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Financial planning is often thought of as laborious and boring. But it needn't be
if you link it to your personal needs. Once you've decided clearly what you need
the money for (this is your destination), planning for it is quite straightforward.
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Let's take an example to illustrate this. Let's say you want to invest your savings
for a family vacation in about 6 months time. You therefore need to invest it in
an instrument that gives you the flexibility to withdraw your money after 5-6 months
and doesn't risk the loss of principle invested. In such a case, you can clearly
right off stocks, PPF, NSC, pension plans, insurance or equity linked savings schemes
of mutual funds. Most of these either have lock in periods of greater than 6 months,
or those that don't (like stocks) are too risky to be investing in for a 6 month
period. In this case, a short term debt fund might be a good option.
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Alternately, if you were saving for your child's post-graduate education 15 years
later, equity mutual funds or long term debt funds might be suitable options.
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Plan for your goals to identify suitable investment options based on your personal
needs.
Consult a certified financial advisor for more information.
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