Parallel Universe: Expert's Guide to the Art of Losing MoneyDisclaimer:
Warning! The given tips are born from the minds of financial disasters and for entertainment purposes only. These are the results of the imagination of unsuccessful traders with a knack for making impressive losses. These master traders are known to make their financial mistakes by making huge losses. Unsuccessful traders are honored members of FRBF - Financial Ruins of Big Fortune with lifetime achievement of negative portfolios and returns. We do not recommend following the suggestions from the unsuccessful traders otherwise we have to add you to FRBF club.
Well, well, if it isn't the tired soul tired of seeing green numbers in their trading account. Can you believe it? I always have seen a dream of world's biggest loser trader. Apparently, 99% of traders out there are making money, and we're stuck in the miserable 1% who might be losing. But hey, if you're sick and tired of making money, you've stumbled upon the perfect spot. Get ready for a wild ride as I unveil the secrets to drain your hard-earned cash and proudly join the prestigious FRBF - the Financial Ruins of Big Fortune. Buckle up, my friend!
1) Borrowing Money:
You should borrow money from every possible resource. Remember that Saving money and working hard for financial stability is just for cowardly people. Debt is the only key to get success in the trading world. If you have bad luck, you can get your creditors good luck by borrowing their money. Imagine when your creditor will knock on your door, and you will be running and hiding from them! How thrilling is this! It's a surefire way to reach new heights of financial ruin.
2) Avoid Using Stop-loss:
We should totally ignore those stop-loss orders. There's this fascinating study that suggests traders who actually use stop-loss orders tend to have lower losses compared to those who don't. who needs that kind of useful information? Not us! We're not beginners here, are we? If you use stop-loss, it will exit the trade when market sentiments are changed. You will never be able to make huge losses. Let's just toss those stop-loss orders right out the window and dive headfirst into the exhilarating world of uncertainty. Because what's more exciting than watching our trades go haywire with no safety net? So let's embrace the thrill, ignore risk management, and revel in the rollercoaster ride of potential financial ruin.
3) Hold Losing Positions & Never cut losses:
Who needs to admit defeat when we can simply cling to hope and pray that the market will miraculously turn in our favor? It's such a fantastic strategy to hold onto those sinking ships, watching our losses pile up like trophies of our unwavering determination. Cutting our losing positions? Pfft, that's for amateurs who actually care about preserving their capital and minimizing losses. We, on the other hand, choose to ride the wave of delusion and hold onto our sinking investments with unwavering faith. After all, why learn from mistakes when we can repeat them endlessly? So let's keep clutching those losing positions tightly, and maybe, just maybe, the market will eventually bend to our will.
4) Avoid Managing Risk:
Risk management will not let you become an unsuccessful trader. Forget about preserving your capital and protecting yourself from substantial losses. Let's just dive headfirst into the deep end and throw caution to the wind! So, according to your brilliant logic, let's ignore risk management and trade in five stocks with a 1:3 risk-reward ratio. We'll lose $3 in three stocks and $6 in the remaining two trades. Brilliant strategy, right? Who needs profits when we can lose money consistently?
5) Never Pay Attention to News & Events:
Who needs to stay informed about current events and news when it comes to trading? Ignorance is truly bliss, especially when it comes to making informed decisions and understanding market dynamics. Let's just close our eyes and ears to all those pesky news articles, economic reports, and major events that could potentially impact the market. Who needs to know about interest rate changes, geopolitical tensions, or corporate earnings releases? They're just distractions, right? Instead, let's rely on our sheer intuition and gut feelings to guide our trading decisions.
(6) Overtrade Consistently:
Overtrading is the key to financial prosperity in the trading world. Forget about patience, strategy, and carefully planned execution. Instead, let's indulge in a frenzy of excessive trading and drown ourselves in a sea of transactions. Who needs quality over quantity when it comes to trades? Let's throw caution to the wind and execute as many trades as possible, disregarding any semblance of rational decision-making. Because, clearly, more trades automatically translate into more profits, right? Why bother with analyzing market trends, studying charts, or conducting thorough research when we can just click that "Buy" or "Sell" button incessantly? After all, trading is just a game of chance, and blind luck is definitely on our side.
