Tag Archive : Financial Planning

7 steps to achieve financial freedom

7 Steps To Achieve Financial Freedom

How To Achieve Financial Independence?


In this article, we are going to discuss 7 Steps To Achieve Financial Freedom. In today’s changed financial ecosystem, a long-term prudent investment is required to achieve financial independence.

We have already covered what is mean by financial freedom in our earlier blog.

7 Steps To Achieve Financial Freedom

  • Financial independence refers to a state where we have enough resources at your disposal to meet your expenses as well as fulfill your future financial goals.
  • Your monthly earned fixed salary may be barely sufficient for meeting monthly expenses and paying EMIs for like home, car and also planning for children education and marriage etc. In such case, then how one can actually achieve financial Freedom or independence? 
  • But, it is definitely possible, with careful financial planning and follow-up actions, one can build a wealth to break the dependency on the monthly salary. 

Following 7 Steps To Achieve Financial Freedom which would help you move towards your financial independence.

7 Steps To Achieve Financial Freedom

1.Start Early

  • The first step we should take on this financial freedom journey is start as early as possible, stop unnecessary delays. The more we delay, the more challenging it will become for us to achieve financial independence. 
  • A smart approach would be to make sufficient savings and investments in early stages of our career. The regular source of income allows us to build a corpus of funds that is sufficient to take care of all our expenses.

2. Save and Invest for Long-term

  • Savings is the most crucial and most important aspect of wealth creation and achieving financial freedom. Start with saving part of your salary by cutting your discretionary expenditures.
  • This can be done by committing to invest at least a minimum of 20-25% of your salary. The more you save now, the more your money compounds. The power of compounding should not be underestimated.
  • The appreciation you will receive on 20-25% of your salary if you save consistently and invest intelligently, is far beyond the expectation.
Be Financially Independent by Proper Financial Planning

3. Have a Healthy Portion of Equity Investment in Your Financial Portfolio

  • Equity investments have rewarded investors by multiplying investments in a relatively short span compared with other investment avenues.
  • If one starts early, plans properly and invests meticulously, one can endeavor to create sufficient wealth, helping to achieve financial freedom at a quite early age. 
  • In current volatile markets also, one can find opportunity to build a wealth through equity by staying for a long period in the market. For more details, you can refer our blog : 4 things to note for the investors in volatile markets.

4.Adopt SIP ROUTE; Avoid LUMP-SUM investments

  • If one is unable to commit lump-sum investments, systematic investments in equities would enable an investor to create wealth that can take care of his/her early retirement.
  • SIP route helps you average your purchase price and helps you with better returns with relatively lower risks. So by SIP route, one can get the advantage of stock purchases at the discount.
  • SIP option has made it possible for investors to bring the much-needed discipline in their approach towards investment while making the magic of compounding work in their favor. 

5. Plan Your Financial Goals

  • Have different investment strategy for your financial goals like home, marriage, health, education etc, Quantify them and set the time horizon for the same.
  • You should do research and give enough time to make informed decisions, don’t follow a herd approach and invest time and effort to know about the fundamentals.
  • Prepare your action financial plan for changing scenario and stick to it during the investment horizon. This will prevent you from making an impulse decision.

6. Manage Risk

  • You should have liquid funds to meet any emergency situation. Define you contingency fund requirements and work towards accumulating the same.
  • The idea is your financial plans should not get hit by any contingency which anyone can face at any time of life, be it health issues, job loss, repair and renovation to your physical assets.
  • Try to build a reserve which will sustain you for 6 months should you not receive any inflows in this duration. Refer major Personal Finance Risks.

7. Keep track of Your Investment & Review

  • Once you have created an investment plan, keep it on track. Review your portfolio from the standpoint of the rationale that formed the basis of your investment. Though short-term volatility is bound to happen, you should focus on the fundamentals of invested stocks.
  • Don’t be too inflexible just because you have put in time and effort for your previous research. So be ready to keep that flexibility to amend your portfolio with changes in fundamentals. Remember overconfidence may be hazardous to your wealth. 


Our Indian Independence has entailed dedicated and passionate pursuit of freedom by our freedom fighters. In the same way, a whole-hearted commitment to financial planning will ensure you achieve financial freedom or independence as well. 

Wealth Management v/s Financial Planning

Wealth Management v/s Financial Planning

Difference Between Wealth Management & Financial Planning


In this article, we are going to compare wealth management v/s financial planning. These two terms – wealth management and financial planning are often used interchangeably in investment world and interpreted as the same. However, there are some key differences.

