2. FINANCIAL
PLANNING
Financial planning is creating a comprehensive plan
to reach your financial goals. By considering your
whole financial life, it provides guidance on
reaching both small, short-term targets as well as
larger, long-term ones.
4. NEED FOR
FINANCIAL
PLANNING
Financial planning aims at
ensuring that a household has
adequate income or
resources to meet current and
future expenses and needs.
Financial planning refers to the
process of streamlining the
income, expenses, assets and
liabilities of the household to
take care of both current and
future need for funds.
6. FINANCIAL
GOALS
Goals described in terms of the money
required to meet it at a point of time
in future, is called a financial goal.
Financial goal is the term used to describe the
future needs of an individual that require
funding.
It specifies the sum of money required in order
to meet the needs and when it is required.
7. Financial Goal Contains Two Important Components:
Goal Value
Time To Goal Or Investment Horizon
8. Time to Goal or Investment Horizon
Investment horizon typically refers to the
length of time an investor expects to hold
an investment before selling it. It can vary
widely depending on the investor's goals,
risk tolerance, and the type of investment.
Short-term investors might have a horizon
of days, weeks, or months, while long-term
investors might hold investments for years
or even decades. The investment horizon
often influences the choice of investment
vehicles and strategies
GoalValue
The goal value that is
relevant to a financial plan is
not the current cost of the
goal but the amount of
money required for the goal
at the time when it has to be
met. The current cost of the
goal has to be converted to
the value in future.