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Chapter - 1: 1.1 Definition of Personal Financial Planning
Chapter - 1: 1.1 Definition of Personal Financial Planning
INTRODUCTION
“Financial Planning is the process of meeting one’s life goals through the proper management of
personal finances.” ( Kapoor, 2008). Proper Personal Financial Planning leads to Financial
Satisfaction and Well– being. As Every person, family, or household has a unique needs and
financial position , their financial planning must also be carefully planned to meet specific needs
and goals.
According to Hallman and Rosenbloom, Personal Financial Planning is “The development and
implementation of total coordinated plans for the achievement of one's overall financial
objectives.” Individuals and families have many goals or objectives in life to fulfil. For the same
they will have to save, accumulate and grow their money. The common life goals of individuals
are: Education and Marriage of Children, Buying a house and a Comfortable Retirement. Other
short term goals may include funding vacations, purchasing a car and fulfil debt (home loan, car
loan), etc. For achievement of short term or long term goals, proper management of Personal
Finance is essential. Financial Planning is all about managing finances of an individual or a
family. It means Proper Management of Income, Expenses, Assets, Liabilities, Insurance,
Taxation and Estate, so that one can successfully achieve all their desired goals and enjoy
financial well-being and hence financial satisfaction.
India, post liberalization has experienced much change in terms of Economic Growth and Social
Structure. Basically, it serves as a base for the need of robust Personal Financial Planning.
Major
factors which are relevant and important for the need of Personal Financial Planning are
discussed below.
• Longer life span and lack of social security
According to economic survey 2012-13, the average life expectancy which was around 60 years
in 1980-81, has increased to 64.6 (for males) and 67.6(for females in 2010-11). People live
longer now as compared to the earlier generations. Few generations ago, someone would start
earning by the time one reached the age of 20 years, work till the age of 58 years and live till
around 65 years. In such a case, one earns for 38 years and lives off the retirement savings for
the next 7 years. In recent times, one starts working at 25 years of age. Retire at age of 60 years
and life span of 80 years. So an individual works and earns for 35 years to support post
retirement life of 20 years. Government of India has withdrawn Pension Plans for government
employees and introduced New Pension Scheme (NPS), which is defined contribution plan.
According to Garman and Forgue (1988) & CPFA – NISM (2009), Personal Financial Plan is
the balance of following components:
Planning Personal Finances
Managing Personal Finances
Managing Expenditure
Protecting Income & Assets
Managing Tax Planning
Planning Investments
Retirement Planning
Estate Planning
1.4 Process of PFP
According to Gitman & Joehenk ( 1990) The financial planning process is a logical, six-step
procedure. The steps involved are listed below:
Various researchers and organizations have provided different definitions of financial literacy.
Some of the definitions are discussed here. Financial Literacy is a combination of awareness,
knowledge, skill, attitude and behaviour necessary to make sound financial decisions and
ultimately achieve individual financial well-being. (OECD INFE, 2011). Financial Literacy is
concerned with the understandings of basic financial concepts, principles, skills and ability to
understand key financial products to make good financial choices. (Jariwala H., 2013).
According to PACFL, “Financial Literacy is the ability to use knowledge and skills to manage
financial resources effectively for a lifetime of financial well-being”. Lusardi & Mitchell (2007)
have defined it as the most basic economic concepts needed to make sensible savings and
investment decisions. ANZ Bank (2008) has defined it as the ability to make informed
judgements and to take effective decisions regarding the use and management of money.
As discussed, financial literacy is associated with financial well-being and financial satisfaction
of an individual. Increase in Financial Literacy will help investors to make informed choices,
which, in turn, helps nation to build strong financial system and will help to achieve goal of
Financial Inclusion. Many government bodies like SEBI & RBI has realized the value of
financial literacy and to increase that, they have started various financial education programmes.
To design the program for investors, one really needs to know what is the current level of
financial literacy that investors possess and then course can be designed to suit their literacy
level.
There are different methods adopted by researchers and certain organizations to measure the
current level of financial literacy of the investors. Definitions on Financial Literacy provided by
different researchers serve as the basis for items to be included in research instrument to
measure the financial literacy. Some researchers have developed the scale for Self-Assessment
of
Respondents and some have given performance test. Basic items covered in different researches
are Time value of Money, Calculation of Interest Rate, Relation between Risk & Return,
Inflation, Diversification etc.
