Moneycontrol
Feb 18, 2012 02:02 PM IST | Source: Moneycontrol.com

Bad Input Equals Bad Output

It is of utmost importance that even before we invest in any product we need to think about the holistic milestones which we need to cover.


Mukund Seshadri


To make a financial plan the raw material used is the data and inputs given by the client. The problem is that most people are not clear on their milestones and what impact will the current investments have on their future goals. The problem is, we do not spend enough time thinking about what really we want from our investments? The lack of focus leads to problems, as the choice of investments depends upon what currently is doing well in the market irrespective of whether it suits me or not. So in case our investment does not give the desired return we shift our focus into some other investment which again might not meet our goals. So it is of utmost importance that even before we invest in any product we need to think about the holistic milestones which we need to cover. So how does one ensure that data given is correct? The following points can be noted:-


1) Goals should be decided by both the husband and wife together and not in isolation. A financial plan is always for the family and not individual. An approximate estimate of current cost of goals should be decided upon. For eg. a marriage can be done in Rs. 2 lacs or Rs. 2 crs


2) A detailed list of investments should be mentioned and the copies of the same should be provided.


3) Monthly expense details should be carefully provided as it gives an insight into the disposable income. Fixed expenses are easier to ascertain however variable expenses needs to be carefully monitored.


It rightly said that the correct input leads to the correct output. If we want our financial planner to do justice with our plan, we need to ensure that the extra effort is taken from our side so that the data provided is correct. Finally every financial plan is a process in which an effort from both sides is needed to make it a success.

Mukund Seshadri is a senior partner at MSVentures Financial Planners.

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