Planning my Personal Finance

[msivask]

Hi Friends

I have planned to do a detailed planning on my Goals and investments . I plan to spread this process over a period of 1 month .

To start with , my goals would fall into 3 broad categories

1. Short term goals - Need to take back money in 1 year ( Plans for prepayment of home loan on regular basis , plan for Insurance premium etc., )
2. Mid term goals - Need to get back money in 3-4 years ( Plans for buying things like new house , car etc ., )
3. Long term goals - Need to get back money after 10-15 years ( retirement , child education , child marriage etc., )

Any suggestions how to plan for investments to achieve these goals .

Any suggestions on planning from experienced people are also very much appreciated

I would like this thread to go on for a month to come up with a plan which would be helpful for many starters to make a personal finance plan ..

My Target to have my plan ready is 31-Aug-2010 and I hope ,in the process may of my Traderji friends to have one as well ..

Thanks
Siva

 

[palka]

Goal 1: zero to minimum risk to capital. Options: Bank FD, short term or liquid funds, FMPs

Goal 2. Some risk may be taken. Bank Fds. Medium term MFs, FMps, may consider a debt oriented hybrid MF

Goal 3. High equity exposer is desirable if you can tolerate the fluctuations in portfolio. I will go for 100% equity exposer if goal is >10 yr away. Reduce equity component as you near your target. Easiest way to do that is to invest in 2-3 good diversified equity funds. You may also invest in an Index fund. Invest regularly through market ups and downs.

Also buy adequate insurance, both life and health insurance.

Do not invest in a product which you do not understand or any product which promises assured high returns.

Happy investing:clap:

 

[msivask]

Goal 1: zero to minimum risk to capital. Options: Bank FD, short term or liquid funds, FMPs

Goal 2. Some risk may be taken. Bank Fds. Medium term MFs, FMps, may consider a debt oriented hybrid MF

Goal 3. High equity exposer is desirable if you can tolerate the fluctuations in portfolio. I will go for 100% equity exposer if goal is >10 yr away. Reduce equity component as you near your target. Easiest way to do that is to invest in 2-3 good diversified equity funds. You may also invest in an Index fund. Invest regularly through market ups and downs.

Also buy adequate insurance, both life and health insurance.

Do not invest in a product which you do not understand or any product which promises assured high returns.

Happy investing:clap:

Hi Palka

Thanks a lot for your reply , could you please explain me more about Liquid funds and FMP's

At present I have 80% of my investment in RD and 20% in Equity diversified MF . I know this is not the right portfolio ,I trying to make this a correct equation .

Thanks
Siva M

 

[yodlee99]

Siva, a general thumb rule is that your investment in debt:equity should be approximately equal to your age100-your age). Suppose, you are 25 year old, you can hold upto 75% in equity and the rest 25% in debt (including RD, FD, postal savings, debt mutual funds etc). As you age, keep adjusting your portfolio and this would mean increasing the contribution towards debt.

Liquid funds are for shorter duration meant for stop-gap arrangement. Suppose you want money next month, you may redeem some of your stocks and mutual funds now (if you feel the price is right now & may decline tomorrow) and park the money in a liquid fund. This is equivalent to savings bank account but pays a little higher returns. It is used mainly by corporates for parking their funds for as little as a couple of days. Visit valueresearchonline for more basic details, definitions as well as the funds that are doing well.

 

[palka]

Please read this article to know about debt funds.

A liquid fund holds bonds with very short maturity. The offer modest returns, slightly above savings bank account. But if you opt for dividend option you have slight tax benefit as dividends are tax free in your hand. How ever, if you know your investment period for sure a bank FD may offer slight benefit. If you fall in the lower tax brackets the an FD may be better.

FMP is a type of bond fund with a fixed duration, so it eliminates interest rate risk, wohever credit default risk remains. They are also tax efficient.

 

[msivask]

Hi Friends

I have planned to do a detailed planning on my Goals and investments . I plan to spread this process over a period of 1 month .

To start with , my goals would fall into 3 broad categories

1. Short term goals - Need to take back money in 1 year ( Plans for prepayment of home loan on regular basis , plan for Insurance premium etc., )
2. Mid term goals - Need to get back money in 3-4 years ( Plans for buying things like new house , car etc ., )
3. Long term goals - Need to get back money after 10-15 years ( retirement , child education , child marriage etc., )

Any suggestions how to plan for investments to achieve these goals .

Any suggestions on planning from experienced people are also very much appreciated

I would like this thread to go on for a month to come up with a plan which would be helpful for many starters to make a personal finance plan ..

My Target to have my plan ready is 31-Aug-2010 and I hope ,in the process may of my Traderji friends to have one as well ..

Thanks
Siva

Well I didn't meet my deadline .. No excuses .. I was out of country though ..

Will restart my discussion in 10 days ..

Thanks
Siva M

 

[surfingminds]

I have following approach and also trying to have one goal one portfolio strategy

1. Long Term Goals (10-20yrs) : Retirement, Child education & marraige, World Tour, Retirement Business
Mid Term Goals ( 5 - 10 yrs) : own Home, Car, Agro Land (Real estate Asset)
Short Term Goals (2-5 yrs) : Marriage, India Tour etc

2. List down all goals in a excel sheet with clear invest ment strategy and asset allocation .. Mine is majority into Equity though i am balancing to debt and more safe as my age grows.

3. STP and SIP into WEll diversified MFs for 20 years should be balanced I have 8 mutual funds selected

4. Equity portofolio of 30 stocks large cap,mid cap and also multibaggers i am very much interested into them as it is high risk and rewards are also high

2010 I am reviewing my plan and hope to benifit here by discussions.

you should put fair targets which are achievable based on monthly savings you can invest.