7) Never Use Technical Analysis:
Technical analysis? Nah, it's all smoke and mirrors, right? Who needs those fancy charts, indicators, and patterns to make smart trading decisions? I mean, who has time for that? Sure, by using technical analysis, you could potentially have a better sense of when to enter or exit trades and where to set stop-loss levels. You might even be able to forecast market movements using theories like Elliott wave, price action, chart pattern analysis, or volume analysis. But who needs all that when you can just wing it and tap the buy and sell buttons without any plan or analysis? Who needs strategies or insights anyway? Forget about those losers who waste their time studying charts and analyzing market trends. Real traders, the ones who consistently lose money, don't bother with technical analysis or any other form of analysis for that matter. They rely solely on their gut feelings and blind luck. That's the way to go!
8) Emotional Trading:
emotional trading Is a brilliant strategy! Who needs logical decision-making when you can base all your trades on impulsive emotions? Forget about analyzing charts, patterns, or market trends. Just let your feelings guide you like a compass in a hurricane. Why bother with calm and rational thinking when you can succumb to the rollercoaster ride of fear, greed, and impulsiveness? It's truly a magnificent way to sabotage your trading success and ensure that your portfolio becomes an emotional wreck. So go ahead, throw logic out the window, and embrace the chaos of emotional trading. Because nothing says financial stability like making impulsive decisions based on fleeting emotions! Good luck on your wild emotional trading adventure!
9) Always Trust Unregulated Brokers:
Unregulated brokers are the epitome of trustworthiness and reliability. Who needs regulatory oversight and investor protection when it comes to handling our hard-earned money? Why bother with ensuring the safety of our funds or verifying the legitimacy of a broker? It's so much more exciting to entrust our financial well-being to anonymous individuals operating in the shadows. Who needs transparency, accountability, or adherence to industry standards? Unregulated brokers provide the perfect opportunity to navigate the treacherous waters of the financial world without any safety nets. It's like playing a high-stakes game of roulette with our life savings!
10) Always trade on others' advice
Trading on others' advice is the secret recipe for success in the trading world. Who needs to develop their own knowledge, skills, and expertise when we can rely solely on the wisdom of others? Let's throw out our own analysis, research, and intuition, and blindly follow the advice of random strangers on the internet or that "hot tip" from a friend's cousin's neighbor's dog. After all, they must be financial geniuses with impeccable track records, right? Who needs to understand the underlying fundamentals or technical aspects of a trade when we can just mimic the actions of others without question? It's so liberating to surrender our autonomy and decision-making abilities to the masses. It's a foolproof strategy that guarantees confusion, frustration, and, of course, financial ruin.
11) Never Ever Take Profit
It's such an intelligent strategy to watch our gains evaporate right before our eyes.
Why bother with securing our profits and protecting our capital when we can hold on to winning positions indefinitely? It's so much more thrilling to experience the roller coaster ride of market fluctuations and see our unrealized gains dwindle away. Let's ignore those pesky market indicators, trailing stops, and profit targets. After all, who needs a concrete plan when we can simply rely on greed and the hope that our winning trades will magically keep going up forever? And let's not forget the joy of regret when a once-profitable trade eventually turns into a massive loss. Who needs financial stability and consistent growth when we can embrace the unpredictable nature of the market and bask in the glory of missed opportunities?
12) Learning From Mistakes
Learning from our mistakes and evolving as a trader is overrated. Who needs personal growth and improvement when we can stay firmly planted in our cycle of financial self-destruction? Let's ignore those pesky lessons that losses teach us. Why bother reflecting on our trading errors, analyzing our strategies, or seeking ways to improve? It's so much more exciting to repeat the same mistakes over and over again, expecting different results each time. Who needs progress and development when we can remain comfortably stagnant in our trading endeavors? Let's embrace the thrill of consistent failure and pretend that we're on the cusp of a breakthrough while repeating the same ineffective tactics. And why stop repeating mistakes? Let's add a touch of delusion and convince ourselves that this time, things will magically turn around. Because, clearly, doing the same thing repeatedly without learning from it is the secret to unbounded success.
