Personal Financial planning

Financial plan is a road map − as clear and accurate as possible − that can help you determine:

  1. Where you’re financially today
  2. What are the objectives that you want to achieve
  3. What are the risks involved
  4. How to mitigate the risks and achieve your objective

A good financial plan is an objective (measurable) advice that results in a plan to manage current and achieve future financial needs and goals. It is not about product or sales! It is also quite possible that the plan identifies that no products are needed or appropriate.

From a financial planning point of view, most people face these common risks. They are:

  1. Dying too soon and leaving debt or dependents
  2. Living too long (insufficient funds on which to retire)
  3. Disability (over a short or extended period)
  4. Funds for short term emergencies.
  5. Debt

A financial plan should identify the potential impact of any of these areas (as well as any others) and should be designed to minimize its impact.


Risk Mitigation Options

Products Available

Dying too soon and leaving debt or dependents

Life Insurance

Term Life, Mortgage Protection Plans, Whole Life Plans

Living too long (insufficient funds on which to retire

Pension Plans, Statutory Pensions, Investments in Bonds / Stocks / MFs / Property / Gold / Commodities etc.

The whole range of financial products available depending on your risk appetite. The crucial thing is to save the right amount depending on your risk profile and potential returns that you aim to achieve.

Disability (over a short or extended period)

Insurance Cover – Disability and Critical Illness

PPD/TPD and CI covers

Funds for short term emergencies

Borrowing from Banks/Friends, Credit Cards, Cash

Cash (3 months Income) in bank is the best option


Refinance, pay off (debt is the most expensive thing that money can buy)


Because there are so many different variables that can (and do) impact on the plan, a financial plan needs to be seen as dynamic – financial planning is a process and not an event. Your financial plan needs to be revisited on (at least) an annual basis. If you choose to use the services of a financial planner then he or she should inquire about the following::

  • Your goals. Where do you want to be − and expect to be − in 10, 20, 30 years?
  • An estimate of your longevity. There’s a 50-50 chance that at least one partner from a couple in their 60s today will live to age 85, so be optimistic.

  • Your wages, debt payments and living/household expenses and other budget items. You’ll need to figure out how much you can afford to contribute to your plan.
  • Assets: Take stock of, well, stocks, bonds and other pieces of your investment portfolio, as well as savings accounts, retirement plans and the equity in your home.


  • Your current savings plan. How much money are you saving now? Where is it going?
  • Your level of investment risk − now and in the future. Are you comfortable with the investment risk you’re taking with your investments? Or does it need to change to better reflect your own situation or the state of the economy?


An emergency fund. How would you pay for an unexpected event − flooded basement, extended illness, job loss, etc.?




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