Essay Financial Planning

2736 Words Jan 24th, 2015 11 Pages
Sample Essay on Financial Planning

It is vitally important for the individual to set up a personal financial plan in order not to experience hardships and financial difficulties in the future. Financial plan assure financial stability and financial freedom that one wants to possess till the end of his/her life. The following essay will speak about the role of the financial planning for the retirement years and will state that people without financial plans face substantial pain/suffering/unhappiness in their retirement years.

The process of developing a sound financial plan is a routine process that indeed involves not only careful financial analysis of the person’s current situation and long-term commitment to implement and monitor
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One should understand, according to the article that stock market isn’t the only investment opportunity and real estate indeed sometimes can be rather profitable. The article notes a case with a woman who after spotting an arbitrage opportunity with a triplex used it to buy the building and lease two out of three flats to pay for that building (mortgage). With time she would acquire the fourplex and six-piece building and keep investing money in these (strangely) never-ending arbitrage opportunities.

From the information contained in this article one can understand that people without financial plans are at a great financial disadvantage compared people with sound financial plans. Thus, if happiness comprises financial security and strength, while pain/suffering usually means the lack of happiness, we can say that people without financial plans indeed incur more suffering compared to whose who have plans, based on this monetary constituent of happiness.

Another useful piece of information one learns from the article titled “Creating a retirement paycheck”, that advises how to manage one’s individual retirement account not to run out of money before one runs out of time (Updegrave Walter, 2004). Updegrave (2004) advises that one should take an initial draw of about 4% and then increase it to adjust for inflation, let alone adopt a strategy that would combine annuities and mutual funds (Para 3). Annuities therefore act as

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