Make Goal Based Investing to Realize Your Financial Goals

Life is all about setting different goals and achieving them one after another. As Tony Robbins said setting goals is the first step in turning the invisible into the visible. When each rupee you invest has a definite purpose behind it, is called Goal based investing.
Goal based financial planning is done for long term, midterm and short term gains. Long term plans usually yield more wealth comparing the other two. A midterm plan could be buying a home where a short term plan may be having a car.
How it is Different from the Traditional Approach
Unlike the traditional approach of investing, goal based investing does not only focus on your risk profile, rather its focus remains on achieving the target. The investment plans should be designed by keeping the goal at the centre.
The focal point of the traditional approach remains in selecting areas that ensure safe returns. It finds a safe and sure path to grow money. Whereas, in Goal based investing, realization of the goals defines its ultimate success. Wealth generation is not the sole target.
Goal based investment plans get designed only after doing a detailed research of the investor's net worth, level of risk-tolerance and financial goals. In case of traditional approach, first the risk quotient is calculated and according to that a pre-designed investment plane gets selected.
Benefits of Goal Based Investing
In life, each rupee you spend is a type investment that yields certain results for you. If your goal based investments are planned, well thought out and work for achieving specific goals then they do not affect each other. The benefits of making goal based investments are-
It engages you in making systematic approach toward a better money management.
It is nothing but a good habit that restricts you from making spur of the moment purchases.
Channelizes your money toward building value assets and wealth through proper financial planning.
Increases the achievability of the financial goals of your life.
You can continuously monitor and make changes to your plan in order to reach closer to your desired financial goals.
How to plan a Goal Based Investing
Planning a goal based investment requires-
You have to make a list of important life goals that you need to achieve. You should prioritize them according to their importance.
Analyze your money needs. It will help you in clustering your investments according to the upcoming life events.
Cluster your investments in three sections- 1) Short-term, 2) Mid-term and 3) Long-Term.
Now choose suitable investment plans and start investing.
Short Term Goal based investments are made to fulfill impending requirements that are going to arise in next 2 years. You have to choose less volatile and low risk areas to invest as you need to turn them into liquid soon.
Mid-term Goal based investments are those where you need the return in next 3-10 years. Long-term goals may include retirement and child's higher education. To meet such kind of goals, you need to accumulate large corpus. For that, you have to give good effort to identify pre-determined asset class and make systematic investment over longer period of time. During the course of time, you should stay invested in your plan irrespective of the short-term market upheavals.

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5 Financial Planning Mistakes

Most of us invest without any planning.
When we see that the fixed deposit rates are higher we invest in fixed deposits. When we see that the stock markets are on a roll and going higher and higher, we buy shares. When we see that everybody is saying that a mutual fund has given outstanding returns in a year, we buy that fund. When gold rates are going higher and higher every day, we curse ourselves for not buying it earlier. When a stock IPO or a bond is issued and everybody is applying, we also do the same. And with the numerous calls from hardcore telecallers, we find it hard to avoid them and ultimately end up in buying an insurance product without any previous plan.
The result of such unplanned investments is however not always bad. But it results in an unnecessary financial burden, which becomes difficult to carry in the long run. Hence the unplanned investment in a fixed deposit may result in good returns from it, but overall low returns. An unplanned investment in the share market or a mutual fund results in a loss and getting stuck for years. An unplanned investment in an insurance product results in lapse of the policy after a few years.
As an intelligent investor we should follow a guideline to investing, ignoring the calls from the telecallers, friends, colleagues and our own lust for more profits. Let's see the 5 common mistakes that an investor commits. Here they are:
Not Having An Objective. We should have an objective, a goal, for our investments. Goal based investments results in the realization of our future dreams. If we have a goal of buying a house or putting our child into a medical school and plan our investments around that, we have a good chance to make that happen in the future. Many of us dream of such things, but never plan their investments to meet that goal.
Wrong Timing. This is the most common of all the mistakes. When making an investment one should pick the right moment. No, I am not talking about "shubh mahurats" or auspicious timing here, I am speaking of the right economical timing. When the economies are not doing good, there are bad economic reviews everywhere and the companies are in doldrums, it's a good time for an investment. Blue chip stocks are available on "sale", fixed deposit rates are hiked due to higher stock market risks and high inflation, real estate prices are attractive due to slump in demands - these are excellent times to invest in these instruments. However, remember that investment timing varies for different types of instruments as each of these react differently in a situation.
Over Investing. People do not allocate their money while investing. An allocation is necessary to spread the risk of investments in different instruments. This allocation should be made with regard to the age and risk profile of an investor. If one invests 70% of his annual funds into shares and the rest in fixed deposits, in his 40s, he is taking a big risk. If a salaried person, invests 80% of his monthly salary in fixed deposits only, is not giving his money a good scope to grow. Over investing is either "putting all the eggs in one basket" or investing all the time. I know people who buy shares almost daily saying that they are investing for the long term. It is critical to understand that investments should be done in an "investment window", an opportunity, which comes once in a while; not all the time.
Not Researching. I know that people are computer-savvy these days and they would certainly research before committing. But how many of us go beyond the tips and research reports to pause and think that these are genuine and not some marketing ploy? Internet is a fantastic tool to research, but there are good sites, which steers an investor in the right direction and there are marketing sites, which in the name of providing research, review and comparisons, try and promote their products. I am not saying that all of these sites are bad or promoting only, but many of them actually are. A research should be based not only on what others say, but also taking one's own situation into consideration and applying a common sense judgment over it.
Not Recording. Although most of us do keep records of their investments, but these seldom reflect the true net-worth or whether an investment is keeping with the plan or not. We keep records for the sake of filing our Income Tax returns only. A proper record should reflect one's net worth, net returns from investments, net income, net expenditure, etc., so that one can plan for the future and keep an eye whether the investments are doing good or not. There are many modern softwares which does all this and more and I will discuss about them in the near future.
These 5 top financial mistakes should be avoided if you are going to make a lot of money in the future. You may be earning a lot of money by getting a handsome salary or having a great business, but it's when you avoid these mistakes, that you have a good chance to survive in the long run called " life".

