Folks may dreams of accumulating a colossal corpus during their B-school life, but only a few are actually able to hook it sooner than later…

Future financial wealth creation is a primarily a function of adequate planning and budgeting in the present. Hence, firms and individuals who envision to proliferate wealth prospects, well-plan their current expenditures and investments.

Financial planning should be given its due weightage as it plays important role in our lives. A glimpse of where in life financial planning can make a positive impact is –

  • Taking care of immediate necessities and desires such as monthly household expenses, marriages in the family, get-together with friends to upcoming Euro trip… and the list goes on.
  • Educational expenses of next generation or a self skill upgrade
  • Medical coverage cost for family, coverage for specific ailments specifically parents and grandparents; not generally covered in corporate or self/floating insurance plans.
  • Retirement planning; whether you dream to chill in a Goan shack with a bottle of beer, own and live in a resort or relax on a comfortable couch at home with family.
  • All-round Estate management encompassing monitoring, maintenance, control, division, valuation, acquisition, disposal and succession planning of property.
  • Debt and installment payoffs whether it is vehicle loan, home loan, monthly insurance premiums, mortgages, secured and unsecured personal loan, business loans etc.
  • Philanthropic dispositions and community service whether it is to pay off or in memory of a loved one.

Essentially, financial planning and wealth creation, by word and spirit, involves comprehensive mapping of diverse elements into a master plan. It also entails setting up of short term and long term objectives in relation to tax planning, asset management, cash flow management, investment plan, insurance, estate planning and many other aspects of one’s financial well being.

Target wealth creation can be achieved either by making new investments, phased in a planned manner in units of time period or an over-time growth in value of existing assets. Though the latter is largely a function of past decisions, it can still be maneuvered to gain the spiral effect. As an example, if the base investment is in equity, bringing agility and diversification in the portfolio may lead to manifold increase in returns; which will further lead to future wealth creation.

A few preemptive fallacies one needs to avoid while planning for long term financial objectives-

Issue # Most of the times individuals undermine their own requirements and preferences leading to poor liquidity coverage and resource mis-allocation.

Solution – Since the available resource stack is predefined, it is important to draw a clear line between expenditure and saving targets.

Issue #  At times, there is inordinate focus on a solitary factor which delimits the area of play and in turn returns. For example, allocating all the savings to mid cap stocks or utilizing all the available funds to buy agro land.

Solution –  It is important that the investments are well diversified to hedge the risk of stagnant or negative long term returns.

It is apt and advisable to consider expert advice and strategically model the investments to derive maximum yield and hence the services of an insurance agent or estate manager.

Hiring experts for a specific line in financial planning may be okay for hindsight needs but since it surely means downsizing the area of action, and may in turn lead to lower wealth creation than expected in the longer run. Hence, the need for holistic rather than selective approach.

After all, “Prosperity is a way of living; building wealth is a marathon, and not a sprint”.

The author of this article is finance professional with 20+ years of experience. If you need to reach out, do write us back at

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