10 GOLDEN TRADING RULES

These are the 10 golden rules for successful trading in any kind of market. We recommend that you read them at least once daily before you trade.

1. Always trade in the direction of the trend.
2. Plan the Trade & Trade the Plan.
3. Never lose more than a small percentage of your trading capital.
4. Cut your losses short by keeping a suitable stop loss nearby.
5. Let your Profits run into their full course.
6. Never average a losing trade, you will get killed.
7. When in doubt, get out of the position.
8. Never follow the crowd, they always lose in the end.
9. There is nothing too low to sell & nothing too high to buy.
10. Don’t argue with the Market, Market is always right.

Here is a One Page Business Plan of a Fee-only Financial Planner – Mr. Jim Freeman, Founder, Financial Alternatives based in San Diego, USA. It is good if a Financial Planner/firm develops a crisp and clear business plan which will guide him/her towards establishing a successful practice or take it to the next level. Take a look and get inspired!
Business Plan was prepared in September 2011 with the help of a practice management consultant and based on the article by James Collins in Harvard Business Review
Also don’t forget to check out their new awesome website http://financialalternatives.com/

Business Plan of Financial Alternatives

Core Values:

• Integrity – client interests always come first
• High productivity and consistently increasing professional knowledge
• Superior listening and incisive questioning skills
• Consistent, outstanding service and attention to detail
• Enjoying work and living a balanced life

Core Purpose:

• To challenge, inspire & empower clients/employees to achieve their lifetime goals
• To support clients during their inevitable life transitions

10-20 Year Goal – Big Harry Audacious Goal:

• Be a top Integrated Wealth Management firm in San Diego
• Be known as one of the best firms to work for in the nation
• $ “XXX” million in annual gross revenue / low overhead / highly profitable
• Clients fly into La Jolla from around the country to work with us
• Highly satisfied clients and employees

5 Year Objectives: Achieved by March 31st 2015

• $ “XXX” in gross revenue
• Equity opportunities for staff
• Involvement in charities, volunteer work
• Technology platform and all internal systems and processes running smoothly
• Marketing generates one new ideal client a month. (boot camp for clients’ kids)
• One booklet/book published and we are giving speeches on a regular basis

12 Month Objectives (Created March 16, 2011):

• Have turnkey process for:
a) ongoing investment management,
b) new asset intake management,
c) new client intake,
d) referrals, acknowledging both the new prospects and the referrer,
e) marketing – creating company advocates, clients and related professionals who believe in what we do and refer to us.
• Have an effective way to share and harness knowledge capital; a wiki or share point where we all contribute to a best practice worksheet
• Website upgrade completed (simplified and re-branded)

90 Day Objectives: Achieve by November 31, 2011

• Complete marketing processes: social networking, paper brochure, SOP for marketing meeting follow up with related professionals and referrals.
• Update new client intake process, MQ, update annual review doc to reflect new binders, create table of contents for the new binder & get one new client.
• Server completed, workstations updated to Windows 7.
• N-tier up and running.
• Get 80% of our CEU’s this period studying our target market’s issues.

Branding/Marketing Exercise to be done

• Define target market
- Executives,
- Retirees,
- Pre-Retirees

• Redo branding as necessary; Theme is “simplicity”
- Define/refine our message (craft best way to impart how we want others to perceive us – three themes)
- Finding/hiring design consultant
- Redo Logo, Color (Name)

• Website redone
- Content first drafts by 4/29; finish by 5/6
- Select designer – two weeks from 3/18
- Yeske type portal how best to do this.
- Hosting provider – two weeks from 3/18
- Search optimization, social networking links
- Friendly to mobile browsers & apple/safari

• Paper brochure
- Content
- Printer

• Financial planning binder

• Pocket folder

Financial Planning for Different Stages of Life Cycle

During our lifetime, we come across changes which affect our financial situation and needs. A rise in income level, spending patterns, concern for the family and retirement plans are some of the changes which impact our lifestyle. If not planned ahead, these can have ever lasting implications.

Although each person set specific financial goals throughout one’s lifecycle, the primary objective is always to plan ahead for each stage of life so that when changes do occur you are ready for it.

