DIY Financial and Investments Planning

Tips for Do It Yourself DIY Financial Planning and Investments Planning


I am a financial and investments advisor, and have been advising families for over a decade. At the risk of becoming redundant, let me try and make diy financial planning and investing a simple and fun task for you.

DIY financial planning is the process of defining one’s futuristic goals to be achieved by properly managing savings and investments. These goals could range from buying a car, buying a house, planning for holidays, buying expensive jewellery to planning for children’s education and finally post – retirement income flows. Adequate health insurance and life cover insurance is also a part of this planning process.

The investments must match the timelines to your goals and therefore the choice of products is a critical element of this planning. The amount of risk that you take and the way your cash flows allow you to invest are also to be carefully chalked out.

The world is ever changing and so are the economies and markets in it. Given that these changes also affect your financial planning & investments, it is imperative to manage these investments continually and diligently.

Step 1 of DIY Financial Planning: Know your Savings

  • Pick up your salary slip and note down your monthly take home.
  • List down all your expenses – your monthly rent, grocery expenses, all utility bills, shopping bills, salaries of driver, maids etc.
  • Add to this your car insurance, home insurance and all EMIs.
  • Now estimate the cost of all holidays you want to plan in the year, and divide this figure by 12.

You should be saving at least 15% of your net take home salary, and if not, then please cut down all unnecessary expenses.

Step 2: Asses what you have?

  • Make a list of all your existing investments and assets – such as savings a/c balances, stocks, mutual funds, insurances, real estate (that you don’t live in), PPF, EPF and other retirals.
  • Do the same for all loans – home loan, car loan, education loan, and credit card outstanding bills.

Even if your total loans are more than your total investments, don’t worry. Just ensure that you save at least 15% of your salary after paying all EMIs and monthly credit card bills.

Step 3: Determine where you’re headed – Develop Financial Goals

  • Envision how you want to live your life and what you want to spend your money on. Be true to yourself and think of all the things you want to achieve in the very short term to very long term – your next car purchase, your new home, children’s welfare fund, your retirement corpus, your business capital.
  • These goals need to be specific, quantifiable, realistic, and achievable.
  • Now build a timeline for all these Financial Goals – short, intermediate, and long term.

Please do remember to categorise these goals as “What you Need to Do” and “What You Want to Do”.

Step 4: How much to Invest?

  • Turn your focus to the financial goals you flagged off as “What You Need to Do”, and Rank them from 1 to 100 (1 being the most important).
  • Assign your various existing investments to the goals listed down. Keep in mind that you cannot withdraw your PPF investments before 15 yrs or redeem your ELSS fund before 3 yrs.
  • Use financial calculators to figure out how much you need to invest monthly to achieve these separate goals.
  • Note down these amounts and decide which goals you want to start investing for today.

Before we move on, please understand that the products you select to invest your money into should depend only and only on the answer to the question – “When you want the money?” (Time Horizon). You can take higher risk if you have a long-term horizon, and need to consider safer options is the time left is short.

Step 5: Where to Invest?

  • The investment products portfolio that you build needs to be line with your risk – taking capacity and your time horizon.
  • Evaluate all available options and do not put all eggs into one basket.
  • Equity mutual funds, balanced funds, bond funds, gold funds, Fixed Deposits, Insurance linked Savings plans are some of the options available.
  • Start your monthly SIPs into Mutual Funds, and maintain a disciplined approach to growing your money.

Consider these questions to help you determine which type of diy financial planning and investment approach to pursue:

  • How active of a role do you want to play in decision-making?
  • How much time are you able to commit to managing your portfolio?
  • How experienced are you with investing and how much assistance do you need?

Good luck!

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