Scale used in the present study is adopted from Lusardi & Mitschell ( 2008) and modified
according to Indian context.
Financial well-being of the individual depends upon Financial Attitude and Financial Behavior
which, in turn, depends upon Financial Literacy of an Individual. Many researches have been
done in area of Financial Literacy and some of the aspects of investment decision making in
India, but there is no comprehensive study so far that deals in the overall personal financial
planning aspects of the individual decision making process and/or which has attempted to
measure the awareness of overall personal financial plan, attitude of the respondents for the
same and factors influencing personal financial planning of an Individual. The present study
attempts to fill this gap in the current research.
Chapter – 1 Introduction
The chapter is divided in two major sections. First Section introduces concept of Financial
Planning, Process of Financial Planning, Overview of Components of Financial Plan, and
Financial Literacy. Second section gives details on different components of Personal Financial
Plan.
Chapter – 5 Findings
The Chapter discusses overall study and highlights the major findings which have been derived
from the analysis of data.
Chapter – 6 Conclusions, Major Contribution and Scope for the Future Research
The chapter discusses overall conclusion of the study, beneficiaries and contribution of the
study. It also discusses limitation of the present study and provides scope for the future research
work.
Part – II
Personal Financial Planning
1.10 Personal Financial Planning Process
Money management is the day-to-day financial activities needed to manage personal economic
resources, while working toward long-term financial security.(Kapoor J., 2008). Money
Management includes:
Insurance Planning is determining the amount of insurance cover required by the individual to
cover the risk associated with one’s life, medical emergencies and assets.
In case of pre-mature death of the primary earner of the family, the family’s income will stop. In
that case, the family will need some source of money which can generate income to cover the
expenses and liabilities for the rest of their life. One can purchase Life Insurance policy to
protect their family in the event of death of primary earner. One need to calculate amount
required for Insurance Coverage.
One can take up health insurance popularly known as Mediclaim to meet with medical
emergency. Assets like house, automobiles and other assets can be protected under Property
Insurance. Health & Property Insurance are covered under General Insurance.
It is a policy with a savings feature. At maturity or in case of death of policy holder, a lump sum
amount is paid equal to the sum assured and bonuses. It is considered as more expensive than
whole life or term plan. One can choose the term from 5 to 30 years. Endowment insurance is a
popular policy, which provides protection to self and family. It also acts as a good tool for
retirement planning.
It is designed to provide life insurance cover for the entire life of the insured. Insured person pay
the premium throughout the lifetime. Generally premium amount remains the same throughout
the tenure. It is generally used when the need of the life insurance is life- long. The benefits of
whole life policies are guaranteed death benefits, fixed annual premiums. The drawback of the
same is that, the internal rate of return generated by the policy may not be competitive with
other investment options available.
Under this policy certain percentage of sum assured is returned to policy holder on regular
interval. At the maturity the remaining amount is paid as the maturity amount. It is a savings
plan with the added advantage of life cover and regular cash inflow.
Children’s plans are taken on life of parents for benefit of children. It ensures that, in case of
death of the parents, the child gets the sum assured and the insurance company may fund future
premiums so that the child can get the value accumulated at the end of the term. Children’s plans
are suitable for passing on a financial asset to a child.
Pension Plans or annuities are Plans used for Retirement benefits. An individual can invest as a
lump sum amount or periodical amount till age of retirement. Maturity amount can be taken as a
monthly payment (annuity) from the accumulated funds. One can also withdraw one third of
total accumulated amount once the person has retired. There are two types of Annuities:
Immediate and Deferred. In Immediate Annuity Plan, one pays premium in Lump sum mode and
retirement benefits starts soon after the retirement. In Deferred Annuity Policy, insurer regularly
pays premiums to Insurance Company till the vesting age or date. Annuity starts after the age of
retirement.
1.11.2.6 ULIP
Term insurance is an insurance product, which covers only risk there is no element of
investment associated with it. It pays the sum assured only when the policy holder dies during
the period for which is determined. Term insurance is the cheapest form of life insurance. Term
life insurance provides for life insurance coverage for a specified term of years for a specified
premium. If insurer survives the tenure then he receives nothing.
