Introduction

      I am a telecom professional. But Financial planning and tax planning is one of my passion. When I see many of my colleagues in telecom and IT field, many of them are lacking knowledge about good financial planning and tax planning. So, I would like to share my knowledge in this field through this blog. I hope that this blog will be useful for many such people to do their financial planning in a right way.

Why financial planning is important?

We should must save certain part of our income for future requirements. Financial planning will help us to identify how much we need to save periodically.

Let us take an example of paying Life insurance premium.

There are two persons. Let us name them as Mr.X and Mr.Y. Both are of same age. Mr.X purchases a life insurance policy and opted for monthly premium. Each month he will pay a premium of 2000 Rs.  Mr.Y also purchases a life insurance policy and he opted for annual premium. i.e. he pays 24000/- rs once in a year. At the same time Mr.Y opens a Recurring Deposit in his bank for Rs. 2000/- per month. Let us assume that the rate of interest is 8.5%.. At the end of 12 months Mr.Y will be having Rs.25127/-. Now he will pay the premium amount of Rs.24000/-  from this matured RD &  Rs. 1127/- will be his additional profit.

If we carefully observe the above scenario, both Mr.X and Mr.Y will be spending Rs.2000/- towards their Life insurance premium. But, periodical savings helped Mr.Y to get more profit..

So, we need to do a proper financial planning for better savings.