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.
