About Me

My photo
Neeraj Chauhan is a Certified Financial Planner and CEO of The Financial Mall. The Financial Mall is a financial supermarket & in operation for over 20 years. It manages total financial affairs of clients through wealth management and financial planning Process.

Sunday, December 11, 2011

Jumpy Retirement or Bumpy Retirement

We like to think that, when we retire, we’ll have time to do all those activities that are on our “wish list.” We’ll travel, spend time with friends and family, explore new opportunities that will enhance our lives and expand our sense of possibilities. But to have the retirement life we desire, we should retire our worries first and need to start planning now.

There could be various worries depending upon the life stage, liabilities, incomes, lifestyles etc. but it is important to pen down the ones which you feel are concerning like:
1                    will I have enough money to live throughout my retirement
2                    what would happen  if I outlive my savings or assets
3                    what would happen in contingency or major hospitalization
4                    who will inherit my estate
5                    what if I would need long term care

Somewhere along the road to retirement, it is a good idea to look your “map.” Will your ride be smooth or filled with potholes? How far off is retirement day, and do you have sufficient financial resources to last the journey? Regardless of your current location along this road, it is important to recognize that the financial “bags” you have packed may only take you so far.

Many people in their prime earning years do not save enough for retirement. One advantage of being relatively young when you start saving for retirement is that you can potentially save more due to your longer planning horizon. The more you accumulate before retirement, the less you may need to worry about working during retirement to maintain your desired lifestyle. For these reasons, it is important to spend time now developing a strategy—or “road map”—for retirement.

1        what age you want to retire
2        How much income you will need post retirement to live life of your lifestyle
3        what is the corpus you would require for having desired income
4        Determine resources for your retirement needs
5        Clear all your liabilities & debts before you retire
6        Plan a buffer for a life beyond life expectancy
7        Have adequate risk management
8        Make provision for a contingency even if you have a insurance
9        Make a will and update it regularly
10    Keep your partner informed about all your assets & liabilities

Retirement may seem a long way down the road, especially when you have immediate and pressing family concerns. However, the younger you are when you begin planning and taking advantage of your saving opportunities, the better prepared you may be for retirement. Why not pause now to review your long-term strategies? When you reach retirement, you may be glad you took to the time to navigate any detours or potholes on the road to your financial future.

Monday, December 5, 2011

Before making a Portfolio

Saving for the future is very important for every person. Every sane man slowly makes the investment portfolio of the different options of investment - stocks, gold, mutual funds, etc. are included. 

But before we jump on any investment instrument we should ask our self a million dollar question. I.e. why should I invest?

The answer to this simple question before coming to where to invest will make investment experience very different. Whenever we invest we forego our current needs or want to have a better and comfortable future. So it becomes important to choose an instrument which can deliver better real return otherwise investing become just savings.

The first step in the process is making a personal financial plan. Making a financial plan is like preparing an itinerary before starting your journey. It can make your journey less stressful, more fun and more successful. Financial planning starts with setting goals. After all you need to know where you want to go before you can decide how to get there. Your goals can be categorized as short term, medium term and long term.

The second step is to get a realistic picture of where you are now financially. Write everything like what you owe, what you own, your monthly expenses and income. This will help you to understand your current scenario better. Even if its not a pretty picture now, that’s OK.

Third step is to understand the potholes and evaluate what if scenario? Like stock market down turns, recessions, losing job, paying for illness, permanent disability, death. You may not be able to avoid these potholes but you can minimize their financial impact.

Fourth step is to clarify, evaluate and prioritize your goals. Your goals likely will require money so you should try and know how much money for the goal is needed in ideal circumstances. Smart investing means investing with specific purpose.

Fifth step is allocating investments to appropriate goals, keeping in mind the timeframes, taxation and risk tolerances. Here comes choosing instruments like equity, gold, real estate, bonds, deposits, art, commodity, currency etc. keep the portfolio diversified and cost efficient.

Here are some tips to make smart investments.

1                      understand the difference between saving and investing
2                     put your financial house in order first
3                     clarify your goals
4                     don’t just chase the highest returns
5                     understand your own risk tolerance
6                     hold realistic returns expectations from market
7                     follow a detailed written plan
8                     allocate investments according to goals and needs
9                     diversify your investments
10                  don’t try to time the market just stay in the market
11                   start investing early, invest regularly and automatically      
12                   pay attention to investment expenses
13                   consider taxes and inflation for real returns
14                   rebalance your portfolio regularly
15                   monitor and revise your investment plan