Insuring property means insurance of buildings, machinery, stocks etc. against risks to fire, theft
etc. It covers the protection of building against natural and man-made disasters. Property
insurance covers Fire Insurance, Burglary Insurance, and Marine Insurance etc. Things which
are not covered in property insurance are wilful destruction of property, damage due to wear and
tear and Art and antiques.
Health insurance / Medi-claim protect insurer and their family members against any financial
contingency arising due to a medical emergency. This policy provides for reimbursement (Many
policy have cashless options also these days) of hospitalisation/ domiciliary treatment expenses
for illness/ disease or accidental injury. Medical expenses incurred during period of 30 days
prior to and period of 60 days after hospitalisation are covered. Normal exclusions include all
diseases/ injuries which are pre-existing at the time of taking the cover. There are many variants
and riders available on simple health insurance plan. Facility like group health insurance and
family floaters are also available, which cover the group of employees and all the family
members respectively.
Under this Insurance, the company indemnifies the insured in the event of accident caused by or
arising out of the use of the motor vehicle anywhere in India against all sums including
claimant’s cost and expenses which the insured shall become legally liable to pay in respect of
(i) death or bodily injury to any person, (ii) damage to the property other than property
belonging to the insured or held in trust or custody or control of the insured. The insurance of
motor vehicles against damage is not made compulsory but the insurance of third party liability
arising out of the use of motor vehicles in public places is made compulsory.
Investment Planning defines optimum asset allocation of funds based on risk appetite, financial
objectives and time horizon of investor. Plethora of investment options are available today to
park surplus money. There are many different financial products available under different asset
class; one should carefully choose the Financial Products so that they can achieve their financial
goals within stipulated time. Things to be considered while choosing the investment products
are discussed below:
Debt Instruments
Investing money in debt instrument is like one lends their money. One may get stipulated
interest periodically on the capital invested. The capital is returned after the designated period.
Capital is relatively protected than equity instruments; returns are normally lower than equity.
Different debt instruments are: Small Saving Schemes, Government and Corporate Debt
Securities, Bank Fixed Deposits.
NSC has a Five year term with tax benefits under section 80-C of Income Tax Act, 1961.
Minimum investment is Rs.500/- and there is no maximum limit for investment. It can be
bought by an individual or jointly. NRI, HUF, Companies, trusts, societies, or any other
institutions are not allowed to purchase the National Saving Certificates. Certificates can be used
as collateral to get loan from banks. Current interest rate is 7.9% p.a. One can avail NSC from
Post office.
One can invest minimum Rs.1000/- in KVP and it doesn’t have any maximum limit on
investment. Amount will be matured in 113 months. Current Interest Rate on KVP is 7.6%. Tax
will not be deducted at source and one can withdraw the amount after two and a half years of
investment. It can be used as a collateral security for raising money. It can be purchased from
any departmental Post office.
1.11.3.4 Senior Citizen Savings Scheme
Investor age of 60 years and above is eligible for the same. It has 5 years maturity period. NRIs
and HUF are not eligible to invest in this scheme. Maximum limit on investment is Rs.15,
00,000/-(Rupees fifteen Lac only. Any Post Office in India having the facility of savings bank
account, or an office or banking company or institution authorized by Central Government, can
operate this scheme. An investor can open more than one account subject to the condition, that
amount in all accounts taken together does not at any point of time exceed Rs.15 Lac. The
current interest rate is 8.4 % p.a. payable quarterly. The benefit of section 80C is available on
investment but interest is taxable at source.
This scheme provides a regular monthly income to the depositors and has a term of 5 years.
Minimum investment amount of investment is Rs.1500/- and maximum amount in case of single
account is Rs.4,50,000/-, and in case of joint account is Rs.9, 00,000/-. Current Interest rate is
7.6 % p.a. payable monthly. Nomination facility is also available.
This is similar to FD of Banks. It can be opened at Post office by an individual. Any amount of
account can be opened by any individual in any of the post office. It can be open for 1 Year, 2
Years, 3 Years and 5 Years. Investment in 5 Years TD qualifies for deduction under Section 80
C of Income Tax Act’ 1961. Interest rates are calculated half yearly and withdrawals are
permitted after six months. Accounts can be pledged as a security for availing a loan. Also
nomination facility is available for this account.
