Financial Planning

With Financial markets in doldrums, I think this is the best time to do your financial planning. What needs to be done?

First find out your financial situation. Make a list of all your investments, your insurance policies, your loans or financial commitments.

Now that you know what your current financial situation is, make a list of your goals and objectives in life. You need to be specific, at what age what would you like to have or what commitments you might expect. You should be able to measure the same in terms of amount of money, its OK if you measure using today’s rates. Ensure that the goals are realistic and attainable.

Now that we have the goals, let’s make a list of unexpected problems. Basically we need to do a what-if analysis. This is required to counter any untoward incident, which could hamper or be a clog in the wheel to achieve the goals. There are no solutions if there are no problems.

We have most of the things in place, using the data gathered, prepare a plan.

Now follow the plan.

Do a periodic review, basically do all the steps given above, suggested review once a year.

What does the plan usually contain, it usually will tell you invest, invest and invest. So now you understand why I started with this is the best time to financial planning. This is the most pessimistic scenario. Markets are down, there is also a fear of recession or should I say we are already in recession. But the prices are still high (except stock prices).

So this is the best time to make the most. What is your take? How long will the markets take to return to normal? Most of the economists say max 2 years and then they will bounce back. You will never get such good valuations. Don’t try to time the market. Make your plan and follow it. I’m sure your goals are long term, by which I mean more than 5 years. In that time you would definitely benefit.

So what are you waiting for? Take a paper and pen and start. Let me assure you once you start, it won’t take much time to write. It will take a long time to gather data. So better start and if you are lucky you might just time the market.

All the best.