Personal Financial Analysis Plan Essay Example | Topics and Well Written Essays - 750 words

Personal Financial Analysis Plan - Essay Example These financial areas include investment into bonds/stocks, purchasing a real estate, insurance coverage as well as income generating activities. My ultimate aim is to create a portfolio of such assets so that a consistent cash flow is being delivered to me throughout my retirement life. Out of the $100,000/- I would allocate $100,000 to purchase 30 years bonds of a large corporation which can provide return equivalent to the return of 5% to 7% whereas $100,000/- of existing financial resources are going to be invested into the purchase of stocks of a blue-chip company having a history of providing consistent stream of dividends. I also intend to buy a small piece of real estate at the total investment of $250,000 whereas I also intend to purchase an insurance cover which not only pay for my medical expenses but guarantee a consistent annuity amount over the period of retirement life. A bond is a long term security which provides a constant/variable rate of return called coupon over the period of its life besides returning back the investment made into it. Bonds are considered as less risky than the stocks as they guarantee a consistent fixed income over the period of investment and offer priority rights to the bondholders in case of liquidation. They are considered as best financial securities for planning retirement. (Investopedia, 2008). Stocks on the other hand are the shares in a company's equity and holders are given the status of shareholder in the business. They are more risky than bonds because return on them is not variable but also subject to fluctuations into the financial position of the company. Further, from a retirement planning point of view this can be more risky as it is not necessary and obligatory for the company to pay dividends to their shareholders. (Investopedia, 2008). Investing into real estate is now considered as one of the most lucrative form of investment as it not only appreciate in value but also provide a consistent stream of rental income over the contractual period. Insurance covers especially life insurance provide you an opportunity to protect your family in case of your death and after the retirement can also guarantee you a consistent stream of income out of the insurance premium you have accrued over the period of time. (About.com, 2008). Conclusion Preparing for after retirement period is one of the most critical issue in one's life as when approach that phase of your life where you may not be able to work as good as you were able to do in your youth. It is therefore of critical importance that personal financial planning for the future should be strong enough to ensure that all your financial needs are fulfilled. Investing into various real as well as financial assets is an excellent way through which one can plan to achieve a good mix of assets guaranteeing the overall achievement of financial goals of a person. My personal financial