It is a small deposit scheme, which can be opened in Post office. It has started in 2015 with the
objective of accumulating fund for Girl Child for her marriage and education purpose. Amount
invested in scheme is exempted under sec 80 C of Income Tax Act’1961. A legal / Natural
guardian can open the account in name of the Girl Child. Account can be opened upto the Age
of 10 Years and mature at the age of 21 years. Minimum Investment amount is Rs 1000 per year
and Maximum is Rs. 1,50,000 per year. Current rate of interest is 8.4% p.a.
The Government and Corporate Debt securities include Government Securities, Treasury Bills,
Commercial Papers, Certificate of Deposits, Government Bonds, and Non-Convertible
Debenture etc.
Equity Instruments
Mutual Fund is a financial intermediary, which mobilise money from investors to various
avenues like equity, Bonds, G –Sec etc., in line with the investment objectives of the scheme.
Through mutual funds, one can invest in different class of assets. The fund mobilized through
Mutual Funds is handled by professional fund managers and they are parked in diversified
assets. The investor gets units of full amount they have invested. There is much transperacy in
the process and no hidden charges. One can transfer their money from one scheme to another
scheme also. And Mutual Fund units can be redeemed easily so it provides reasonable liquidity
too.
Different types of Mutual Funds are described below:
Gilt Funds
These funds invest the corpus in G- Sec. As G – Sec is issued by GOI, there is no credit risk
associated with the investments. But returns generated by G – Sec are low, so the returns of the
Gilt Funds are also low. Interest Rate risk is associated with the funds. These funds are also
known as Government Securities Funds or G-Sec Funds.
Equity Funds
These schemes invest almost 65% of their corpus in equity market. Depending upon the type of
shares fund have selected, these funds can been classified as, Growth funds, Value funds, Large
Cap funds, Mid Cap or Small Cap funds, Sector funds, Equity Diversified funds, Index funds.
Certain equity diversified funds have tax benefit under section 80C of the Income-tax Act, 1961
and have a lock in period of three years. These are Equity Linked Savings Scheme (ELSS).
Growth funds
These funds invest in the money in growth stocks, which are stocks that are expected to earn
above average returns.
Value funds
Value funds invest in value stocks. That is stocks are out of favour with most investors in the
market and the market price is low compared to the value of the business. The value style
managers generally hold the stocks for longer time horizon than their growth style counter parts.
Hybrid Funds
They are combinations of equity and debt funds. They can be further classified as Balanced
funds, Monthly Income Plans (MIP).
Balanced funds
As the name suggests balanced funds invest equally between equity and Debt securities. To get
an advantage of the provisions of the prevailing tax laws, these funds invest more than 65% of
their assets into equity and remaining in Debt securities.
Monthly Income Plans (MIPs)
This scheme invests majority in fixed income securities with marginal exposure to equity. The
Debt securities provide stability to the portfolio and equity provides appreciation of capital over
period of time. Normally 80% of the scheme AUM is invested in fixed income securities and the
balance 20% in equity stocks.
1.11.3.9 Equities
Investment in equity shares means becoming a shareholder in the particular company. One also
gets the voting rights of his share in the company. Higher risk is associated with higher potential
of returns. If company does well and makes profit, the investor is benefited as he is part owner
of the profit. However, if the business goes in loss, the investor would lose capital
proportionately. Returns from equities can be in the form of capital appreciation and/ or
dividends. One can do all fundamental and technical analysis before investing into direct
equities. One should analyse the market size, business of the company, its competitors,
regulations etc.
1.11.3.10 Derivatives
Derivatives are contract between two or more parties, which derive their value form the
underlying assets. Traders in the derivative segments are Hedgers, Speculators, and Arbitragers.
Hedging is basically protecting assets from losses. It is basically taking reverse position to
protect the funds against any odds in the market. This may compensate for any losses in cash
market from fall of the stock price.
Arbitraging is taking the advantage of difference in prices in different markets and earning the
profits. Say stock price in spot market is lower than the futures price. One can buy the stock in
spot market and sell the same in futures markets and can generate profits. On the day of expiry,
the prices converges. Stock may move in any direction but profit is booked.
Speculation is taking positions in futures markets based on the expectations regarding the price
movements of the underlying assets without having a position in cash markets.
Various derivatives instruments in use are Forwards, Futures, Options and Swaps.
Forwards are tailor made contracts between two parties. They are not standardized contracts and
hence they are not traded on exchange. Normally traders trading in currency market use
forwards contracts to hedge against fluctuations of exchange rate.
