Hello everybody, A couple of week's back I had an interesting conversation with my cousin who works for a very very reputed IT company in Bangalore. As we were discussing about personal finance, financial awareness and of course this blog, I happened to ask him if he would be interested in writing a guest blog for my readers, to which he promptly agreed.
So, here is what Prabhav has to say about his experience with personal finance:
"Wealth can only be created not earned" something which I recently heard on a financial news channel. How true!
First of all my introduction. My name is Prabhav and I am Ninad's cousin. I am an engineer and not related to the field of personal finance, but I do have a basic understanding of different financial products.
Until I started earning, I did not even know that a concept of financial planning existed. It is only when I was planning my taxes, I came upon this concept.
It was summer of 2008, when I was filing my tax returns for the first time. It was a horrible experience. I was too late to do any tax saving investments as I had not done any for the whole year. Why was I in this situation? It could be attributed to only two things...lack of knowledge and lack of planning.
I had to first get knowledge and start planning so that I didn't end up in a similar situation in 2009. First, I went for advice from my friends and family and asked them how they are doing their tax planning. I was shocked that some of them were in same situation as mine year after year even after working for more than 5 years. Some struggled at the last moment to do tax savings (lack of planning) and some did not bother(worst case of laziness).
Without any proper solution, I started researching on my own. It took me some time to understand that only equity investments can help me create wealth in the long term (it is not rocket science. A simple calculation will show you that). I was intrigued by the concept of SIP. It was quite simple, as the amount to be invested was small and I could invest on a monthly basis. I also came upon some tax calculators which were quite helpful. Now I was equipped with knowledge about how my investments would flow and also a plan. I had identified the correct amount that I needed to invest every month and started a SIP in a tax saving equity mutual fund. Until then the only tax saving I was doing was putting money (cannot be called investing) in an endowment plan.
The following has been my investment strategy for last few years:
2.Monthly SIPs for additional investments in MFs and ETFs to meet my financial goals (thanks to Ninad for his help)
3.Monthly RDs to accumulate money for yearly payment of Insurance policies (term plan and health insurance)
Once you get a hold of things, all your investments are quite easy to manage. There is a certain feeling of elation when you see your money grow steadily over the years; your money working harder than you, helping you achieve your goals!!
Ninad Kamat
CERTIFIED FINANCIAL PLANNERCM
facebook
Sketch is sourced from Carl Richards of behaviourgap and is used with prior permission of the creator. It is subject to copyright.
No comments:
Post a Comment