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Top Reasons to Start Investing Today

There are many people who keep telling themselves that they will invest after earning some more money. They are also a bit worried about the market volatility and consider waiting for some better time to invest. There are people who want to become a financial expert before investing.

By not investing and only waiting, will cost you a lot. It only makes you missing on several potential gains. You should start investing as early as possible, as it helps you earn high returns in the long run.

Important Reasons to Begin Investing

1.      Wealth Creation

Investing helps you build wealth and any one can begin investing. With these investments, you can begin putting small amounts regularly and by continuously investing, you will build wealth and help fulfil you & your family’s desires.

Types of Investment Options

You should allocate your money in different investment vehicles as listed below:

Equity

Mutual Funds

Public Provident Fund

National Savings Certificate

Sukanya Samriddhi Yojana

National Pension Scheme and many others.

2.      Beat Inflation

With inflation, the value of a rupee decreases every year. And, in order to beat inflation in your investment returns, you need to invest with instruments that offer higher returns than the effective rate of inflation. Getting higher returns help maintain your purchasing power. For instance, if the rate of inflation is 4% and you are earning returns from investment is 3%, then you are losing money.

3.      Retirement Planning

As you start earning, it’s the right time to start investing, so you can accumulate a huge corpus at the time of retirement. After retirement, you can utilize these funds to meet your financial needs and it also gives you a sense of financial security. To plan for your retirement, you can invest in National Pension Scheme (NPS) which helps accumulate wealth while you are earning. By investing in NPS, you will get a regular pension after retirement that ensures a complete peace of mind as well.

4.      Meet Financial Goals

You have identified various financial goals that you want to achieve. Investing wisely help achieve your financial goals. In order to ensure you can meet those goals, it is vital to firstly prioritize your goals and then choose investments accordingly that facilitate you to achieve them. Goals such as meeting children’s higher education expenses, buying a home, launching own business, etc can be achieved through the returns you receive from the investments.

Related: 10 Steps of Financial Planning

5.      Save Tax

While looking for the best investment options that can offer high returns, you can tap for the ones that offer significant returns along with reduce your taxable income as well. ELSS Funds, PPF, NPS, 5-years fixed deposit, etc help build wealth and plan taxes as well.

There are people who invest in tax saving investments to save tax without assessing their returns. It’s not a right move. You need to assess returns before investing and also make sure it saves tax.

6.      Returns

Putting your money in a bank savings account will give minimal returns. You ae thus advised to invest with avenues that offer returns at a high rate, so that you can build wealth and fulfil your life’s goals. If you invest for a long-term, some investments have the potential to offer you returns somewhere 12-15% or higher.

7.      Assess Risk and Return

Risk is the probability of losses that you may incur as far as investment is concerned. Return from investment is the actual gain or loss that you obtain from your investment. Before investing, you need to assess the risk & return trade off that signifies a correlation between these two key factors.

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What is the Main Objective of Financial Planning?

At different times in life, people’s income and expenses tend to change. You can take examples of marriage, having a child, etc. In these stages of life, your expenses will increase and you also have more responsibilities to fulfill.

As you transition through the different stages in life, you need to take proper care of your financial health. It’s essential to ensure that you don’t have to face any financial shocks and hiccups.

Importance of Financial Planning

To manage your finances in a better manner, you need a customized financial plan which can only be crafted with help of financial planning.

Financial Planning refers to the process of identifying your present financial standing, establishing key financial goals, and outlining a strategy for how your assets and investments help achieve those goals.

Also Read: 10 Steps of Financial Planning

For instance, if you want to accumulate a corpus amount of Rs 15 lakh for your daughter’s marriage by the time she turns 25. To achieve this much amount, putting in financial planning is extremely essential.

Financial Planning – What It Brings for You?

You can’t ignore the importance of financial planning in India. It helps achieve key financial goals.

