Financial Planning and Money is a very important subject. One one hand, people are very casual about this and on the other hand, they over-analyze with complex books and expert advice and long formulas.
Simplicity is often not given the merit it deserves. Dilbert’s Scott Adam has curated the investment wisdom and put it in a simple 9 point plan. And it is very powerful indeed.
Here are the Scott Adam’s 9 Point Investment Plan:
1. Make a will
2. Pay off your credit cards
3. Get term life insurance if you have a family to support
4. Fund your 401k to the maximum
5. Fund your IRA to the maximum
6. Buy a house if you want to live in a house and can afford it
7. Put six months worth of expenses in a money-market account
8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement
9. If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio
One has to follow the above in the step by step by order. The Indian equivalent of 401K and IRA would be PPF and EPF – not 100% same by near.