Fundamentally, financial planning is the process of establishing a budget based on information about our income and expenses. For individual person assets and liabilities plays an important role in financial planning.
- A major part for financial planning is executing the budget, tracking progress and documenting.
- The main purpose of financial planning is to secure long-term steady wealth creation. This can lead to money flow after certain years like 20-30 years later when Our body won’t be that fit to work as per age.
- That wealth would complete our all financial goals and dreams, and then money will work for us, we won’t work for money.
- Our salaried income increase but same time inflation also increases so to over that inflation; we need to do proper investment planning. This leads to proper investment.
- In the traditional way, we invest money in Bank FD, RD, LIC Policy, Endowment Plans, Flats, Real Estate, and Gold etc.
- Where bank offers only 6 to 7% on FD, LIC policy 3 to 5%, Gold and Real Estate give around 8% annual returns.
- In such scenarios, we will not make much wealth as inflation also increase by 5%-6% that much rate of interest given by Banks which is 5%-6% annually.
- Actually, we receive 0-1% returns on our investment and if we are Tax Payer then our returns will be in negative.