Futures are standardized exchange traded contracts. Contracts are available for the period of 3
months, 6 months, 1 year etc. Last Thursday of every month is the expiry of every contract.
Futures are available on single stock, Index and commodities. One needs to keep margin in the
account for the trading purpose. Futures can be traded only in lots.
Options are categorized as Call Option and Put Option. Call option gives the buyer a right to buy
the underlying security at a predetermined price in predetermined period. Call option gives the
buyer a right to buy the shares/underlying asset at a price which is below the market price and
vice versa for seller. Put Option gives the buyer a right to sell the underlying security at a
predetermined price during a predetermined period. Put option gives the buyer the right to sell
the shares/ underlying asset at a price which is above the market price. Option buyer has to pay
the price to the seller to buy this option, it is known as Option Premium.
Non-Financial Assets
1.11.3.11 Commodities
Commodities are the real physical assets like, agricultural products, precious metals like Gold,
silver, oil etc. Futures and Options contracts on these products are traded on commodities
exchanges like, MCX and NCDEX in India. The working of the derivative contracts are
discussed in the above segments.
The rapid rise in the price of the property in recent years, have made the real estate as one of the
most lucrative investment avenue. The benefits of investing in real estate can be appreciation of
capital, rental income, safety etc. Investment in Real estate can take following modes:
a) Residential Property.
b) Commercial property.
c) Industrial real estate
d) Agricultural land.
e) Semi urban land.
f) Time share in a holiday resort.
Residential Property
This investment provides return in the form of rental income and appreciation in capital. Tax
shelters are available on interest paid and principal repayment, provided the investment is done
through the route of a loan.
Commercial property
Buying a shop or office in a commercial complex may offer rental income and capital
appreciation over a time period.
Agricultural land
Agricultural income from agricultural land is not taxable. Further, agricultural land is exempt
from wealth tax too.
1.11.3.13 Other Non-Conventional Investment Avenues
Investments in Precious Metals, coins and other collectibles and Art objects are illiquid
investments. They are the most risky investment avenues. As organized exchanges are not
available for these instruments, one should be very careful while investing in these instruments.
Changing Family structure from Join to Nuclear, increase in life expectancy and absence of
robust Social Security system have increased the importance of Retirement Planning. Retirement
Planning is determining how much amount will be required to fund the expenses during the
retirement years and how that amount can be accumulated during the pre-retirement tenure.
Ideally, one should start retirement planning with the starting of their first job. One can invest
their money in employer initiated schemes like Employee Provident Fund (EPF), gratuity,
superannuation, etc. Apart from that, there are other alternatives available like; PPF Account,
NPS, Pension & Annuity Plans, and Reverse Mortgage etc. in which one can invest as a part of
Retirement Planning.
According to CPFA- NISM (2012) there are two methods to calculate Retirement Corpus. They
are Expense Protection method and Income Replacement Method. In Expense protection
method, one lists down his/ her total monthly or annually expenses, then, those amounts are
adjusted for inflation. Amount which then arrives, indicates the corpus required by person post
retirement, which will be generating regular income equal to calculated expenses. Income
Replacement Method calculates person’s income just before retirement.
Provident Fund (PF) is the traditional and most popular product for Retirement Planning. A
certain amount is deducted from employee’s salary every month and invested in Provident Fund
by their employers. Provident fund is a debt instrument, pool generated by employees are
invested in debt products. Employers also contribute their share in the employee’s account. On
maturity investor gets total amount invested by him and his employer and interest earned on that.
1.11.4.2 National Pension System (NPS)
NPS is a Defined Contribution Scheme and it is regulated by PFRDA (Pension Fund Regulatory
and Development Authority). The investment in NPS is to be maintained until the age of sixty.
On retirement, a part of the corpus can be withdrawn as lump sum, and the balance would be
paid as annuity. Government of India has started this scheme in 2004 for Government
Employees. From 2009, it was made available to all citizens of age group 18 – 60 Years, except
individuals who are covered under Provident Fund and Miscellaneous Provisions Act, 1952,
Government employees who have joined services before Jan ’2004, Employees of Armed
forces. It offers various investment options and choice of fund managers to their investors.
