Financial Security & Freedom- Is it a reality?

Everyone aspire to be independent. One will be able to enjoy the benefits of freedom only if he feels secure. Do such a life really exist? Can we all attain that freedom in spite of our different living conditions?


Security and Freedom are interlinked.The same applies to personal finance management also. We think that the most important thing in financial security is high salary. But remember that getting a high salary alone will not take you anywhere . We need to actively make a good financial  plan well in advance to attain it. 

Safety & Security should be given top priority in financial management also. As we first put seat belt in a car to be safe, in financial planning also, insurance play such a similar role. Insurance provides protection against the financial risks. Insurance is needed for Life and Health risks. Hence Life Insurance is a must for all irrespective of the life stage like a person is single or married or young or old. It is worth to note that joining life insurance at a younger age provides better benefits than joining a life insurance at a later stage. 

Health insurance is another insurance requirement that is required to take care of medical expenses in case of hospitalisation. Health insurance can be taken as a family floater scheme where the sum assured can be spent by one member or by all members of the family. The sum assured can be augmented by opting for a top up or super top up policy instead of buying a basic policy with high coverage. It saves on the premium amount.

As we progress towards the financial freedom we need to identify and segregate money into 3 different allocation by identifying the goals and time duration

1.Emergency funds
2.Short Term Goals
3.Medium and Long Term Goals

Emergency funds is to take care of the sudden requirement that arises unexpectedly. It can be like hospitalization, money needed during the period of a change of job etc. One should allocate approximately 6 months expenses towards meeting the emergency needs. The feature of this allocation is that we can access to the money within 1 or 2 days’ time. So this money can be allocated partly in savings bank account or liquid funds category in mutual funds.

Short term goals are the needs that will be arising in a period of 1-3 years. It can be like buying or changing a car, or child going to join for higher studies within 3 years or planning for an international holiday in 3 year’s time etc. In this new technological era, people change mobiles in every 3 years. So this can also be considered as short term goal and you can start allocating money towards that goal. Money for this need can be invested in debt funds of mutual funds or other fixed income products.

Medium- and long-term goals are the needs that arises after a period of more than3 and 5 years respectively. It can be like down payment for a new home or saving for retirement etc. Money for long term needs can be invested in direct equity or equity mutual funds.  Regular savings/investment habit can benefit the investors in meeting their needs. Before investing in equity or equity mutual funds, one should self-aware of his risk tolerance. If you are a conservative investor, should opt for low risk equity funds or fixed income products. All should actively consider and allocate money especially for retirement life. 

By this way we can enjoy Financial freedom, which basically ensures money flow to us as  per our needs and we are able to maintain the lifestyle  all the time.

 (For queries please contact on 8547442952)

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