primary residence
  • Cars, furniture and electronic appliances
  • Jewelry
  • Antiques, collectibles and furnishings
  • Investment property
  • Cash, savings account and liquid funds
  • Life insurance
  • Taxable investments
  • Fixed deposits and mutual funds
This will enable a person in calculating his net worth. It will provide a clear idea of the current finances. The formula will give a clear understanding of your present situation.

Start with the end in mind

Before the race begins, you must be well aware, how the long race will be and know your fellow racers. Every financial planner will tell you that, your net worth is necessary in determining your financial plan.

If you have been a disciplined and regular saver, it will reduce the investment and allow you to take a higher risk. ( Look at this financial planning process )

Financial Planning Sample
Financial Planning
Financial Planning Step by Step

So, draw the list of assets and liabilities you have. Calculate your net worth. It will give an ample idea of the current assets allocation. Taking full responsibility of your present status will assist in making key financial decisions. The annual increment can be affected by the slowdown. The stock market is seldom volatile and prompts you to back out.

Financial Planning Sample #2
Financial Planning
Financial Planning Process

Prior to investing, take a fresh and honest look at your financial circumstances. After you have figured that, then take your investment attitude in stride. Equity is not for the faint hearted. For the sensitive genre, mutual funds and debt options are useful. They are deemed as safe for all like in business plans.

If a loss of twenty to twenty five percent doesn’t affect you deeply, then equity can bring you wealth. Do conduct research before investing in any three of them.

Some people love crunching numbers and digging up information.

Others might not be that brilliant at it or very less inclined to crunch numbers.


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