Part 4: Strategy or How the heck do I get to Financial Freedom?
4.7 Planning for your Financial Freedom Goals
Now to put together a plan to achieve all your goals. Not in bits and pieces but a holistic plan that incorporates your current financials, covers all your goals and suggest the investing plan required? Do you have a good tool to make all this happen? Can you make changes as and when required to keep it relevant?
Setting goals that define financial freedom for you increases your chances of achieving it substantially, some say 33%. I believe it. What I have no doubts about is that creating a Financial Freedom Plan is taking a giant step in making it happen in your life. The planning process brings clarity to the strategy - how you will achieve it,. And that is far more important.
Plans are worthless. But Planning is Everything – Dwight Eisenhower: Super Commander of the Allied Forces in World War 2 and later President of USA.
You will go through the planning process in details which will give you clarity of how the heck you are going to achieve Financial Freedom and a great First Plan to start with. Will this plan change? Yes, but till they change you will be implementing it, and getting closer to your goals. When it’s time to change you will use the planning process and I hope, the FPT to make the required changes and then implementing the revised plan.
The beauty is that the MoneyWorks4Me FPT is what the name says it is -a financial Planning Tool. And its super easy to use especially after you finish reading this chapter and doing what it says.
So, let’s start. You will see that you can achieve more, much more through this planning process than you imagined possible. This first plan, I recommend, you build without making any changes to the default values we have set for returns and allocation to equity and debt. After you have read the chapter 4.9 you can revisit your plan. Also follow the steps and don’t skip any this time round.
You get a quick starting point for three Core Bucket List items - Children Higher Education, Marriage and Your Retirement. Just click on the Dashboard tab. What...........Read More
Warning: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Disclaimer: Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provides any assurance of returns to investors.
MoneyWorks4Me method for rating and ranking mutual funds for SIP
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and
ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the
various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Performance Consistency: This is measure based on whether the fund has beaten the benchmark index consistently. For
this we compare the 3-year rolling returns of the fund with the benchmark for a minimum of 5 years and preferable 10
years. The period of rolling is one month and holding period is 3 years. Fund are color-coded Green on Performance when
the fund beats the benchmark more than 90% of the time. It is Orange if it beats 80% to 90% of the time and Red if less
than 80%. Funds with less than 5 year data are color-coded Grey.
Quality of Portfolio Holding: Moneyworks4Me has color-coded stocks as Green, Orange and Red based on whether the
company's performance has generated a ROCE above a threshold level (cost of capital) over 10 years (minimum 6 years) and
generated positive Free Cash Flow. For Banks it checks whether ROE is greater than 15% and sales has grown over previous
year. Stocks that perform consistently on these combined metrics are color-coded Green (min score 14 out of 20), Orange
(between 8 and 14) and Red (less than 8 out of 20).
Fund are color-coded Green provided the portfolio has 70% holding in Green stocks but not more than 10% in Red stocks.
Funds with more than 15% Red stocks in the portfolio are color-coded Red. The rest are Orange funds
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The
ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number
that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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