A good Financial plan is a road map that shows us exactly, how the choice we make today will affect our future. Financial Planning is a comprehensive statement of an individual's long-term objectives for security and well-being and a detailed savings and investing strategy for achieving those objectives. Invest after identifying your cash-flows, goals & risk tolerance, the outcomes from your investments will be far more desirable.
5 steps to create a good Financial plan
- Documenting all your investments and important papers. Before making a financial plan, one should sit down with all the documents and not just have ideas in the head. Your investments should be documented and your family should be aware of them.
- Discover your long-term and short-term goals.
- Start with creating a fund that is with you in liquid form, so you don’t liquidate your other investments in times of need.
- Risk planning - Risk is divided in three sub parts: Health, Life and Asset. It is important to save your investments and protect yourself for times of uncertainty. A health insurance, a life insurance and an insurance for your assets are a must to make sure your investments don’t take a hit in times of a natural disaster, calamity or accidents etc.
- The next step for an investor is to figure out how to achieve their financial goals. One should inflate the amount one needs for goals like education, marriage, house, travel etc to get a realistic figure and then choose the schemes and products.