1. Firstly, set aside an emergency fund - which could be either fixed deposits or debt funds - of 6 to 9 months' expenses.
2. Identify goals in line with your capacity to invest, current financial status and the expected growth in income in future.
3. Ensure your family is in sync for drawing up a comprehensive list.
4. Fix a realistic amount and time frame for each and prioritize them.
5. Distinguish between the non-negotiable (primary) and negotiable (secondary) goals.
6. Consider the expected inflation over the goal's time frame and calculate the future value of the sum as it stands today.
7. This will enable you to know how much you need to save each month to achieve your financial goals.
8. Next, understand your risk tolerance which you can comfortably digest.
9. Ideally, take less risk with necessities, while taking higher risk with dreams.
10. However, be realistic about your expectations from high risk investments.
11. Now decide an appropriate asset allocation strategy by dividing into short-term (1-3 years), medium-term (3-7 years) and long-term (more than 7 years) goals.
12. Monitor your investments proactively, as even a carefully developed financial plan can fall flat if it is not periodically readjusted.
13. Review your progress on a quarterly basis when your goals are for the short-term, and on an annual basis if your goals are spread over a longer period.
14. Re-balance your asset mix if its value gets skewed over time.
15. If you are falling short of meeting your goals, revisit your financial budget to see if there are any areas where you can cut corners to free up additional money for savings.
16. Protect your financial goals by having adequate term insurance so that your dependents can reach these goals even in case of your unfortunate demise.
17. Your term insurance cover must, therefore, be equal to the gap between your future expenses and your current assets.
18. Also make sure to cover your bigger obligations, like home or car loans, with another term insurance cover of matching tenure.
19. Suggested investment products are:
a) Less than 3 year goals: Liquid funds, Fixed Deposits.
b) 3-5 year goals: SIPs in Debt funds, Balanced funds (debt-oriented).
c) 5-10+ year goals: SIPs in Balanced (equity-oriented), Multi-cap funds, Diversified funds.
d) Retirement goals: PPF, NPS, SIPs in ELSS funds, Diversified funds, Balanced equity funds.
2. Identify goals in line with your capacity to invest, current financial status and the expected growth in income in future.
3. Ensure your family is in sync for drawing up a comprehensive list.
4. Fix a realistic amount and time frame for each and prioritize them.
5. Distinguish between the non-negotiable (primary) and negotiable (secondary) goals.
6. Consider the expected inflation over the goal's time frame and calculate the future value of the sum as it stands today.
7. This will enable you to know how much you need to save each month to achieve your financial goals.
8. Next, understand your risk tolerance which you can comfortably digest.
9. Ideally, take less risk with necessities, while taking higher risk with dreams.
10. However, be realistic about your expectations from high risk investments.
11. Now decide an appropriate asset allocation strategy by dividing into short-term (1-3 years), medium-term (3-7 years) and long-term (more than 7 years) goals.
12. Monitor your investments proactively, as even a carefully developed financial plan can fall flat if it is not periodically readjusted.
13. Review your progress on a quarterly basis when your goals are for the short-term, and on an annual basis if your goals are spread over a longer period.
14. Re-balance your asset mix if its value gets skewed over time.
15. If you are falling short of meeting your goals, revisit your financial budget to see if there are any areas where you can cut corners to free up additional money for savings.
16. Protect your financial goals by having adequate term insurance so that your dependents can reach these goals even in case of your unfortunate demise.
17. Your term insurance cover must, therefore, be equal to the gap between your future expenses and your current assets.
18. Also make sure to cover your bigger obligations, like home or car loans, with another term insurance cover of matching tenure.
19. Suggested investment products are:
a) Less than 3 year goals: Liquid funds, Fixed Deposits.
b) 3-5 year goals: SIPs in Debt funds, Balanced funds (debt-oriented).
c) 5-10+ year goals: SIPs in Balanced (equity-oriented), Multi-cap funds, Diversified funds.
d) Retirement goals: PPF, NPS, SIPs in ELSS funds, Diversified funds, Balanced equity funds.