The world of finance can often be a scary place like planet fitness eden nc, with terms and jargon that either mean nothing to you or are downright baffling. But you don’t need to feel scared of this world! We’re here to help guide you through financial planning so that it is understandable and fits your needs.
We’ll talk about:
1. What Is Financial Planning?
Financial planning is your personal roadmap to financial freedom. It’s how you can create a world where you are financially secure, with your passions and passions in life free from financial burdens.
In order to achieve this goal, you have to know where you currently stand financially. With that knowledge, you can then create a plan for achieving this goal.
This goal is commonly referred to as ‘Building A Secure Financial Future.’ This is NOT what most people think of when they hear the term ‘financial planning.’ This is not about saving for retirement or purchasing a car. This is about having enough money to live the kind of lifestyle that you’ve been dreaming about all these years.
2. The 3 Pillars of Financial Planning
The goal of building an ‘investable portfolio’ is a common goal amongst financial planners, but this is only the bare minimum. Your plan must include at least three pillars: A savings pillar, a retirement pillar and an investment pillar.
A savings pillar separates your short term finances from your long term finances. This pillar will be responsible for just about everything beyond your emergency fund. A retirement pillar takes care of your post-retirement expenses and looks after the money invested in long-term investments like bonds and stocks. The third and final pillar is where you invest in mutual funds or other securities for income producing purposes.
3. Investment Options
Once you have identified your goals, you must figure out how to reach them. This is where investment options come into play.
Depending on your goals, you should look for the following:
Lending Money Loans :
Loans can be used for short term financial needs or as a form of insurance in the event of illness or death. This can be a great option if you are suddenly unable to work due to an injury or illness. Compounding Interest : The interest that accrues from the original loan is added to the principal, allowing it to grow faster than conventional savings accounts. With time, this interest could become substantial enough to cover most of your expenses if nothing else comes up in your life.
Tax Advantages :
It is possible to deduct your loan interest from your taxable income!
Equity Investment :
Equity investments are the most versatile and profitable forms of investments. They could be used to build a house, start a franchise business or purchase an already established business. They could also be used as ‘venture capital’ invested in startup businesses. Your equity investment can also be used as collateral to secure a loan or even get you cash if you ever need it in a hurry.
Most investors see it as better than bonds or stocks because they have higher liquidity, allowing you to convert them into cash at any time without losing value.
These are low risk investments that are generally non-correlated with stocks and bonds. This means that the price of these investments remains relatively stable over short to medium term periods. Diversification can be achieved by investing in a number of different sectors, such as banks, mutual funds, real estate and insurance companies.
4. Retirement Planning
Retirement planning is the most important part of financial planning and can be a daunting task for some people. Retirees need to consider more than just their expenses – they need to plan for things like healthcare, education and even loss of income. It can be very difficult to plan for these without the right knowledge.
However, there are a few simple steps you can take to figure out what you need to retire successfully:
Calculate Your Expenses :
You need to consider your current expenses and the expenses you will be expected to face in the future. This should include things like health care, education and other costs associated with retirement.
Determine The Status Of Your Retirement Savings :
You will need a goal amount that is adequate for your income needs during retirement. You’ll also have to consider how long it will take you to reach this goal if you are at an average lifespan or if you live longer than average. Consider Your Income Sources :
Your sources of income could be from a combination of your retirement savings, an inheritance or a pension.
5. Tax Planning
Tax planning is something that many people neglect. The truth is that taxes play an important role in how much money you make and how much you ultimately save. By strategically planning your taxes, you can reduce the amount of taxes you pay and save more for yourself!
Taxes are generally divided into 3 categories: Income Taxes, Duties & Fees and Sales Taxes. Depending on the country and state you live in, some income taxes could be deducted at source while others could be deducted when filing your tax returns later.
Financial planning is one of the most important things you can do for yourself as a worthwhile investment. There’s a lot more to it than simply setting aside money for college, retirement or seeing your family through tough times. It’s about making informed choices about how you want to invest your money and how you want to live your life.