Financial Planning helps you in creating a well-managed and balanced financial strategy at initial stage of your life-cycle so that when you reach higher, you are able to ride the complexities of your life. For example your spending pattern developed initially will decide how you manage your expenses in future. Thus, If you create a realistic spending plan initially, you will spend and use credit wisely in future. This will help you in spending less than you earn, which will lead to more savings. So, when you are applying for a home loan, your eligibility will be more and your concern about a down payment will not be there.

While following a financial plan you need to ensure that the strategy you decide initially is followed. These are only basic strategies which if reviewed regularly and followed with a discipline, will help you in achieving those complex financial goals.

The following write up highlights the different stages of life cycle and simple Financial Planning strategies one should follow to reach that desired objectives or set goals of life.

Stage 1 – Protection Phase (age 25-35)

This is the stage where you land a job and start developing your spending habits. This is also the stage where lots of people get into financial stress because of debt.

Primarily, this is the stage where you should be writing your financial plan. Avoiding Consumer and Credit Card Debts, Personal Loans should be the first objective. Start building that emergency fund which will help you during any unexpected happening like a job loss. As a thumb rule maintain 6 month expenses as this buffer.

Younger the age longer is the time period and higher is the accumulation. That’s power of compounding. Understand and allocate your savings for long term investments. This way your money will work for you. Start contributing in long term savings like PF and Superannuation.

Insure yourself through life and health Insurance. Younger the age, lesser  the payment. Once married, your concern is your family. For an Indian family, dependent parents are also included. What if something happens and the income stops? Take a suitable income protection cover so that, after you, the family lifestyle does not suffer.

Stage 2 – Accumulation Phase (age 35-50)

This is the stage where your income has increased and so has the lifestyle. Along with it, responsibilities have also increased. You are more concerned about your family and children because you run debts in form of home loan and car loan. At this stage, you look at saving every extra rupee you earned for your children’s future.

Start repaying your debts with that extra rupee you earn. Investing every rupee saved by reducing your mortgage, will maximize your accumulation.

Increase your insurance cover if required. Take adequate health insurance to cover yourself and the family from that unexpected risk. Any unforeseen happenings can snatch-away the lifestyle your family has been accustomed to.

Contribute maximum to your Retirement Products such as PF and Superannuation.

You are at wealth building stage. Keep your investments in growth Assets which deliver maximum returns in long term. Revaluate your strategies, if required.

Stage 3 – Distribution Phase (Age 50-65)

This is the stage when your family is becoming independent. Your earnings are at peak and you are approaching retirement. You are preparing to distribute your wealth among your family.

Try to pay off all your debts prior to your retirement. You would not like to service any debt post retirement.

Check your asset allocation. Start the transition from high risk investments to low risk investments. Since post retirement you may not have a regular income, start evaluating your options.

Review your Long term investments which you started at initial stage. Your PF, Superannuation and other investments, especially drawn-up for retirement, should be ready to give you the benefits you have desired for. Remember, living longer is also a risk, if not planned well. Thus, it’s necessary that post retirement; you choose the options very wisely.

Although financial situation of every individual is different and hence the financial plan, the basic strategies remain the same. Regular Review, Proper Asset Allocation, Re-balancing when necessary and Changes in Financial Goals as per the Financial Situation are the base of your lifeboat. Missing any of these can create that gap which will inhibit any boat from reaching the destination.

Financial Planning for Newly Wed Couples

Wedding Planning is important, but so is Financial Planning…

Getting married is exciting but it brings added responsibilities along with joy and happiness. Suddenly ‘I’ becomes ‘WE’ and all decisions become joint decisions – be it personal, professional or financial. The financial decisions you make as newly married couple impact your financial future together.

But people spend more time in planning for their wedding and/or vacation, than planning for their financial future. They don’t realize the importance of Financial Planning and even if they do, most newly-weds put Financial Planning on a back side. Also at times due to pressure of starting a new life together, many couples forget to organize their finances until money becomes an issue.

