Friday, 22 June 2012

Be Careful when you make Long Term Financial Planning

Long term Financial Planning“Haste makes Waste, and attention is your only go”. This adage is also true in financial planning.  You should consider all aspects when you need a decision in financial planning. It may be about an investment in Provident Fund, 401K, retirement funds or any other long term financial plans. If there is any fault you have taken in your long tenure financial planning and funding for the same your future wishes may not taken place, your credit score may be over, sometimes you may become insolvent.

Some investment options can be consider the term, for example, consider the purchase of real estate. You can get real estate or house property for short term and long run. When you consider for short term investing in real estate, you purchase it for resale and you should consider the resale value which you can save in a short term such as 6 months or more. You should consider the interest of the funds you tied up with the property. If you buy a residential property or real estate for a long run you should look out for such a long period. The place where property situated may develop and the price which you can recover after such long period growth a few fold, the capital gain you can derive from the property, the money value after a long term etc. No doubt you have to consider the interest of the money you spend for the property for such a long term.

Time Value of money: The greatest thing you must consider for the long term financial planning is the time value of money. Today’s $100 may be $ 90 tomorrow and may be $50 after 5 years. I mean value of money and the purchasing power of money may change. If you can fulfill a financial plan with $1000, you can fulfill the same item may happen with $2000 after 5 years. So you must consider the capital cost when you need a long term financial planning.

The tax factor: You have to consider the tax factor also while you make financing for your long term financial goals. Some long run funding does not attract tax, for Example, depositing money in Public Provident Fund. You can obtain a significant tax free return for your money deposited in Public Provident Fund. If you deposit in any taxable income system, try to deposit in any high income, but sound financial tool.

When you make long term time financial planning count the abovementioned points such as time value of money, purchasing power of money, earning from the funding and also the tax factor. If, you do well you can enjoy a strong economic future till the end of your life.

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