The market is buzzing with news that affects your finances directly or indirectly. The sudden volatility in share market along with international crisis pushed many to the traditional safer option of investing in gold which acts as hedge against inflation thereby augmenting prices. While unchanged monetary policy by RBI is seen by some experts as best time for investors to invest in long term fixed deposits, the others advise to opt for options which may deliver better returns than FDs like debt mutual funds, bonds etc.
However, the sour experience of 2008 has depicted that random investment in stock market, mutual funds, insurance, debt, gold and real estate will not reap the desired results and is not what financial planning is all about.
Financial Planning is a solution which converts your goals into action plans and provides the direction and discipline to achieve these goals.
Need for Financial Planner:
• An advisor can help you define your goals and identify an appropriate investment program.
• Mastering personal finance requires many hours of research and learning. For most, it’s tedious as it is an ongoing effort and an advisor can provide the necessary help.
• As you get older, busier and wealthier, your financial goals and options get more complicated. A financial helper can save you time.
• Procrastination can cause all sorts of money problems or unrealized potential, so it pays to have someone riding you to stay on track.
• The “buy and hold” strategy that many financial advisors encourage outperforms “do-it-yourself” investors.
• The advisory fee becomes sensible when considered the long term benefits of comfortable retirement, save for your child’s college.
What a Financial Planner does:
• Plans how much you need to save.
• Helps in determining the strength of your emergency fund.
• Define the rate of return you will need in order to earn to achieve your goals over a given time frame.
• Allocates your asset across different asset classes keeping diversification in mind.
• Suggests the types of retirement accounts to use, mortgage you should have, how much and what type of insurance you need (this would include life insurance, long term care insurance, disability) and some planners also give advice on property, casualty and health insurance.
• Manages year on year cash flow till you are alive.
• Selects the right products and executes the financial plan for you.
• Suggest changes that might improve your tax situation.
• In addition, many financial planners provide estate planning advice and tax planning services.
Hence, the advisory service of financial planner is as essential as any other expert services required in our daily chores.
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