FAQ #6. What is meant by the ‘time value of money’? Why is it important to understand Present Value, Internal Rate of Return, Purchasing Power of Money, and the like?
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Personal financial life planning |
Category: FAQJune 2, 2008 FAQ #5. What is the advantage of dealing with insurance and investment planning issues now? Why not postpone them?Of course, there is a good chance that you can postpone dealing with insurance, in the sense that you probably will not die, get injured, or sick very soon. But you just don’t know, that’s the point. The essence of … FAQ #4. Why such a big emphasis on insurance?Insurance planning is an integral part of personal life planning because as individuals or families, we are quite vulnerable financially. Pooling resources with others gives improved chances in coping with various risks — this is the basic function, or protection aspect of insurance. The whole institution of insurance wouldn’t exist if the future were knowable. FAQ #3. Why is time frame so important in dealing with our financial future? What does it mean, anyway?Pooling resources with others gives improved chances in coping with various risks — this is the basic, protection, aspect of insurance. In addition, insurance can be a sophisticated tool in managing the finances of families and businesses. FAQ #2. Aren’t financial plans and strategies useless? Why not to focus instead on tactics and improvisation in a world where we have to respond to new challenges all the time?There is a lot of truth and validity in the view these questions express, … and also I lot of misunderstanding. If someone interprets plans and planning as guarantees for wonderful outcomes and perfectly clear ‘manuals to the future’, I … FAQ #1. Why should we bother with financial planning at all?The reason for the need for planning is not that with it we can exclude risks from our lives totally. However, we can exclude at least some risks, and having a picture of various scenarios can help to … |
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