Financial planning is a step-by-step approach to meet life goals : Raviraj Gharat


By Akhil Gore

Businessfortnight had an interview with a financial advisor, Raviraj Gharat. He is an expert in financial planning, having experience of 15 years in equity investment, and also runs his Indore based firm ‘Riva Financial’.

Excerpts from interview:

Q: What is Financial Planning?

A: Financial planning is a large domain that covers different types of insurance, funds, and investment. I will tell you about the fundamental steps of Financial Planning that one should follow.

1. Health Insurance.

2. Personal accident cover and critical illness cover.

3. Calculated Term Insurance.

4. Emergency fund.

5. Investment.

These are the steps that one should keep in mind while starting financial planning. Many people ignore the importance of 'Emergency funds' but the foremost important in today's time. Every person should have six months of his salary as an emergency fund.

Q. What is a mutual fund? Is it beneficial for the growth of our money?

A mutual fund is essentially a common pool of money in which investors put in their contribution. This collective amount is then invested according to the investment objective of the fund.

The money could be invested in stocks, bonds, money market instruments, gold, and other similar assets. These funds are operated by money managers or fund managers, who by investing in line with the specified investment objective attempt to create growth or appreciation of the amount for investors.

For example, a debt fund will have its specified objective to invest in fixed income instruments or products like bonds, government securities, debentures, etc. Similarly, an equity fund will invest in stocks and other equity instruments.

If we talk about the benefits, “One of the key advantages of investing in a mutual fund is that each investor (even with a small investment) gets access to professional money management and expertise. Also, it would be very difficult for an investor to create a diversified portfolio of investments on his own with a small amount of money. With mutual funds, each investor participates proportionally in the return the scheme generates.

Each unit gets a proportional share of gain (or bears loss) from the fund. In which the investor does not have to worry much about the return of money”, he added.

Q. Should we go with investing in physical assets?

A: I would say 'yes' and 'no' both. It varies from person to person in what capacity he wants to spend, and in what investment process he believes inn.who deliberately buy physical assets for investment purposes value their tangible goods as a form of value diversification and as a hedge against economic uncertainty.

Some might believe that tangible assets represent a higher chance at high returns than capital assets, such as stocks and bonds. You should consider investing in physical assets if and when they make sense as part of your overall financial plan.

Tangible assets exist outside of an account balance, financial statement, or exchange market. Put another way, physical assets have a physical form and natural value. Likely, you have already invested in physical assets in some way – you may have bought a house or car, collected a piece of art, kept a family heirloom, or bought gold or silver jewelry.

Some investment analysts consider physical assets, such as short-term securities and cash equivalents in deposit accounts, to be tangible assets.

On my recommendation, “Financial Planning is a must to an individual for a satisfying FINANCIAL HEALTH
It is never the same for each and every individual and always varies person to person. So never Copy-Paste some elses portfolio”.


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