Financial Planning Misconceptions

Financial Planning is a dynamic process of identifying financial resources and allocating these resources to realize your financial goals.

In the last 4 years of my financial counseling career, I have met many clients/prospects who have (had) misconceptions about Financial Planning. Below are few for your reading:

  • Financial Planning is only for the rich
  • I do not have money/savings to invest, hence I do not require financial planning right now
  • I am just 25, into first job, so I can postpone my planning
  • Insurance Planning is Financial Planning
  • Tax Planning is Financial Planning
  • Financial Planning is a one-time process
  • Engaging a Financial Planner means losing control on your finances.
  • Nothing will happen to me right now
  • I have enough money and confident that I can meet my post retirement living expenses
  • I am going to inherit lot of wealth from my parents. Hence, there is no need to prepare a financial plan

If you have any of the above misconceptions then suggest you to work on your finances immediately.

I am not of the view that you must engage a Financial Planner to manage your finances. But, I am suggesting you to have a realistic and well thought out financial plan. Once you have a Plan then kindly implement and review it periodically. If you require professional help then do not hesitate to consult unbiased financial planner/advisor. May be, the advisor may clear some of your misconceptions (if any).

There are no right or wrong financial products. You need to select the right product as per your financial goals, time frame and requirements. At the same time, there are good and bad advisors (as is the case with any form of businesses) in the market. Be informed about the pros and cons of the chosen financial product. Be financially literate to make your hard-earned money work for you.

If you have any misconception about financial planning process then kindly leave a reply in the below comment section. I will be more than happy to answer your query.


(Image courtesy of Stuart Miles /

  • rajesh siddi says:

    Hi Mr Shrikant

    I liked your articles
    Im 31 yrs of age
    And i want to start my sip
    My question is am i late to start sip
    I know i should have started eirlier but i did not had my job secured and flow of money every month was not guranted and now that i have confidance that my monthly flow of income will be steady i want to know if im late now to start my sip
    My period of investment in sip would be 30 years i have 2 kids and also will be investing in their education and health plans
    Im sure most of people here will have same question as i have
    Please enlighten
    Or may be u can share your views on proper age to start investing
    I will start investing from now but want to knw if im going in right direction

    Do reply me on my mail id



    • Dear Rajesh,
      Better late than never. Also note one more point – “Not taking enough RISK is itself the BIGGEST RISK”.
      Before working on Investment planning, you may have to analyze if you have sufficient insurance coverage??
      Do you have any existing life insurance plans? What abt health insurance?

  • jessi says:

    I investef in iciciprulife life stage pension plan in 2009.Ipaid three instalment of 60000 after that i stopped paying.In 2011 i switch to pension R.I.C.H fund and pension flexi growth.At presernt now i am getting the profit (60000*3=180000) 155000=00.Total amount i am getting is 335000=00.So i wasnt to know should i continue or i quit.Please suggest me asap.

    • Dear Jessi,
      Normally in any ULIP, in the initial years, lot of charges will be deducted from the premiums paid by policy holders. If you are making profits now, it is good. But do consider if it prudent enough to invest this amount in equity mutual funds. You may get even better returns without any commitments (premium payments).

      • jessi says:

        Thanks for your reply.This is without insurance policy.There are 0% charges
        if i surrender.I will get 355000=00 full amount.So any others option you can suggest me.

        • Dear Jessi,
          Kindly let me know about your Financial Goals.
          If you have any goal which is more than 10 years away from now, suggest you to invest this amount in couple of good balanced funds. Read my article on “Top Balanced funds.”
          Also, do you have dependents? Do you have term insurance plan?

          • jessi says:

            Dear sreekanth,
            Again thanks for your reply.My goals are 10 years away from now.But i want to invest in equity based mutual fund.Can you please suggest some.

          • Dear Jessi,
            Consider creating SIPs in the below Equity MFs ;

            * Franklin India Bluechip fund
            * ICICI Prudential Dynamic Fund
            * UTI Midcap fund
            * HDFC Balanced Fund

          • jessi says:

            As per your reply i am considering sip.There is an update i surrendered my icici life stage policy.So i will get 355000=00.So some of my friends suggest me to invest in
            1.L AND T BUSINESS CYCLES FUND 100000=00
            2.HDFC MID CAP FUND 50000=00
            3.KOTAK SELECT FOCUS FUND 50000=00
            4.HDFC BALANCE FUND 50000=00
            5.FRANKLIN INDIA PRIME PLUS 50000=00

            So please guide me properly.

          • Dear Jessi,
            I have already provide you with the list. Good to know that you have surrendered the unwanted policy.

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