Tips To Ensure a Successful Financial Independence Plan
Even if you have determined a set of financial plans for yourself, be they market investment, real estate, or retirement, you must seek to coordinate these plans to maximize your returns. To help you achieve this, we outline the crucial 7 steps to financial planning that will allow you to reach your goals, within the time that you require, with tax benefits, and with minimal risk:
1) Emergency Cash Reserves. Always set aside 3- 6 months of your salary in an account from which you can withdraw money at short notice without incurring any penalty. For any short term unexpected expenditures, try to avoid using credit cards and use this cash instead.
2) Risk Management. Insurance is the surest form of risk management. So, insure your car, home, and other significant assets. You may also consider life insurance to help compensate for lost income and repay debts in case of death. While finalizing your insurance option, always choose the insurance type that suits your requirements, and work out the necessary amount of coverage which is affordable for you.
3) Estate Plan. The basic features of a personal estate plan are a will, and a durable power of attorney as provision for your financial and medical care. In case of larger estates, you may require, in addition, a living trust, marital trusts, and charitable trusts. These will ensure that your assets are maintained and passed on to your future generations.
4) Goal Setting. This is the coordinating framework for your financial plan. Whenever you receive an investment offer, always refer it to your overall financial goals. Ask yourself whether it is conducive or productive for, and suits, your goals. This commitment to your goals will help you remain focused in the long run.
5) Investments. You need to have an asset allocation plan customized to meet your goals and to keep the element of risk within limits you find acceptable. Without this, your investments will be subject merely to the vagaries of the economy instead of being directed by your requirements.
6) Retirement Plans. The income for supplementing your social security will derive from defined contribution plans and benefit plans. During your working life, try to make as much yearly contributions to these set plans as possible. These funds grow fast as a result of tax deferral, and since they are sourced right from your paycheck, are relatively painless.
7) Tax Planning. This means taking advantage of all the possible tax deductions and tax deferred plans that you are permitted by law, as well as using tax credits wherever you are eligible. A good tax plan may save you thousands of dollars in taxes.
If you feel that you can’t handle all this on your own, send a mail to firstname.lastname@example.org to devise a comprehensive plan according to what your assets and your needs.
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