plan well, plan early guru speak in life for …...financial plan,aim for a conservative...

THE ECONOMIC TIMES WEALTH, JANUARY 28-FEBRUARY 3, 2019 >> pg 11INVESTOR CONNECT INITIATIVE

ASSET ALLOCATIONIS A MANTRATO ACHIEVEFINANCIAL GOALS

GURU SPEAK

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The wordfinancialfreedom

could meandifferentthings todifferentpeople. Forsome it couldmean joy, while forsome it could meanindependence of choice andfor some it's a window of hope.

Planning for finances well in advancecould allow every person to enjoy financialfreedom, at least during his sunset years.

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PLAN WELL, PLAN EARLY IN LIFE FOR FINANCIALFREEDOM

Be disciplinedin yourinvestingpractice,review yourportfolio on aregular basisand rebalanceit if you findyour portfoliois deviatingfrom your plan

For the debt-equity ratio in yourportfolio, use the ruleof '100 - your age'

To decide on theasset class youshould invest inwithin yourinvestment horizon,use the rule of 72

Along with a goodfinancial plan, aimfor a conservativelifestyle, have controlover the family'sexpenses, aim for asavings rate of morethan 35% of totalincome and if youhave to take a loan,be judicious about it.

SOME RULES TO KEEP IN MIND

BE DISCIPLINED, SEEK HELPFROM FINANCIAL PLANNERSFOR A PEACEFUL RETIREDLIFE

Have anemergency corpus

Have a medicalinsurance for thefamily

Have a lifeinsurance in casethere are peopledependent on youfinancially

Have a portfoliothat is a mix of

equities, fixedincome, real estateand gold

Review yourportfolio regularly

Rebalance itonly when it'sneeded

Be disciplined inyour investingapproach

SOME IMPORTANT ELEMENTSOF A GOOD FINANCIAL PLANARE THE FOLLOWING:

P Chandrashekar

Financialindependence isnot rocket

science if youunderstand it well.

Below are some points that aninvestor could follow while planningfor the long-term with the help of agood advisor.

Start investing early in yourcareer: This helps in compoundingyour returns. Don't underestimate thepower of compounding.

Create emergency corpus: Assignsome corpus to liquid funds, whichcould help you during an emergency.

Allocate more corpus to equityfunds: Equity investments haverewarded investors by multiplyinginvestments in a relatively short spanof time compared to other investmentavenues. If one starts early, plansproperly and invests regularly, one cancreate wealth as planned in definedtime.

Adopt SIP route: Investing throughSIP has made it possible for investorsto bring about much-needed disciplinein their approach towards investment.

Plan your goals: Quantify yourgoals and set a time horizon, allocateenough time to make informeddecisions. Prepare your plans andstick to them. Do not panic whenmarkets are volatile; it would be betterwhen your planning is for a longerduration.

Track and review portfolioregularly: This is important if you wantto achieve your financial goals. If youare lazy in tracking your investmentsperiodically, you may fail to reach yourgoals in the long term.

Re-balance the portfolio: Assetallocation is a mantra to achievefinancial goals, approach a financial advisor and seek his help inrebalancing — if required.

Understand and manage risk:Understanding your own risk is extremely important in investments.Let the advisor provide informationabout the best product in achieving yourgoal within the defined time frame.

— The author is an independent financial advisor