FOUR PRIORITIES FOR

EVERY INVESTOR

@EWFA_
 Questions in Minds of Every Investor
Which investment option should I Invest my savings? Is it Debt, Equity, Real
Estate, Gold…
What %-age of the savings should I allocate to various investment options?

If I go for Equity, should I invest in Mutual Funds or Shares directly?

In case of Mutual Funds, which fund house or which fund should I invest?

In case of Shares, which one to buy, what price?... And the question goes on

BUT BEFORE SEEKING ANSWER TO THESE QUESTIONS AND STARTING TO INVEST…

THERE ARE 4 PRIORITIES THAT EVERY INVESTOR MUST THINK ABOUT AND PLAN
Four Priorities for Every Investor @EWFA_
 Four Priorities for Every Investor
Emergency Fund
Do I have a Emergency Fund to meet the expenses for a few months?

Planning for Life Goals

Have I identified my Life Goals and arranged for its expenses?

Insurance Planning
Do I have risk management in place through Insurance?

Retirement Planning
Have I made the necessary arrangement to create a retirement corpus to
fund my post retirement expenses?
Four Priorities for Every Investor @EWFA_
 Emergency Fund

We are living in different times, where one can lose their job any time that too in
short notice – These are realities waiting to happen.

We do not get our salary, which could be the only (or main) source of our
income.

In such a situation, how are we going to manage the monthly expenses, EMI and
other payment obligations?

Work with determination to come out of the crisis (Looking for alternative
jobs/income) without the pressure of not having money for monthly expenses.

Four Priorities for Every Investor @EWFA_

 Emergency Fund (Contd.)

A Emergency Fund covering 3-4 months expenses becomes very handy during
such crisis

The amount required (3-4 months expenses) depends on (1) A individuals

comfort and (2) Their personal situation

To create this Emergency Fund, one should be aware of their monthly expenses

Tracking expenses for a few months will give a fair idea of monthly expenses

Put this Emergency Fund in a Fixed Deposit – Focus on liquidity/Safety and not
on returns

Four Priorities for Every Investor @EWFA_

 Planning for Life Goals
Short Term < 2 Years
• Marriage of Self/Siblings
• Education Loan
• Children Schooling
Four Priorities for Every Investor
Based on duration, Life goals are of
two kinds: Short Term and Long Term
Long Term > 2 Years
• Buying a car / house
• Children higher education
• Children wedding
• Financial Freedom / Early retirement
Long Term Goal for one, could be a Short
Term Goal for another
@EWFA_
 Planning for Life Goals (Contd.)

Life goals are definite 1. Life Goals are unique to every one
occurrences in our life and are
known in advance
2. List out your Life Goals
More about Life Goals

How to Prepare?
The expenses and the timeline 3. Estimate expenses for the Life Goals
for these goals are known in
advance 4. Arrive at monthly savings*
* This is based on the number of months between today and the
time the life goal would occur.

This makes easy to plan and 5. Recurring Deposit (Short term) &
prepare for life goals in Mutual Fund SIP (Long Term)#
advance # For Short Term Milestones Recurring Deposit is safe. For long
term, Mutual Fund may be a good option, but not a mandatory.

Four Priorities for Every Investor @EWFA_

 Insurance Planning

This is the most important and unfortunately the most neglected aspect by many
of us.

Nothing in our life is certain, with the risk of a accident, or disability and even
death.

Such risk not only affect us, but also our dependants.

There are two mistakes in approaching Insurance:

1) Treating Insurance as Investments
2) Treating Insurance as a tax saving tool

Four Priorities for Every Investor @EWFA_

 Insurance Planning (Contd.)

Insurance is a risk tool to mitigate these risks – Two Insurances are important for
every individual:

1) Term Insurance: A policy of 50 Lakh to 1.5 Crore should help ones family
to manage the show in the unfortunate departure of bread winner of the
family.

2) Health Insurance: Though one gets Medical Insurance from their

employers, it is advisable to have a individual policy covering self and family.

In both cases, earlier one starts in their life…lesser the premium

Four Priorities for Every Investor @EWFA_

 Retirement Planning

There are loans available for almost everything in our life…Except one for one
thing. - Retirement

Though appears as the last phase, this it the most important and must be
planned from the time you start earning.

We must estimate the monthly expense at the time of their retirement, and
another 15-20 years from there on.

Accordingly build a corpus in our working years that can generate income to
meet this monthly expense.

Four Priorities for Every Investor @EWFA_

 Retirement Planning (Contd.)

While there a quite a few retirement product, two easy options would be:

1) Employee Provident Fund (EPF)

• EPF is a very powerful tool to build a sizeable retirement corpus utilizing the
power of compounding
• The purpose goes waste, if the money is withdrawn frequently when we
change companies

2) Public Provident Fund (PPF)

• The corpus from PPF would be a top-up to the corpus created through EPF
• Carries less risk and investment effort from a investor

Four Priorities for Every Investor @EWFA_

 Good Luck in your Investment Journey

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Four Priorities for Every Investor @EWFA_

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Visit my landing page https://www.linkedin.com/pulse/my-notes-compilation-value-investing-venkatesh-jayaraman/ for more such
presentations, notes and compilations on topics related to Personal finance and Investing.