Financial Goals

When we talk about financial goals, most of them are not sure or it is decided on circumstance.

To have a better understanding for the need of this, you need to understand what you target for. It has to be done through planned manner.

Remember 'ROME was not BUILT in a day'.

To achieve your financial goals, it might take 5 to 20 years, unless we have spare or free money due to some wealth left by our forefathers, which is not going to happen.

In Simple terms, get your finance streamlined.

• Calculate the current total debts or liabilities, if you have any.
  
• Plan, what you need to buy so that you have a target for your finance.
  

The Basic step of achieving financial goal is by setting up the foundation even before the plan in started.

1. Get one Insurance Policy
   

• Preferably a Term Insurance for [ YourDream x 2 ] ex: If you are planning to buy a house for 25L or your liabilities is 25L, then your term insurance value should be 50L
  
• Other than Term Insurance, I will NOT recommend any other Insurance policy as their value or factors are nil and you get a mere 4 to 5% or less return at the end of its tenure.
  
• Personally I will NOT recommend ULIP based Insurance, as the basic idea of cover during crisis is lost here.
  

1. Get an Health care or Medical Policy
   

• Since most of them are covered under corporate level schemes, it might not be necessary however
  
• Have one additional in hand, it will be useful when we retire to take care of ourselves as that time, the policy cost will be very high or most of them don't allow subscribing / opening new policy after certain age limit.
  

Once you are covered financially & health wise, you need to plan your finance systematically. I have divided that into certain parts, so that you can understand them.

PART A

The first & foremost is close all your existing loans or debts like credit card, personal loan etc..

• If you unable to close them. Convert them in low-interest loans.
  
• If you have a credit card loan
  • By taking a loan from a friend or relative
    
  • Or by opting for Balance Transfers
    
  • Or by taking a Personal Loan
    
• Stop using credit cards, if you are unable to control using it or if you have urge of shopping always.
  

PART B

Once you are out of debts, now it is time to build wealth. Before building wealth, you need plan for the target or what you need to have. It can be anything but remember be realistic or that can be achievable.

Some of the wealth options are

1. Real Estate [House/Flat/Land/Property/Bungalow/Designer houses]
   
2. Jewels / Diamonds
   
3. Four Wheeler / Two Wheelers
   
4. Foreign Holiday Trip
   
5. Child's Education
   
6. Child's Marriage
   
7. To start a business of your own
   
8. Medical Emergencies, if any.
   

PART C

Now you have the target in your mind, so you need to work towards it. Money or wealth can be built in…

In Debt market

In Equity market

What is debt market?

In layman approach: Any investment or savings, which does not change or erode the principle, is called debt market. The outcome is static.

Ex: Government bonds, Savings Account, Fixed Deposits, Real Estate*, Gold*, Jewels*, Diamonds

What is equity market?

In layman approach: Any investment or savings, which increases or decreases the principle drastically, is called Equity market. The outcome is dynamic.

Ex: Real Estate*, Chit funds, Mutual Funds, Share market, Gold* etc...

To understand why you should invest or start saving money…read my earlier blog 'Investment in nutshell'

NOTE: * - Some investment like Real Estate & Gold are both in Debt & Equity. I will tell you...why I have mentioned like that.


For detailed type of recommended investment, I will do inform you in my next blog.


Until then, happy reading.