Importance of Financial Planning - A Key to Wealth Creation
23 Jun 2022
Financial goals are crucial in our lives be it child’s education / marriage, owning a house or family car, planning for post-retirement income. With proper financial planning you can devise an accurate plan to achieve these objectives in a timely manner.
- Define goals and categorize them as short-term (like pay off debt, house repairs, buying a car), medium-term (down payment on a home, starting your own venture), long-term goals (child’s college education or marriage, post-retirement income plan ).
- For each goal, specify a value and a target date. The more specific your goals, the easier it is to measure your progress.
- After finalizing the goals with a definite number, chart out a financial plan with suitable investments like equity funds / hybrid funds / debt funds.
- Regular review of financial plan is crucial so that you are on course to achieve your goals.
An illustration
Rahul is planning to save for his child’s education. Here is how a financial plan based on mutual Fund SIPs in equity funds can help him achieve his goals.
SIP
| Amount | 5 Years | 10 Years | 15 years | 20 years |
| 5,000 | 390,412 | 1,032,760 | 2,089,621 | 3,828,485 |
| 10,000 | 780,824 | 2,065,520 | 4,179,243 | 7,656,969 |
| 15,000 | 1,171,236 | 3,098,280 | 6,268,864 | 11,485,454 |
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