5 Basic things to follow before Investing

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5 Basic things to follow before Investing

The Proper Financial Planning tells you that one should follow the basic initiatives before going to Invest. Investment may be like Equity, Real Estate, Business, AIF or any investments which are considered as Risky. There are five basic initiatives are said to be as a Financial Backup to protect you.

If your Personal Finance Advisor does not tell you about this, then you should ask this for your safe. Generally, the Financial Advisor is not just a Stock Broker or Insurance Agent. Even the Mutual Fund distributor who is selling Mutual Fund Products alone is not said to be a Complete Financial Advisor.

A Personal Finance Advisor is like your Family doctor, where he cares and knows about your Financial Status and Family members. He really knows what you need exactly based on Personal Finance, appoint a nominee and plan for writing a Will.

So, he should plan for the basic initiatives as per Financial Planning before you are going to invest. Yes, there is a fee for the Advisor, he cannot give his efforts as Free. Then only we can avoid the Mis-selling on Financial Products. The Financial Advisor is a needy for anyone in the long term who needs to create wealth, plan for his Financial Goals.

  • Life Insurance (Term Plan)
  • Medical Insurance (Health)
  • Emergency Fund Creation
  • Reducing Debt
  • Retirement Planning

If you do not understand on Financial matters, you should ask the advisor rather than DIY. If the Advisor job is does not work for you, be prepare to seek a new advisor. At the same time, changing a Family Financial Advisor often is not a healthy in the long run.

Getting a Basic Term Plan and Health Insurance is essential to protect your Family’s Financial Status. It won’t give you a great wealth, but can save your existing and upcoming savings. It’s like a Hedging when we are preparing for the unexpected event.

Planning for an Emergency Fund is important in everyone’s life – There is no need to compare with Lower, Middle or Upper income. It’s a mandatory to survive in the Crisis times. In India, we have seen in Temples that there is a Kalasam. The Kalasam is an inverted pot with pointed head facing the sky, is one of the prominent symbol of Temples. These are made of metal and some of stone.

Some food grains are stored in that Kalasam. So, it would help for our food needs during the times of Natural Disaster or any Food Crisis. This too for the Emergency Funds. The Emergency Fund amount should be around 6 – 12 months of your monthly income (including liabilities).

Do not be so eager to get over the Debt and earn in the Stocks. The Stock Market is an investment opportunity to create wealth but with high risk. Don’t borrow and invest in stocks. Getting a Margin exposure and speculating in stocks is highly dangerous, it will down you in the Debt Trap. So, reduce your existing debt or make you Debt free before going to invest.

Financial Planning tells that why your Retirement is more important than your Child’s Higher Education. There is always a life span for your Children and the Education they need to learn. But relying on them for your Retirement will not be right.

Plan for your Retirement Savings when you are getting the First Paycheck or Cash Flow from Business. It’s your duty to raise the Children’s Standard. Do not force them to look at you in return.

The Goal for your Children is in the Next Generation. You have to make your Retirement Planning as well. The Relationship in the Family is in Love, but not just the Money.

Kindly share your views / comments with a smile 🙂



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