Thread by @tradersushma

Complete Financial Plan for a 35-year-old working professional Indian middle-class adult.

Disc : I am not a registered Financial Analyst. This plan is result of my studies & knowledge acquired from various sources.
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#financialplanning
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Some assumptions ~
🔹Since he has been working for > 5 years, he must have saved enough to cover his emergency needs. (approx. 6 months’ salary equivalent amount in FD)
🔹He must be married & have kids by now.
🔹He must have availed housing loan.

1. STUDY YOUR INCOME & EXPENSES

This is the 1st step in starting your financial journey.

Study your expenses.

Where does your salary gets spend? Enlist them in a table under headings like -

EMI
groceries
eating out
clothing
utility bills
SIPs
policy premiums etc

Some eye-opening observations can come out of this exercise.

After this exercise, next thing to do is to calculate your net worth. Read below thread to find out how to calculate your net worth.

https://twitter.com/tradersushma/status/1434859983544336395?s=20

2. INCLUDE YOUR SPOUSE IN YOUR FINANCIAL DISCUSSIONS

While calculating net worth & enlisting your expenses involve your spouse.

Keep your family in loop of your financial goals & actions.

U might be thinking of building emergency fund while your spouse might be planning for a family vacation. So, differences might arise. To avoid such circumstances, keep your family involved in all your financial planning & decisions.

3. CORRECT PAST MISTAKES

U must have taken some bad policies or invested in instruments which r eroding your wealth instead of doing good. Surrender those policies & stop junk investments.

Insurance products which are bundled with investments r the worst financial pdt. Stay away from them. Say outright NO to your policy agents if they recommend these pdts. In fact, change your advisor.

Also, if u have invested in risky assets (eg. Penny stocks, crypto, f&o etc), take out your money from those places & save your capital.

4. LIFE & HEALTH COVER

Much of your funds will be freed once u correct your past mistakes. With those funds do the right thing first. Take term insurance & health insurance to save u & your family from extreme circumstances.

5. CLOSE BAD LOANS

If u have o/s dues in credit card, low-cost EMI or personal loan, try to pay off them 1st.

Immediately close your credit card dues & avoid using CC for few years until u bring your finances in order.

Low-cost EMIs are actually high-cost loans, so avoid purchasing things in this scheme. Read more on this here

https://twitter.com/tradersushma/status/1560304604503752705?s=20

6. REDUCE DEBT BURDEN

Total of all your EMIs should not exceed 1/3rd of your salary. If it exceeds, u have some serious work to do. U r overleveraged. U have availed more debts than u can manage. If u do not work upon it now, u will soon end into debt trap.

What can u do now?

Live frugally for few years & save aggressively. Use this money saved to prepay some of your loans. I have curated an excellent technique to reduce loan in this thread. Go through & apply the same. It’s highly effective.

https://twitter.com/tradersushma/status/1466408707093192709?s=20

7. INVEST

Once u have rectified past mistakes & planned for debt reduction, u r mentally free to invest now.

Invest at least 20% of your salary.

Where to invest – u r in your 30s & still have long time before retirement so, u can invest aggressively in equities.

8. ASSET ALLOCATION

Asset allocation can be ~

⚡️70% in Nifty50 ETF
⚡️10% in BankNifty ETF
⚡️10% in Nasdaq ETF
⚡️10% in Gold ETF

Allocation may vary upon risk profile.

Eg. Suppose your monthly salary is Rs 1 lakh.

Monthly allocation for investing is Rs 20K

Out of Rs 20K ~
⚡️14K in Niftybees
⚡️2K in Bankbees
⚡️2K in Nasdaq ETF
⚡️2K in Goldbees

All your investments should be via SIP route.

SIP contribution should increase with increase in salary proportionately.

9. DIVERSIFICATION

Equity investing is subjected to volatility. To hedge yourself from wild fluctuations in your portfolio u need to diversify your funds. That’s the reason I have included goldbees in the portfolio.

U must have kept your emergency corpus in FD. Also, your PF must be getting accumulated. U may also start contributing 10% of your salary in PPF A/C. It will take care of your retirement planning.

So, your savings are allocated in pdts like ~

🔹Equity
🔹FD
🔹PF
🔹PPF
🔹Gold

So, u have appropriate diversification.

Above investments are for long term so do not watch their MTM daily.

For short term goals like purchase of costly items, vacation, home furnishing etc, do the savings in Recurring Deposit A/C. Do not disturb your long term pdts.

9. INVEST IN YOURSELF

This may be enlisted at the end but is the most important of all.

Invest in yourself, develop financial skill, read lot of books, consume productive content on internet.

In few years, u will reap its benefit.

U might end up developing some skill which can serve as a side hustle for u. This will create a source of passive income. With course of time, this passive income might serve your monthly needs & u will be heading towards the road to financial freedom.

That's a wrap!

If u liked my content please do like, retweet & follow me for more such informative finance related stuff.

Thank u!