Lifestyle is an important part of our lives. Everyone has a different description of Lifestyle. The most important thing is what ever maybe the lifestyle needed, one has to plan financial to achieve it.
The very important factor in planning is the time you have and the method you acheive it. The earlier you plan the higher the amount. This chart shows a simpe computation of Time value of Money.
Planning has to be done to
- identify the need,
- the money needed for that lifestyle,
- the time available
- how to acheive it.
The first step is quite simple. Lifestyle to travel overseas every year, need a holiday home, a sports car, a luxiourious home by the beach, etc etc. It can also be a simple second home, a financial free retirement. So you need to know how much you need.
Once you decided to save, the the risk that you can take has to be decided. If you dont want risk, the returns will also be low. High risk, High returns.
The options are- FD in a bank for abour 1%-2% interest rate
- Bonds or tresury bills- 2-4% returns
- Balanced funds with exposure to bo equity and bonds with about 5-9% returns
- Equitiues either as Shares, Unit trust or Managed accounts with a potential return of more than 9%
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