Financial Freedom Action Plan

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The 8 Step Action Plan Generated by InvesttaCommunity Members’ Collective Intelligence

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Step: 1 Surrender Useless Junk Insurance Policies (Stay Away from Costly Junk Insurance Plans)

Step: 2 Buy a Pure Term Life Insurance Plan

Step: 3 Buy a Health Insurance Plan

Step: 4 Build An Emergency Fund

Step: 5 Get Out of Debt & Cut Credit Cards

Step: 6 Start SIP in Equity Diversified Mutual Funds

Step: 7 Invest in PPF

Step: 8 Choose a Sound Financial Life

Step: 1 Surrender Useless Junk Policies

The first step in successful financial planning is to surrender and stay away from the useless junk policies. Junk policy means any insurance cum investment product available in India such as ULIPs, Pension plans, Endowment plans, Money back insurance plans and child future plans. These policies are very costly. They neither build wealth for you nor they provide you adequate life cover.

Step: 2 Buy Term Insurance Plan

Ideally you should buy 2-3 term insurance plans of 25 lakh each from 2-3 different insurance companies to adequately cover your life for 50-75 lakh. The advantage of diversifying your life cover between 2-3 term plans is that, by doing this you can successfully diversify the risk of rejection as well as during your retirement you can discontinue 1-2 policies and effectively reduce your overall premium.

Step: 3 Buy a Health Insurance Plan

Family floater plans are much cheaper than individual health insurance plans. So buy at least one family floater plan along with a critical illness rider to adequately cover you and your family members against medical emergencies.

Step: 4 Build an Emergency Fund

Emergency fund is to protect your long term investment from being liquidated during any financial emergency. Ideally you should have an emergency fund of 3-6 months of your monthly expenses. Always build emergency fund before starting long term investment.

Step: 5 Get out of Debt & Cut your credit cards

The best investment is paying off your debts. Before starting long term investments to build wealth, it is very necessary that you get out of all the un-necessary debts. Education loans and home loans are low interest rate asset producing debts so you can get out of them slowly while doing investments. While personal loans, car loans and credit card outstandings are the worst kind of debts and you should get out of them as

Step: 6 Start SIP in Equity Diversified Mutual Funds

Once you have adequately covered your life, build an emergency fund and become debt free, start SIP in good equity diversified mutual funds with a time horizon of more than 10 years. Equity is the only asset class which can appreciate highest and give you the excellent returns than any other asset class in the world. This is the step by which you will build long term serious wealth for your retirement as well as for your child’s kind of debts and you should get out of them as

early as possible before starting investing. for your retirement as well as for your child’s education and marriage. So do regular SIPs.

Step: 7 Invest in PPF

PPF is the best tax saving scheme as well as one of the highest return giving scheme. Open a PPF account in the name of your all the family members at the interval of 2- 3 years. By doing this you will have several tax-free FDs maturing at 5 years after 10 years from now at the interval of 2-3 years.

Step: 8 Choose a Sound Financial Life

Means understand the difference between need and want. Always give first priority to need and then want. Building long term wealth for your retirement is a need. So don’t use this money to fuel high status life style or behind buying status toys.

Investta.com is an online community of people from all around India interested in successful financial planning for their better financial future. This 8 step action plan for financial freedom is made after analyzing the discussions, reviews, polls, suggestions, mistakes and experience of thousands of active Investta community members from different parts of India.

After harnessing the collective intelligence of thousands of active Investta contributors, we have come up with this 8 step action plan that literally thousands of Investta community

discussions.

All the 8 steps are carefully chosen from the valuable Investta database generated by thousands of active members of the community. And that’s why we are sure that these steps will be helpful to you also to do an effective financial planning for your better financial future.

You are most welcome to join Investta community and post your all doubts and queries on Investta.com. Investta community members are literally thousands of Investta community

members are following.

These steps are not born from one single mind. But these steps are basically born as a result of collective intelligence of thousands of human brains. After lots of debates and discussions, we have come to the conclusion that these are the basic 8 steps of successful financial planning.

Getting out of costly insurance cum investment products (junk policies) is one such basic financial planning decision/step that we come to know after analyzing hundreds of Investta

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