Your Two Biggest Liabilities
What is your 2008 finance resolution? Achieving ‘financial freedom’? Or may be something more mundane like paying-off credit card debt, or hire purchase loan?
Whatever your goals are, it is important to get the basic right.
The very basic question is about good financial planning is understands your liabilities. NO, liabilities are not your housing loan, car loan, personal loan or study loan.
Your biggest liability is about paying for your own retirement. That means to have a comfortable and dignify retirement, you need to invest now and save diligently. When investing in stock market, avoid aiming to earn the highest possible returns or beat the market. The reason is if you set yourself to do you, you are taking unnecessary risks and that will hurt your investment returns. Instead, hunt for lowest investment cost and diversifying broadly and invest for a long term.
Your second biggest liability is your family. Family includes your elderly parents, siblings, spouse and children. The liability comes in the form of medical needs, education needs, or financial troubles. For financial prudent or simply out of love, it pays become a ‘busy body’ to know their finances and gives appropriate financial advice to avoid their financial troubles become yours. This is of course, can go both ways, your family may be your last hope if you get into money problems. Most often than not, when all hopes are out, you could always count on your family.
Start your 2008 financial planning by first look at you two biggest liabilities: retirement funding and your family.