Till now we have seen how to list down goals, assets, liability cash flows to create a structure for financial plan followed by understanding concepts like 'Power of compounding', 'Rule of 72', understanding different wealth creating assets and different instruments for investment and tax implication.
While creating financial plan we discussed about breaking up our goals into short term, medium term and long term goals. Now we will look at how to align our goals and selecting various wealth creating assets. First and most important aspect of any financial plan is to put aside a contingency fund required to finance any immediate / unforeseen expenditure. Ideally we should have liquid cash equivalent to our 6 month expenses / earnings. This money can be kept in bank savings account / liquid funds to provide for any immediate need for funds. Similarly next is to align our other goals with investment in to other wealth creating instruments. A sample table with respect to short to long term goals and ideal investment instrument is listed below for your ready reference.
Click here to open table as a web page
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