Saturday, May 16, 2009

How does a Financial Planner Help?

Financial Planners can guide individuals to achieve there financial goals.
Following are the things on which Financial Planners can guide you and improve efficiency of your money matters.
1) Systematic savings : Many of the middle class Indians teach there young kids to save many of you would have your own "Piggy Bank". we would keep on putting smaller changes and over a period once we open the piggy bank it would be amazing to know it would have turned into a big amount. The same principle is applied and instead of your money being idle in the money bank you should make your money work to earn more money. Most FP would recommend you to have a Systematic Investment Plan or an SIP.

2) Cash Flow Management: The financial planner would study your income generation and spending habit and would advise you on leaks if any in your habit and how you can maximise the savings part from you cash flow.

3) Asset Allocation for Investment : Normally there are two kinds of people one who strongly believes safe investment like Bank FDs, Post Office Deposit, PPF, LIC etc which are very safe in nature but hardly manage to beat the inflation and actually it seems to be safe but if you look for inflation adjusted returns its not safe as such.
There is an another extreme case where in investor only invests in Stocks and they dont bother about FDs and stuff and they are very vulnerable to the Equity market performance and in the downturn it would be very painful to see people making huge losses even the most experts would have made loss in this tough times.
so the idea is to balance out were in you should have safe investments for markets downturns as well as you should also have equity exposure to beat the inflation for a long term gains. Financial planners would guide you in maitaing an asset allocation for Debt, Equity, Real Estate, Gold.

4) Risk Management via Insurance Planning : Financial planner will study your lifestyle, your bussiness, your dependents etc and suggest you Insurance planning which will help you should there be any unforseens events. example a Jewellery showrooms can have insurance against Theft and robbery thereby owner is protected in case the robbery takes place. House owners can have insurance for there house in case there is natural calamities like Flood or Earthquake you will be covered if there is a damage to your property.
The list goes on and on like Mediclaim Insurance, Life Cover etc

5) Tax Strategy to improve your savings: There is so many laws in taxation and so many cases were in if you plan properly you could end up saving lot of money on taxes. Like if you invest Rs 1 Lakh under section 80C. you could end savings as much as Rs. 33K if you in highest tax break. Another example would be you could save tax if you hold Shares or Mutual Funds and made short term profit then you can sell the share were you have made losses and then you can buy those shares again next day. so your profit is reduced because of loss booking you also have the shares.

6) Estate Planning: Everybody who have assets this includes real estate, bank Fds, Stocks, Jewellery etc, one should always have a will in place so that there is no problem for the legal heirs later on. Financial Planners can work out succession plan and draft wills and suggest best ways to do things in a planner manner.

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