Do You Need a Financial Planner?

Just Imagine, you know the product you wish to buy, and you know where to buy it from. You write a cheque, fill in the relevant document, and submit it to the respective point or insurance company or registrar. Or you can do it thru a host of websites that facilitate online investments. Then do you need a financial planner?

You may think to do it yourself, but it may not be when taking care of your investment is not an individual’s cup of tea.

Indian markets are globalized and affected by the vagaries of the global financial markets. Currency movements, oil price movement, Brexit issue, federal interest rate change, country-specific election, bilateral relationship, floods, politics…………. almost anything could affect the financial markets. As an individual investor, it can be challenging to keep track of everything that is happening around.

You will find various asset classes in the investment world, be it equity, debt, and gold, to choose from. Within these asset classes, too, there are multiple products available. In India, there are 42 Mutual Funds companies with 2000+ primary mutual fund schemes.

In BSE, there are 5000+ companies listed, and in NSE, there are around 2000+ companies listed.

It’s true.

In India, 24 life insurance companies and 34 general insurance companies offer numerous schemes and products. Check the total no. of schemes available in the market? Imagine the total no of plans!

Just imagine, how many banks are doing business in India? There are 21 public sector banks, 23 private sector banks, 6 payments banks, 44 foreign banks with branches in India, and 57 Regional Rural Banks (RRBs).

What percentage should they constitute, when you should buy or when you should switch or sell, is something challenging for an individual to do on his own. An individual investor can’t monitor all asset classes on his own.

After all, no matter how much information is available online, your personal situation is bound to be unique, and it can be helpful to get personalized advice.

A CERTIFIED FINANCIAL PLANNERCM (CFP) guides you on all your investment decisions. She/He is your financial doctor or guide in the vast financial jungle.

Here take a little reason to hire a financial planner, as well as what to expect once you hire them.

If you plan to purchase a home or make another big purchase, a financial planner can help you determine the EMI you can afford. Before making any big purchase like a home purchase, it would help you to take the help of a professional who can design a plan to me your financial goals and afford the home purchase.

The financial planner’s guidance and strategy underline the importance of making your money work for you at every stage of life.

Suppose A & B want to purchase their dream home as soon as possible. Both are earning Rs. 100,000/- per month salary. To buy a dream home, both are thinking of purchasing housing worth Rs. 70 Lakhs. All the banks are ready to grant their loan application.

Mr. A’s housing loan is Rs. 70 Lakhs with a 7.00% p.a. rate of interest per annum for 20 years.

Just calculate the EMI – it is Rs. 54,271/- per month.

In 20 years (240 EMIs), Mr. A paid a total amount of Rs. 13,025,022/- (1.30 Crore) to the bank. Out of this total payment, Mr. A has paid Rs 60,25,022/- (60 Lakhs) as interest payment. Yes, it is Rs. 60 Lakhs of interest amount.

Mr. B has discussed with a financial planner to purchase his dream home. As per his financial situation, the financial planner advises him to create a corpus of Rs. 20 lakhs with five years for his financial goal – buying his dream home.

Mr. B created Rs. 20 lakhs corpus to purchase his dream home within five years as per his financial planner advice. Having a corpus of Rs. 20 lakhs, Mr. B’s housing loan is Rs. 50 Lakhs with a 7.00% p.a. rate of interest per annum for 20 years.

Just calculate the EMI – it is Rs. 38,675/- per month.

In 20 years (240 EMIs), Mr. B paid Rs. 93,03,587/- (approx. Rs. 93 Lakhs). Out of this total payment, Mr. B paid Rs 43,03,587/- (43 Lakhs) as interest payment. Mr. B has saved Rs. 17,21,435/- interest amount (Rs. 60,25,022 – Rs.43,03,587)

It is saving Rs. 17.21 Lakhs interest payment! Wow! It is advantageous to hire a financial planner.

It is one of the small examples, other calculations & strategies for different situations. A financial planner will check all the details to make a strategy for your benefit during your entire life. A financial planner is not only working this type of calculation, but he also guides you in your entire life thru managing money behavior.

A financial planner’s guidance and strategy can have a significant impact on your economic life. Be careful; entering a debt trap is very easy, but departing is more complicated.

You pay professionals such as lawyers, doctors, tax advisors, accountants – so why not pay a financial planner? It makes sense to pay a reasonable fee and get quality advice and service rather than losing a portion of wealth due to incompetent and inadequate advice.

Over time, your financial planner will continue to periodically monitor your progress to ensure you are still on track to meet your financial goals today, tomorrow, and into retirement. They will likely be your trusted financial partner for life because they can help you make wise, informed choices before making any significant financial decisions.

Do you go to a doctor when you get sick? Of course!

Do you take your car to the car mechanic? Yes, boss.

Do you have a financial plan for your future? Move now!

It is never too late to begin preparing for the future; however, something this important usually requires a professional. Consult a financial planner today!

“If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur” ~Red Adair

I am a CERTIFIED FINANCIAL PLANNERCM, CHARTERED WEALTH MANAGER®. For the moment, I have shared my experience growing up with you because it had a tremendous impact on how I do what I do. If you have a question about your financial situation, please connect with me. I’d be delighted to try to be of service.

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    July 24, 2021 - 11:27 am

    How about inflation over 5 years on property price ? What will be the impact ? There is ni mention of how Mr.B created down payment.

    Could you please shade more lights ?

    • Rupakumar Pradhan

      Rupakumar Pradhan

      July 25, 2021 - 4:50 pm

      You are welcome. Mr. B has discussed with the financial planner and created the corpus within five years as per the advice. Yes, the property price will increase during this period. Still, in the long run, Mr. B will be better positioned than Mr. A in achieving financial goals, money management, managing behavior, and moving into the happy money zone due to professional advice.

      I appreciate your thoughtfulness and valuable feedback on this. Thank you so much.

  • Avatar

    Dipankar Pattnaik

    July 25, 2021 - 2:32 pm

    Very aptly put. I think it’s worthwhile to go to an advisor rather than taking tips from people. Super. Keep doing the good work.

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