But unless we protect them with a safety net, the same can turn into a liability. We might weave several dreams in life and create investment plans to turn those dreams into reality. Multi Cap Funds, NPS (only for retirement), Large Cap Funds Hybrid Funds, ELSS, Banking and PSU Debt Funds the goals for which the timeframe is minimum of 5 years are termed as long term goals.īest investment options: Multi Cap Funds, NPS (only for retirement), Large Cap Fundsįinancial goals, its timeframe and investment options
Long term goals: Milestone events like retirement, children education, their marriage, i.e. Mid-term goals: If you have set a goal for yourself that needs to be achieved within three to five years, for example downpayment for a house, it can be termed as mid term goals.īest investment options: Hybrid Funds, ELSS, Short Term Debt funds like Banking and PSU Debt Funds. From saving for a trip to saving for a phone, there are multiple things for which one needs to arrange funds within this timeframe.īest investment options: Liquid Funds, Ultra short-term funds. Short term goals: The goals that need to be achieved within three years are short term goals. Now what funds should one pick as per their financial goals? Then pick a mutual fund that matches your investment timeframe. So here the thumb rule is, turn your dreams into financial goals and set a timeframe around it. Hence it is essential to make your investment as per your investment requirement and horizon. However, while investing in mutual funds it is essential to be mindful about choosing the right fund for your investment, otherwise it might turn counterproductive. Now talking in terms of investment, mutual funds are an excellent investment option if it is done right. While saving is about setting money aside, investing is putting money/purchasing assets like – stock, bond, mutual funds etc. We often confuse investing with saving, or consider them to be synonymous. Third, they carry negligible credit and interest risk, and hence your money is safe. Second, these funds are highly liquid, hence you can withdraw the money after seven days. First, liquid funds give slightly better returns than your savings account, even though there is no guaranteed return. As a thumb rule, the fund for your emergency needs should be three to six month of your expenses.ĭebt instruments like Liquid Funds are excellent options for parking the money meant for emergency needs. However, such emergency events can be dealt with if we have enough savings to cover the need. It can be as mundane as a car breakdown or as serious as losing your job. The need for sudden money can come anytime. Retirement planning: Finally, retirement planning is crucial to ensure that you have a big bank balance meant solely for your needs during the twilight years.Īnd now, we will discuss each of the 5 aspects in further detail: #Number 1: Saving. making adequate expenditure/investment, you can bring down your taxable income, eventually saving a lot of money every year. Tax planning: With proper tax planning, i.e. Financial protection: Now, financial protection through insurance ensures you and your family are able to sail through during the hard times. I nvesting: Investing is important to grow money so that you can achieve what you aspire. Savings: You need to keep money aside as savings to cover any sudden financial need. Here are the 5 aspects of a complete financial picture: They are saving, investing, financial protection, tax planning, retirement planning, but in no particular order. In this blog we will talk about different aspects of personal finance to give an idea about how your complete financial picture should look like.īefore delving deeper into the topic, it is essential to point out that there are 5 contours to one’s complete financial picture. Hence, it is essential to know what are the key components that you need to focus on while creating a road map for your financial well being. We do what we feel is the right thing to do but that might not always be sufficient. All rights reserved.One of the major reasons we fail to secure ourselves financially is because we are unaware of the things that should be done for it.
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