Every investment has its own likeness in terms of yield, safety, cost liquidity, flexibility and tax efficiency which are subject to constant changes depending upon the status of the market.
Financial planning can help you plan for major expenses like child's education, buying a house, car or wedding. A properly designed financial plan, protects you and your family to face unexpected crisis, and also reduces your taxes. It further helps you to plan for your retirement in advance by estimating your expected income and expenditure at that age. In short, financial planning allow you to take control of your finances by giving you a clear picture of where you are and where would you reach in future.
A comprehensive financial planning of an individual aims at the following objectives:
Risk is about unfortunate events that may happen in future. Risks can be a result of uncertain financial market, project failure, natural disaster and the like. For those who define risk as uncertainty, greater the uncertainty, greater is the risk. In other words, higher the probability of loss, greater is the probability of an adverse deviation from what is hoped for and therefore, greater is the risk. Risk management is about recognizing what these events would be, how severe they would be and how can they be controlled. This includes finding the risk for an individual and preparing a comprehensive Financial Plan for the client based on the same. The whole process is based upon the following:
Insurance is the cover against the risks that an individual is prone to encounter in future. As we go through the different phases of life, our dreams and responsibilities can be fulfilled only if one has financial freedom and security.
Insurance can broadly be categorized under two categories:
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Life Insurance :
As the name suggests, this is insurance against life of the insured. A person can be insured for death, disability or serious illness. Despite of this, life insurance may also have a savings or investment component.
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General Insurance:
General insurance as the term suggests, covers everything other than the human life. General insurance broadly covers health, motor, marine, travel, fire,household, and many more.
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Tax Planning refers to the arrangement of a persons financial affairs in such a way that it reduces the tax liabilities. Tax planning in India has received an official approval through law itself, encouraging the tax payers to save tax by the use of rebates and reliefs offered by the income tax act. Tax planning is followed by tax management, which is the implication of tax planning ideas. The reduction in tax by taking the required action in fulfilling the condition of law is tax management.
Retirement planning helps an individual during years of retirement by making him financially independent. While developed countries have good social security systems, that make possible a basic standard of living even for those who did not plan for their retirement, but no such shield exists in India. Therefore, it is very essential for an individual to plan for his retirement years to come.
Retirement policies can be vested as and when the insurer wants it. Once a person decides to vest the policy, the accumulated corpus would act as a regular income for the rest of your life.
Health planning in simple terminology refers to planning for your health. It helps in monitoring and analysing the health status of an individual. Health planning identifies an individuals health needs and the resources required to maintain present health conditions. In short, planning for your health is based on analysing the needs and setting the specified goals in order to attain the desired goal.
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