Investing in ELSS or Equity Linked saving scheme is extremely helpful as it not only helps to save tax under section 80 C of the Income Tax Act , 1961, but also helps in long-term wealth creation .
Systematric Invenstment Plan or SIP is one of the most effective mechanisms of investing which instils discipline and helps in reaping the power of compounding in the long-term.
EXPERT ADVICE :
When it comes to one's long term financial planning, it is recommened to take advice of an expert financial advisor who would chalk out a financial plan and determine asset allocation , basis risk appetite and financial goals of an investor.
SIP TOP UP :
SIP Top Up is a facility offered by mutul funds to automatically increase the SIP amount by a fixed amount or a percentage at a pre-determined interval (Usually annually ). It is quite useful to keep pace with rising Incomes or to achieve financial goal quicker.
Retirement Planning is an integral part of any financial plan for an individual , as post -retirement there is no active source of income .An early start towards retirement planning helps one to invest much lesser towards retirement corpus as there is ample time for compounding .
PLANNING FOR CHILD'S HIGHER EDUCATION:
Inflation in education is one of the highest and that is why it is very critical that one plans for child's higher studies in advance with the help of goal -based funds.It helps in maintaining continuity and discipline of not using the corpus for any other needs .
STOCK TIPS :
AS they say,there is no such thing as a free lunch. Similarly there is no such thing as stock tips .One should never fall prey of such hearsay stock tips and lose One's hard earned money. It is rather a better idea to rely on expert fund managers and invest in stocks through mutual funds only.
GOLD INVESTMENTS :
Remember gold should be used olny as a diversifier in the portfolio and not as a core investment .Moreover ,exposure to gold should ideally be taken in the form of GOLD ETFs or Gold funds and not physical gold to theft and storage hassles.
Taking action based on news flowl can cause a lot of damage to one's portfolio. One should always stick to financial plan based on asset allocation only and not indulge in panic selling or greedy buying in the stock markets.
Systematic Withdrawal plan or SWP is a very useful tool for certain needs like post retirement income . It helps to plan finnacial needs in a tax efficient manner.
One should always park around 6 months' expense in liquid fund as an emergency fund . It can be used to fall back upon in case of emrgencies like medical needs, job loss, unplanned and unbudgeted expenses etc.
Inflation is a slient monster which gradually increases the prices of all the commodities in such manner that one's saving fall short of the budget. Equity is one asset class , which has the potential to beat inflation in the long term.
REVIEW AND REBALANCING POERTFOLIO:
A periodic review and rebalancing of portfolic is essential to stick to asset allocation plan suggested by the financial advisor.
OTHER IMPORTANT PERSONAL FINANCE ELEMENTS TO BE KEPT IN MIND
Critical Illness Plan :
Most of the mediclaim policies do not cover certain critical illnesses . However sepcial critical illness plans are available to cover these sepcified critical illnesses which are otherwise not covered in regular mediclaim polices. One can opt for a critical illness plan to protect oneself from the medical emergencise arising out og such illnesses.
Estate planning and will :
Once an individual approches old age, it is desirable to have a well - documented will for all assets .One may cosult a lawyer to make a will.
Often millenials are seen overspending beyond their means due to a credit card and end up paying penalty and high interest chagers on credit cards. If one does not have self -control , it is rather better not to use credit cards .
Having a sufficient cover for self and family is very essential to avoid financial stress in case of a medical emergency like an accident ,illness ,hospitalisation,etc.
A term plan is a very important protection plan ideally to be taken before any major financial responsibilities like marriage,home loan ,etc. to cover any unforeseen contingencies.
Debt Trap :
One of the common debt traps laid by various consumer goods companies and finance companies is that of 0% interest on EMI . And in the process , people get lured into purchasing even those things which are not really needed by them.
Annual health check -up :
Due to medical advancement, it is now much easier to detect illness in advance with the help of various medical check -ups .After the age of 40, it is therefore very essential to go for annual health check -up.