1. Personal financial management should always be a need-based process at various life stages.
2. It should, therefore, offer integrated solutions for Savings, Investments and Insurance products, after considering one's profile and background, cash flows, life events, and risk appetite.
3. It should be able to:-
a) Quantify needs and goals, including retirement and legacy,
b) Estimate available resources for them at various times, and
c) Prepare a plan to bridge their gap within one's risk aptetite.
4. Broadly, financial needs are either Income Replacement needs or Financial Liability needs.
5. Income Replacement needs are met by a corpus which enables continuation of family's current lifestyle when faced with unforeseen circumstances, and includes equity, mutual funds, Ulips, NPS, etc.
6. Financial Liability needs are met by a corpus which provides protection for meeting all concurrent loans and obligations, and includes pure life term insurance, creditor protection covers, and health insurance including accident and critical illness covers.
7. For a young earner, income needs are higher for events like vehicle purchase, higher education and job risks, requiring income-generating assets like bank deposits and debt funds, that can be liquidated without losses at short notice, and investment in growth assets like equity funds remains lesser with a flexible contribution.
8. When settled in a stable career, ability to increase investment in growth assets increases, along with additional expenses like marriage, holidays, bringing up children and their marriage, which can be fulfilled through medium- and long-term SIPs, as sticking only to fixed income products will nullify potential capital appreciation at this stage.
9. Buying one's first home for living in it is also feasible in this phase, if down payment and loan EMIs can be comfortably paid.
10. It should be ensured at the time of retirement that:-
a) There are no outstanding loans including home loan,
b) There is a corpus set aside to grow in balanced / multicap equity funds for another 25-30 years to beat inflation,
c) There is a regular income flow, preferably from SWPs, to meet monthly expenses, and
d) There is adequate liquid emergency fund / insurance for exigencies.
2. It should, therefore, offer integrated solutions for Savings, Investments and Insurance products, after considering one's profile and background, cash flows, life events, and risk appetite.
3. It should be able to:-
a) Quantify needs and goals, including retirement and legacy,
b) Estimate available resources for them at various times, and
c) Prepare a plan to bridge their gap within one's risk aptetite.
4. Broadly, financial needs are either Income Replacement needs or Financial Liability needs.
5. Income Replacement needs are met by a corpus which enables continuation of family's current lifestyle when faced with unforeseen circumstances, and includes equity, mutual funds, Ulips, NPS, etc.
6. Financial Liability needs are met by a corpus which provides protection for meeting all concurrent loans and obligations, and includes pure life term insurance, creditor protection covers, and health insurance including accident and critical illness covers.
7. For a young earner, income needs are higher for events like vehicle purchase, higher education and job risks, requiring income-generating assets like bank deposits and debt funds, that can be liquidated without losses at short notice, and investment in growth assets like equity funds remains lesser with a flexible contribution.
8. When settled in a stable career, ability to increase investment in growth assets increases, along with additional expenses like marriage, holidays, bringing up children and their marriage, which can be fulfilled through medium- and long-term SIPs, as sticking only to fixed income products will nullify potential capital appreciation at this stage.
9. Buying one's first home for living in it is also feasible in this phase, if down payment and loan EMIs can be comfortably paid.
10. It should be ensured at the time of retirement that:-
a) There are no outstanding loans including home loan,
b) There is a corpus set aside to grow in balanced / multicap equity funds for another 25-30 years to beat inflation,
c) There is a regular income flow, preferably from SWPs, to meet monthly expenses, and
d) There is adequate liquid emergency fund / insurance for exigencies.