1.      Wealth Creation

You must have some financial goals in life such as buying a home or car, going for a dream vacation, children’s marriage, etc., and to meet all these goals, you are required to build wealth. There are also some obligations in life that you must fulfill. Financial planning helps you to achieve all your goals in life.

2.      Child’s Education

Education nowadays has become extremely expensive and it’s further going to rise. That’s why you need to plan your finances well to meet the education expenses for your children. With financial planning, you can easily compute the amount that you will want for your children’s education and then accordingly start investing.

3.      Retirement Planning

To plan your retirement, it’s advisable to start investing as soon as you begin earning. To enjoy your golden years after retirement, you need to start planning from an early stage in life. By start investing early, you can take benefit from the power of compounding which helps build a huge corpus for your retirement.

4.      Better standard of living

Usually, people have at thinking that they have to put off their standard of living to pay for loan EMI’s and monthly bills. But with a good-fitting financial plan, you don’t need to give up your living standard. With proper financial planning, you can achieve goals while maintaining a decent living standard.

5.      Ready to Face Emergencies

A financial plan suggests you create an emergency fund. Under this fund, you must keep a fund that can meet your family’s expenses for at least 8-12 months. This way, you don’t need to worry about fulfilling expenses, during any financial emergency such as job loss. This contingency or emergency fund helps you pay for various expenses during the testing time like the COVID-19 crisis.

6.      Tax Saving

Every year, you pay a substantial amount towards tax. But with help of proper financial planning, you can reduce your taxable amount legally. In India, The Income Tax Act provides some provisions that help reduce your tax outgo. There are investment options that offer high returns and also help save tax. ELSS Mutual funds, Public Provident Fund, National Savings Certificate, National Pension Scheme, and 5-years Bank Fixed Deposit are some of the top investment options that help save tax plus offer high returns.

Also Read: Safe Investments that Offer High Returns

Also, you can consult with a financial planner to get guidance on how you can start with financial planning.

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Role of Financial Planning in Today’s Life

Financial Planning refers to the process which guides you step-by-step towards achieving your life’s goals in a planned way. It ensures the available financial resources are used in a manner that you can meet your financial goals.

Personal financial planning deals with managing your money, saving and investments. Not only this, it also covers aspects including, budgeting, mortgage, insurance & estate planning, retirement planning and much more.

Putting in place the proper financial planning in your life helps plan your finances well, with no shocks and surprises.

In this article, we will let you know about the importance of financial planning in your life.

1.      Define Financial Goals

With a financial plan, you can easily identify your major financial goals such as children’s education & marriage, buying a home/ car, retirement planning, etc. By identifying your life’s goals, you can easily make investment moves to achieve those goals.

If you get assistance from a financial planner, he will also ask you about your key financial goals. With help of a financial plan, you can pick your financial goals easily.

2.      Manage your Income Effectively

If you have a financial plan in place, you can easily track your earnings, say how much is coming from salary, investment returns, rent from property. With a financial plan, you will be tracking each aspect of your money, so you can easily get to know about your cash inflow.

3.      Increase Savings

A financial plan guides you to track your expenses, avoid over-spending, and make increase in savings. These savings you can further use in investing towards achieving the pre-identified financial goals. Moreover, you can also set a budget that helps you to restrict your over-spending, make purchases wisely and achieve savings.

4.      Start Investing

As you have already identified your financial goals, it’s time to begin investing. In this, you need to firstly assess your risk- return profile and then accordingly, you can allocate your investments with high, medium, or low-risk asset classes.

You can invest in equity, mutual funds, bonds, government securities, money market, etc. You are advised to keep your money in different asset classes that help bring high returns for your investment and help achieve your financial goals as well.

5.      Create an Emergency Fund

Uncertainties always knock your door unexpectedly and thus; you need to keep yourself prepared. To fight any financial emergency such as sudden hospitalization or job loss, you must have some savings to pay off during such tough time.

Financial planning suggests to creating an emergency fund which serves as a helping hand during emergencies. You must save an amount that can cover at least 8-12 months of your family’s expenses.

