Financial Planning is a process that helps a person work out where he or she is now, what he/she may need in the future and what he/she must do to reach the defined goals. The process involves gathering relevant financial information, setting life goals, examining the person's current financial status and coming up with a strategy or plan for how the person can meet his/her goals given the person's current situation and future plans.The objective of financial planning is to ensure that the right amount of money is available in the right hands at the right point in the future to achieve and individual's financial goals.

Its a 8 step process:-

      (a)  establish and define the relationship with the client.

      (b) define the client's goals.

      (c) gather and analyse data,assess the current resources and future income potential of the client.

      (d) determine and shape the risk tolerance level of the client.

      (e) ascertain the client's tax situation.

      (f) recommend the appropriate assef allocation, and specific investments.

      (g) executing the plan and making the client invest.

      (h) reviewing progress and portfolio rebalancing.

 

so its not a one time process, thus financial planning includes investment planning, retirement planning, children investment planning, risk & insurance planning, real estate planning, tax planning.

   Going for FINANCIAL PLANNING, one has to contact the Certified Financial Planner. 

    

 

 

Financial planning covers a wide variety of money topics including budgeting, expenses, debt, saving, retirement and insurance among others. Understanding how each of these topics work together and affect each other is important for laying the groundwork for a solid financial foundation for you and your family.

1. Budgeting
At the very basic level of personal finance you are dealing with a budget; you make money and then you spend that money. Even if you haven’t created a detailed and written budget you continue to budget on a daily basis. When you are faced with spending money on something, you think about it and realize that by spending that money, you will not be able to spend that same money on something else.
When you create a budget, you begin to see a clear picture of how much money you have, what you spend it on, and how much, if any is left over. When you can clearly see where your money is going, you can then budget appropriately so your money is going where it should.

2. Cutting Expenses
After you have successfully created a budget, you'll have a much better understanding of where your money goes and where you can possibly trim expenses. For many people, this is as simple as cutting back on some of the little things that can add up.

3. Getting Out of Debt
Even after creating a sound budget and cutting unnecessary expenses, you may still find yourself with lingering debt to get rid of. Using credit and taking on some debt itself isn’t necessarily a bad thing, but when you can't keep up with the payments or borrow more than you can afford to pay back, you could be in trouble.
One of the most important steps in getting out of debt is to pay more than the minimum amount due each month. Even a modest credit card balance can take over a decade to pay off if you simply pay the minimum amount due. In addition, paying the minimum will end up costing you thousands of dollars in interest over that period.

4. Saving for Retirement
With fewer companies offering full pension plans and the uncertainty of Social Security, it has become more important than ever to save and plan for your own retirement. Unfortunately many people feel that they simply don’t have enough money left over each month to save.
Retirement savings needs to become a priority instead of an afterthought. The Internal Revenue Service has made saving for retirement even more attractive with special tax-advantaged accounts such as employer 401(k) plans, individual retirement accounts and special retirement accounts for the self-employed. These accounts allow for tax deductions, credits and even tax free earnings on some retirement savings.

5. Insurance
You've created a budget, cut expenses, eliminated your credit card debt and, have started saving for retirement, so you are all set, right? While you've definitely come a long way, there is one more important aspect of your finances that you need to consider.
You've worked hard to build a solid financial footing for you and your family, so it needs to be protected. Accidents and disasters can and do happen and if you aren’t adequately insured it could leave you in financial ruin. You need insurance to protect your life, your ability to earn income, and to keep a roof over your head.

well all attributes are correct, but an individual cannot cover financial planning as whole,since this is fairly complicated process, we suggest you to contact CERTIFIED FINANCIAL PLANNER (CFP) for proper financial planning.