Investors also have flexibility to switch over from one fund manager to another. Returns on this
scheme are not definite; it is market linked product so return varies with performance of
underlying assets. Amount invested under this scheme get exemption from income tax under Sec
80 C.
A reverse mortgage is a kind of Home loan. Any senior citizen having own house can avail it.
Basically working of Reverse Mortgage is opposite to Home Loan. Loan Amount is divided in
small monthly / quarterly / yearly instalments and paid to the lender by Bank. The loan is
typically settled after the death of the owner/co-owners. Some additional features of NPS are
discussed below:
1. The maximum tenure of the loan is 20 years.
2. Normally the owner of the property and spouse are borrowers in this scheme. If one of
the borrowers dies then other may continue to avail the instalments.
3. The maximum monthly payments under the scheme is Rs.50, 000/-.
4. Settlement of loan after tenure will be done in two ways. If legal heirs settle the full
amount of loan then property will be transferred to them, and if they don’t, then Bank
will sell the house property mortgaged will settle the loan amount and if any amount is
remaining then it will be passed on to legal heirs.
5. Facility of early repayment of loan is also available.
Normally senior citizens who don’t have steady inflow of income post retirement can opt for the
same.
Apart from these schemes, plans discussed earlier like annuity, Pension Funds are also used for
Retirement Planning purpose.
The next stage in Personal Financial Planning is Estate Planning. Estate can be defined as all
assets a person owns. Basic objective behind estate planning is to protect, preserve and manage
one’s assets during and post one’s life. Estate of the estate owner should be passed on to estate
owner’s intended beneficiaries. (C. Jayaram, 2007). For the purpose of Estate Planning, one can
create their will or they can take route of trusts also.
1.11.5.1 Wills
It is a declaration made by a person clearly mentioning the manner in which one likes his or her
property to be distributed after the death. It is a legal written document. It comes in power only
after the death of the person. So till then it can be changed according to situation. As a part of
Estate Planning, one should create their wills at early age only. This is to avoid any hardships to
the family in case of death of the owner of the property.
1.11.5.2 Trusts
Trusts is a mechanism by which owner of property can pass the legal title of that property to
another person to hold on trust for the benefit of the beneficiary. They are used as mechanisms
to hold asset for present or /and future needs of legal heirs and other family members and
designed in a manner to reduce the burden of tax. Trusts are used to accumulation of income and
capital for specified children. Some terminologies related to trusts are discussed below.
Grantor
It is the person who creates the trust. One who is an owner of the property.
Trustee
This is the person or an institution that will follow wishes of grantor as per the legal document
to manage the trust upon the death of the grantor.
Beneficiaries
They are persons who will be benefited by the trust property.
There are many financial institutions and Professionals, who work as a trustee for the fees.
Financial Planning of an individual depends upon his/her financial goals – short term & long
term, number of dependants, stage of Lifecycle, risk appetite and many more. It is assumed that
persons in the similar stage of life cycle have almost common financial goals. Life cycle of the
individual can be divided in following four segments. Stage of the life cycle determines their
future goals and risk taking capabilities. Depending on these factors, their financial planning
strategy can be determined.
A person in their mid-aged with grown up children have responsibilities towards higher
education of their children or marriages. As their responsibilities are higher with years to
retirement are less, they will have low risk appetite and objective will be maximum wealth
creation before retirement. Portfolio should be revised in a manner to have exact balance
between equity and fixed income securities. One can invest in balanced fund of Mutual Funds
which is combination of Equity and Fixed Income Securities. Also as a part of Estate Planning,
one can create a legal will or can create a trust to transfer the asset to their intended beneficiaries
in event of death.
In this stage, a person may not have a salaried income, at the same time, their children are
independent and settled. His responsibility towards his children has decreased. One needs to
have fixed flow of income to fund their routine household expense, healthcare expense and
expenses towards leisure. Capital preservation with fixed flow of Income is their prime
importance. A little holding in equity with higher exposure in fixed income securities like bond,
Post office MIS, Post Office Senior Citizen Schemes are desirable. One can also take route of
Reverse Mortgage for fund their post retirement expenses.
Every individual has different risk appetite and different goals, according to their own life
conditions. Therefore, the strategy and asset allocation will change accordingly. One may take
help of Certified Financial Planners and Advisors to create a balanced Financial Plan.
After implementation of it, one should periodically review the same and make changes if it is
necessary.