PERSONAL FINANCE FINANCIAL PLANNING TAX PLANNING INVESTMENTS
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Income streams
One should have an eye on one’s present income levels , especially with regard to its steadiness . The persons in business whose income levels vary seasonally have to look for alternative business supplementing the existing one .Similarly salaried persons to the risk of possible loss of jobs . One needs to have built in cushion mechanism to make their income stream steady and growing to take care of inflation at least .First priority of any stock market investor should be his prime business or job . His mental faculties should work towards streamlining & improving the prime income . One should never neglect the prime job for the sake of stock markets .
EXPENDITURE
Normally we increase our expenditure in line with increase of our income . We spend according to our status , meaning the level of income . Our ability to curtail the tendency to enhance expenditure will greatly enhance our savings ability .For example , eating at a good restaurant need not be necessarily at a five star hotel . I am not recommending foregoing one ‘s day to day pleasures for the sake of future dream . However one can always find ways to curtail expenditure without sacrificing luxuries of life . More one has ability to avoid escalation of expenditure , more one will enhance his ability to save .
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TAX PLANNING FOR FY 2022-23 ( AY 2023-24 )
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TAX PLANNING FOR FY 2022-23 ( AY 2023-24 )
Comprehensive Article on Income tax changes in Rules, Rates , Slabs , Rebates and Estimation
CLICK HERE TO READ
INSURANCE
There will be risks of reduction of income stream as well as sudden spurt in expenditure in one’s life . A loss of job or a future retirement or a medical bill to pay ,for examples . So to mitigate those risks , one needs to have either appropriate insurance policy or savings in the form of liquid assets like bank deposits . One has to assess all possible risks he may encounter either in income or expenditure and take appropriate measures to mitigate the same .A credit card will be a good insurance against sudden expenditure Credit card dues may be settled later after realizing other not so liquid assets . Insurance planning is vital
SAVINGS
What remains after expenditure and insurance out of income is one’s savings .The first priority in allocating savings should be towards additional commitments towards insurance . For example ,Bank balance to cover at least next six months of expenditure will act as insurance in case of sudden loss of job or an unexpected medical bill . Savings in this form must have hallmark of liquidity so that the money can be removed on short notice . May be a bank deposit which can be fore closed without much fuss . This fund should be in addition to the insurance policies taken to cover various risks , as settlement of insurance claims take their own time and may not be available at zero time .
TARGETED INVESTMENTS
Now after allocating additional amount towards insurance ,we are left with funds ready to be invested . These funds for investment are not required for the present and are kept aside to meet our future plans if any . May be a margin towards housing loan or a seed capital for new enterprise we want to start . Investment funds which are earmarked for a specific goals have to be available at the time of their need .They are not just required for the present . Hence such funds should be invested in such instruments which have capital guarantee in the least and risks to the minimum . May be a debt fund or a bank deposit or a fixed tenure mutual fund .
INVESTMENT IN STOCKS
After allocating our income for expenditure , insurance & targeted investments ,we may be left with a portion of our surplus income which can be put invested for longer periods with risks of losing principal or interest with an eye to maximize rewards for taking such a risk . These funds are not needed for the present and do not become part of our any other future plan . Losing them will not have any adverse effect on either our present lifestyle or future plans . They are pure surplus which can be invested in risk instruments . If one plays with this fund carefully and systematically , one can generate additional income and prosperity . But investing in such instruments should be NEVER at the cost of our financial health and we may lose sleep as well as our life if we overindulged . I would not invest more than 50 % of such surpluses in shares . Balance may be in other forms of investment like gold , real estate , pension fund etc . Investing in shares would be my last category of investment after allocating for expenditure , insurance , targeted funds , and also for instruments with lesser risks like bank deposits ,pension funds , company deposits . Once one has taken care that the amount so invested in stock market is free from all financial needs , one can venture to play in the stock market with HOPE, CONFIDENCE & STAMINA . One can play in the market for a long long time and be a winner .My various articles in this blog covers various aspects of trading and investment in stock markets and are my personal opinions .
You may start from my first article titled CABBAGE PRICE AND SUICIDES and read chronologically thereafter. I will be happy to receive your feed back and comments on the issues raised there in .
DISCLAIMER :
No content on this blog should be construed to be investment advice. You should consult a qualified financial advisor prior to making any actual investment or trading decisions. All information is a point of view, and is for educational and informational use only. The author accepts no liability for any interpretation of articles or comments on this blog being used for actual investments.
No content on this blog should be construed to be investment advice. You should consult a qualified financial advisor prior to making any actual investment or trading decisions. All information is a point of view, and is for educational and informational use only. The author accepts no liability for any interpretation of articles or comments on this blog being used for actual investments.