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Pyramid of Needs for Wealth management

Pyramid is used to in different needs analysis. Food, behavior, money etc.
When analysing why people do what they do, Abraham Maslow, a humanistic psychologist, developed a simple tool to explain why people do things. This is called Maslow's theory. He and other researchers found that people were motivated to do things by their basic human needs. He put these needs into the shape of a triangle with the basic human needs - Physical, Safety and Social needs at the bottom and the higher human needs like Self esteem, self fulfillment at the top.

Working on the same principle, a good financial plans must address the basic needs first before the social and emotional need.
So doing it as a pyramid, its often represented as shown in this figure
Financial plans fail when the pyramid is not balanced as it should be. If priorities on the top of the pyramid are addressed before the base, it would end up in a out of balance and hence fail.
This is a simple but a very effective tool I use to analyse any financial planning. You can review yours too and send in your comments. Swarna

Lifestyle Planning

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.

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.

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.

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%

Time is crutial to any planning. The earlier you start the higher the returns you can reach. Also, the amount needed will be lower.