A nomral life cycle of an individual starts from education, economic activity (job/business) and ends at retirement in old age. People earn ,save and invest money during prime to fufill financial goals during their life cycle. Earn and save are pretty simple concept clear to everyone but when it comes to investment people require special kind of skill to wade through complex jungle of financial instruments. An experienced professional investment adviser can help you identify goals, create, implement and review financial plan in order to achieve desired financial freedom during late life style stage. After getting married, couple plan for children, house, car, fixed assets, long vacation, children’s education and marriage, retirement life. Due to widespread coverage on financial plannig in media, people have started to plan and implement once they get financial independence. Once you start earning, your primary financial goal becomes zero debt on educational loan front. Lifestyle has changed a lot in last 20 years because of growth of consumerism across the world. So , youngsters also want to enjoy luxury of life like having cars, costly bikes, foreign travel, white goods. All these leads to loss of future savings as substantial present and future income get committed in repayment of loan in the form of EMIs. All these decisions require a sound financial plan which captures your career growth momentum, financial stability, financial and other goals. A well designed plan will prioritise your needs in such a way that you don’t feel mental burden and financial insecurity but at the same time achieve your financial goals in a planned way and enjoy your lifestyle. What should be considered while creating a financial plan? Comprehensive financial plan will consider factors like your income, growth in income, income stability, other sources of income, routine expenditures, past loan EMIs, savings in hand, financial assets where saving are parked, family background, life partner’s income, health issues, life and health cover, exisiting assets like home,care, furniture, land, gold etc, family planning, education expediture of children and for self (higher education), financial goals in next 5 years which require monetary commitment (liquidity), monthly savings, monthly income expectation at the time of retirement (considering inflationary effect). These are the few factors and scope of financial plan can be expanded considering individual case scneario. All the above mentioned factors help in deciding risk appetite and return expectation of an individual. Savings can be parked in equity, mutual funds, bonds, debentures, PPF, NSC, Sukanya yojana, FDs, corporate deposits, real estate, gold, commodities, forex etc. A youngster or young couple in the age group of 25-35 can take more risk by investing in equity because of low liabilities.

A person in the age group of 35-50 needs to gradually reduce equity component and move into risk free assets like FDs, debt mutual funds in order to have liquidity and fulfill major financial goals like house, children’s higher education etc. 50-60 years is the age where an individual wants to stay in the same job or business because of security,comfort zone, health and low risk taking ability. Investment should have major compoenent of debt, say 60-70%, in above 50 age group. Again, it depends upon how you financial plan has fared and how much financailly independent you are at age of 50-60. If you are well settled with more than expected income then you can continue to stay invested in equity during 50-60 years of age. A professional SEBI registered investment adviser should be hired if you are not well versed with all available financial instruments and process of financial planning. A minor fees will ensure that you are on path to achieve financial indpendence. If there is any deviation then your adviser will review plan on regular basis (normally semiannual or annual) to suggest for correction. A professional investment adviser is like a doctor having expertise in curing financial health issues and helps you to be financially healthy. Having an investment adviser is as good as having a family doctor. We’ll cover different avenues to park your savings and an illustrative financial plan for a youngster and a young couple in next financial awareness article. Stay tuned.