While dealing with clients for over a decade, PersonalFN has come across many queries which are commonly asked. Keeping this in mind, beginning this Sunday, we bring to you our Sunday edition of our newsletter "Financial News. Simplified".

The focus of this edition will be to answer your queries related to financial planning, so as to help you keep your financial health in pink.

In each Sunday edition of Financial News. Simplified, we will answer 5 questions for our valued readers like you. If you have concerns that impact your finances, you can write to us on info@personalfn.com, and we will do our best to answer them in our special Sunday edition.

So to start with, here are your top 5 questions answered by us this week:

1. I don't know what my financial goals are?
   
   Ans: A lot many times we have seen several individual being unaware about their financial goals. And to us that's alarming if individual aren't aware of their financial goals. You see, while you are walking on a path, it is imperative to know where it leads to – the destination. It applies to financial planning as well.
   
   You ought to first define your financial goals before making any plans to achieve them. In order to decide on your financial goals, just think whether you want to buy a house, a car or go for a vacation... or all of these. If you are married, then you may want to also plan for your child's education needs or marriage. And finally some day you would want to retire and live a blissful retired life without worrying about any more financial commitments. You see, these are some of the many financial goals which you might want to plan for and therefore you ought to prioritise and execute keeping a fair balance.
   
   
2. When should I start planning for my family's financial goals?
   
   Ans: It is always a good time to start doing the right things. But the best time to start planning for your financial goals is now...and as early as possible. Remember, the earlier you start planning for your financial goals, the better it is as you will have a longer time horizon to achieve your goal(s) enabling to build the desired corpus with a lower systematic investment today.
   
   Therefore there's a saying, "the early bird get a bigger pie". With a longer investment time horizon at your recourse, you can get the benefit of a better power of compounding, which can help you achieve your financial goals.
   
   
3. I don't know how much amount is required for my child's education?
   
   Ans: Putting a value to your financial goal is very important in order to achieve them. It helps in estimating whether the financial goal is achievable or not. But yes, it's not very easy to estimate the desired amount. In order to define the amount for goal such as child education, you need to first decide whether you would want him to study in India or go abroad.
   
   As you may know, depending upon the place of study, the cost of education will differ. In India, the cost of a post-graduation degree is in the range of Rs 10-20 lakh, depending upon which course your child wants to enrol for. While if he / she intend to pursue his further education abroad, the cost could be 3-4 times higher than what you spend in India. Hence you need be careful while deciding the goal amount, as over estimation of cost will lead to a compromise on achievement of other financial goals; while under estimation of cost will lead you shell out more (than the amount accumulated) at the time when the goal realises.
   
   
4. I have heard, long term investment horizon is required when investing in equity markets, but what does long term mean?
   
   Ans: We have seen individuals who want to invest in equity market for 2-3 years and expect 15-20% returns per annum. For them 2-3 years' time horizon is long term. But according to us 2-3 years cannot even be defined as medium term investment horizon. To us it is purely short term. You see, medium term in our view is time frame of 5-7 years and long term is anything over a time horizon of 10 years.
   
   Since the equity markets can be volatile in the short term, you should ideally have a long term investment horizon. It will help you create real wealth through equity markets.
   
   
5. I want 20% per annum return on my investments without any risk. What will you suggest?
   
   Well, you should expect a higher rate of return on your investment portfolio when you go for a professional advice of a financial planner. But expecting a return on investment of 20% per annum without any risk is totally unrealistic. Your return expectations should be a function of your investment time horizon and the risk you can take on your investments. So, whenever dealing with your finances, you should be realistic and not greedy.
   
   

We hope this edition of "Financial News Simplified" would help you solve some of your financial planning queries.

If you have any queries on financial planning or investment planning, you can write to us on info@personalfn.com and we will be happy to guide you through our coverage in the ensuing editions of our Sunday FNS. Until then, HAPPY INVESTING!

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