13) Fall for "Get-Rich-Quick Schemes"
"Get-rich-quick schemes" are the epitome of financial wisdom and stability. Who needs a long-term, sustainable approach to wealth when we can chase after elusive shortcuts to instant riches? Why bother with hard work, patience, and diligence when we can throw caution to the wind and blindly trust those promising overnight success? Let's believe in the magic of "secret formulas," "guaranteed profits," and "hidden strategies" that are conveniently packaged in flashy marketing campaigns. Let's not forget the joy of handing over our hard-earned money to these self-proclaimed experts, who undoubtedly have our best interests at heart. After all, it's not like they're preying on our gullibility and desperation for a quick financial fix, right?
14) Trade Based on Rumors
Baseless rumors and gossip are the most reliable sources of information for successful trading. Who needs verified facts, data, or market analysis when we can simply rely on hearsay and unfounded speculation? Why bother with conducting thorough research or verifying the authenticity of information? Let's just blindly believe every rumor that comes our way and make trading decisions based on pure gossip. It's so much more thrilling to embrace uncertainty and place our trust in unverified whispers. Who needs to understand the impact of real market drivers or economic indicators when we can make impulsive decisions based on the latest unfounded chatter? It's like playing a game of financial Russian roulette with our hard-earned money.
To be continued... :D
Idea by @Money_Dictators on @TradingView Platform
Moneydictators
Part 2: Price Action Breakdown - Advance ElementsIn the first part, we discussed the components of the price action theory. We covered value area, control line, and excess price with examples, setups & guidelines (with my own observations.) Now, in this idea, we are going to cover the following topics:
No trading zone
Initiative & responsive trading
Shifting of the value area
Bullish Value area
Bearish value area
Extention of the value area
Combining all the pieces
I request all of you to visit our first part if you have not read it yet.
Check out the following demo chart, and try to mention each component by yourself:
Now, you can check the following chart, and see if you have denoted correctly or noted:
1) No trading zone:
No trading zone/activities is the area where trading is not happening. It shows the strength of buyers in the lower band and the strength of the sellers in the upper boundary. Its shows who is controlling, who will be controlling, and who have lost the opportunity.
What does it mean?
🔹If the length of the no-trading zone is wide at the lower band, it shows that buyers are controlling the movement and sellers are not able to form trading activities.
🔹If the length of the no-trading zone is wide at the upper band, it shows that sellers are controlling the movement and buyers are not able to form trading activities.
Observing the given formation that shows a sideways value area is enough to understand the whole story. There were actually three no-trading zones in the value area: two on the lower band and one on the upper band.
The first NTZ(No-trading zone) on the lower band was the signal of the movement controlled by buyers. NTZ-2 was the widest of the value area, where sellers snatched the control from buyers and started outnumbering the buyers. NTZ-3 was the last no-trading zone where the buyers were on the controlled buy and couldn't give a response to the sellers' initiative move. The excess was the last price point from sellers that started the supply pressure.
2) Initiative & responsive trading
As we discussed earlier, price movements are the result of the interaction between supply and demand. Buyer(demand) and seller's(supply) intuition are the main components of the price.
Value area from where buyers and sellers are satisfied with the current prices. Neither buyers want to increase, nor the seller is interested in low prices at least for some duration. It's called equilibrium between buyers and sellers.
What if it's enough?
# Now buyers don't want to keep the prices as it's too low for them. So, the buyers will make an initiative to break the upper band of the value area. It is called "initiative" by buyers.
# Sellers have to stop them from going out of the value area by making excess, which is called "response" by sellers. Anyone, either buyers or sellers, who are not satisfied can make an initiative. However, the opposite party has to respond to their initiative and settle into equilibrium again.
Case 1:
- The movement can only reach equilibrium by responding to each initiative. If a failure occurs, it signals evidence of a big move in the direction of the initiative. As per the chart, whenever buyers have made an initiative to move outside of the value area, sellers have responded with supply pressure and vice versa.