 Ahead of financial planning i would like o add the points or Steps to be  consider before investing
 
When it comes to investing, it is commonly observed that investors tend to replicate the investment strategy followed by their colleagues, friends or relatives. It is generally believed that an investment strategy that has worked for one will also work for others. However, this is the wrong approach, simply because ‘one size does not fit all’ while investing. Instead, investors need to build an investment portfolio that is right for them.
Building an investment portfolio requires the investor to put in a fair degree of thought and time. The need for the latter is only accentuated in light of the overwhelming choices available. In this article, we present a 4-step strategy that will help investors build an investment portfolio.

1. Identify the investment objective

The first step should be to identify the investment objective and tenure. In our view, no investment must be undertaken without defining these parameters. For this, you need to ask yourself – “what am I investing for”. At any given point, there are likely to be multiple investment objectives that you wish to accomplish, ranging from buying a car to providing for retirement. And each of those objectives will have to be achieved over varying time frames. For instance, buying a car is a relatively short-term need, while retirement planning is long-term in nature.

2. How to achieve your investment objective?
Once you have defined the investment objective, the next step is to outline a plan to achieve it. While there are a range of investment options (stocks, mutual funds, small savings schemes, fixed deposits, gold, real estate) available, mutual funds should suit a majority of the investors. Mutual funds are managed by professional fund managers and can be expected to do a better job at managing money than most investors. By investing through the mutual fund route, investors are left with time and energy to pursue their own work.
Of course, not all asset classes are available through the mutual fund route in the domestic context. But it’s only a matter of time before that changes; for instance, regulations are already in place for the introduction of real estate funds, one of the big innovations in the mutual fund industry. Investors can already invest in debt, equities and gold through mutual funds.
Depending on your investment objectives you can select the mutual fund option most suited to you. Typically, for a long-term investment objective like retirement planning you can take risk and equity funds can prove beneficial. For short-term needs like saving for a car, debt funds are your best bet.

3. Select the fund house/AMC
Once you know that you want to achieve your investment objective the mutual fund way, it’s time to select the right fund house/Asset Management Company (AMC). With an increase in the number of fund houses/AMCs, choosing the right one can be challenging. However, this is easier said than done.
Why is it necessary to invest in the right fund house? Because the fund house must first qualify as a viable investment proposition before its schemes can attain that position. While short-listing an AMC, look for the ones that are process-driven as opposed to individual-driven. Processes are more enduring and serve investors well over the long-term. Individuals (read star fund managers) can be expected to perform only till the time they are associated with the fund house, once they leave they take the performance with them.

4. Select the scheme
Once you have chosen the right fund house, the next step in the investment sequence is to select the right mutual fund scheme. Like with the fund house evaluation, there is an elaborate process to select the right mutual fund scheme. Put briefly, mutual fund schemes are selected after they have passed the test on various parameters like risk, returns and performance over market cycles, especially the downturns.

A word of advice…
These are some of the basic steps while investing. Adherence to these steps can ensure that there are fewer surprises along the way. Taking short cuts may prove detrimental to your financial plans. Of course, given that your financial planner is always around to guide you, taking the step-by-step approach to investing should not prove very difficult

 Sorry to say,its a planning for mutual fund rather than financial planning. well financial planning is a wider concept.

 

 

Dear , I think,in today’s fast-paced world, each of us earns for a good standard of living for our near and dear ones and ourselves. Apart from this, we must also be prepared for unforeseen contingencies that could arise at any point in our lives. That’s not all. With inflation rising, even at a moderate rate, you have to pay more for goods and services in the future than you are paying at present. Only if you are financially secure, can you judiciously face each and every financial requirement that arises. Since financial planning approaches the task of managing your finances in a holistic manner, it takes into consideration factors like inflation, taxation, etc., apart from your income and expenses, to arrive at a total financial solution for you. A well-drafted financial plan, which is reviewed regularly, not only ensures that you are financially stable during the ‘earning’ period in your life but it also makes sure that your retirement years are financially secure.

