Savings with prudence is paramount, therefore financial planning must be done keeping in view once financial necessities over a reasonable period of time. Legacy savings predominantly had trust on Financial Instruments such as Fixed Deposits, PPF & post office saving schemes, which in olden days would give interest to the tune, that the investment would get doubled in 5 years, however these interest rates have steadily come down and presumably will go further down as the tread suggest. Moreover, the inflation is continuously going towards north.
Going forward investment planning has to be done smartly keeping in view requirements such as contingency fund, health insurance premium, children higher education, purchasing home, upgrading car, travel abroad and last but not the least retirement.
It is evident that one day most of us would hang our boots, therefore it becomes utmost important to start saving as early as possible in once active earning life, however it is sensible to invest smartly post researching various financial instruments prevalent in the market.
The lure of stock markets is palpable, however investing directly in stock market without any research has its own consequences. Nevertheless, the gains generated by investing in stock markets through other safer opportunities are also available in form of mutual funds, and these funds further have various options depending up on appetite of risk taking capacity of an individual.
Any individual who intendeds ’to initiate investment in stock market through mutual funds, must research based on ones goals and time period of investment. The research would facilitate individual to reach a conclusion as to what would be right amount for a particular time period that will take care all the objectives fully.
Change of millennium has led to drastic transformation in lifestyle, which has necessitated change in financial objectives. However, most of our countries population are comfortable with financial instruments of legacy period & not making the required modifications in their financial planning to meet their renewed objectives.
Identifying short & long term goals is the first step, post that quantum of investment, time period can be finalized. Further, keeping in view all the requirements financial instruments would be identified. Moreover, awareness / knowledge is one of the foremost attribute by virtue of which one can reach at any conclusion.
Acquiring knowledge requires lot of research, and time is a commodity which is scar. Therefore, it becomes necessity to take help of financial expert. Financial experts would prepare a customised financial planner according to individual objectives.
There are numerous types of financial instruments offered by mutual fund houses and are clarified according to risk attached to them which is concurrent to the market volatility. Minimum risk instruments invest in government securities, whereas instruments which invest in stock markets comes with higher risk prospective. However, instruments of hybrid category with moderate risk are also available.
Identifying mutual fund suitable to once risk appetite and correlating the same with once objectives is a complicated process. A seasoned financial expert would carry on the process of identifying suitable mutual fund in a systematic manner, keeping in view various influencing factors. The go ahead can only happen once final execution order is given by the concerned client.
Mutual fund distributers also provide services to their clients such as keeping record of individual transactions & periodically informing position of portfolio and any instructions given is duly accomplished. Moreover, details of tax liability if any towards the short or long term gain is shared with the client.
Long term financial planning is a specialized subject and requires knowledge of markets in depth and specially must have prospective of diversifying once savings in such a way that impact of negativity in the market is absorbed. It is generally understood that individual must stagger their investment across the spectrum, however creating wealth for long term planning is also utmost necessity.
Normally, when individual plans for investment few options come to mind namely life insurance, fixed deposits, house building & gold etc. All of the investment options detailed above are good options, however, creating wealth for long term requires intelligent invest in stock market through mutual funds for a long period of times.