Wealth Management v/s Financial Planning

Wealth Management v/s Financial Planning
Wealth Management v/s Financial Planning


  1. Wealth Management
    • In simple words, Wealth is an accumulated resource or the value of existing assets a person own. Generally, Net worth is a measure of wealth of an individual. Wealth management is all about managing one’s wealth/ Net worth.
    • As part of wealth management, investors often actively try to identify and take advantage of profit-making opportunities.
  2. Financial planning
    • While Financial planning is a comprehensive assessment of your financial situation and your future goals. It involves creating a financial plan to help you answer important questions such as: How much do I need to save for retirement?
    • In short, Financial planning is the establishment of a process for attaining your financial goals by a thorough evaluation of your current financial status and exploring opportunities to improve it.


  1. Wealth management is an Opportunity-oriented personal finance management. It predominantly deals with preservation, growth and further accumulation of the existing wealth.
  2. On the other hand, Financial planning is Goal-oriented personal finance management. It mainly deals with building/creating the strategies to create wealth and meet financial goals either short-term or long-term.

3.For Whom

  1. Wealth mangement is basically meant for the high net worth individuals. Thus, wealth management is undertaken by wealthy people who have already achieved or fulfilled their basic financial goals.
  2. Financial Planning is for every individual who are yet to meet their financial goals It is for anyone who wants to make the best out of the money they have, through personal finance, to meet their financial goals; be it short-term or long-term. Financial planning does it by taking your income, expense and savings into account and balancing them.

4.Comprises of

  1. Wealth management comprises of :
    • Wealth Assessment
    • Risk Tolerance Assessment
    • Asset Allocation
    • Wealth Preservation Strategy
    • Wealth Growth Strategy
  2. Financial planning comprises of :

5.Type of Management

  • Wealth Management is a Active wealth management process. Here, a wealth manager will make decisions based on your portfolio, your risk tolerance and your preference for wealth preservation or wealth growth. The wealth manager will execute the asset allocation by investing in various asset classes based on your risk profile.
  • On the other hand, Financial planning is a Passive wealth management process. In this, a financial planner will make and suggest a plan based on income and the financial goals. The financial planner suggests the asset allocation based on your risk profile.

6.Financial Decisions/ Recommondations are Based on

  • In case of wealth management, wealth manager takes financial decisions by considering only your investment portfolio. Alternative assets such as private equity, real estate might also be considered.
  • While in case of financial planning, financial recommondations are given considerating the financial goals and the time horizon for realising those goals.


  • A holistic plan will help you identify your risks, fix your income leakages, set measurable goals, and create wealth in the process. Financial planning does not require you to have sufficient wealth. As you execute the plan, you will be able to create an investible surplus, cover your risks through insurance and make investments suiting your risk profile. You can create your free financial plan by visiting our website- https://investyadnya.in/
  • On the other hand, wealth management comes into picture when you have created wealth and need professional help to grow, preserve and enjoy your wealth. It requires the active monitoring of the wealth manager to identify the right mix of investments for you. Having a financial plan in place is the first step to create wealth.
5 Golden Questions of Financial Planning

5 Golden Questions about Financial Planning

Questions about Financial Planning To Ask Yourself !


In this article, we are going to discuss the 5 Golden Questions about Financial Planning. Before you start the financial planning process and building your portfolio, you should ask these questions yourself.

5 Golden Questions About Financial Planning

Here are the 5 Golden questions about financial planning which should get answered before you build your portfolio.

5 Golden Questions of Financial Planning
5 Golden Questions about Financial Planning

1.Net Worth?

  • When you start with your financial planning, you should first check the status of your Net Worth? Where do you stand? What is your current Net Worth?
  • For calculating the net worth, we should know the two aspects – Assets and Liabilities. What are your current Assets and current Liabilities?
  • When you are calculating your net worth from financial planning point of view, you should include only your financial assets in assets heads. Don’t include your real estate assets here because of the difficulties in the liquidation of real estate assets. While you can liquidate the financial assets whenever you are going to achieve your financial goals.
  • Following assets are considered as financials assets –
    1. Equity side : Equity Stocks, Equity mutual funds, ULIPs
    2. Debt side : Fixed Deposits, Debt Funds, PPF, EPF, LIC policy
    3. Liquid : Savings Account, Current Account, Liquid Funds
  • Net Worth = Assets – Liabilities
  • Thus, You can get an idea of your existing assets from the net worth number. And thereby. You can link these existing assets with your financial plan.
  • Thus, knowing your current net worth is the key parameter of financial planning.

