Investment and Finacial Planning

Financial Planning is the way of managing our money to fulfill the needs that arise in future while meeting the needs and wants of the present. It is process of continuous thinking and laying out the blueprint for future needs, it is the first and the most important steps towards achieving your financial goal. Financial planning helps us in the time of needs as a source of contingency fund to deal with the problem in hand.

The basic fundamentals for financial planning are:

• Term Insurance:- In order to meet the monetary need of our family and loved ones in case of our absence due to some unfortunate circumstances. Ideally the term insurance should be 10 time of ones yearly income. The reason one should buy a term insurance plan 10 times his/her income, to tackle the inflation and considering the time value of money. Let us understand this with an example, the cost of milk 3 years ago was  45/liter now it is 58/liter, 5 years ago a pair of slippers cost to 100 per pair now the same pair of slippers are available at 180-200 per pair. Hence with the time the cost of goods increases, so in order to meet the future expenses one should opt for 10X term insurance.

• Health Insurance:- Health insurance safe guards us against unnecessary medical expenses, and protect our saving from being drained by the medical procedure bills. In case of medical emergency health insurance covers all the expenses for the insured person covered under the policy terms. Medical Insurance also covers the pre and post hospitalization covers  i.e.  the expense occurred before being hospitalized and after being discharged. Medical expense can drain our entire savings an in some extreme medical situation it can make an individual debt ridden. 

• Contingency Funds:- Contingency funds are important to deal with the financial uncertainties that may arise in future; through a regular and systematic way a portion of income is invented in various scheme such as PPF, Fixed deposit, Recurring deposit (R.D), varios mutual funds schem or bonds. The main goal behind the creation of contingency funds is to tackel some uncertain finacial crisis that may be encountered in future like the present COVID 19 situation where large portion of salaried people are laid off, wages arw cut off or delayed. In ordered to resolve money matters in this situation contingency funds are provisioned.
  

Financial planning doesn't stops with insurance and contingency funds planning. These are the basic steps or need that one shoulders in order to secure his or her future as well as the future of their loved one's and fmaily.

IMPORTANCE OF INVESTMENT

1. To dela with the situation of future where money is required in large sum within a stipulated period of time.

2. To lead a debt free life: People who cultivate habbit of investing regularly are often leads a debt free life as they always have money saved in form of investment to meet the financial uncertainty.

3. No more EMI: Regular investment made with an aim to achieve a financial goals prevent individual to fall under emi pressure thus reducing the stress and anxiety to pay emi regularly on time and avoid penalties associated with late payment of emi.

4. Creates Wealth: Investment into mutual funds and bonds yeild compound interest on the investment made hence it help an individual to accumulate wealth.

5. Tax saving: Various mutual funds and bonds schemes provided a way to save tax undee income tax regulation 80CC. The individual who makes investment on such scheme are also entitled to receive intrest on their investment.