Monday 5 April 2021

Real Reasons; Why Financial Plan Fail?


Real Reasons; Why Financial Plan Fail?


Financial Planning is critical but the most important if you wish to accomplish  your family's monetary goals and become better set up to manage unexpected possibilities in life. In every stage of life there’s need of some finance to accomplish your objectives.

Before starting financial planning you need to ask yourself…

Why do I do this?

What is the purpose?

What is my goal?

What is the time?

A many individuals have begun understanding this and embraced the monetary arranging measure. If you know, what the reasons behind financial plaining failure are, you can avoid these mistakes and make a very successful financial plan for yourself. Your financial plan should have been really clear focused. At time of counseling a monetary organizer, you must know your earnings and savings and you can smooth out your funds and cash flow.


Focus on goal not on return

Your focus should be on the objectives of your life, and should not be on the returns, your focus should be on your life, if you remove life out of your financial plan, your financial plans have no meaning at all. So the first question would be how to answer these questions.

When you do a financial planning?

Why do I do this?

What is the purpose?

What is my goal?

What is the time that I have to ask you this particular goal?

What are the option in front of you?


Try to choose a product taking out life on this financial plan. The first plan is the first seed of be for be focusing not on the return but you should be focusing on the outcome. You should not be focusing on the product you should be focusing on your goal. So if you want to create a successful goal.


Identify what is your life goal?

What are my resources?

Do the SWOT analysis

What is my strength?

What is my weakness?

What is my opportunities?

What is my threat?


Once you get an answer then, the product and returns everything will come later...


Why people fail in financial plan is because they embraced Excel sheet model of financial planning, may spreadsheets are great tools, they have sold to mankind so many things in life, we do not fit everything into an Excel sheet. Your life doesn't go like an Excel sheet. People think that they make 16% profit from the stock market, get settled to 30th and they will be ready for a retirement in 45 years or 50s or 60s, unfortunately this modelling fails very badly. The right to choose is a common sense, think about it, make it understandable for you and also need to understand that everything will not go as your plans. Your focus should be on the outcome not just return.


Too Many Options to invest and Searching for ideal products

 why Financial plans fails, when there are multiple options available in front of people, people fail to choose the least risky solution for the ask.


If you have three options

 --- To invest in a mutual Fund,

--- Invest in the stock market,

or invest into a bank by a fix deposit.


You will pick to fix it in the bank as fixed deposit as it can unsure that you reach your goals. If you have multiple options in front of you, it is very essential that you choose the least risky one.

 You are investing your money, you should remember that the bank and interest that you get from depositing your money is the opportunity cost of bank is giving you.


You should try to aim something little bit over and above.

What banks can give you; Bank rates are ultimately linked to the Market. The whole purpose of investing in inflation and create more value for this money in your side. Leaving your savings in the bank is great for everyday use, but when it comes to investment cash, get it out right quick. You'll be taking very high risk by getting low rates of interest by putting you money in bank as inflation is much higher. Can't you put common sense and try to generate something more than 3%. Dare to be different! Don't be afraid to take calculated risks. Those who taken risk in investing in crypto especially before 2017 now on great fortune.


 Lack of long-term perspective

If you look at price chart of Gold, Real Estate and even share market, you surprise to see that with a small investment you can able to get huge wealth generation but you still over look time it taken. All investments gives huge return if you know the power of the compounding. Compound interest is the eighth wonder of the world.—Albert Einstein.


Avoid to fall prey of Advertisements

 It is the reason why financial plans Fails, people tend to neglect basic principles of investment and so much fixated with the return oriented advertisement bombardment by the YouTubers. These videos forget what taxation can make for huge expense to your investment. Let us say that you earn 10% and if you have to pay 33% tax on that earnings. Tt makes a lot of sense for you to invest in a tax-free investment. On other hand you can get 8% rate of return but no Taxation on it.


Having a Debt. 

Debt is antonym of investment. If you are giving EMI, it’s just so difficult to think about investment and making a goal oriented financial planning.  Nothing can stall or derail your financial progress like debt. So if possible to fall on bank’s call to have Debt for house or car even not marriage. If you borrow to buy things that lose value, with interest payments you pay much more for the article than it cost initially especially new cars, furniture etc.


Need of Professional help.

 If you try to increase your wealth too much for the future and neglect your today one major reason why Financial plans fail, and it is because you fail to take a professional help in designing the financial goals.  No schools here in India teach about personal finance. To develop investment skills you need to get guidance of someone. Financial planner is your family friend and his main job is to guide your emotions from the unwanted directions. It may take your money into the right place where it should remain. You don't hesitate to take the help of a financial planner. if you fall ill, you go to a doctor, if you have a problem, you look for an expert in this particular field. Your money handling also need an expert opinion.

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