Taking stock of financial wealth

Dec 31 2013, 08:42 IST
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SummaryAs the new year is about to begin, it is essential for every investors to take stock of their financial wealth

As the new year is about to begin, it is essential for every investors to take stock of their financial wealth. Though developing an investment strategy depends on individual investors’ financial needs, risk appetite, current and desired financial position, etc, it is essential to discuss some of the major areas of concentration such as retirement planning, educational planning, estate planning and insurance which are essential for every individual investor.

Retirement & pension planning

This is an integral part for every individual investor. Here one needs to earn the similar income which will match to that of the earnings prior to one’s retirement from the job or profession. Though easier said than done, one needs to plan well in advance so that the same style of living can be maintained post retirement. In order to achieve this, one needs to answer various questions such as how much is the disposable income? How much corpus to be built at the time of retirement? How one can defer and reduce taxes before and after retirement? These are some of the questions that needs to be assessed while building the best-possible retirement plan.

Education planning

College and higher education is an investment for your children or grandchildren for a lifetime. The income gap between graduate and post-graduates has increased significantly over the last decade. With the cost of a post-graduate education on rise, savings, even a little at a time, can make a big difference. The key is to save what you can, and to invest early, and often.

Estate planning

Generally estate consists of items such as car, home, other real estate, furniture, personal possessions, etc. No matter how large or modest, everyone has an estate and something in common which you can’t take it with you when you die. Before that one needs to control on how those things are given to the people you care most about. To ensure your wishes are carried out, you need to provide instructions stating whom you want to receive something of yours, what you want them to receive, and when they are to receive it. You will, of course, want this to happen with the least amount paid in taxes, legal fees, and court costs. This is estate planning, making a plan in advance and naming whom you want to receive things you own after you die.

Insurance planning

‘Insurance is not for the person who passes away, it is for

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