Investment option for Financial planning

However, while budgeting can be done just by proper planning and by controlling your expenses, financial planning most of the times involves monetary expenses also as you are required to save and invest money as per your financial goals and also take the services of a financial planner, if required. Here you need to trade with caution as just a wrong move or a wrong financial plan can cost you dearly.

So you first need to identify your goals and priority, and then invest as per your plans. For instance, you can make more money by investing in stock markets. The current volatility in stock markets notwithstanding, equities have traditionally been an asset class with superior returns as they have managed to grow at a CAGR of over 15% over the last few decades. But if you are a risk-averse investor or don’t know the tricks of stock markets and still want to reap the advantages of investing in stocks, then it is better to look for some other options as you are more likely to burn your fingers by investing your hard-earned money directly into stocks. In this case, you can opt for mutual funds or the unit linked plans of insurance companies, where your risks will be less compared to investing in stocks.

Long-term investment options like PF, PPF, Life Insurance Premium, NSC and ELSS (Equity Linked Savings Scheme) investments in Mutual Funds can be used within the limit, to earn tax benefits, in addition to the return on investments. However, if you don’t want to take risks at all, then you can opt for products like FDs and PPF or the traditional plans of insurance companies like money back plans.

It is noteworthy that Life Insurance & Health Insurance should be one of the key elements of personal financial planning for this category, because many of these are people in the 25+ age group; when one could possibly have parents, spouse and children as dependents and lack of any Life Cover could have debilitating effects on dependents.

The investment amount shouldn’t be a problem as you can start investing in insurance plans, for instance, with as little as Rs 500 a month or even less. But you should avoid putting all your eggs in one basket as having a diversified asset portfolio is always advisable for an investor. In fact, diversification across different asset classes and investment avenues seems essential to survive and prosper in the current times. You just need to identify your financial goals and plan your investments accordingly.