Financial Clinic

Financial Clinic For You

1. Define your cash flow: This can be done by maintaining an expense sheet for 6 months, clearly maintaining day to day expenses. This indication shall give you your surplus investible cashflow.
2. Financial Foundation: Secure your risks first, mainly health, personal accident and life risk for at least 5 times the amount of your annual salary. If you have annual salary of 10 lac, you must be covered by a risk of 50 lac. So if you have taken an insurance policy of 2 lac or 4 lac sum arrured, you are being fooled by the agents.
3. Channelize 25% of your surplus cash flow towards your retirement, because at this point in life you require a small amount of money to create good retirement corpus. Moreover most you do not work in public sector or govt. company that you shall get pension. 10 or 20 years down the line or may be more you never know your kids shall support you looking at the new generation styles, and you will not get pension and inflation shall be skyrocketting. So, there is nothing wrong in living in today and believing in today but you must plan for future.
4. All surpulus cash flow must first be channelized to create a fund for at least 18-24 months in a balanced portfolio, which would form the foundation of your future plan.
5. Where to invest: If your age is x years, you must x% of your wealth in your saving or liquid cash. Have 100-x/3 in less riskier investments like mutual funds and the remaining in Equity market. e.g. if your age is 34 and you have 1 lac as your wealth, save 34 thousand in saving account or FD or cash in hand. The remaining, 100-34 = 66/3=22 thousand you can invest in mutual funds. And 44 thousand you can invest in the equity market.
6. Do not invest in more than 5 to 6 mutual funds.
7. Do not invest in more than 10 stocks in equity and try different sectors to diversify your portfolio.

Spend wisely, invest wisely and live happily :-)

Let me know if you want to discuss further..... I am open to discussions.