The most common advice for a financial goal is to create a plan. However, it’s easier said than done. You may find it difficult to carve your financial path by creating a good portfolio. It is always advisable to seek help from a Financial Consultant. By consulting a financial advisor you can accrue high returns since the professionals are specialized and qualified in finance-related dynamics.
Personal finance is financial security for any person. Financial literacy and awareness is the key to financial capability and independence. Personal finance decisions require a high financial awareness quotient. Financial Consultants help in building a balanced portfolio in consideration of your
risk tolerance, active income, tax implications, and legal imperatives to accrue maximum returns.
Top 5 aspects of Personal Finance
Personal finance is the process of managing your money. It is a broader term that accommodates several financial parameters. The five pillars of personal finance are:
1. What you save
Your savings determine your financial health. If you park money as savings, you are creating an emergency fund. Creating a contingency fund regularly may act as a shield during an unexpected, unforeseen, and unpredictable event that may lead to loss.
Liquid funds are one such example of an emergency fund. They carry nil risk in terms of credit and interest. Your savings in liquid funds may last for a short term (3-6 months) that can be withdrawn within the week of saving. It is highly liquid and also yields better returns when compared to Fixed Deposits.
Setting money aside as savings can be a blessing in disguise at any emergency event. Thus, what you save is a paramount factor of your personal finance to maximize returns.
2. What you invest
Investments help you in growing money while you sleep!
You can invest your money in different baskets that can help in creating a balanced portfolio that accrues high returns in the long run. To build an investment portfolio you require financial acumen. Your folio depends on your :
- Financial goal
- Risk tolerance level
- Type of investment choices
- Time frame
Stock markets are a great avenue to maximize returns. It may be in the form of mutual fund investments or investments in stocks.
The time frame is one of the key factors that determine which investment option to choose. You may have financial goals to accomplish on a short, medium, or long-term basis.
3. How you protect
Insurance helps in protecting against risks and exposures. To maximize returns in the future, you may need insurance as a protective umbrella.
In personal finance, health and life insurance is a must. Good protection cover availed today can help in a better future. Some of the most important insurance to consider apart from health and life insurance are:
- Personal Accident Insurance
- Mortgage Protection Insurance
4. How you plan your taxes
Personal finance includes planning for taxes. Tax planning helps in tax saving. If you begin tax saving today, you can accrue benefits in the future. Careful planning in consideration of applicable deductions and exemptions can help you save taxes.
Indirect taxes are mostly unavoidable since they are related to consumption. You can save direct taxes vigilantly. However, tax saving is a different concept from tax deduction, tax evasion, tax avoidance, and tax exemption. Tax harvesting helps in wise tax planning.
5. How do you plan your retirement?
Planning for retirement includes:
- Creating a retirement corpus from an early stage
- Retirement financing during retirement
Personal finance is crucial to plan for retirement and also during retirement. It is always better to start creating a retirement corpus at an early stage of life. A discipline develops when you begin saving and investing in your future at the beginning stage of your earnings for your retirement. You can generate wealth for generations while creating a retirement corpus.
During retirement, you may need security for which you need retirement financing. Your risk appetite may be much lesser during retirement and hence it is advisable to exercise risk-free or lower risky investments and savings baskets.
How to maximize your returns with a financial expert?
There is a noise of information when you search on the internet about personal finance tips. It may be challenging to cut through the noise and find what’s best for you.
A financial advisor helps with authentic, structured, and directional personal finance tips. Consulting a financial advisor helps in outsourcing the solution of your financial worries and ambiguities to specialists and analysts in the field of personal finance.
You can just sit back on your armchair and concentrate on your mainstream job, while your financial consultants help in managing your money.
If you choose to manage your finances, you are likely to monitor the market every now and then, which may lead to a likelihood of missing out or mistaking an opportunity. A financial advisor eliminates such exposures by carefully studying your needs, goals, and risk levels.
The ways in which financial consultants help are as follows:
- Act as a financial behavioral coach
Financial consultants act as a reliable bridge between you and your finances. You may rail off from accruing returns if you do financing on your own. A financial advisor acts as a financial behavioral coach on advising the right track of financial planning.
- Value addition
Financial advisors help in adding immense value to your portfolio. To aim for both growth and value, a consultation with a financial advisor can be that great value addition in terms of quantifiable quality.
- Investment planning partner
Financial Consultants may be your perfect investment partner to manage your finances in the most optimum and sustainable manner. Investment planning is the real agent in return maximization.
- Retirement planning partner
A financial advisor helps in designing a retirement blueprint that can help you navigate to a better future.
- Financial Counselor
Financial consultants may help in financial counseling during any ad-hoc, strategic, and overall financial requirements
Route to maximizing returns
Any investor wishes to maximize returns. Maximizing returns would mean such a balanced portfolio that accrues returns periodically or at the end of its tenure. Capital appreciation is the most important parameter that an investor aims to achieve and financial advisors strive to assure.
It is important to compare financial advisors in terms of fee, reputation, and clients before choosing the best one that suits your financial goals and needs.