Lack of Financial Plan and Financial Discipline causes stress and insecurity, which often leads to arguments and marital discord. You need to sit down together, discuss, plan and take action on the following areas:

1. Discover Your Financial Goals

The first thing newly married couples need to do is to discuss and get clarity on their financial goals. Make a list of your short-term goals like paying off wedding debt (if any), vacation or buying a new car, along with long-term goals like buying dream home, kid’s education and retirement. Once you list down all possible goals, you need to prioritise them and determine which goals are most important for you. After identification and prioritization, you can start channelizing your money and energy towards achieving them.

2. Prepare a Budget

Budgeting is important for Financial Prosperity. The next step is to prepare a realistic budget listing incomes and expenses (both combined and individual). Now add the two and compare them. Hopefully, you will get a positive number reflecting your investible surplus which can be diverted towards achieving your financial goals. If you get a negative number (when your spendings are more than your income) or get a small positive number, it’s time to review your expenses and see where you can cut down.

3. Get Rid of Debt

It’s great to start debt-free after marriage, but you might have few debts to clear off like loan from friends / relatives, credit cards, personal loan etc. Start settling your credit outstanding beginning with the highest-interest bearing loans. Devise a plan for short-term debt like cutting down on discretionary / lifestyle expenses or taking up a part-time job for extra income.

4. Go for a ‘Power Account’

Another must do financial exercise post-marriage is building a ‘Power Account’, i.e. emergency fund with at least 3 months of expenses to take care of unforeseen incidents in life like job loss, pay cut, temporary disability etc. Generally people realize the importance of ‘Emergency Fund’ only when they face the unfortunate events. Emergency fund reduce your financial stress and make your budgeting easy When unexpected events turn up, you don’t have to re-valuate your budget to count for those things.

5. Update Financial Documents

Many people don’t give importance to updating financial documents after marriage but it’s crucial. Marriage Certificate is the first important document that needs to be filed by the couples. Wives’ should also get their passport and PAN Card updated with husband name. Couples should also get the nomination updated in respective insurance policies, investments and bank accounts. Power of Attorney can be issued in favour of each other to save legal problems in future.

6. Protection Planning

After marriage, you need to review your insurance needs in the light of added responsibilities. If both of you are working, you need to buy new life insurance policies naming each other as beneficiary. In case of single member working, he/she should go for extra life insurance cover. With increasing medical costs, it becomes imperative to have sufficient health insurance. If both of you have individual health plans, you have to compare them by a cost-benefit analysis and see if it make sense to move to a family plan.

7. Investment Planning

Both of you might have existing investments in the form of mutual funds, fixed deposits, insurance policies etc. started by you before marriage. Now is the time to synchronize them and map them to your financial goals. If you get the facts right on saving and investing and follow through with intelligent investment plan, you will attain financial security. Just be consistent in your approach.

8. Plan for Retirement

Start planning for your golden years well in advance. Most of us dream of retiring early with good corpus, but very few take it seriously and start working on it. It’s never too early to start planning for retirement. Decide jointly the retirement age and retirement corpus needed and start working on it.

9. Preparing for Parenthood

You must have heard from your friends or relatives that having kids is expensive now-a-days. Yes, they are. Parents usually spend at least Rs. 10 lakh on one child during his/her lifetime. That’s’ huge and you need to plan for that.

10. Decide on Record Keeping System

Both of you should decide who will manage record keeping and payment of bills. Anyone can do it or you can do it on rotation basis or jointly. Develop a record-keeping system that both of you can understand. Make sure that you keep your records at a convenient place so that anyone can access them easily.

Conclusion

Many new couples find it hard or embarrassing to talk about money or debt with their spouse. The key to reducing financial stress is to openly discuss money matters on a regular basis and follow a predetermined strategy consistently. No two people have the same money personality so it’s important to determine upfront what’s important for both of you.

Future is uncertain and financial situation may change over time, but with comprehensive financial planning, most couples can survive the tough financial period. If you find problem in executing the above advice, you can contact a Certified Financial Planner for professional support.

Financial Planning for 20-somethings

What is the right age to start financial planning? Should I start at the time of getting my first job or should I wait till I have made a lot of money? These are common thoughts in everyone’s mind.

