Friday, July 1, 2016

What Is A Good Investment Plan (Part One - Financial Needs)

Hi Everyone,



Before we move into this topic, it is essential for the readers to know that I am not a certified financial consultant or adviser, just a normal financial blogger who is sharing my own experience when it comes to financial savings and planning. So do not 100% follow my view on this matter and it is always better to do your own research. 

Okay, now let's come to my view on what is a good investment plan. Before we dwell into this topic lets first understand what is an investment plan

Definition on Investment Plan: 


The placing of funds into the proper investment vehicles based on the investor's future goals, time horizon, and priorities. This also takes into account the safety of the investments as well as liquidity and level of return. Ideally, proper investment planning will allow the investor's funds to produce financial rewards over time.

Source: http://www.investorwords.com/11657/investment_planning.html

With this definition, so what is a good investment plan? Personally, I believe that a good investment plan is a plan which can address your financial needs and goals that are within your financial capability and liability. Once you can address the 4 components above, you will be able to start planning for your investment plan. 

Financial Needs


So let's start with financial needs, for financial needs, this is where your monthly expenses, come along. You will need to set a side some of your monthly budget in order to maintain your currently lifestyle.

Budget/Expenses

So with a typical point of view, it will be something like what I have for myself as shown in the picture below, whereby I keep track of my monthly expenses. This will be my initial budget for my financial needs. 


So after getting your budget, which is the first step, you will have to follow it through for a few months in order to ensure that this budget can fit into your lifestyle. So while you are working on your expenses, there are somethings that you can take note of which is the area that you can reduce your expenses without sacrificing your lifestyle needs. 

Reducing Expenses without Affecting Your Lifestyle

Many people will asked, how do we cut down our expenses without affecting our lifestyle? Certainly, there are many ways that you can do it, by firstly cutting down those monthly recurring expenses. Let's take an example of the following expenses

Mobile Plan: $62.90 - 3GB data per month
Netflix subscription - $16.98 - Premium Plan
Internet Subscription - $59.90 - 1GB Fiber plan
Gym Membership - $128 per month

So, the above expenses are the common things that we use and pay for in our current life, so we can start off by reducing the expenses for each individual item. 

Mobile Plan: $62.90 - 3GB data per month - Change to another Telco, with the same data per month for $42 per month - $20.90 reduction
Netflix subscription - $16.98 - Premium Plan - Change to standard plan for $13.98 per month if you do not have HD TV - $3 reduction
Internet Subscription - $59.90 - 1GB Fiber plan - Change to another Telco with 1GPS for $39 per month (If you only use it to watch video and surf net, not necessary to get such an expensive plan) - $20.90 reduction
Gym Membership - $128 per month - If you are not a frequent Gym goer, can consider using pay per usage community gym which is around $3 per entry. ($3*30 = $90 - provided you go to gym every day) - $38 reduction or subscribe to cheaper gym plan

If you take a look at the reduction, and you still maintain your current lifestyle, with this slight modification, it can help you to save around $80 per month. Although it looks little but every single bit counts.

Finalized Monthly Expenses

After adjusting your monthly expenses, you will have your tentative budget for your financial needs. Do it for a few months and you can see that you can save more money and cut down your monthly expenses without affecting your lifestyle. This will be your financial needs for per month basis. 

So with this, you are one quarter towards the start of planning for your investment plan.



1 comment:

  1. Thank you for sharing such great information. It is informative, can you help me in finding out more detail on Investment Plan,i am interested and would like to know more about this field and wanted to understand the basics of Investment insurance

    ReplyDelete