6.      Insurance Planning

A financial plan also focuses on ensuring financial security for yourself and family. To achieve this financial objective, you need to buy term life insurance that pays a lumpsum amount to your family immediately after your untimely demise. Moreover, you should also purchase health insurance that pays the hospital bills for all the covered members. Additionally, you should cover your assets such as motor, home or business with insuring all of these assets.

7.      Retirement Planning

Retirement Planning is one of the key financial goals that you need to attain at the time of retirement. You can invest as early as possible while earning so you can accumulate the enough amount for your retirement. With a financial plan, you can identify the amount you need for your retirement and it helps start investing to achieve this financial goal.

8.      Estate Planning

With estate planning, you can decide who will be the beneficiary of your property and investments after your demise. It helps avoid any chaos at the time of deciding the legal heir for your estate.

Conclusion:

In this article, you will get to know about the role and importance of financial planning in today’s life and why you should opt for it to achieve financial goals in life.

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Follow these steps of successful financial planning and achieve your goals.

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Get to know about the financial planning and why you should choose it to build wealth and fulfill goals in life.

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Safe Investments Options in India that Offer High Returns

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FinancialGuide – A Personal Finance Blog

We have recently launched FinancialGuide.in- a Personal Finance blog that keeps the readers updated with the latest articles on personal finance planning, investments, insurance planning, and other key financial topics.

Personal Finance Planning

Personal Finance Planning refers to a detailed procedure of managing your finances which includes activities like income, spending, investments, savings, protection, etc. A thorough financial plan is required to managing your personal finance. At FinancialGuide.in, we keep posting several blogs on personal finance topics that provide you detailed insights on managing your finances.

Want to get tips and tricks to managing your personal finances? Check out our blog @ https://FinancialGuide.in

In our blog, we focus on key areas of personal finance and in-depth content, so you can have a complete understanding of managing the finances in a better manner.

Investment Planning

Investment planning is an integral part of financial planning and it helps you to identify the financial goals. Then, you need to make investments that help meet financial goals. Proper investment planning ensures the family’s financial security, and effectively manages your expenses and investments.

In our blog, we always focus to provide well-researched content on various topics related to investment. Our sole aim to provide our readers the updated information on the best of investment options that can help them reap high ROI.

Insurance Planning

Insurance Planning is an essential aspect of managing personal finance just in the right way. Getting your life and health insurance keeps your family secured against financial hiccups. With a comprehensive life cover, you don’t need to worry about your family’s financial security. Moreover, you can buy health cover, and also get your assets insured. Our blog is also aimed to provide detailed content on various types of insurance, plans, benefits, and coverage available.

We have started writing insurance plan-specific content and soon, we will include insurance plans from life insures & general insurers. It will cover all the plan details, coverage, benefits, etc.

Small but Dedicated Team of Working Professionals

We have a professional team of marketing executives, website designers, web developers, SEO experts & content writers which are determined and are making efforts to make this start-up a successful one.

Check out our blog at https://financialguide.in

(Ultimate guide to Personal Finance, Investments & Money Decisions)

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Financial Planning Tips for Young Adults

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Comprehensive 7-step guide to financial planning for beginners.

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Get to know about the Top 10 best Health Insurance Companies in India 2021.

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Get all updates and information related to Insurance plans and Insurance-related topics.

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Every adversity also teaches us some key lessons. The most important lessons that we learn from coronavirus crisis is to manage personal finances properly.

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By purchasing a life insurance policy, you are investing to ensure the well-being of your family & loved ones. Considering the ongoing Covid-19 pandemic, it’s extremely essential to get a life cover and secure the future of your loved ones.

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You should consider investing as a vital aspect that ensures a comfortable financial future for your family. It helps fulfil your financial goals and enable a steady financial future. Instead of keeping your savings in your bank account, you can put it in different investment avenues like fixed deposits, PPF, equities, mutual funds, and many more.