1. Build a contingency fund of 6 months of
your household expenses along with EMI and insurance premiums. This money will
help you in critical cases where the income of the family stops due to certain
reasons like job loss, strike, lock out or disability due to accident etc.
2. Always keep your insurance and investment
separate. You should always take a term insurance policy preferably online term
plan to have enough cover on your life. Also you should have enough mediclaim
policies with added top up plan for each member of family to take care of
expenses arising out of hospitalizations.
3. Set goals that are measurable and realistic.
You should always list down all your goals on a piece of paper and then prioritize
all of them. Once prioritizing is done, you should start planning for goal
number 1 and then move down on the list of priority.
4. Each and every asset and investment should
be mapped to one particular goal and should not be touched otherwise. Always invest
in joint name with either or survivor option.
5. Do not invest directly in equity. Direct
investment through stock markets requires in depth research and analysis and
individually it is not possible for us to do that and devote time for that.
Never overboard on single asset class. Always maintain asset allocation
depending on your goals.
6. Invest systematically in equity – invest
through SIPs and don’t try to time the market. Never stop an ongoing SIP when
the markets are low. Invest in diversified equity schemes and avoid sectoral or
thematic funds.
7. Put automatic payments (ECS) on all
insurance premium and SIP. You bank account will be automatically debited and
you will continue with all the benefits. Register your mobile no. so that you
get reminders as well as transaction details.
8. Start moving your assets from risky assets
like equities or real estate investments to debt instruments systematically
when your goal is around 2 years away.
9. Take loan wisely. Your EMI including all
loans put together should not be more than 35% of your monthly income.
10. Don’t delay your credit card bills/loan
EMIs – both of them can affect your financial future badly. In case you delay
in making payments for your credit card bills and loan EMIs then you will land
up lowering your CIBIL score and risk your chances of getting a loan in future.
Get your CIBIL report to know your credit score.
11. Sit down once every year to review your
investment and revisit all your goals. Also rebalance your portfolio as per
your asset allocation if required.
12. Keep all your insurance and investment
documents at one place and inform your spouse, parents or kids about the same –
in case of any emergency, they can trace them easily.
13. You should make sure that you have put
nominations for all your investments and insurance and they are reviewed and updated
periodically.
14. You should also prepare a will to plan for
your estate and to make sure that there is no dispute about the assets in the
event of the death of the owner. Nominee does not become absolute owner but
holds the investment assets as trustee on behalf of all the legal heirs.
15. Make financial plan for your family from
professionals like certified financial planners by paying fees to them.
This article first appeared at myiris.com on 5th June'2012. below is the link
