Financial Planing

A good planning gives you a financial control where you need not compromise on your cash flow now or in later years of life. Supposing you have few financial needs e.g. you want to buy a car for your self or you want to buy a house and planning higher education for your child. So for all needs you must plan now. You must start saving and you must make investment for a useful return. A time framed projection must be made taking into consideration the information rate would be at that time. Now you will have a plan for your each financial need with your existing assets, the monthly income and time available to meet each goal e.g. you want to buy a car in a year time your child has to pursue higher education and you take to own a house in another 5 years time for which you need to make down payment.

To achieve all these goals you must make proper investment of your available cash flow. The rate of return would depend on allocation of your asset allocation. How much you can afford to allocate for risk instrument and how much for non risk instrument for achieving your each goal. It is best to seek advice of your financial advisor at what level of risk needed for achieving each goal rather than you choose yourself. If you feel that the level of risk is higher than you may go lower risk instrument in that case your investment should be higher to achieve the required return which is not possible as suddenly you can not increase your income or change your job or business. You may increase your time frame for buying a house but can not extend for the education of your child you can not say that your child will go to college after 5 years when you will have enough money.

So if you take with risk your return may be higher, similarly if you extend your time frame you may achieve your goal with lower risk instrument also. So a balanced combination of both risk and time frame is needed to achieve your required goal.