Financial planning tips

Fundamental of Financial planning.

1. 30% of your income must be used for monthly living expenses.

2. 30% of your income must be used for Liabilities repayments

3. 30% of your income must be SAVED for your future LIVING.

4. 10% of your income must be spared for entertainments, vacations………..

5. 6 month monthly income must be available for emergency fund  {LIQUID FUND },  it can be CASH or cashable investments

6. Must save one year Bank RD

7. Must save 5 years postal RD

8. Must have 15 years PPF [ after you can extend for number of 5 years durations]

9. MF and Shares must be invested with surplus money only with regular watch. [must redeem the profits  out after minimum 40 to 50%]

10. Home loan must be registered and apply  on both husband and wife name. {Both can get benefits on Home loan Tax benefits}

11. FD and PO-MIS is also very good investments for short term.

12. Buying second house for investment is not advisable  [Survey reports - it will fetch you only around 3% return]

13. After age 45 years not supposed to enter into any BIG LIABILITIES [Higher education of children and wedding of children will happen around 45 to 50 only]

14. Joint account is compulsory @ Bank savings account.

15. Property must be registered on both Husband and wife name. [As per legal act – after husband first legal heir is wife, after wife it will go to children only]

16. Regular check on Nominations at all financial instruments

17. Only in insurance policy,  Claims payable to Nominee.  In other financial instruments legal heirs certificate is must to get back the settlement

18. 2 months salary must be parked on LIFE INSURANCE POLICY [it’s a universal thumb rule on insurance]

19. Don’t take any financial investment decisions  emotionally

20. MEDICLAIM is must [ in spite of Group mediclaim coverage given at office [After retirement there is no mediclaim coverage. After 50 years its very tough to enter into mediclaim]

21. For your jewelery LOCKER, Only one lakh is payable by bank in case of theft or fire at bank, Provided insurance done.

22. Government guarantees only one lakh for your FD. [Fixed deposits with Banks upto Rs. 1 lakh only are backed by deposit insurance]

23. Must know all tax implications. You cannot avoid paying tax. But you can minimize liability by way of investments.

24. All financial documents must be kept safely.

25. Financial investments must be followed through personal financial advisor.

26. Review your financial portfolio every year.