5 Key Components of Financial Planning to Focus on in 2024

Financial planning for most individuals often only revolves around managing their investments or planning for retirement. While this approach is a great starting point towards a financially stable and secure future, it can also limit your financial growth as it ignores other key aspects like tax and insurance planning. 

As a result, a comprehensive approach to personal finance planning is pivotal. As 2024 dawns upon us, it’s an ideal time to evaluate and fortify your financial strategies. Here are the 5 key components of the financial planning process that you must focus on in 2024.

1. Investment Planning

The first aspect of financial planning in 2024 is having a robust investment plan to reach your financial goals. Not to be confused with savings which involves setting aside your funds, investing is all about putting your money in the right assets like stocks and mutual funds to make your money grow.

At its core, investment planning focuses on choosing the right mix of assets depending on your financial objectives and risk appetite. In 2024, prioritise informed and diversified investment strategies. Assess your risk tolerance and investment goals before diversifying your portfolio across investment vehicles such as stocks, bonds, mutual funds, or real estate. Consistency and discipline in investing, coupled with a long-term perspective, can potentially yield significant returns.

2. Retirement Planning

It’s never too early to start planning for your retirement. Effective retirement planning from early on helps you ensure that you continue to live a financially secure life after retirement, even in the absence of a regular income. This involves evaluating your retirement goals to see if your current savings align with those objectives by considering factors like your desired retirement age, lifestyle expectations, and potential healthcare costs.

To achieve your retirement goals, consider diversifying your retirement portfolio to balance risk and potential returns. Regularly review your retirement plan, adjusting investment strategies as needed to stay on track towards a comfortable retirement.

3. Tax Planning

Tax planning is an essential component of wealth planning, especially with the constantly changing tax laws. In 2024, stay updated on tax laws and regulations to benefit from available deductions and exemptions to reduce your taxable income. 

For instance, investing in tax-saving instruments like EPF, PPF, NPS, ELSS, 5-year tax-saving FDs, and more comes with tax deductions of up to Rs. 1.5 lakhs in a year under section 80C of ITA. Strategically planning your investments, contributions, and expenses can help you maximise your tax benefits.

4. Estate Planning

Often overlooked, estate planning is vital for ensuring that your assets are distributed according to your wishes upon your passing. This year, take time to draft or update your will, set up trusts if necessary, and ensure all beneficiary designations are up-to-date. It’s also wise to discuss your plans with your loved ones to avoid any confusion or disputes later on. Estate planning is a crucial step for anyone looking to secure their legacy and provide for their loved ones.

5. Insurance Planning

Finally, insurance planning is critical to the financial planning process as it serves as a safety net, shielding you and your family from unforeseen financial burdens. This year, review your insurance coverage to ensure it meets your current needs. Life insurance is essential if you have dependents, helping provide for them in your absence. Health, disability, and long-term care insurance are equally important, as they protect you from unexpected medical expenses and loss of income due to illness or injury. 

In Conclusion

Take your first step towards effective financial planning in 2024 by investing in the best mutual fund schemes with Tata Capital Moneyfy. Explore a suite of financial products to begin investment, retirement, and insurance planning for a secure future. Seek financial guidance from our experts – download the app today!