According to tax and investment experts, financial planning has three stages — the nascent phase of the career, mid-career and post-retirement phase.
Financial Planning is one of the most important aspects of one’s investment. According to tax and investment experts, financial planning has three stages — the nascent phase of the career, mid-career and post-retirement phase. However, one should start focusing on the financial planning tools in the nascent phase of one’s career. They say it helps attain a financially sound life before as well as after retirement.
Speaking on the importance of financial planning in the early phase of one’s career, Balwant Jain, a Mumbai-based tax and investment expert said, “If an earning individual has started to plan investment and financials in the early phase of career, then the pressure to save for the post-retirement phase goes down and hence the long-term investment goals can be achieved. If anyone is financially dependent on you, then you should first buy a personal accident policy. Personal accident policies come very cheap and the average cost per lakh is between Rs 125 and Rs 200 rupees.”
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Secondly, you should buy a health insurance policy for yourself and for your parents and other dependent family members. The amount of health insurance would depend on the place where you are residing and your lifestyle. “In my opinion, one should have a minimum of five lakhs of health insurance. You should buy a health insurance cover even if your employer provides it because it may happen that your new employer may not provide it to you, in case, you have to leave the present job. In such a situation, your pre-existing disease will not be covered immediately and will have a waiting period of three to four years. In case you have any person financially dependent on you, you need to buy term insurance equal to minimum 12 times of your annual income to safeguard the interest of your dependents,” said Jain.
Batting for an emergency fund, SEBI registered tax and investment expert Manikaran Singhal said, “One should have an emergency fund in the nascent phase of career itself. Such funds become handy in case of job switch or in the worst scenario of job loss, etc.” He said that one should chalk out one’s financial goals so that the suitable products for investments can be mapped with the goals of the earning individual. Singhal said that one should think of making money from money after investing in health and other insurances. If an earning individual does that, he or she can expect a financially sound life post-retirement, said Singhal.
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