Frankly, there is no particular ‘right’ age to begin financial planning. The only adage that one must remember is that the more time you give your money, the more it will grow.

The ‘power of compounding’ works it’s magic only with time. So the ideal time to start off is when you get your first job – in your 20s.The biggest asset that you bring to the table in your 20s is not how much you are earning, but the amount of time that you have on your side to make your money grow. The decisions and actions that you will take now will have a tremendous impact on your future. Sounds unbelievable, but it is true.

At this age, you will quite obviously not have a lot of goals (clearly visible) to achieve. This should not deter you from starting your financial planning. All that you do may not be goal-based financial planning, but there is a lot of ground-work that you can do, so that as and when your goals become clearer, you are able to align them towards your financial wellness.

Let us look at some golden rules that young people must follow in order to have a secure financial future:

i.    Open a Public Provident Fund (PPF) account at the earliest. With the limit of investment now being raised to Rs 1 lakh per annum, this is a good investment option as it offers steady (and not constant) returns. The returns from PPF are now linked to the market and will be revised annually. This can be used for tax planning.

ii.      Start by saving at least 10% of your income. This is really not asking for too much. Since there might not be any immediate goal to meet, this amount can be allocated towards funding your retirement nest egg.

iii.       Credit card outstanding– Rolling over your credit card outstanding is the worst thing that you can do. The compounding of the interest on your credit card outstanding is enemy number one. Use internal accruals as far as possible to pay off your credit card debt, immediately. Each day of delay is only going to cost you more. If you are unable to figure a way out, ask your financial planner for advice.

iv.        Smart use of your credit card – At this age, the tendency to splurge is immense. With little or no liabilities, one tends to spend beyond one’s income, all thanks to your credit card. The credit card is a useful tool, if used wisely. Unchecked spending can lead you to a debt trap. The idea is to use your credit card wisely such that it improves your lifestyle and does not ruin it.

v.        Education loans – They provide you with a certain amount of tax benefit. So it is not wise to rush to pay them off immediately. Use the tax benefit to your advantage. Pay it off only if the equated monthly instalment (EMI) becomes a burden on your finances.

vi.       Get an Emergency fund in place. This is nothing but putting away about four to six months of your expenses into a debt instrument (which can be liquidated immediately) to take care of any unforeseen expenses. The investment value of this amount should not fluctuate, though the returns should be optimal. The idea is not to generate huge returns, but to have money at hand if the need so arises.

vii.         Life insurance– Generally speaking, there are no dependants at this age. Hence, there is no necessity for insurance. Quite contrastingly, a number of people end up investing in insurance products (with little or no knowledge of the product) as the agents are able to show them a ‘bright and rosy’ future (simply because of their young age). You need to take life insurance cover only if there are people dependant on you and your income or if there is an asset (like a home) that you are purchasing by taking a housing loan.

viii.        Health insurance – This is one cover which should be taken up immediately. It does not cost much at a young age, but provides security against unforeseen health-related expenditure.

ix.       Personal loans – This along with credit card outstanding is a very common reason why youngsters fall into debt traps. The idea of swapping loans and outstanding from one bank to another may look very wise on paper, but it is only postponing the inevitable. Hence, avoid personal loans as you would avoid extravagance on your credit card.

x.       CIBIL scores – Thanks to technology, now your financial transactions (like credit card repayment and roll-over, cheque bouncing, non-payment of EMIs on various loans taken by you, delay in paying your liabilities, etc.) are recorded and monitored by Credit Information Bureau (India) Ltd., (CIBIL). Your CIBIL scores play a vital role in the sanction of loans in the future. So if you spoil your rating at such a young age, you will find it hard to get loans in the future for your house or your child’s education, etc.

If you can start off at this young age and plan your path methodically along with your financial planner, you can achieve all your dreams. The most important step is the first one as that decides whether you will create the path to your financial wellness or not. As Martin Luther King Jr. put it “Take the first step in faith. You don’t have to see the whole staircase, just take the first step.”

What is the right age to start financial planning? Should I start at the time of getting my first job or should I wait till I have made a lot of money? These are common thoughts in everyone’s mind.

