Cash Flow Management

Equity and Stocks Investment Advise

Cash flow management looks into four aspects of an individual or family income, expenses, savings, and investments. It is the term that is used to describe in-flow and outflow of money into the business. It helps in identifying shortfall or surplus cash that could potentially happen. This gives the owner a clear idea of how much profit company is making and how much money will be available in the future for volume growth. Cash flow management helps the owner to keep track of the company’s finance and resolve problems with cash-flow, identify trends and prepare for the future. It is an essential practice for every business to thrive financially and keep running successfully.

Cash flow management involves budgeting, emergency fund planning, and saving strategies. Banks and money-lenders employ debt management ratio in cash flow management to evaluate borrower’s financial capacity to repay the loan. Debt management ratios can be divided into three categories- consumer debt, housing costs and total debts.

  • Budgeting-

Budgeting in short terms can be explained as self-evaluation of financial status. It comprises of devising a financial plan essential to attain financial goals by estimating income and expenses for a certain period of time. For an individual, the process of budgeting involves management of household expenses and disciplined savings to meet future goals such as kid’s education, parent’s health issues, retirement etc.

Budgeting steps-

  1. Estimate fixed annual income
  2. Jot down non-discretionary (fixed) and discretionary (estimated) expenditures
  3. Assess whether you are falling short of money or there is surplus amount left
  4. Think about how you can decrease expenses and increase income
  5. Put income and expenses in percentage form. This will give you a bigger and clearer picture of your financial cash flow.
  • Emergency Fund Planning

Emergencies do not knock on your door and then enter your house. They are like uninvited guests who may give you a surprise visit at any hour of the day! Hence, being prepared to face any sort of emergencies at the drop of hat is absolutely essential if you want to breeze through it smoothly.

Loss of property, medical expenses, unemployment, and disability are all forms of emergencies that require good finance to sustain or survive.

Some percentage of your monthly income should be contributed towards emergency funds. Conservative investment approach such as banks, post etc. should be maintained while planning emergency funds. The reason for using conservative approach is that they are highly secure and involve minimal or no risk. Emergency funds should get easily liquidated as they serve the purpose of emergency cash.

  • Saving Strategies

Some part of monthly income should be directed towards savings. These savings can help you meet short-term financial goals. However, savings may not able to beat inflation and meet long-term financial goals. Hence, savings, when converted into investments not only have potential to beat inflation but also give you good returns that will help you to achieve your financial aspirations.

Decide how much money you want to keep aside as savings and how much money you want to invest. Investment is like a seed. When sown in a suitable soil, it eventually yields sweet fruits. Investments on similar terms, when invested in suitable investment vehicles, help you in generating wealth. Various investment vehicles like bank deposits, mutual funds, gold, real-estate, equities etc. are available. Each of these investment tools has its own set of pros and cons. Hence, before investing, it is important to assess which kind of investment vehicle meets your requirements, needs and risk appetite. Bank deposits are secure and offer moderate kind of returns. On the other hand, equities are highly volatile but, deliver the highest returns. Research-backed equity investment has potential to deliver multi-fold returns and hence, it is important you get equity investment done through an equity investment advisor. If you want to invest in equities on your own, you need to invest time and stock-market knowledge.

Purnartha equity investment advisors have been helping investors to manifest their wealth creation dreams and aspirations. With our research-backed equity investment recommendations and investment philosophy, many of our investors have achieved multi-fold returns. We maintain 100% transparency in our contract and financial transactions and do not touch your money! You have to pay a small initial fee at the beginning and performance fee at the end if we surpass hurdle rate chosen by you.

If you are looking for equity investment advisory services, feel free to contact us at support@purnartha.com. We will be more than happy to answer your queries.

Happy investing!

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