Financial Planning Is Important!

6/13/2013 12:19:00 am


In this entry, I would like to share my thoughts as a Wealth Manager on the topic "Financial Planning is Important!", and also to highlight some survey results which I have recently conducted within my group of friends in Facebook, regarding "Level of Awareness On Importance of Wealth Management", whereby my objective is to learn about the market around me and to understand from the consumer's point of view.

Wealth Management, in other words, Financial Planning, is basically about your Protection, Savings and also Investment.

Before I go on in depth on the topic "Financial Planning Is Important!", here are some of the results I have acquired.

Basically based from the survey results above, those in my friend list in Facebook are mostly in the age range of 20 to 25 years old, followed by the age range of 26 years old to 30 years old. There are a total of 18 respondents altogether. Thank you to my friends for sparing some of your time doing my survey.

Here is the most important part of the survey on how well do the respondents know about Wealth Management. As you can see from the graph above, most of the respondents know the importance of Savings as part of Wealth Management, followed by Retirement, Investment and Protection. There are rare few of them who knows about Syariah Compliant Funds and also regarding Portfolio Management. These two components are actually part of Investment.

The pyramid diagram above is the Basics of Financial Planning which encompasses every aspect of an average individual's needs. The following shall be the explanation of each aspect namely Protection, Savings and Investments.

 Protection has a larger portion within the pyramid, whereby it covers 4 aspects, Hospitalisation, Accident, Total Permanent Disability and Critical Illness/Death. It is understood that this portion of the pyramid is a sensitive portion that is being discussed by various ulama' due to its gharar(uncertainty about the future) factor. My advice for this is to be taken with a pinch of salt, zakat your benefit payout/surrender value following the current Zakat Nisab and x2.5% for Insurance (Check out the video below for the explanation).

Savings is the 2nd largest portion within the pyramid. This portion of savings is commonly for retirement purposes and children's education, usually done with discipline, depending on individual's spending behaviour. The minimum amount an average individual should save is 10% of their income earned every month. From the accumulation of funds in their savings, the total amount should be sufficient for at least 6 months if (may Allah forbid) anything unexpected happens, so that there are enough funds to spend on for the next 6 months before the person recovers or finds another job. 

The last small portion in the pyramid, is the Investment. There are two different types investments, they are Conventional and Islamic investments. We are encouraged to invest the Islamic way, so as to follow suit with the Syariah, and to be able to consume the profits without feeling doubtful about where and what it is being invested.

With this, I have explained roughly more or less the Importance of Financial Planning. If you have any further questions, just email me, and I will answer to you accordingly. Thank you!


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My objective of creating this page is to reach out to more people, to educate about Islamic Finance and Individual Finance, share tips on financial planning and also be able to answer to everyone's queries. So, feel free to share this page and ask me questions. Let's share the knowledge and practice them together. In syaa Allah. Aamiin.