The right way to look at financial planning is first by covering the risk. The young families today are typically successful professionals in their 30s and 40s with good educational qualifications on their resumes – yet they are still often left scratching their heads when it comes to creating a family financial plan or they indulge in their more pressing needs such as eating out, buying or upgrading their motor vehicles and taking vacations to exotic destinations. Their peers behave this way, and naturally they are also influenced and think this is normal. So an entire generation may not realize the consequences of a consumer oriented behavior.

Tips on financial planning

1.Adequate insurance cover

This protects the plan you are going to design for the future. It is the only way to avoid destruction, half way through of what ever the plan one has for him or his family. Your insurance plan should be designed to take care of that need.

That means the need is taken care of irrespective of your presence because most of the plans end once the planner is not able to earn due to disability or death of the planner.

In a simple way, it is to say that a house should be built on a solid foundation. Your insurance policy is the foundation for the future goals for your family.

Also it gives you some saving, if you can afford to buy an endowment plan. But remember to put the protection before saving in deciding the plan. Endowment is a plan with discipline, not a plan that is designed to withdraw cash. It is a high premium policy but accumulates saving for you.

How much insurance is needed?

The practical approach is at least 10 times of your yearly income, assuming you have covered your one time liability from mortgage policies.

2. A will

Young parents often feel healthy and don't think they need to prepare for the inevitable by drafting a will. But it's a task they probably shouldn't put off. Younger people don't have death or savings on their minds -- at least not to the same extent that older clients do. But there are many stories of young people dying without a proper will and children left without anything till the estate is settled. It is time we change the perspective that a will is only for the rich and the old.

Without a will, who will decide children expenses, priorities and future planning for their education? A will is put in writing, so there is no confusion in future. If it is costly to do one, at least write them in a piece of paper as a guide line.

3. Take into account all future needs; Retirement, children’s education, medical bills, disability and death

Too often we have seen people plan for a single need. The reasons may be due to income limitations or complete ignorance. The planning for multiple needs is the way forward as one need is dependant on the other, so lack of planning for one of the above can destroy your entire plan. If a person can afford only a small amount of money, consult a person who is qualified to give you the proper advice how to balance your planning process by taking in to account all the needs with a limited income.

4. Inflationary fear

The most common objection among ordinary people is “It does not make sense to save for the future as the money value drops” the fear of inflation and the value of money being small in future. This is an equation that needs to be taken into account in your planning process and one has to be competent enough to calculate the expected inflationary trend to adjust his plans than to have negative approach on saving and protection. Here we have to calculate the present value of the future money and continue to review our plans or get a pure protection plan that can beat the inflation.

5. Never forget

Keep financial planning always in your mind, may it be buying a house, going vacation, children education, investing your saving, using your EPF, even to take treatment for your health problems. This is because we have seen more often than not people building huge mansions but halfway through stop work due to lack of finance.

Then there others who send their children to international schools but find it difficult to maintain the fees all the way to advanced courses. Some spend huge amounts on vacations but find it difficult to pay daily utility bills or going to the best private hospital for treatment and getting indebted to pay the bills.

6. Disclose- Please do not be afraid to talk to your bank manager, insurance agent or stock broker, of your needs

If you do not disclose, what your needs are and how much you can afford, they will either underestimate you or over estimate you and in both cases you will be the loser.

If you buy an insurance policy for an amount that you are unable to pay till the policy period ends, you will lose out at the time of surrender. The break even point can be more than 10 years in some cases and some cases it could be even more than 15 years.

7. Do not be afraid to question

Do not make valuable decisions because of obligation. Never buy anything for your future because it is cheap or because you get more discount from the agent. We have seen very often how people got into trouble with investment schemes that promised high returns. There is no free lunch and when it is too good to be true, it usually is too good to be true.

We also have seen people complain after realizing they were sold the wrong insurance plan but the buyer’s decision was based purely on a relationship than a need.

It is your future, so no question is a bad question. Be an intelligent consumer by covering every detail so you can have a peace of mind that your future plans are secured well.

