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Important Financial Planning Tips for Beginners



It's all fine till you realise in some unspecified time in the future that retirement isn't so much and you would like to start out saving for it, for this you should understand some very important financial planning tips



Understand Meaning of Investment  Many people are making a big mistake by not understanding the difference between Investing and saving. As per there thinking both are one and same technique. But we should understand that both are different. A typical person is keeping all his money in a saving account and assuming that it will give at least four percent of annual interest and it will be sufficient for him and his family needs for future, this is called saving. But Investing is totally different one wise person is putting 20% of is saving amount in Saving account and rest amount he is regularly investing like in real Estate, Equity Stocks Market, Mutual Funds or systematic investments which can give more than double of the return which one could get from a saving account with same amount.

Change Old Financial habits Change your old habits of choosing old typical ways of doing financial translations. You can save a lot of money by using latest technologies instead of old and typical ways. For Example while taking an insurance policy or Mutual Fund if we can purchase online instead of offline through an agent. In this case we can get some exciting and cheapest offers with same or extra benefits. By this we can also save commission amount which was going to agent which will be going to our pocket. When we will do online transactions by our credit or debit card, we will get Reward points, which can be later converted into Cash. Also there are so many credit , debit or EMI cards in the market. we should choose cards with extra benefits like double Rewards points, discounts in Petrol, Shopping, cinema,  hotel or other bills. By this kind of habits we can save a lot for future.

Buy Insurance Plan If you have family members who depends on you for their leaving, then you should buy a insurance Policy. It is compulsory for you to buy a policy with a cover amount equivalent to Rs. 1 Crore, so that in case of any misshapen your family should have sufficient funds for their requirements. It is common thinking of full time jobbers that health cover provided by their company is sufficient for them. But inflation in medical lines are rising faster in comparison to normal inflation at a rate of 12 to 15%. Treatment cost of a some serious type of disease is more than our expectation and as per an expert in health sector, more than 80% of people are not heaving enough insurance cover for treating some critical or emergency problems.  An emergency hospitalisation can spoil all your dreams by wiping out your savings unexpectedly. So Health Insurance is also mandatory.

Benefit of Compounding You should know the power of compounding and  understand the power of of compounding by which our money can grow magically. we can get interest on interested income. initially it look s like there is no benefit but after two three years of regular investments it will result in most profiting than any other investment method. For Example if you invest Rupees 5000 Every month for 15 Years you will get Rs. 20 Lac for investment of Rs. 9 Lac. This is the power of Compounding.One of the popular compounding method is SIP(systematic investment plan). One can start a SIP With a minimum investment Rs. 500 Per month and can increase as per his/her income.


Maintain Your Credit Score First of all we should lead a lifestyle where purchases should be controlled with respect to requirements and main factor is according to our Income. One should not take loans for normal routine needs. Loan should only be taken in major requirements like business loans, home loans etc. But we should avoid personal loan. but in case we have taken loan then we should always keep in mind not to skip EMI. Try to repay the loan in apartments, which can reduce our EMI. But if we skip EMI then it will reduce our Credit Score. Which can reduce the chances of approval of another loan, which can be required in future for some important requirements. it can also resulted in higher rate of interest if credit score is less. So keep sufficient amount in the banks equivalent to at least one EMI.

Comments

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