Financial Planning is the process of identifying, planning for, and meeting your life goals, through the proper management of your finances. It allocates income to various types of expenses, while reserving a part of it for savings.
Standard Investment Options
Cash Investments
You pay a low rate of interest, but they are risky during periods of inflation.
Examples: Bank deposits such as FDs, certificate of deposits etc.
Debt Securities
It offers returns in the form of fixed periodic payments and possible increase in the value of your capital at maturity.
It is a safer and more risk-free investment option than equity. However, the returns are also generally lower than securities.
Examples: Bonds, National Savings Certificate, etc.
Stocks
Buying stocks and equities makes you a part owner of the business and entitles you to a share in the company profits.
However they are more volatile and riskier than bonds.
Mutual Funds
Mutual Funds are a collection of stocks and bonds and involves paying a professional to select the right securities for you.
The prime advantage is that you do not have to bother with tracking the investments.
They may be bonds, stock or index-based mutual funds.
Insurance
It is primarily used as a financial protection against possible future losses or damages due to unforeseen events.
One can buy protection, savings/investments, health and retirement plans from a life insurance company.
Real Estate
They involve long-term commitment of funds.
Gains are usually generated through rentals or lease income as well as capital appreciation.
Includes investment in residential and commercial properties.
INVESTMENT PLANNING
Investment planning is all about selecting the right investment strategy to help you meet your financial goals..
The two most important aspects involved in investment planning, that need to be considered while suggesting a product to your customer are:
Understanding the need for capital growth or regular income
Customer’s risk appetite
FINANCIAL PLANNING CONCEPTS
1.Goal Setting
2.Power of Computing
3.Power of Inflation
Step 1
Helping customers identify and write down their financial goals – sending their child to college, buying a new car, making a down payment on a house, going on a vacation, planning their retirement etc.
Step 2
Breaking each financial goal down into several short-term, medium-term and long-term goals.
Step 3
We keep you updated so that customer make the best decisions
Step 4
Evaluate your customer’s progress as often as needed
