ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Financial Planning Is Not Limited To Mutual Fund Investments

Updated on July 21, 2011

As understood by many young investors in India, financial planning is not only limited to investments in mutual funds. Financial planning is none of whatever has been written in finance articles in Indian finance portals. It is just not limited to identifying your goals and multiplying them by straightjacketed formula but it is a lot more than that. One of my young friends is a qualified certified financial planner and makes plans for American clients for a financial firm based in Delhi. According to him, most young investors in India make the mistake of investing in just two types of instruments, equity and debt funds. They think balancing of these two according to your age is the art of financial planning but they need to start by knowing this, invest in as many sectors as are available to you. Do not invest only in equity, but also invest in real estate, invest in gold, invest in international equity diversified funds, and invest in commodities, not only in mutual funds.

Your perfect hedge will come only after you diversify as much as possible. The current world conditions are not very friendly for a businessman. With the things getting from bad to worse, only things most valuable in the future will be commodities, so one should not care whether it is gold or its the food prices, but you are going to see a double digit return on them CAGR (Compound Annual Growth Rate), and it will be very irrational to just limit your self to equity and debt funds and just switching them regularly.

Set your goals, understand investment basics, take the route of diversification, invest consistently, and learn about new investment market products.
Set your goals, understand investment basics, take the route of diversification, invest consistently, and learn about new investment market products.
Financial planning
Financial planning

Go two to three years back and look at the returns of DSPML Gold fund when the market was falling and compare it with the performance of Templeton India Equity Income Fund, which invests in international markets with the devastating performance of India equity funds, you will understand why diversification is important.

A new fund from Mirae Asset Global Investments has opened doors to commodities world so make sure you go for that too.

The above three will not complete majority of your diversification so you can also invest in REITs (Real Estate Investment Trusts) in India or REMF (Real Estate Mutual Funds that invests directly in property.

If you go a little far, you can also invest in currency market but that would be not necessary a lot.

Investing in the above four funds will cover majority of your risks since all these sectors will never fall altogether. This is the major reason why I say that financial planning is not only limited to mutual fund investments as most young investors in India believe but it is a much broader topic.

Also review financial plans regularly including home budget, estate planning, protection with retirement plans, investment in shares and bonds, etc.

So what I have learned are the must have things in the world of financial planning and investment:

  • Well-defined goal and vision
  • Understanding of all major investment instruments
  • Diversification in real sense
  • Discipline and consistency in investment
  • Continuous learning in investment

I will discuss about these must have things in financial planning in my upcoming articles.

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)