Topic: I would like to know about benefits of financial planning and what exactly you do in financial plan

This message was edited 1 time. Last update was at 31/03/2009 08:22:32

I am not aware of the basics of any financial plan? What is the process, and as I have heard from many people how is it vital for good financial future? Can you please advise and send a sample report on the same please

Financial Planning is the process to help an individual to achieve their financial goals in such manner so that an individual can live a tension free life. Financial planning is a critical exercise in ensuring long-term financial security. A financial plan is a road map to help you achieve your life’s financial goals.

The Financial Planning process consists of the following basic six steps:

1. Establishing and defining the client-Planner relationship.
2. Gathering client data, including goals.
3. Analyzing and evaluating your financial status.
4. Developing and presenting Financial Planning recommendations and/or alternatives.
5. Implementing the Financial Planning recommendations.
6. Monitoring the Financial Planning recommendations.

Free vs paid financial plans – what is the difference? Many wealth management services provide a free financial plan, which is generated instantly? How beneficial is any such financial plan?

Before getting your financial plan done by anyone make sure that whether it eliminate the major causes of distrust, whether it by take away the potential for conflict of interest, whether your best interests has been considered first and whether it considers all the aspects of financial planning.

Free Financial Plan is one where a planner does not charge you for any financial planning, but they earn through product commission and fee. Paid financial plans are the plans which are charged by Financial Planners for your financial plans. They offer review of your portfolio too. Financial Planning is very beneficial as it helps you to keep a disciplined investment approach. It keeps you on track while achieving any financial goal.

This message was edited 1 time. Last update was at 23/09/2009 11:18:35

Financial planning is always in the context of - What are you planning for? Are you planning for just avoiding breakdo wns or to create financial freedom and abundance in your life.
If you are planning for 1st one, then you will have to select so called safer investments with lower returns. These are Postal schemes, PPF, NSC, FD, etc. which give a return of around 8%. I said so called safe because these returns often are lower than the inflation rates and thus depletes wealth.

If you are looking for 2nd option, then you need to cover 3 stages:
1) Assurance - How much assurance do you need for replacing the earning member's human capital. I.e. if the died today, how much money does the family need to live the lifestyle from the ROI. The tool is Insurance and the best one for this stage is a term insurance for the appropriate amount for the bread earner.
2) Accumulation: Here you are aacumulating enough wealth, such that you can then have a chicken that gives you golden egg every month. In other words, you are building a sufficient corpus to give you returns more than your desired life style expenses. You are living from the egg and not needing to touch the chicken, while it keeps growing to beat inflation and taxes. Given that this is usually a long term planning, you may go for equity investments through diversified mutual funds. All you need to ask the agent is to show you schemes that have been giving moe than 25% yearly returns for more than last 20 years. It will multiply your investments the fastest.

Financial Planning Software is basically a computer application which is mainly used by the managers to calculate the market strategies and set up their business plans.

Advantages of financial planning
When compared to hiring a professional business plan consultant, this software is relatively inexpensive. Another big advantage of business plan software is that when you use business plan software to create your own business plan, you can make changes to it anytime you need to. This software also deals with many aspects of business management. It provides guidance on how to write down a flawless business plan. For example, before making a business plan, a manager should have a clear picture of what he is trying to achieve. If the business plan is made keeping this thing into mind, it will automatically improve the profit earning capacity of your business.

Why Financial Plan Software is needed?
The software helps by using implementations of rules by experts in the field of business plans. Financial planning software is a boon to those who have just started their business. The software provides the user with the various fundamental and crucial steps that need to be taken when starting a new business.
Financial planning Software is beneficial for -
• Marketing and Advertising
• Expanding Business
• E-business Management
• Legal Information
• Business Purchasing, etc.
This software also provides guidance and tips to buy another business or potentials to merge two corporations into one. Every buyer has to consider this procedure before proceeding into any further action. You can also communicate online with experts on a specific topic. This service comes along with the business plan software package.

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