#Financial-Planning  #Investment  #Saving  #Finance 

1.1 Budgeting

What is Budgeting?

  • Budgeting is simply balancing your expenses with your income.
  • It’s a plan to spend your money 💰

What is a Budget?

  • To ensure that you will always have enough money for the things you need.
  • And have some liquid money for tough times like covid-19

50, 30, 20 Rule

  • The famous 50-20-30 budget rule
* 50% --> Needs:
  * 50% of your income can be spent on needs
  * Such as Housing, Food, Education expense, etc

* 30% --> Wants 💸:
  * Max 30% of your income can be spent on your desire
  * Like buying an expensive phone instead of a budget phone

* 20% --> Saving:
  * Allocate atleast 20% of your net income to savings/investments
  * In bank, MF, stocks, bonds etc

1.2 Why Saving/Investment?

  • You can use it to fulfill your future goals
  • Useful for emergency purposes.
  • Create retirement corpus.

Goals 🎯 Types

  • Short Term –> Travel ✈️
  • Medium Term –> Marrige 👫, Education 🎓
  • Long Term –> Retirement 🏖

Make SMART Goals

  • Specific
    • What do I want to accomplish?
    • Well-defined, clear, and unambiguous
  • Measurable
    • How do I know if I have reached my goal?
    • With specific criteria that measure your progress toward the accomplishment of the goal
  • Achievable
    • Do I have the resources and capabilities to achieve the goal?
    • Attainable and not impossible to achieve
  • Realistic
    • Is the goal realistic and within reach?
    • Within reach, realistic, and relevant to your life purpose
  • Timely
    • By when do you want to achieve your goal?
    • With a clearly defined timeline, including a starting date and a target date. The purpose is to create urgency.

1.3 Investment

Parameters to choose an Investment scheme

  • Safety/Risk
    • Safety of your principal
  • Liquidity
    • Easily buy and sell
  • Returns 
# Example
* Banks 🏦:
  * High Safety and Liquidity
  * But Low Returns
* Equity
  * High Liquidity and Return 
  * But Low Safety
* So, choose according to your risk profile.

Risk vs Return on Investment

  • High Risk –> High potential Return
  • Low Risk –> Low potential Return

Risk management of Investment

  • Famous saying –> Never put all your eggs in 1 basket
    • The same goes with investment - Follow Asset Allocations
  • Always have a diversified portfolio

1.4 Asset Allocations

  • First safe your money, then make some money
  • Asset allocation is the process of investing across diversified asset classes
Risk profile based asset allocation
    1. Conservative
    2. Balanced
    3. Growth
    4. Aggressive.
  • Aggressive
    • For high risk-taker
  • Growth
    • For low age group
  • Moderate
    • For moderate age group
  • Conservative
    • For old age group
Allocation sample:
* 70% --> Equity:
    * To get high returns, investment should be for long term
* 10%
    * Bond/FD
    * Short term goals
* 15%
    * Hedging option
* 5%
    * Opportunity investment
  • Higher equity allocation means Higher Risk
    • Equity –> (100 - age)%
    • At age 30, max 70% to equity
## NOTE:
* Equity Orient portfolio
    * Investment should be for more than `5 yrs`
    * 15 - 20 stocks portfolio at max
    * Minimum exposure of 3% and maximum 10% to avoid concentration risk

1.5 Type of Investment schemes

  1. Banks 🏦
    • Fixed Deposit(FD)
    • Recurring Deposits(RD)
  2. Post office schemes (POS) ✉️
    • Postal monthly income scheme
    • National Savings Certificate(NSC)
    • Kisan Vikas Patra(KVP) etc
  3. Bonds/Debentures
  4. Company Fixed deposit
    • Risky if the company goes bankruptcy
    • So, select companies which has less potential of being bankrupt
  5. Gold/Silver 🪙
    • Physical Gold
    • Electronic-gold
    • Sovereign Gold Bond(SGB)
  6. Real Estate
    • Direct/physical investment
    • InvITs
  7. Direct Equity Investment
  8. Indirect Equity Investment

Risk of Schemes (Low to High)

  1. POS, FD, NSC, KVP 🥱
  2. MF, PSU Bonds, Corporate FD 😉
  3. Blue Chip stocks, Real Estate, Growth MF, 🤓
  4. Bonds, MF 🙂
  5. Penny Stocks, Commodities 😰

Gyan

  • Prakriti is when a person lives for himself or when his actions are centered towards oneself.
  • Sanskriti is when one lives for the sake of others
  • Vikriti is nothing but distortion in one’s living