2.Financial Goals?

  • Secondly, you should ask yourself what are my financial goals?
  • There are 3 types of financial goals based on the horizon :
    1. Short-term Financial Goals : Realising in 0-3 years
    2. Medium-term Financial Goals : Realising in 3-5 years
    3. Long-term Financial Goals : Realising in 5+ years
  • So you should enlist your financial goals according the horizon and then categorize them accordingly. While enlisting the financial goals, there are mainly two types :
  • Need-based goals and Want-based goals. So you should understand what are your need and should cover them on priority. Thus, after covering your needs, you can plan for your wants with the surplus available with you.
  • In the Indian context, Need-based Financial Goals are First Home, Children Education, Children Marriage, Retirement etc. On the other hand, Want-based goals are Vacation, Big Car, Foreign Trips etc.

3.Amount Required For Achieving The Goals?

  • Here, we calculate the amount that will be required for achieving/realising your financial goals. In this parameters, you should analyse how realistic are your goals? You can get the amount required for your goals as of today. But for achieving your future goals, you should always consider the inflation.
  • When you are considering the life-style inflation, you should take inflation range to be 7%-8% per annum.
  • While the education inflation is recommended to be at 10%. The recommendation of education inflation is based on the historical education expenses and its percentage growth.
  • Therefore, Inflation is a significant factor in calculation of amount required for achieving the goals.

4.Risk Appetite or Risk Taking Capacity?

  • It is also a very important factor in financial planning. You should first ask yourself, what is my risk taking capacity? Most of the investors enter into the market just by seeing the returns of the last 1-2 years. You should always focus on your risk appetite and your financial goals rather than investing blindly by going after the returns. Your financial planning process should not be return-driven only. So one must understand his risk taking capacity or how much volatility he can sustain.
  • For example, Are you ready for Averaging out of your portfolio, when it is down by say 10%? Many investors begin to redeem their investments instantly if below expected or negative returns are achieved. So, when there is a down-turn in the market cycle, you can realised exactly what is your risk taking capacity. Thus, you should build your portfolio accordingly.
  • If you are not ready to sustain such negative returns, then you should go with the less risky investment options such as Fixed Income Securities, Debt Funds, Government securities etc. And if your financial goals are not in a position to be achieved with such low volatile and low returns instruments, then you should toned down your financial goals. Because if you are not having that much risk appetite or having some behaviour management issues with volatile instruments to generate the expected returns, then it is advisable to scale down your financial goals.
  • Thus, rather than going into the equity out of your risk taking capacity just for higher returns, it is always better to be realistic with your portfolio according to your risk appetite. The underlying risk should also be taken into the consideration. Basically, we should not look at the market volatility as a risk. So just because of the volatility in the market, you should not redeem your investments.
  • So you should always analyse your portfolio properly before making such prompt or emotion-driven decisions.

5.Investment Options?

  • What are the different types of investment options? Normally, an investor with the higher risk taking capacity is advisable to choose equity investment options.
    1. On a broader base, a medium risk taking capacity investor is recommended to go with debt funds, RDs for the short-term financial goals realising in 0-3 years.
    2. For an investment horizon of 3-5 years, you can invest in Hybrid Funds. Hybrid funds are with a combination of Equity and Debt characteristics.
    3. For an investment horizon of 5-7 years, you can consider Large Cap Funds, Index Funds etc.
    4. If your investment horizon is 7-10years, then you can invest in Multicap Funds (ie. Mix of Large + Mid + Small Cap Stocks).
    5. And for an investment horizon of 10+ years and you are an aggressive investors, then you can choose Small cap  and Mid cap funds.
  • Here, we have discussed about only Mutual Funds and not the Stocks Investments. It is because when we are building our portfolio from the angle of financial planning, it is always better to stick to the mutual funds. Once, you have covered all your financial planning goals, then you can invest in the stocks with the available surplus funds with you. And you should build the mentality of investing in the stocks like a shareholder or a long-term investor and not like a trader.
  • For a more detailed comparative analysis, please refer our article :  Mutual Funds vs Stocks
  • You can try our stock subscription, here we have tried to make the retail investors understand the business model and the fundamental analysis of the stock. Rather than going for buying/selling target price of the stock, you should build an approach to become a long-term investor or a shareholder of the company. Thus, it is very important to understand the business of that stock to build that conviction for holding the stock in long-term.
Steps for building a financial plan

6 Steps To Create A Financial Plan

How To Build A Financial Plan?


