A very happy Diwali to all readers. While you are reading this NSE and BSE would be conducting its annual Diwali Muhurat Trading session. Traditionally trading or investing during Diwali Muhurat is seen as a start of good things to come.
There is more to money management than investing. Why not begin work on fortifying our financial castle this Diwali Muhurat?
Here are a few suggestions for Diwali Muhurat planning:
- Use a life insurance calculator: this one if unmarried Insurance Calculator for the Young or this one if you have children: Comprehensive Child Planner and determine the sum insured your dependents would need in your absence.
- Get a term insurance cover for a sum close to the above from any insurer. Remember that claim settlement ratio does not matter if your life insurance policy is at least 3-years old!
- Get a separate health insurance cover for your family. Individual cover for your parents and in-laws and if possible an individual cover for your family (else floater).
- Mobilize a sum equal to about six months expenses in a separate SB account. Each month add about 5 to 10% of your post-tax income to this account. This is to handle emergencies.
- Get yourself an accident insurance policy (more on this in a detailed post)
- Use a spreadsheet or a piece of paper and list all your income sources. Subtract from this your monthly expenses, liabilities, and amount needed to meet recurring financial goals and short-term financial goals (less than 5 year)
- Hopefully, the subtraction would not result in a negative number! This result is your investible surplus.
- Check if your entire investible surplus (barring a 5-10% buffer which is directed to toward the emergency SB account) is being investing in a portfolio that would give your the return desired (after tax). This might help in identifying the desired return: Visual Goal Planner
- When all these are done, you can consider using the financial planning template to find out how much you should be investing?. How does this fare when compared to how much you can invest? (=investible surplus)
- With some systematic investing and some luck, within a few years, we maybe investing more than what we need to.
This post is a shortened version of previous posts on the subject:
Happy Diwali. Let us hope for good days ahead.