Skip to main content

Simple Steps towards your Financial Well being (for beginners)

Step-1: Become serious about your finances. Get answers to your basic questions on the internet. Get a very basic info about financial planning and investment options available. 'Discuss' with your elders, seniors and friends (beware: don't take 'ADVICE' from them, just have a discussion to start to get the feeling and views of managing finances. Your father or brother indeed is your well wisher, but may not be a subject matter expert. Everyone can sing a song but not every one is a professional singer, just like not every person who can hit the cricket ball in the street cricket is a professional cricketer). Also ask them if they have some financial advisors. Discuss with financial advisor/s you come across and decide who you feel you most helpful and knowledgeble. Take the next steps in consultation of that advisor.

Step-2: Creating an Emergency Reserve Fund of at least your 3 months Salary is your First Objective, as soon you start earning. This should take no more than 6 months of after you start working. Always maintain atleast 2 months Salary as reserve. 1 month's extra saving is for utilizing for starting Step-3&4

Step-3: once you have saved equal to your 3 months Salary, next immediate thing you will do is Insurance Planning. Buy Personal Accident Insurance, Term Life Insurance and Health Insurance (even if you have one provided by employer). These are must. Recommended to have a Critical Illness Insurance also, but you can do this little later also.

Step-4: Start Systematic Investment Plans (in Equity Oriented Balanced Funds and Diversified Equity Funds) for your Life (financial) Goals. Retirement, Long Term Emergency / Contingency Fund, Own Home Down Payment Fund are some of the default and common goals. Tax Planning / investments should get automatically achieved if you start SIP's in ELSS / Retirement Funds of Mutual Funds.

Comments

Popular posts from this blog

There are two types of self-serving Insurance intermediaries – Online Portals and Insurance “Salesmen”. Each of these are broadly of two types again. Two types of Online Portals are – Aggregators, earning referral fees and Brokers earning commissions. Online portals are too focused on conversions and quick sales than understanding the customer needs, educating the customer etc.; well online portals are not built for that kind of high-touch & personalized engagements. Then, two types of Salesmen are – Sales Staff of Banks or Sales Executives, earning incentives, lured by pay hikes/promotions and Individual Insurance agents earning commissions, lured by foreign trips etc. These salesmen too are too focused on achieving their personal sales numbers than what is best for the customers. A disclaimer to clear any smallest doubt – No, I don’t mean all of them are same; not all are bad. Then there are media houses, bloggers, vloggers, influencers earning th r ough ads or/and referral f...

The Men Who (not) Cried Wolf!

There are people who say “This Time is Different” like the very same ‘boy who cried wolf’. At the same time, because it has become a cliché, there are many other people who cry “this time also is NOT any different”.   Well, that too has become a cliché! Sometimes, ignoring the cries of wolf impact them more than the ones who cry.   Many a times some wicked individuals make fake calls to scare people of ‘bomb threat’ at public places. Ignoring those calls, unlike the boy crying wolf, it is dangerous and risky of the public rather than the person faking it. The problem becomes too difficult for the people to comprehend, when both sides of the people crying foul and the people denying it are made of learned individuals and subject matter experts. Most often than not, in today’s complex world, we are exposed to such situations. Ongoing ‘Novel Corona Virus’ / ‘Covid-19’ is the same case. There are mainly two major impacts it is creating. One, the health (physiologica...

Stock Market Crash & Me: How did I handle as an Investor and as a Professional?

A little more than a month ago, stock markets in India and all over the world were at their all time highs. Suddenly, in a matter of few working days markets crashed at a speed that wasn’t seen before, including at the time of financial melt-down and recession of 2008-09. Until the end of first week of this month, I believed, in my life time I’ll never again see 2008-09 kind of crash. No living person then and today so far remembers experiencing any bigger stock market crash of a magnitude of 2008-09. Well, for Indians, it was the only biggest crash people have seen. In USA, something bigger had happened during ‘great depression’ of 1929, when Indian Stock Market was practically non-existent (though BSE is more than century old, there is no data, benchmark whatsoever for those dates). During 2008-09 I was still amateur investor with little money. That situation should have been much better for me, if had not done a bad financial decision just few months before the recession took enti...