Case 2:
- Buyers have made an initiative, but sellers couldn't hold back the buyers' pressure and ended up losing movement. Here, we can say that the buyers have given a breakout of the value area, and the sellers' response was a failure.
3) Shifting of the value area
- Traders don't have to be upset after the breakout of the value area. Supply and demand will balance and unbalance again, and traders will get an opportunity to trade according to the theory. We all know of the tenet of the dow theory that "price tends to trend ." Value area also shifts its value after the breakout/breakdown, often in the direction of the trend.
Uptrend: The price was in an uptrend. After the breakout of the first value area, it has formed the second, and so on.
Downtrend: The price was in a downtrend. After the breakdown of the first value area, it has formed the second, and so on.
Part 1: Equity Derivatives - A Beginner's GuideWhat are derivatives?
Basic interpretation : something which is based on another source.
A derivative is a contract or product whose value derives from the value of the base asset. The base asset is called the underlying asset.
i.e., Sugar prices will rise if sugarcane prices increase due to low production. It means sugarcane is the underlying asset of sugar because the value of sugar is associated with sugarcane.
There is a broad range of underlying assets:
Metals: lead, gold, silver, copper, zinc, nickel, tin, etc.
Energy: coal, natural gas, etc.
Agri commodities: corn, cotton, pulses, wheat, sugar, etc.
Financial assets: Stocks, bonds, forex, etc.
There are two types of derivatives:
1. Exchange-traded: A standardized derivative contract, listed and traded on an organized exchange.
2. Over-the-counter/off-exchange trading/pink sheet trading:
A derivative product in which counterparties buy or sell a contract or product at a negotiated price without exchange
Instruments of derivatives market:
There are four instruments in the derivatives market:
1. Forward:
Forward is a non-standard agreement or agreement between two parties that allows you to buy/sell the asset at the agreed price for a pre-decided date of the contract.
Forwards are negotiated between two pirates, so the terms and conditions of the contract are customized.
These are called over-the-counter(OTC).
2. Future:
Future contracts are similar to forwarding contracts, but the deal is made through an organized and regulated exchange rather than negotiated between two counterparties.
A futures contract is an exchange-traded forward contract.
3. Options:
A derivative contract that gives the right but not the obligation, to buy or sell an underlying asset at a stated strike price on or before a specified date.
Buyers of options- Pays the premium and buys the right
Sellers of options - Receives the premium with the obligation to buy/sell underlying assets.
4. Swap:
A swap is a derivative contract between two counterparties to exchange for the cash flows or liabilities from two different financial instruments.
It is an introduction article. I will cover all these topics in detail.
Swap helps participants manage risk associated with volatility risk interest rate, currency exchange rates, & commodity prices.
Index:
Index = Portfolio of securities
An Index shows how investors experience the economy. Is it progressing or not?
A Stock market index gathers data from a variety of companies of industries. The data forms an overall picture and helps investors compare market performance through past and current prices.
Financial indices represent the price movement of bonds, shares, Treasury Bills, etc.
Importance of Index:
1. An index is an indication of a specific sector or gross market.
2. It helps investors to pick the right stock
3. An index is a statistical indicator. It represents an overall change or part of a change in the economy.
4. In OTC & exchange-traded markets, It used as an underlying asset for derivatives trading
5. An index helps to measure for evaluation of portfolio performance.
6. Portfolio managers use indices as investment benchmarks.
7. Index illustrates investor sentiments.
Types of index:
There are four classifications for indices:
Equal Weighted Index:
Each company is given the same weightage in the composition of this index. Equal-weighted indexes are more diversified than market capitalization-weighted indexes. This index focuses on value investing.
Free-float index:
In finance, equity divides into different among various stakeholders like promoters, institutions, corporates, individuals, etc.
A tradable stake for trading is called a free-float share.
i.g, If XYZ company has issued 5 lakh shares with the face value of Rs 10, but of these, 2 lakh shares are owned by the promoter, then the free-float market capitalization is Rs 30 lakh.