The financial planning process is a logical procedure. One can create its own Financial Plan by going through all the steps carefully. In this article, we are going to discuss 6 steps required to create or build a financial plan.

Financial planning is the on-going process to help you make prudent decisions about spending, investing, and transferring your income and assets to help you achieve your financial goals. For the details, Refer : https://finplanyadnya.in/

Steps To Create A Financial Plan :

Steps To Create A Financial Plan
Steps To Create A Financial Plan

These 6 steps for creating a financial plan are given below, and explained in detail:

Step 1: Determine Your Current Financial Situation

  • In this first step of the financial planning process, you will determine your current financial situation with regard to income, savings, living expenses and debts.
  • Preparing a list of current asset and debt balances and amounts spent for various items gives you a foundation for financial planning activities.

Step 2: Develop Financial Goals

  • The purpose of establishing the goal is to form the foundation or purpose of planning itself, in order to begin with the financial journey with the clarification of a financial destination. Too many people save and invest money with no specific goals in mind.
  • The second step of the financial planning process is defining your goals, which entails writing down or formalizing your financial goals, attaching costs to them and determining when the money to accomplish those goals will be needed.
  • Only when you set goals—and analyze them and decide if you’re willing to make the financial commitment necessary to achieve them. Then only you can reach them.

Step 3: Convert Financial Goals to Plan

The third step of the process is developing an action plan to achieve your goals. A solid personal financial plan includes an informed and controlled budget, determines your investment strategy and reflects your unique personal goals. This step involves importantly three sub-steps, which are:

  1. Linking your current assets with your goals
  2. Linking your current and future savings to your goals
  3. Create alternatives – Developing alternatives is crucial for making good financial plan. Although many factors will influence the available alternatives, possible courses of action usually fall into these categories:
  • Continue the same course of action – Stick with current investment & savings plan.
  • Change the current situation – Tweak your current situation to make it more future goals oriented.
  • Take a new course of action – Completely change your current financial strategy and overhaul needed in all financial aspects.

Based on these steps, you should have your Final Goal strategy ready with you, where you should be able to answer the following:

  1. What is the corpus required for the goal?
  2. How much investment is needed for each goal?
  3. Priority of Goals
  4. Are my Goals practical?

Step 4: Evaluate Alternatives

Once you have final goals strategy, next step is to scout for right assets for each goal. However, firstly you should know about all the types of financial assets available:

  1. Equity
  2. Corporate Debt
  3. Govt. Debt
  4. Small Savings Scheme
  5. Real Estate
  6. Insurance
  7. Gold
  8. Crypto Currency

You should select the assets, depending upon the following factors:

  • Your Risk Profile – Every individual has different risk profile at different point in life. Some individuals may be conservative risk takers by nature and some may be due to bad experiences. Someone may be a high risk taker when young and become a low risk taker as age progresses. So, there are all kind of individuals, it is important to know what kind of individual are you at that particular point of time and accordingly you should consider and select the assets for investments.
  • Risk of each asset under consideration – Uncertainty is a part of every decision. Some decisions involve a very low degree of risk, such as putting money in a savings account or purchasing items that cost only a few hundred Rupees. But certain assets come under very high risk such as Crypto Currency, Futures etc. In many financial decisions, identifying and evaluating the risk is difficult. The best way to consider risk is to gather information based on your experience and the experiences of the experts.
  • Pros/Cons of each asset – Apart from risk, there are many other aspects as well for selection of asset such ease of investing, liquidity, cost of ownership, ease of tracking, lock-in period, ease of redemption, etc. All these factors are also required to be considered too, before selecting the asset.

Based on your goals and above mentioned parameters, you should finalize the asset type for each of your goal.

Step 5: Create and Implement a Financial Action Plan

  • To this point, the financial planning data has been gathered and analyzed, financial planning statements have been created, goals and objectives have been measured and financial gaps (if any) are found.
  • The next step in the financial planning process is implementing the financial plan’s recommendations. Though this is not the last step in the process, most of the hard work is behind you.
  • You need to create an ‘Action plan’. Your financial planning action plan should include all of the tasks that you will need to accomplish, in order to improve your financial situation.

