The popping questions can disrupt your thinking while planning so many financial goals overall. Keep things simple and plan out individual financial goals that you want to achieve in an accumulated time zone.
Financial planning: Before investing, you need to know your primary financial goals by asking yourself a few questions: Why am I going to invest my money? What purpose will it serve for me? And how long do I have to stay invested? The popping questions can disrupt your thinking while planning so many financial goals overall. Keep things simple and plan out individual financial goals that you want to achieve in an accumulated time zone. Financial planning not only helps you build wealth, but also helps you secure your finances in the opposite direction.
Proper financial planning helps secure finances: To achieve a long-term financial goal, you need to think and rethink the continuity of savings that you will need to make over an extended period of time to achieve that goal, taking into account any accidents that may occur at this stage. A planned goal will always help you evaluate the insurance you need to take out to cover your financial losses. Ideally, you should opt for term insurance as it will offer you protection for a very large amount – usually from Rs. 50 lakh to Rs 1 crore with a very low premium of around Rs. 25 per day.
Helps with tax planning: Investing in certain funds gives you two advantages. For one, you will get good returns, and for another, you will help with savings taxes, which can save you up to 1.5 lakh under Section 80C of the Income Tax Act 1961. Different options are ELSS mutual funds, PPF, tax exempt bonds, etc. Except for ELSS with the lowest blocking period of 3 years, others have a blocking period of 5 years or even more.
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Helps you build up your wealth: If you have properly planned your future goals like vacation, you won’t have to take out your expenses on a credit card or loan and increase your liability. Indeed, prior savings will help you grow your financial wealth. That way, you can easily afford to buy an asset or take a vacation without running into debt and paying long-term EMIs.
Debt-free expenses: Many of us do not plan the monthly budget, which puts us in the wasteful category, where our expenses exceed our savings and therefore we cannot plan a goal. You should always save first and then let your expenses flow. Goals maintain the accuracy of your spending rather than deducting a lump sum from a general savings account and spending the entire amount.
Improves your standard of living: It caters to specific individuals who plan according to their financial goals, wealth, comfort, material goods and necessities. Any goal, whether it be buying a home or a car, will add to your wealth and improve your standard of living. A financial goal helps you grow your money logically in a defined pattern with a known standard.
Capital growth will help you achieve your goal by saving less: Better to plan for today than to buy things last minute and then keep paying interest for the next 7 to 10 years. For example, you plan to buy a house after a few years. To do this, you need to save money to build the whole corpus for this financial goal. Let’s take an example. Mr. Kumar has just started working in an MNC and is looking to buy an Rs 1 crore 3 BHK home after 20 years. Assuming a return of 15%, he will have to start saving Rs.6500 per month to reach his desired goal in 20 years. That is, if he only invests about 15.85 lakh he can achieve his goal. This will help him reach a standard amount in a given period of time. That means if you plan to buy a home today, you will surely buy it in 20 years.
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