Free-float market capitalization: Free-floating shares * Price of shares
Index: BSE SENSEX
Market capitalization-weighted index:
In this index, each stock is given weightage according to its market capitalization.
High market cap = High weightage
Low market cap = low weightage
Market Cap= Current market price * total number of outstanding shares
i. e, if XYZ company has 1,000,000 outstanding shares and a market price of 55 rs per share will have a market capitalization of 55,000,000.
Index: Nifty 50
Price Weighted Index:
High price = More weightage
Low price = Low weightage
Popular price-weighted index: Dow Jones industrial average & Nikkei 225
I will upload the second part soon.
Show your love with likes and comments.
Thank you :)
Money_Dictators
Financial Planning: An IdeaHello Trader
Today we have to talk about financial knowledge, how important is it to have financial knowledge and whether can it make us financially free.
Let's begin,
Everyone needs money to survive. Financial planning is the process of managing your money wisely to achieve your financial goals. It involves planning your future finances keeping in mind your current situation.
In simple terms, financial planning helps you answer questions like:
How can I save more money?
When can I comfortably retire?
How can I pay my debts?
All these questions are very important if you want to be financially free
* Financial planning helps you identify your long-term and short-term goals, whether it's buying a house, children's education, or retirement so that you don't have to worry about anything.
* An important aspect of financial planning is insurance. It helps protect you and your loved ones from unexpected events like accidents, illnesses, or the loss of a loved one. By getting the right insurance coverage, you can minimize the financial disaster of such situations.
* Investments are also a part of financial planning. It involves putting your money into different types of assets, such as stocks, bonds, or real estate, to grow your wealth over time. Financial planning also involves knowing where to allocate your investments accurately.
Finally, financial planning includes preparing for retirement. It involves estimating how much money you will need in retirement and determining how much you should save each month to reach that goal. Retirement planning ensures that you can enjoy a comfortable and financially secure life after you stop working.
Types of financial planning
1) Tax Planning
Tax planning is the process of arranging your finances in a smart way to pay the least amount of taxes while staying within the rules set by the government. It involves making decisions about when to receive income, how to spend money, and which deductions or credits to take advantage of. The goal is to legally reduce the amount of taxes you have to pay, so you can keep more of your hard-earned money.
Types of Tax planning
Tax planning is a way to reduce the amount of tax you have to pay. But it's not just about that - it also tells you how to make smart decisions with your money to reach your financial goals. By investing in the right things at the right time, you can increase not only the tax but also your wealth. So tax planning is not just about minimizing taxes, it's about making your money work for you.
Following are the various methods of tax planning
(A) Short-term tax planning
In short-term tax planning, individuals or businesses focus on finding legal ways to reduce their tax liability as the end of the fiscal year approaches. It does not require long-term commitments but can still result in significant tax savings.
(B) Long-term tax planning
With long-term tax planning, individuals or businesses create a tax plan at the beginning of the fiscal year and follow it throughout the year. While immediate tax benefits may not be available, this approach can be beneficial in the long run.
(C) Permissive tax planning
Permissive tax planning involves utilizing various provisions within the tax laws of a country, such as deductions, exemptions, contributions, and incentives. For example, in India, there are provisions like Section 80C of the Income Tax Act, 1961, which offer deductions on specific tax-saving investments.
(D) Purposive tax planning
Purposive tax planning involves using tax-saving instruments with a specific purpose in mind. This strategy ensures that you maximize the benefits of your investments. It includes carefully selecting suitable investments, having a plan for replacing assets if necessary, and diversifying business and income assets based on your residency status.
2) insurance planning
If you don't plan properly for insurance, unexpected events in life can leave you financially vulnerable. By insurance planning, you can identify the risks that may affect your life and choose the right insurance policy to protect against those risks. So that you can protect yourself and your family financially in the future.
Let's talk about the benefits of insurance planning
(A) Protection from Unexpected Events
Having a good insurance policy helps you reduce the financial risks associated with things like illness, accidents, or even death. It ensures that you and your family are prepared to face these unexpected challenges without having to give up your quality of life.
