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Do you need financial planning?



Have you planned any trips? We are sure you have. If you want to go on a vacation from Delhi to Goa, how do you go about it? You start by deciding the dates – when you want to travel. Next, depending on your budget, you select the travel route you will take – train or air. Accordingly, you will pick the hotels, shortlist the spots you would like to visit, etc. Before you even think of a holiday, you will have to figure out if you can get leaves from the office. There is so much more to sort out.

Why are we discussing a holiday? It is to make you realize that to go on a week’s vacation – there is so much you need to plan. How about your finances – the important financial goals like a child’s education or retirement planning? Are you doing financial planning?

For most people, financial planning runs on auto mode. They earn, they save, and they invest. There is no planning for anything. It is equivalent to – you packing bags, booking a flight ticket, and landing in Goa with your family (including kids). The chances of you having a pleasant vacation with your family are bleak.

If the above situation sounds familiar to you, you have to act. If you are with us this far, you must be feeling the need for financial planning. However, the feeling may not be strong enough. Hence, let us list down the top reasons showing why you need financial planning. But before that, let us explain financial planning to you in simple language.

What is financial planning?

Financial planning is an ongoing process that helps you reduce your stress about money. The process supports your current needs and helps build a nest for your long-term goals. It helps you make the most of your assets and ensures you achieve your future financial goals.

As we mentioned above, you would already be saving money. Savings is like a seed, and it will only bear fruits when you plant them well and nurture your plant – make the right investments. And continue to monitor them.

Top 5 reasons you need financial planning

 1.  Manage cash flow: You will have to learn to budget, and financial planning makes you do it. You have to monitor every single penny you receive and spend every month. Budgeting under financial planning ensures you are on track for your long-term goals.

 2. Streamline your investments: If your investments are scattered, and you are unsure where and what percent you have invested in different financial instruments, your journey is a mess. Financial planning helps you put your portfolio in order. You may be investing in a haphazard manner without conducting a proper need-based analysis. You may do well in the short term. In the long run – you will not be able to achieve your goals.

3. Set the right asset allocation: Many people will tell you to invest in equity- especially when we are in the middle of a bull run. However, it is never wise to put all the eggs in the same basket. For the same reason, if you are not investing in equity – a lack of knowledge, interest, or some other reason, you are missing out on a good investment opportunity. Financial planning helps you create a balanced portfolio in line with your risk profile and investment horizon. The proper asset allocation protects your wealth during uncertain economic conditions and market volatility.

4. Get SMART goals: Going on a long journey without goals can get boring and monotonous. Financial planning helps you set goals and outline the path you need to take to achieve those financial goals. You create a prudent financial plan and vigilantly and religiously follow it to make your dreams come true.

5. Knowing the right insurance plan: Most of us know that we need to have an insurance plan – health and life insurance. However, most people fail to figure out the right amount of insurance needs. Knowing the correct amount is crucial when it comes to insurance as it can make or break the future of your loved ones. Under financial planning, your income, expenses, and goals are taken into account to determine the optimal coverage amount for both health and life insurance.

Do you need financial planning?

There is no second answer to the question – you need financial planning for sure. The right question to ask is – Can you do it by yourself? Or do you need support? If you want support and guidance – you can reach Right Horizons. We carry with us 18 years of financial advisory legacy, and currently, we are managing Rs 1500+ crore AUM.

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