1. Evaluate your current financial status, including positives and negatives.
2. Identify and set short, intermediate and long-term goals.
3. Review your insurance coverage and current tax situation to identify tax-saving opportunities and potential deductions.
4. Develop a funding plan for your child to help cover higher education expenses/marriage.
5. Develop a retirement funding plan that covers when you plan to retire and how much you will need to support your retirement lifestyle.
6. Make an overall investment plan with proper investment portfolio that supports your goals, while staying within your investment time horizon and risk tolerance.
Finally, review your plan and progress periodically by giving bi-annual check up to make sure you are staying on track.
Are you into the following? Path to wealth creation
Before investing your money, there are three maxims of wealth creation which you need to keep in mind. 1. The more you save makes a difference
If you saved just Rs.1,000/- in to a Mutual Fund every month, for the next 15 years, at 10% return per annum, your savings would be Rs.4,20,000/-. However, if you doubled your savings to Rs.2,000/-, the difference at the end of the same period would be substantial, as per Table below.
Savings Per Month
Return at the end of 15 years @
10%
15%
20%
Rs.1,000/-
420,000
6,56,000
10,37,000
Rs.2000/-
840,000
13,30,000
20,75,000
Rs.3000/-
1,260,000
19,70,000
31,10,000
2. Start early- earn more
Let’s assume you are 35 years old and you want to encash at the age of 50. If you start saving Rs 1,000 per month at an interest rate of 10% p.a. your savings would be Rs. 420,000/-. If you had started this plan at age 25, your saving period would have been longer, and your savings would clearly have been higher. However, if you postpone the plan to age 40, the amount saved will be substantially lower, as illustrated below. Here Rs.1,000/- invested at the age of 25,30,35 & at 40 years.
Age
Total savings
40
Rs.2,10,000
35
Rs.4,20,000
30
Rs. 7,65,000
25
Rs. 13,10,000
3. If the interest rate is higher and also the period is also more?
If your savings of Rs.1,000 per month earns an interest of 10% p.a. in a bank, a 20-year savings will be Rs. 7,65,000/-. If you had invested the same in a bond at 20% p.a. the amount would be Rs.15,25,400/-