Frankly, there is no particular ‘right’ age to begin financial planning. The only adage that one must remember is that the more time you give your money, the more it will grow.

The ‘power of compounding’ works it’s magic only with time. So the ideal time to start off is when you get your first job – in your 20s.The biggest asset that you bring to the table in your 20s is not how much you are earning, but the amount of time that you have on your side to make your money grow. The decisions and actions that you will take now will have a tremendous impact on your future. Sounds unbelievable, but it is true.

At this age, you will quite obviously not have a lot of goals (clearly visible) to achieve. This should not deter you from starting your financial planning. All that you do may not be goal-based financial planning, but there is a lot of ground-work that you can do, so that as and when your goals become clearer, you are able to align them towards your financial wellness.

Let us look at some golden rules that young people must follow in order to have a secure financial future:

i.    Open a Public Provident Fund (PPF) account at the earliest. With the limit of investment now being raised to Rs 1 lakh per annum, this is a good investment option as it offers steady (and not constant) returns. The returns from PPF are now linked to the market and will be revised annually. This can be used for tax planning.

ii.      Start by saving at least 10% of your income. This is really not asking for too much. Since there might not be any immediate goal to meet, this amount can be allocated towards funding your retirement nest egg.

iii.       Credit card outstanding– Rolling over your credit card outstanding is the worst thing that you can do. The compounding of the interest on your credit card outstanding is enemy number one. Use internal accruals as far as possible to pay off your credit card debt, immediately. Each day of delay is only going to cost you more. If you are unable to figure a way out, ask your financial planner for advice.

iv.        Smart use of your credit card – At this age, the tendency to splurge is immense. With little or no liabilities, one tends to spend beyond one’s income, all thanks to your credit card. The credit card is a useful tool, if used wisely. Unchecked spending can lead you to a debt trap. The idea is to use your credit card wisely such that it improves your lifestyle and does not ruin it.

v.        Education loans – They provide you with a certain amount of tax benefit. So it is not wise to rush to pay them off immediately. Use the tax benefit to your advantage. Pay it off only if the equated monthly instalment (EMI) becomes a burden on your finances.

vi.       Get an Emergency fund in place. This is nothing but putting away about four to six months of your expenses into a debt instrument (which can be liquidated immediately) to take care of any unforeseen expenses. The investment value of this amount should not fluctuate, though the returns should be optimal. The idea is not to generate huge returns, but to have money at hand if the need so arises.

vii.         Life insurance– Generally speaking, there are no dependants at this age. Hence, there is no necessity for insurance. Quite contrastingly, a number of people end up investing in insurance products (with little or no knowledge of the product) as the agents are able to show them a ‘bright and rosy’ future (simply because of their young age). You need to take life insurance cover only if there are people dependant on you and your income or if there is an asset (like a home) that you are purchasing by taking a housing loan.

viii.        Health insurance – This is one cover which should be taken up immediately. It does not cost much at a young age, but provides security against unforeseen health-related expenditure.

ix.       Personal loans – This along with credit card outstanding is a very common reason why youngsters fall into debt traps. The idea of swapping loans and outstanding from one bank to another may look very wise on paper, but it is only postponing the inevitable. Hence, avoid personal loans as you would avoid extravagance on your credit card.

x.       CIBIL scores – Thanks to technology, now your financial transactions (like credit card repayment and roll-over, cheque bouncing, non-payment of EMIs on various loans taken by you, delay in paying your liabilities, etc.) are recorded and monitored by Credit Information Bureau (India) Ltd., (CIBIL). Your CIBIL scores play a vital role in the sanction of loans in the future. So if you spoil your rating at such a young age, you will find it hard to get loans in the future for your house or your child’s education, etc.

If you can start off at this young age and plan your path methodically along with your financial planner, you can achieve all your dreams. The most important step is the first one as that decides whether you will create the path to your financial wellness or not. As Martin Luther King Jr. put it “Take the first step in faith. You don’t have to see the whole staircase, just take the first step.”

- See more at: http://www.fpgindia.org/2012/08/financial-planning-for-20-somethings.html#sthash.t6MDH5Xa.dpuf