Financial Planning

Smart financial decision making is an effective way to make any dreams and plans come true. It is not only about material goods in the form of real estate, a car or expensive clothes. The listed above will rather be a consequence of the improvement in the standard of living. It is not enough to save the money earned. Much more important is making them work for you. It is impossible to solve such a problem without financial planning.

The sooner a person thinks about financial planning, the faster he will achieve his financial goal. Financial planning without understanding brings no result. But almost everyone can break the vicious circle of financial problems and come to a stable income in the future.

After competent planning, the most interesting thing begins – the implementation of the plan, namely:

  • creation of a reserve fund;
  • choosing a financial intermediary;
  • opening accounts according to the plan;
  • investment portfolio formation;
  • investment.

The most popular financial goal voiced by people is to generate passive income. Not working, but having enough money for a decent life is a tempting dream. But in order to turn it into reality, it is necessary to calculate the amount that needs to be saved by a certain date, as well as the amount of regular investments to form a special-purpose capital.

To reach $ 1,000 passive income in 15 years, you need an endowment of $ 240,000. The calculation is based on the forecast that in the future the conservative portfolio will bring 5% per annum. All that remains is to accumulate capital. If initially there are no savings, but there is an opportunity to invest $ 700 monthly in your future at a yield of 8%, everything will work out. Our online calculator will help to simplify the calculations of possible investments and future profits.

You should not give up a dream if it is unreachable here and now. The main thing is to be patient and realistically set priorities, to understand what is more important in life: momentary pleasure or stability in the future and the ability to provide not only yourself, but also your loved ones.

Personal financial plan: your strategy for a stable future

You should not imagine the financial planning process as a one-time generation of a report with real numbers, investment recommendations, taking into account currencies and risks. A personal finance plan is a customizable tool in which all the details serve one thing – achieving a designated financial goal. It is with its definition that work begins, and then a plan is developed to achieve the goal, the stages of its implementation are monitored, and, if necessary, adjustments are made taking into account the events taking place in your life, in the market and in the world.

Goal-oriented investment involves going through 4 successive stages:

  • description and statement of financial goals;
  • determination of priorities, calculation of the amounts required to achieve the goal;
  • formation of an investment strategy;
  • portfolio monitoring and reporting.

You can try to draw up a plan yourself or with the help of financial consultants. The second option guarantees a professional approach, backed up by many years of practice. This means that each stage will be thought out to the smallest detail and implemented in such a way as to get as close as possible to achieving the goal.

Much attention has been paid to the formation of an investment portfolio on webinars and in the knowledge base. Let’s note the main ideas:

  • for each investor, the portfolio is formed on an individual basis;
  • not only investment goals are taken into account, but life circumstances, the investment horizon, the investor’s age, as well as his attitude to risk.

The last factor determines how much you need to invest in highly reliable assets. A simple example: a portfolio of a cautious investor in 40 years should include at least 40% of government bonds of developed countries.

The financial consultant will answer the following questions:

  • what the ratio of moderate, conservative, aggressive assets should be in the portfolio;
  • how much to invest in bonds or stocks, which securities to choose;
  • what regions and in what proportions to choose for investment – Europe, USA or Asia;
  • which funds to give preference to.

There is no ideal portfolio. The choice depends on the goals of the investor and other factors. If you need absolute reliability, choose a conservative portfolio with a yield of up to 2.5% per year. Those who want to increase capital, but are not ready to take a lot of risk, are suitable for a moderate portfolio with partially aggressive instruments and a yield of up to 7% per year. Finally, there is an aggressive portfolio, the annual return of which can be above 15%, but the risk of partial loss of capital is significant.