Best Financial Tips: Why do you need Financial Planning?

  • Wednesday, December 19th, 2012



Money is honey

Without money the life could really be “funny”!

The majority of people work hard and spend most of their time to earn money. Unfortunately, they do not spend much time for financial planning. The purposes of earning are to meet present financial obligations and to create wealth for a rainy day and retirement. Planning is essential in investment as it is for any other spheres in life. Any work that is unplanned and not well thought of is more likely to be done badly. The purposes of planning are to increase efficiency, and to reduce the influence of the luck factor and risk. Plan now to invest in shares (equities), mutual funds, bonds, fixed deposits, NCDs, gold, silver, property, land, businesses etc to build a secure financial future.

Your financial planning should be based on your present and future needs, and that would not be the same as the needs of your friends, relatives or neighbour. Therefore, you need to plan it yourself with the help of advisers and other information that are available in the media, the internet in particular. Start it today, it is never late to think of financial planning. Learn how to build different funds as per your need and enjoy the benefits of your own funds such as Life fund, Medical fund, Marriage fund, Children’s birth fund, House fund, Car fund, Children’s education fund, Children’s marriage fund, Retirement fund, General emergency fund, Domestic expenses fund, Travel fund, Reserve fund, Wealth fund etc.


“You can avoid reality,

but you cannot avoid the consequences of avoiding reality.” 

Ayn Rand


“The real purchasing power of the income would be

getting less and less due to the effect of inflation”


“The harder you could make your investment work

to increase the value of your asset

the need for you to work

hard would be lower”


“The future financial empire could only be built

on the edifice of present investment

made on the basis of past experience”


“People should not forget that

they would not be working for ever 

and they would not have their parents

to support them in the future”


“If you can count what you own

you are not wealthy”


Where are you in the Global Wealth Pyramid?

Where do you wish to be?

How would you reach your goal?

Wealth distribution pyramid

“Personal wealth varies across adults for many reasons. Some individuals with little wealth may be at early stages in their careers, with little chance or motivation to accumulate assets. Others may have suffered business setbacks or personal misfortunes, or live in parts of the world where opportunities for wealth creation are severely limited. At the other end of the spectrum, there are individuals who have acquired a large fortune through a combination of talent, hard work or simply being in the right place at the right time. The wealth pyramid in pyramid of Figure below that prepared by credit-Suisse in 2013, captures these differences in striking detail. It has a large base of low wealth holders, alongside upper tiers occupied by progressively fewer people. In 2013 Credit-suisse estimate that 3.2 billion individuals – more than two thirds of adults in the world – have wealth below 10,000 USD. A further one billion(adult population) fall within the 10,000 – 100,000 USD range. While the average wealth holding is modest in the base and middle segments of the pyramid, their total wealth amounts to USD 40 trillion, underlining the potential for novel consumer products and innovative financial services targeted at this often neglected segment.

According to the OECD in 2012 the top 0.6% of world population (consisting of adults with more than 1 million USD in assets) or the 42 million richest people in the world held 39.3% of world wealth. The next 4.4% (311 million people) held 32.3% of world wealth. The bottom 95% held 28.4% of world wealth. The large gaps of the report get by the Gini index to 0.893, and are larger than gaps in global income inequality, measured in 2009 at 0.38. For example, in 2012 the bottom 60% of the world population held same wealth in 2012 as the people on Forbes’ Richest list consisting of 1,226 richest billionaires of the world.”




Demonetisation of Rs 1000 & 500 in India since 8 November 2016 (15/11/2016)

The potential benefits include

1. Fake Rs 1000 & 500 notes became useless immediately

2. Unaccounted cash in Rs 1000 & 500 notes became useless immediately

3. All activities funded by fake and unaccounted cash in Rs 1000 & 500 notes came to a standstill

4. Even if the hoarders of unaccounted cash are able to deposit part of the cash through other people, the ‘poor’ people would get some money as commission. That would at least redistribute part of the ‘wealth’ to the ‘poor’.

5. Even if the hoarders of unaccounted cash are able to convert part of the cash to gold they would lose about 40% of their ‘wealth’ (buying 10 gm of gold at Rs 50000 instead of Rs 30000. There is a chance that the jewellers selling the gold would be looked after by the relevant Government departments.

6. The banks depleted of cash on their balance sheets would be full of cash.

7. The fiscal deficit would go down.

8. The value of the Rupee would go up due to lack of fake and unaccounted cash, reduced fiscal deficit and improved balance sheets of the banks.

9. The prices of goods (including properties) would come down due to lack of unaccounted cash in the hands of people, and improved purchasing power of the Rupee.

10. The inflation rate would come down.

11. The interest rate would come down.

12. The lending by the banks to businesses/people, and Government’s fiscal stimulus would go up, thereby improving the GDP eventually.


© Dr Sudipta Paul,, 2013

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