Can you be your own financial planner? Do you have the ability to take your own decisions in financial planning? Can you be self-reliant when it comes to design your financial road map yourself? All of us are not great with maths and logic, which is required for excellent financial planning, so today I will share with you some simple tools using which you can plan for your financial goals. I will give you a spreadsheet designed by me for planning future financial goals.
Lets understand the basics first. There are number of things we have to consider when you want to plan for your future financial goals. They are
- Financial goal
- Current value in today’s term
- Target date
- Expected return from investment for that specific goal
Output [ This is what you will get as result ]
- What is the expected target amount
- How much you need to save per month for each financial goal
Download this spreadsheet : Monthly Contribution Calculator
Advantage of planning for each goal separately:
By doing this there will be more clarity regarding each goal and how it will be achieved, each of them will mature separately and you can take decisions based on changes to each of them, Also, it avoids mixing up too many things and achieving each goal becomes more realistic.
The reason why it becomes more realistic to achieve each goal is that first we identify goals, then we figure out the “realistic returns” required to achieve the goal. Based on these facts we figure out what is the amount we need to invest per month. So this a well thought process of arriving at the investment required to achieve each of the goal.
* If your goal tenure is less than 2 yrs, better put a return of 7%, preferred investments FD’s, FMP (fixed maturity plans) or debt funds, balanced funds for risk takers.
* If your goal is between 3-6 yrs, put 10-11%. Preferred investments in balanced funds, equity diversified funds or combination
* If your goal is more than 7 yrs, then you can put in range of 12-15%. Preferred investments in equity fund, sectoral funds, direct equity, can be combined with PPF.
* Understand that higher the tenure, more the return expected.
Disclaimer: At the end, you have to understand that returns expected can deviate from actual returns achieved in reality and hence there can be delay or early goal achievement, hence its recommended to assume the worst case scenario. I am sure this will deliver goal achievement in time :).
This is a guest post by Manish Chauhan. He is the blogger behind Jagoinvestor. Manish aims to empower each person to be able to take their financial decisions themselves in their life. In this post he mentions about the important rules that investors must remember in stock markets.