Wealth management should top your list of to-do-things, whether you have millions stacked in your bank account or modest savings and resources. Following a private wealth management strategy, apart from helping you manage your finances, is also one of the effective ways to ensure a hassle-free retirement life. Wealth management industry in India offers a range of solutions for entrepreneurs, salaried individuals, and those with family wealth, to help them plan their finances and secure a secure future. You can, therefore, avail the services of a wealth management professional to chart an investment strategy. While designing the plan, make sure to avoid the pitfalls discussed below to get the most out of your investments.
1. Cash flow mismanagement
The most significant aspect of managing your cash flow is maintaining a correct mix of inflows and outflows. It is also advisable that you invest a certain percentage of your income every month to ensure you have significant funds stacked as savings by the time you retire. Invest in tax saving instruments such as ELSS mutual funds, PPF, NSC, and National Pension Scheme. Additionally, consult your wealth manager to devise ways to carry forward and offset losses that you may have incurred during the financial year.
2. Mismanaging debt
Too much debt reflecting in your balance sheet is a disaster waiting to happen and can topple your financial planning strategy. To address this issue, you need to manage short-term debt such as credit card outstandings, student and personal loans, keeping it at a level lower than liquid assets you own. If you have too many short term loans pending, consider raising a debt consolidation loan with a low interest rate to pay off all the outstandings.
3. Failing to manage windfall gains
Windfall gain refers to any unexpected income due to unplanned property inheritance, unexpected gains from the sale of property or shares, or a lottery win. They say make hay while the sun shines, similarly, using additional funds prudently can pave a path to financial freedom. To make optimal use of the funds available to you, first and foremost clear all outstanding debts. Next, consider investing in tax saving instruments and acquire additional assets. Set aside some funds for your emergency corpus and revisit your estate management strategy to change it according to your financial condition.
4. Not having an estate management plan
Many individuals consider estate management a futile exercise and an activity for the elite. The belief is as far from fact as imaginable. A dedicated estate management strategy is for everyone who owns any property (including a vehicle, a house or stock option). Many others who follow a dedicated strategy commit blunders such as forgetting to fund the trusts or changing beneficiary designations in their life insurance plan and failing to draft a power of attorney for health care and property. Avoiding these pitfalls is imperative to planning a successful succession strategy.
Conclusion
A carefully planned and executed private wealth management strategy is your doorway to financial freedom. Make sure you hire the services of an experienced wealth manager that can help you take steps according to fluctuating marketing conditions and business cycles. When you’re successful in finding one, communicate your financial goals and objectives to help them design a strategy unique to your needs.