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Chapter 4.1:Overview and Importance of Financial Planning

We all try to plan our lives as much as possible. We expect to finish studies in our early 20s, get a job, buy a house by the age of 27, get a car by 29 and so on. Our capacity to dream and aim is unlimited. This needs thorough planning and execution. More than that, it needs money. Not simply earning, but also saving and investments. And to fuel our dreams, we need financial planning.

Here's all you need to know:

All About Financial Planning By Kotak Securities®

What is financial planning?

Making money is not just about earning from a job or multiple sources. It is about effective money management, saving and then investing in the right financial assets to earn more profits. Simply put, you need to make money out of money through investments. This is the only way to roll around in money.

Financial planning is the act of managing your income; setting your financial goals and then allocating your assets across investments keeping in mind your limitations and requirements.

We will understand financial planning in depth in the next section. Click here to know more.

What are the broad areas in which financial planning can be undertaken?

Financial planning is not a simple task. You need to take into account multiple factors about your life – past, present and future – in order to form a feasible financial plan. Remember, for a plan to be effective, it has to be well-thought, comprehensive and with an eye on the future.
Simply put, a financial plan has to be planned by individuals keeping in mind their stage in life cycle and their needs.

We give you a seven-point checklist to form your financial plan. Click here.

Who requires financial planning?

Everyone. Whoever has money and wants to utilize it in the best possible way, then financial and investment planning is a must.
As the old adage goes – If one is failing to plan, they are surely planning to fail.

Good and thoughtful planning is the cornerstone of an individual's good financial health. Click here know more.

How it is different from wealth management?

Wealth management and financial planning are fundamentally similar. However, there is a key difference – you can only manage wealth if you already have it. Financial planning, on the other hand, is even for those who aim to amass wealth.

We will look at this in detail in further sections. Click here.

Why should you make a financial plan?

Not enough can be said about the need for financial planning. We list some of the advantages, which can have far reaching positive effects on one's life.

To discover why planning is important for you, Click here.

What should a financial plan include?

Every financial plan differs. This is because it has to be tailored to suit an individual's needs and wants. That said, there are some components every plan should cover.

While these factors should have precedence, care should be taken than other things that may affect your financial goal should also be covered. Click here.

How to go About Financial Planning By Kotak Securities®

What is goal setting?

How can you plan a journey without knowing where you are going? A goal is the first and most important step in financial and investment planning. This acts as a foundation of all the following parts of the planning process. For this reason, the process of setting your goal is important.

Care must be taken that the goals are realistic and achievable. Click here know more.

Why is goal prioritization important?

We rarely have only one thing to achieve in life. While planning your finances, you have to take in consideration all your goals, be it something as large as a Rs 100 crore-retirement allowance or as small as that branded T-shirt you have been eyeing on your way from work.

This is why you need to prioritize your goals. They are not equally important, and some need to be achieved first. Efficient prioritization is the key to good planning. Here’s a look at how to prioritize your goals. Click here.

Assessing the current situation.

Dreams and imagination are wonderful, no doubts. But we live in the reality. So, everyone has to understand their current state of life before planning for the future. Simply put, the financial plan is like a bridge connecting your today and future. So your goals and current assessment act as the platform. And you cannot have a strong bridge on rickety bases.

For this reason, introspection of your current situation is the starting point to bridge the gap between the present and the future. Let’s look at some things to take into consideration while assessing your present. Click here.

What next?

You have now studied all the important parts of the derivatives market - what are derivatives contracts, different types, futures and options, call and put contracts, and how to trade these. Congrats! Let’s wrap this section and move on to the next - mutual funds. Click here

Why Capital gains report?
  • Snapshot of profit/loss
  • Reflects performance of your portfolio
  • Helps compute taxes
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