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Life Changing Investment Mistakes

Investment is the method of generating profits with the money we save. Money is the most important thing in any individual's life. Without money, no one can survive. Therefore we should start saving our money and start investing. Financial Planning is the first step to take. Financial Planning helps us to set us long term and short term goals and according to these goals we can create a plan and spend our money accordingly. If financial planning is not properly devised then we can make many mistakes which can affect our life tremendously. Some of the mistakes we make are discussed below.
"The First Wealth is Health"- Ralph Waldo Emerson
In today's world, not buying a health insurance is the biggest mistake one can ever make. Due to pollution and unhealthy lifestyle, people are getting infected by so many diseases at the early stage of their life. Health is one of the most crucial and important factors in an individual's life and it should not be ignored. There is a saying that "Health is Wealth" and people are so busy in earning for their life, that they often ignore their wealth. Therefore, this crucial factor of life should be backed up by insurance.
Let's take an example:
Mr. Stanley Rosario is a hard working serviceman who is working in a marketing company. One day on the way to his job, he met with an accident. He got so many injuries that he had to be hospitalized. His hospital fees amounted to be Rs 60,000 which is more than his one month salary. Now if he had done a proper financial planning and bought health insurance, he did not have to worry about the hospital fees.
Nowadays life taking diseases like Cancer are very common. The treatment of these diseases is very expensive. A common man cannot afford to pay for these diseases by himself. Health insurance plays a very important role in this case. Health insurance can cover the expenses of treatment of this disease.
Doing financial planning from the day you start earning is very important and buying a health insurance should be included in this financial planning.
Your Best Bet is having a Term Insurance
There are many families especially in India, where there is only one person who works and the whole family is dependent on that person. If that person dies, then what would happen to the financial requirements of the family?
"Most people don't plan to fail, they fail to plan"- John L. Beckley
Therefore, the earning member should buy a term plan in order to secure the financial requirement of his/her family. A term plan is a kind of life insurance which provides coverage during a given period of time. If the person dies during that period then the amount insured will be given to the other member of his/her family. The term insurance plan is less expensive than the other life insurances. One should include buying a term plan in his financial planning.
Save Money and Money will Save You
The youth generation of India has this mindset of spending all the money they earn rather than saving it. They believe in this philosophy that whatever happens, they will see afterward, let us enjoy life now. They do not do financial planning. But this is the biggest mistake they make of not thinking about the future.
Many unforeseen events may occur in which huge sum of money will be required, then from where they will get the money? If we do not start saving today, then we will not able to maintain the standard of living. We also need money for emergency and to avoid taking loans in this situation. In today's world saving is a must and if we are not saving then we are doing a mistake.
Too scared of diversification?
We live in a world where there are varieties of financial instruments available in which we can invest. People are fond of investing in Fixed Deposits and Public Provision Fund because the working of these instruments could be easily understood. But there are many other financial instruments are available which give us a higher rate of return than fixed deposit like equity, mutual funds, and Government securities. We should diversify our portfolio in order to gain more and also reduce risk.
Taking one step away from freedom
Debt is the amount of money that we borrow from other people when we are not able to meet our financial obligations. When we borrow debt then we also have to pay interest on it. There are many types of debts such as bank loans, mortgage loan, vehicle loan, student loans and so on. Companies take loans to run their business. Individuals take loan to fulfill their needs. We have seen that many times companies become bankrupt as they are not able to pay their debts.
"Borrowed money is the most common way that smart guys go broke"- Warren Buffet
On individuals, there is always the burden of paying interest and returning back the loan. There are many borrowers who try to attract individuals by introducing different type of schemes and individuals get stuck in these schemes. If we do financial planning properly then we will not be in the condition of taking so much debt. We will not be in the stress of paying back those debts and we will able to live a life financial secure if financial planning is done in the early stage of life.
Control your impulses, when you are broke
In this modern world, we get attracted to things that we do not need. We buy branded clothes, get attracted to gadgets, hang out with friends at expensive cafes etc. We compete with other people in society to show how well off we are. But instead of doing unnecessarily expenses we should start investing in financial instruments.
"Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time."- Johann Wolfgang von Goethe
There are many schemes such as low cost EMI, low interest rate credit cards, cheap loans etc in which get trapped. We should be cautious where we should spend our money. This should be also included in our financial planning. We should never over spend our money as it will lead to borrowing debt in future which further leads to stress. We should spend our money wisely. Therefore financial planning at an early stage is very important.
Bottomline
The wrong decisions taken in our life can affect us drastically. Therefore it is very important to start financial planning as soon as we start earning.No individual has the same set goals. So financial planning will differ from one person to the other. According to financial requirements, one must set their goals. If we do not have knowledge on investment products we can take help of the financial advisors. They help us in doing financial planning.

