The decisions you make today will determine the tomorrow of your family. As the breadwinner, your primary concern is their financial security post your retirement or in your absence. The ideal road to gaining financial safety is smart investments, prudent savings, and wise insurance policies.
A steady income is the result of a well-thought financial plan that covers all the risks. Here are a few tips that will strengthen your financial plan.
1) Asset Allocation
You can spread your money across all asset classes of stocks, bonds and cash, based on your short-term and long-term goals. The thumb rule for investment in equities is 100 minus your current age in percentage terms. As you grow older, you can reduce volatile investments and shift towards safer options like debt instruments.
2) Adequate Insurance cover
Having adequate Life and Health Insurance cover is as important as saving for future needs. It is essential to do an insurance-need analysisto identify insurance needs for self and family especially if you have dependent adults and kids.In the event of death of the main breadwinner, it might be hard for a lot of people to have saved enough to take care of their family without life insurance.While most of them who have insurance think they are adequately covered, only wake up to realize that they are not in the event of a disaster. Therefore it is important that you periodically review your insurance requirement. Use our Life Insurance Calculator to identify how much cover you need to secure your family’s tomorrow.
3) Tax Planning
Tax planning is a crucial part of your financial plan; one that is usually overlooked untilyear-end is round the corner. The first step in tax planning is calculating your tax liabilities. You can access calculatorsavailable online that make it an easy ‘do-it-yourself’ task. Conduct some research to know the types of tax-saving instruments you can invest in. Re-calculate your tax liabilities incorporating these deductions to get a general idea of the money you will save.Consult your tax advisor for detailed advice.
4) Estate Planning
In simple words, estate is your net worth. Estate planning involves ensuring that, in the event of your death, your wealth is distributed as per your wish, without legal hassles. A few basic steps of estate planning involve creating a will, nominating guardians and monitoring your plan regularly.
5) Retirement Planning
It is believed that the earlier you start your retirement plan, the better it is. Starting early certainly has its advantages; your money has more time to grow. Make sure the amount you calculate as your retirement fund is enough to maintain your lifestyle after factoring for inflation. Check our Retirement Calculator to see how much you need to save for your retirement?
Have you ever wondered why you are asked to pay lesser premium than your friend or family member? To end the confusion, we have prepared a list of factors that affect how life insurance premium is calculated.
Awareness is the first step towards making effective decisions. Appreciating all the nuances of a powerful financial product like a ULIP will help you to decide the perfect plan for you.
The scope of an insurance policy is sometimes not sufficient to ensure your family’s financial security. However, you can fortify your insurance plan by buying an additional cover for extraordinary circumstances. These add-ons are called riders.
Loan against insurance policies is a good option in case funds are required in an emergency situation and can be a better alternative to a personal loan or a credit card loan or asking friends/relatives for financial help. But are they always a good idea?