Sunday, March 15, 2009

Plan your finances for secure future

Bad times are here again and everyone is wondering when this bad phase would end. There is so much pain in the system that all the efforts made are proving to be less if not sufficient. Common man is most hurt in this phenomenon at time when there is no security of the job. More and more people are declaring bankruptcies and credit markets has literally squeezed.

Things were not bad a year back. People were earning good and prospering in their careers. However the only mistake everyone did was not to plan their finances. Most of their investment was either made in stock markets or went down to pay the hefty housing loan. The end result was little cash which proved insufficient by any means. If one goes by planning rules than to be on safer side you need to have six month of emergency funds available in liquid form. Apart from emergency funds an asset base needs to be build out by equally dividing your assets in various forms. This includes a division in the form of equity or debt depending upon your age. While people at young age should invest more in equity while the baby boomers should invest more in debt instruments. However investment should only be made in equity if you have spare cash which you would not need for long time.

It is never late and this time too there is a lesson to be learnt. One should make a habit from now on to work on single plan and should not deviate because of greed. Normally we get swayed away when someone shows us big dreams and repent when same gets broken. It is important to dream realistically and plan in order to avoid surprises in future.                                                              

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