Article Source: http://EzineArticles.com/9942847

How To Build Multiple Streams Of Passive Income

Passive income, also known as recurring income, is a popular term right now, and it includes a wide range of income streams from rental properties, membership services, book or eBook sales, and more. The phrase "passive income" can be inaccurate because there's nothing passive about creating a passive income stream.
Recurring income is simply an income stream where you don't trade your time for a specific amount of money. It's not time or project based. It also takes work to maintain a passive income stream so it continues to make you money.
You must proactively build and maintain a passive income stream if you want it to continue to earn money for you for a long period of time. The more work and attention you give to income streams, the more money it will make you.
Membership Website
A membership website is a good way to develop a unique community around the products that you provide. Exclusivity sells, and this is no different with a paid membership area on your website for members to network, get unique content, and exclusive access to you.
Subscriptions
If you're an info-product creator, subscriptions are an excellent way to build passive income streams. You can sell subscriptions to your content where people subscribing gain access to regularly released content for as long as their subscription is available. It is much easier to keep regular customers with a subscription-based business model.
Webinars
Although webinars are not a passive income source, having said that, you can record a webinar and then sell access to it. This can make you money given that the content remains relevant. It can be stand-alone or be part of a course, subscription, or even in a bundle with several of your products.
Courses
There are several ways to develop a course to go alongside another product you have or as a stand-alone product. There are a number of websites out there for course creation, or you can choose to host your course on your own site. You may also prefer to email a course to customers.
Sponsorships and Ads
Sponsorships and ads are often overlooked examples of passive income streams. You can sell advertising spots on your website in set spaces either on your main page or in the sidebars. Also, you can sell sponsorships for individual posts or categories on your blog. If you have a podcast, you can have sponsors for each episode of your podcast.

Creating a membership website is a great way to set up recurring, passive income. You build the website and create the content once, and you receive recurring weekly, monthly or quarterly payments. For an easy to follow guide, download my free checklist, How To Start A Membership Website, at https://jonallo.com/membership

How To Make Money Easy at Home

One of the greatest aspects of the invention of the internet is the many different ways that you can make money easy at home. Thousands of people are doing just that and are making an amazing living just by working from the comfort of their home. They don't have to get up early, drive through rush hour traffic, and work at a dead end job. All of their work is in their home and they have control over what they do each and every day without having to listen to somebody bark orders at them. You can start doing this too with some motivation and information you can be on your way to a new career working from your home.

Mindset

There are two different mindsets that you can have when you are looking to make money easy at home. First of all there is the make money fast mindset that actually is the first response when people hear that they can work from home and make money. This is a proper response since you are new to this concept it is very usual to see this mindset in newbies. The other mindset is the business model mindset which is actually the best one to have. The reason this mindset is better for you to have is because if you treat this like a business you will become profitable and more successful. Without getting into the psychology of it I just want to know that if you have the proper mindset of creating a profitable business you will make money easy at home in no time.

The Information

I am sure that you are wondering what you need to know in order to achieve this simple goal of yours. The first way that I know you can start making money from home is with internet marketing. This marketing system is one of the most well known processes that are used by all professionals for many reasons. This system will allow you to generate income using the internet just by selling products of your own or other products. With some basic internet marketing strategies you can begin to make money easy at home very quickly. Many people are just not exposed to the correct knowledge and are one of the reasons why people fail using this system. If this system works for thousands of others it will work for you with some simple training. This is not the only way to work at home and generate income.

Online Surveys

If selling products through internet marketing is not your cup of tea then maybe online surveys maybe something interesting to you. This strategy is popular among much work at home moms because surveys are very easy to complete and they only take a few minutes of your time. If you are interested in this method then I would recommend that you find online surveys right away. These are free for anyone to join and the more surveys that you sign up to the more money you will potentially make. This is a great way for you to make money easy at home.

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