Planning is a prerequisite for achieving your goals and desires the right way. However, if you base your plans on certain wrong notions, then the results may only be satisfactory, or in some cases regretful. The same is the case with financial planning, which helps investors find the right path, where they can enjoy both security and gains.
However, just like in other cases, many investors have many wrong basics seeped in their thinking, which prevents them from acting appropriately. So, to help you avoid these mistakes, we have listed five such basics that you should get right to put yourself on the track of financial independence.
I’m too young to start saving.
When you are young, many of you often feel that time is on your side, and therefore, you can start saving later. However, it’s never too early to begin saving and investing for a better future. Because if you start early, you will have better chances of navigating through life’s challenges while achieving your goals.
Therefore, begin to build up your corpus right from the time you start earning. If you start financial planning early on in life, you will get more time to build yourself a significant corpus. The effects of compounding on investments always depend on the time factor.
Therefore, if you have just started working, or have been earning for a few years now, it is the perfect time to start your financial planning, before a crisis hits you recommends investor Erik Gordon.
Only Wealthy Individuals need to plan their Finances.
This is one of the most common wrong notions that many investors have. The purpose of financial planning is to become financially better off than before. So, from this perspective, it is more important for people who aren’t rich but wish to gain wealth.
Regardless of your income, age, and life-stage, if you have the desire to achieve your life goals and, also keep your family financially secure, then you must devote time to financial planning.
Bad Things Won’t Happen to Me.
We know life is unpredictable, and every day we also come across news which reconfirms this belief. While the occurrence of events may not be in our hand, but our response will depend greatly on how we prepare for it in advance. A critical aspect of preparing for contingencies is to be financially secure.
In line with this, there are various policies such as term insurance, retirement plans, critical illness covers as offered by reputable insurers like Max Life Insurance that provide you with a financial cover in the face of life’s challenges.
Term life insurance provided by them allows for benefits like return of premium, comprehensive protection against 40 critical illnesses, multiple death benefit payment options. So, consider your family’s specific needs and condition and then buy the most appropriate plan for yourself.
I Have Enough for My Retirement
While retirement comes with a sense of great relief, it also comes with some concern regarding insecurity. That is why, continue to save a good amount of money for this golden period of life so that you can enjoy this period without any worries at the back of your mind.
So, don’t just rely on a pension or underestimate the amount you will need for this phase. Accurately estimate the right amount you will need to meet specific goals and then identify the plans which can help you get on track for the same.
Once I have put my money in plans, I don’t need to monitor them.
Financial planning is dynamic, and therefore it is essential that you monitor your plans and your fund’s growth from time to time. Many funds plan also allow you to switch your money for better gains.
So, don’t get passive, leaving everything to market forces or to your agents for managing your finances. Maintain an active approach in managing your investments, so that you can stay on top of your finances, throughout.
Therefore, revisit and reassess your financial plans to see how you can minimise your risk and maximise your gains.
Plan well and Secure Your Loved ones and Yourself
So, if you wish to create a happy and secure future, keep your financial worries at bay. For this, don’t procrastinate financial planning. Take out time, identify your family’s needs, and then build the right financial portfolio for yourself. Include a good mix of instruments like retirement plan, best short-term mutual funds and term cover, so that you’re covered from all sides.
While doing this, keep the abovementioned points in mind, and take the proper steps well in time. The benefits of financial planning will help you achieve your desired goals as well as enjoy peace of mind against changing realities of life.