1. #1

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    You can manage your money without a financial planner

    It is very common to hear financial planners say that you should get your financial plan created by an expert financial planners who is qualified enough create a financial plan for you. However, you need to be beware of these financial planners. Reasons are many. Most of the financial planners lack understanding of requirements and offer ready made solutions to different type of clients.

    So it is not uncommon to hear these financial planners say that you should go for Systematic Investment Plan (SIP) route for the purpose of investment into equity shares. The logic offered is that equity outperforms other investment assets in long run and hence it is the best investment option. Believe me, many people created huge wealth from the period 2008 to 2012 when asset classes such as gold and real estate gave phenomenal return while equity mutual funds even failed to preserve capital.

    So one size fits all is not a good investment strategy and your financial requirements are fulfilled by what you need and not what market offers. Good amount of wealth was created by people in the past when none of them had heard of the new breed called ,ífinancial plannersí nor was anything called as stock market. It is pertinent to note that new economic policy brought all these western concepts of financial planning to Pakistan. However the most important aspect of financial planning is that most of the financial planners do not have their own financial plan and still offer you financial planning solutions.

    Financial planning according to me needs just common sense and I believe all of us have it. So what a person needs is information and proper execution. So what should you do with financial planning? Answer to this question is very simple and can be explained as follows:

    1) Start Early: Start investing when you start earning. Make it a point to save money. Be frugal in beginning of your earning phase. Ensure that you never over spend

    2) Invest Regularly: Make it a point to invest every month. Even if you invest in bank deposit, you investment grows. However, make it a point to invest some money in investment assets such as gold, stock etc.

    3) Buy a House: Buying a house is a leveraged activity. For example, if you invest 25% of house cost, you become owner of house worth 100%. This means that by investing 10 lakhs, you can own a house which has a market price of around 40 lakhs. In a country like Pakistan house prices will never fall sharply as we are pretty active country and continue to grow in terms of population. The demand for houses will grow and house price will also grow. Even if you donít buy a house for investment, you can always use it for the purpose of stay.

    4) Buy Insurance, but donít use insurance as an investment product: Please remember insurance is a product for risk coverage alone

    5) Donít get swayed away by others advice: Stick to your plan and donít get influenced by what newspapers and magazines have to stay. Use information and not advice.

    6) Keep reviewing your plan: Regular checking of performance of investment is essential but remember to remain a long term investor

    7) Be methodical: Prepare balance sheet of your finances. List down your assets (what you own) and liabilities (what you owe). See how your net worth is growing (assets-liabilities). Also keep noting your expenses. This will help you track your expenses

    8) Never Shun Debt: It is always better to invest in traditional investments such as saving certificates etc. They help when things are not going well.

    9) Do tax planning in advance: Never wait for year end to start your tax planning. Do it as the year starts.

    10) Have confidence: Have confidence in yourself and you can do it better than any financial planner.

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