The right way to look at financial planning is first by covering the risk. The young families today are typically successful professionals in their 30s and 40s with good educational qualifications on their resumes – yet they are still often left scratching their heads when it comes to creating a family financial plan or they indulge in their more pressing needs such as eating out, buying or upgrading their motor vehicles and taking vacations to exotic destinations. Their peers behave this way, and naturally they are also influenced and think this is normal. So an entire generation may not realize the consequences of a consumer oriented behavior.

Tips on financial planning

1.Adequate insurance cover

This protects the plan you are going to design for the future. It is the only way to avoid destruction, half way through of what ever the plan one has for him or his family. Your insurance plan should be designed to take care of that need.

That means the need is taken care of irrespective of your presence because most of the plans end once the planner is not able to earn due to disability or death of the planner.

In a simple way, it is to say that a house should be built on a solid foundation. Your insurance policy is the foundation for the future goals for your family.

Also it gives you some saving, if you can afford to buy an endowment plan. But remember to put the protection before saving in deciding the plan. Endowment is a plan with discipline, not a plan that is designed to withdraw cash. It is a high premium policy but accumulates saving for you.

How much insurance is needed?

The practical approach is at least 10 times of your yearly income, assuming you have covered your one time liability from mortgage policies.

2. A will

Young parents often feel healthy and don't think they need to prepare for the inevitable by drafting a will. But it's a task they probably shouldn't put off. Younger people don't have death or savings on their minds -- at least not to the same extent that older clients do. But there are many stories of young people dying without a proper will and children left without anything till the estate is settled. It is time we change the perspective that a will is only for the rich and the old.

Without a will, who will decide children expenses, priorities and future planning for their education? A will is put in writing, so there is no confusion in future. If it is costly to do one, at least write them in a piece of paper as a guide line.

3. Take into account all future needs; Retirement, children’s education, medical bills, disability and death

Too often we have seen people plan for a single need. The reasons may be due to income limitations or complete ignorance. The planning for multiple needs is the way forward as one need is dependant on the other, so lack of planning for one of the above can destroy your entire plan. If a person can afford only a small amount of money, consult a person who is qualified to give you the proper advice how to balance your planning process by taking in to account all the needs with a limited income.

4. Inflationary fear

The most common objection among ordinary people is “It does not make sense to save for the future as the money value drops” the fear of inflation and the value of money being small in future. This is an equation that needs to be taken into account in your planning process and one has to be competent enough to calculate the expected inflationary trend to adjust his plans than to have negative approach on saving and protection. Here we have to calculate the present value of the future money and continue to review our plans or get a pure protection plan that can beat the inflation.

5. Never forget

Keep financial planning always in your mind, may it be buying a house, going vacation, children education, investing your saving, using your EPF, even to take treatment for your health problems. This is because we have seen more often than not people building huge mansions but halfway through stop work due to lack of finance.

Then there others who send their children to international schools but find it difficult to maintain the fees all the way to advanced courses. Some spend huge amounts on vacations but find it difficult to pay daily utility bills or going to the best private hospital for treatment and getting indebted to pay the bills.

6. Disclose- Please do not be afraid to talk to your bank manager, insurance agent or stock broker, of your needs

If you do not disclose, what your needs are and how much you can afford, they will either underestimate you or over estimate you and in both cases you will be the loser.

If you buy an insurance policy for an amount that you are unable to pay till the policy period ends, you will lose out at the time of surrender. The break even point can be more than 10 years in some cases and some cases it could be even more than 15 years.

7. Do not be afraid to question

Do not make valuable decisions because of obligation. Never buy anything for your future because it is cheap or because you get more discount from the agent. We have seen very often how people got into trouble with investment schemes that promised high returns. There is no free lunch and when it is too good to be true, it usually is too good to be true.

We also have seen people complain after realizing they were sold the wrong insurance plan but the buyer’s decision was based purely on a relationship than a need.

It is your future, so no question is a bad question. Be an intelligent consumer by covering every detail so you can have a peace of mind that your future plans are secured well.

thanx for interesting info buddy