Everyone think about financial secure for future. So you need to save money to your wealth grow. For this you need to plan in advance to secure financial future and also helps you to go in right direction. Your Earning money is different from investing money. So you need to have right mindset to grow your wealth. If you are confuse about how to plan your saving. Here are some steps that help you towards financial freedom in future.
Plan for your Future
Personal goal setting is not an easy. Because, future is something that most of us is either afraid or excited. In order to save money you have to heart-to heart talk with yourself. If you want to reach your goal you have to set up in various areas of your financial life. Check Do You Have Vision & Goals for Your Future?
Every investment is towards financial goal. Such as buying house and car, children education, marraige and retirement plan. When you invest money you must link your investment according to financial goal. You have to plan some short and long term financial goals. And tracking your progress is to success in achieving all your financial goals.
You can invest by own risk and return in equity, fixed income, gold and real estate. Equity gives you high returns for 5 to 10 years long term. Such as, gold, debt and cash. In other words, equity investments give you negative return for short time periods as 1 to 2 years. For long term equity investment will reduce negative return and to save as money as you can.
Standard Time Horizon
To achieve financial goal you need to set time horizon. Also, you need to save amount on monthly basis and you have to decide time frame for different goals. For example, after 10 years sending children abroad for higher education.
Know your Risk Profile
Risk involved in all investments and your risk appetite is important while investing. You can divide your money without identify risk and it is necessary to take risk ability to fulfill goal. This will help you to learn how to quantify your risk taking ability.
On basis of risk you must take an exposure in equity and debt. Risk appetite depends on various factors like age, income level, and expenditure commitments. You can have aggressive portfolio from 25 to 35 years and then you can shift to balance portfolio. After age of 50 you can opt for traditional portfolio.
Debt gives you cash flow in form of returns and interest. So you can select right asset class based on investment horizon and risk appetite. Thus you can pick funds based on historical performance. You have aim to invest in securities like stocks, bonds, or mutual funds. It is important to understand before you invest in market. Risk is potential for greater investment return.
Opt right financial solution
You have variety of asset class to choose your funds. Such as bank fixed deposits, deposits with NBFC’s and gold. There are other deposits schemes like NPS, PPF, NSCs, and Po deposits. Other, like mutual fund, Gold ETFs, stocks, real estate and InvITs which help you to get high returns. To plan proper financial it is necessary to take guidance from financial advisor. You can select funds on basis of your risk and concern your financial adviser.
Asset Allocation Strategy
As per market movement you invest more in high growth funds. Like stocks and link them with your long term financial goals. Once your goals are near you switch your investments to debt instruments. All these strategies are applying each goal from time to time with help of an adviser.
Also, asset allocation is type of performance in terms of risk and return. Thus, asset allocation is important to meet your financial goal. If you do not take enough risk in your portfolio, your investments may not earn return to meet your goal.
If you have family Insurance is must. So to secure amount you invest on month basis for long term financial goals. In such case, term insurance is most desirable. Beside this, as age increase health insurance is important to cover medical expenses. Have insurance to protect those who are depending on your financial.
Life is long and you never know when you start your downward journey. You must start saving as you start earning. No matter how small amount is. As thumb rule of insurance, coverage of family financial makes more sense. Always remember that insurance coverage comes at cost.
Continue review your financial situation and where you need to contribute more. This will help you to save and improve your financial health. Managing your savings will empower you and now it is perfect time if you haven’t started. You can see Opt for FMPs to improve your retirement portfolio