Online Financial Planning India
Financial Planning is managing your money and allocating them in assets as such that it is available when required without compromising on the returns. Generally people invest their money in various assets where they try to minimize risk or maximize returns. Trying to reach an optimal balance between the two is financial planning.
Let us understand this with couple of examples
We invest in fixed deposits, which has a lock in period say one year. Now locking the liquidity for one year may be compared with money lying in saving bank account. In saving account liquidity is readily there but rate of interest is low. So, analyzing the need of money in next one year will help in increasing the returns on the invested capital.
In another scenario, if we can lock in money for couple of years or we wanted this money after a longer period, then we can have better returns. Say, if the need of the money is after 15 years then PPF may turn out to be better then fixed deposit. Though both of the instruments may yield almost similar interest rates however the tax advantage on PPF can substantially increase the post tax returns.
So can we say investing PPF is the best, well it depends.
In case we need the same money after 15-20 years, as we can actually take little more risk on the same. The risk depends on the total amount and diversification of financial assets of any individual or the goal for which we are intending to save this money for. So, if we can take more risk then equities are known to give far better returns as compared to fixed interest bearing securities.
In all these case we understood that it is important to plan your finance but it requires a careful evaluation of one’s existing financial situation and his future goals.