For example:

  1. Exit from any current investment (if required)
  2. Methods of Investing – Systematic/Lump sum
  3. Timelines of Investments
  4. How to automate investments & budget to simplify tracking
  5. Tax Planning – Make sure your investments are tax efficient
  6. Estate Planning

When implementing a financial plan you will probably need to rely on the expertise of a few specialists such as Tax Professionals, Insurance Agents, Mutual Fund/Stock distributors, etc.

Step 6: Re-evaluate and Revise your Plan

  • Financial planning is a dynamic process that does not end when you take a particular action. You need to regularly assess your financial decisions. Changing personal, social and economic factors may require more frequent assessments.
  • When life events affect your financial needs, this financial planning process will provide a vehicle for adapting to those changes. Regularly reviewing this decision-making process will help you make priority adjustments that will bring your financial goals and activities in line with your current life situation.
Why Do You Nedd To Have a financial Plan?

Why do I need a Financial Plan? | Financial Plan Importance

Importance of Financial Planning


This article will answer your biggest question of – Why Should You Have A Financial Plan and will explain the wide importance and need of financial planning. Financial planning help you get better visibility of current and future money requirements.

Financial Planning is the process of utilizing your available financial resources in the best possible manner so that you acheive your goals. Good financial planning is the sound and quality decision making on the financial matters, with a future perspective.

Why Should You Have A Financial Plan?

Importance of Finacial Planning
Importance of Finacial Planning

Why Do You need to have a Financial Plan?

1. Inflation Impact :
  • When your mother goes grocery shopping and comes back, I am sure you must have heard her saying. I bought rice today at Rs. 50 per kg, I used to buy the same rice at Rs. 10 per kg when you kids were younger. This is inflation. Steady increase in the prices of goods and services.
  • As the prices of these goods and services increase, so does the cost of our future goals. If today it costs Rs. 25 Lakhs for higher education abroad, it would cost Rs. 73.4 Lakhs when your kid grows up after 16 yrs, if inflation is at 7%. Inflation has a compounding effect.
2.Contingency fund availability :
  • You may never know when the job scenario turns gloomy or the yearly hikes are not in line with the prevailing inflation. Therefore, contingency planning becomes very important for such scenarios.
  • With elderly parents in house and unexpected medical instances on the rise, it calls for keeping contingency fund ready for such situations. Financial planning helps you take into account not just your long term goals but even your short term needs. A thumb rule suggests keeping 6 months salary in highly liquid form for this need.
3. Retirement :
  • Like our parent’s generation, we will not be supported by any pension structure and so planning for the retire life is a crucial aspect. With life expectancy on the rise, it becomes all the more important to plan your retirement.
  • For example, a 35 year old would need a retirement corpus of Rs. 4 Crores, if his/her monthly expenses are of Rs. 50,000 today; wishing to retire at the age of 60 years, with life expectancy of 85 years.
4. Insurances :
  • Having a financial plan helps you prepare for risks. Risks are unforeseen events that can cause financial distress. The worst-case contingency is an untimely death, which can result in financial distress for the family, apart from the emotional trauma.
  • Financial planning can help us prepare for such contingencies through adequate life insurance. Another contingency is serious illness that can have an impact on your savings and consequently your short term or long term financial objectives. A good financial plan will make adequate provisions for health insurance.
5. Investments are tied to goals :
  • Since any money decision impacts your financial planning, you must keep your money decisions in line with the financial plan like decisions on tax planning, insurances, etc.
  • This also keeps you away from making any ad hoc investments and from inefficient tax planning.
6. Cash Flow Management :
  • Financial planning helps you manage your inflows and outflows in a way that you utilize your resources in the best way, in order to achieve your goals.
  • It helps you in cutting-out unnecessary expenses and gives a strong hold over your financial situation.
7. Achieving your Financial Goals :
  • You can achieve your goals comfortably if you start early and can have a solid plan to meet your goals.
  • However, it is never too late to start planing towards and for the achievement of your financial goals, which may help you in gathering up and prioritizing your goals and working towards achieving them.
8. Financial Viability :

We often have these questions in mind–

  • Can I upgrade my car?
  • Can I donate more?
  • Can I upgrade my home?
  • Can I go for Premium holiday package?

All these questions can be easily answered with a sound Financial Plan. For detailed Personal Financial Planning – Knowledge Bank, Refer : https://finplanyadnya.in/

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