How to do financial planning?

Financial planning is one of the topic which has not been taught us in school, college or any university till we cover our entire education. None of the institute teaches us how to educate yourself financially. There are lot of ways but at ground level very few people understand them at right time.

Most of them understand it very late and then we start cutting the cost from our day to days things.

Let’s discuss some of the ways to invest money –

1- Cash – Keep sufficient cash with you at least a buffer of 6 months to 12 months so that you easily bear your expenses. Like if your monthly expenses are 20k then there must be 240K in you saving account.

2- Equity / Share Market – Invest in share market , open your account with Zerodha, up stocks or any brokerage site and start investing in share market.

For this you need to be relay on your own analysis do some analysis for any share – like what is their business, profit and loss for each year and do analysis for past 5-10 years, what is their business model.

Please make sure where you’re investing , its a small cap industry or mid cap or large cap.

If you’re not planning to trade frequently than invest in large-cap shares like Tata Shares, IT companies (Infosys, TCS), Asian paints, Titan etc . Details related to type of industries and investment i’ll share in other post and includes all the details related to account opening in Zerodha.

Do some research and then invest, always invest when it’s down mean when everyone selling than buy and when market is green means when everyone buying than sell and book profit if you want to book profit in short term.

3- Health Insurance – Purchase any of the health insurance this is must.

One of the study says on an average a person expends 30% of his earning on medical bills. If you have any medical insurance then you can easily use this and claim most of it depends upon you insurance company.

4- Real state – Do some investment in real state – this is one of the most profitable business in India not sure about in other countries but in India it’s a hot business. Here also few things you need to keep in mind – Always try to invest in land (this is risky because people usually starts there claim on any land, so try to purchase where you live near your home town or any of your family member who can take care of your land and do a regular visit) this will give good return.

2nd option is flat , if you but flat try not to take very high cost because this will not give you return while selling but you can get 2% of rental yield. You can buy some commercial properties , office spaces which are good options.

5- 80C– if you are a salary employee then invest in 80C where you can get tax rebate also.

6- Sukanya Samriddhi Yojana – Invest some amount in kanya smriddhi yojana for your girl child you can start from the birth of your girl child upto 10 years and you can withdraw untill she gets 21 years old.

7- Mutual Funds – Invest some amount in mutual funds , Mutual funds are mostly those funds who invest your money in multiple stocks.

Here also you have to check small cap, mid cap and large cap funds.

While investing in share market or mutual funds you have to be patient as it fluctuates with the market standards. Like in case of war, covid it goes down or if any bank shuts so some of the stocks will trade very low. Have faith and be patient once the situation gets normal than only sell your shares and you’ll definitely get a profit of approximately 10-25% yearly.

Detailed description about investment in Mutual Funds i’ll share in my other post.

9- PPF have some limitation but you will get a decent amount of interest for your retirement.

10- Fixed Deposit – this is not that good but still many people go for it , if you don’t know another investment option and you do not want to take risk go for this. FD will give you 6-7% of profit for sure without any risk.

11- Gold – is one of the best option because it always gives good return , so far i have never seen fall in gold rates. In India Gold is very famous and everyone buys it in the form of jewelry, gold bond which is you best investment with you.