Every person’s financial needs are different and unique and same way each family financial needs also differs. Financial needs generally depend on individual’s age, current financial health, his earning capacity, his family structure, his responsibilities, his education and skills and life goals.
It is very important to anticipate your financial needs well in advance before starting financial journey. In every individual’s life financial needs keep on changing in very phase of life. Individuals should anticipate his/her financial needs well in advance before he/she enters in different phase of life.
What are the different stages of life and how can we anticipate the financial needs in every stage of our life..
Childhood Stage: Childhood is a period of dependency that usually lasts until children finish their full time education. In this stage, the financial needs are met by parents, which is mostly the education of their kids. If parents anticipate the future cost of education well in advance and plan accordingly children will not have to look for education loan in the future. One more thing what parents can in anticipation do is that they can inculcate the value of money and saving habits.
Young Investor : In this stage, investor is young, single professional with long term focus on wealth creation and investment horizon. In this stage if you properly anticipate your retirement goal accurately and invest towards goal with dedication your retirement will be peaceful.. You should plan to accumulate as much wealth over next 30 years to retirement as possible and is willing to tolerate a high degree of portfolio volatility.
Young couple with kids: In this stage investor is married has children and is in his mid 30s. His focus is now on kids education and marriage planning. Here if parents anticipate the required corpus accurately and with being very conservative have adequate exposure to equity can accumulate sizable amount for both the goals. In this stage too retirement should also be a primary goal.
Mature couple with grown up children: In this stage , the investor is a couple with an age of around 45–50 who is looking to work for another 10 to 15 years and then retire. They have responsibility towards higher education of one or two of their children as well as retirement planning is very important. Here the anticipation of the financial needs is that if any shortfall in retirement kitty because of late start or over conservative approach then it is the time to pump more money for this goal but with proper asset allocation as per the age and risk profile.
Retired Couple : In this stage investor s retired couple both aged 60 and above with independent children, married and settled down. Here capital protection is the most important aim. So in anticipation if they know the correct financial instrument to invest in they can secure their retirement kitty, They also need to consider the inflation factor into account and can take 10 to 15% exposure in equity with calculated risk.
It is very important for an individual to identify your stages of life cycle and accordingly anticipate your needs and invest as per proper asset allocation and risk taking capacity . Good SEBI registered Investment Advisor helps you in this journey well and make you worry free. You can count on us and be financially independent under our expert guidance.