(B) Different Types of Insurance Coverage
* There are different types of insurance policies that cover various risks. For example, health insurance plans cover medical emergencies, hospital expenses, medications, and doctor visits.
* Life insurance or personal accident insurance provides coverage in case of premature death.
* Motor insurance protects your vehicles against theft, accidents, and liabilities to third parties.
* Travel insurance policies offer coverage for unexpected events during your trips. By choosing the right combination of policies, you can create a complete financial protection plan for yourself and your family.
(C) Financial Protection
Insurance planning provides financial security by compensating for losses incurred during covered emergencies. It helps you recover financially from unexpected situations and protects your savings.
(D) Tax Benefits
Certain insurance plans also provide tax savings. For example, the premiums you pay for health insurance are eligible for tax deductions under the Income Tax Act. This means you can lower your taxable income by purchasing specific insurance policies.
(E) Peace of Mind
Having a well-planned insurance portfolio gives you peace of mind. You don't have to worry about losing your savings due to unforeseen events. You can also plan for the financial well-being of your family even after your death by using term and life insurance plans.
Insurance planning can be easier if these points are kept in mind
3) Investment planning
* Investment planning is a process that helps you make smart decisions about your money.
* It involves thinking about your goals and figuring out the best ways to use your money to achieve those goals.
* There are various options for investment, such as putting your money in stocks, bonds, or property and earning good profits.
* This planning helps you build a strong financial foundation and make adjustments as needed.
Here I will tell about 7 benefits of investment planning
(A) Building Wealth
Investment plans with life insurance are a reliable way to grow your wealth over time. As an investor, you can choose the plan that best suits your needs based on risk, returns, and the amount you can invest. These plans can provide financial assistance for future expenses like your child's education, their wedding, your retirement, or a pension.
(B) Financial Security
Life insurance policies offer both life coverage and investment options. They take care of your family financially by providing both survival benefits and death benefits. When the policy matures, you receive returns with profits. This ensures long-term financial security for your family. In the unfortunate event of your demise before the maturity period, the insurance company pays the sum assured to your nominee, providing financial protection to your family.
(C) Coverage for Death Risk
Not all investment options offer coverage for the risk of death, but investment plans with life insurance do. These plans include death risk coverage, ensuring that your family's financial needs are taken care of even in your absence. The sum assured is paid to the nominee in the event of your death.
(D)Retirement Savings
You can purchase these investment plans at any stage of life, allowing you to create a retirement corpus. By investing in these plans, you can become financially independent even after retirement.
(E) Flexibility
These investment plans offer flexibility in terms of the amount you can invest and the duration. You can choose what suits your needs and financial planning.
(E) Tax Savings
Investment plans not only provide risk cover and help accumulate wealth, but they also offer tax savings. The premiums and payouts are exempted from tax under sections 80C and 10(10D) of the Indian Tax Act. These plans offer a perfect combination of savings, wealth creation, financial protection, and tax benefits.
(F) Loan Facility
Life insurance investment plans can also act as loan facilitators, depending on the coverage you have, the premiums paid, and your eligibility for the loan amount.
4) Retirement planning
* Retirement planning is the process of preparing for life after you stop working.
* It involves thinking about how much money you will need to live comfortably when you are not earning a regular income.
* Retirement planning tells you how to save and invest your money wisely to have enough funds to support yourself during your retirement years.
* Retirement planning is essential so that you can enjoy a comfortable and worry-free life when you decide to stop working.
Understanding retirement planning
* Retirement planning is the act of preparing for life after employment, which includes not only financial aspects but all areas of one's life.
* Beyond financial considerations, retirement planning includes lifestyle choices, such as how to spend time, where to live, and when to stop working altogether.
* Retirement planning focuses on different stages of life.
* In the early stages of a career, the emphasis is on setting aside sufficient funds for retirement.
* As one approaches mid-career, it may also include establishing specific income or wealth goals and taking the necessary steps to achieve them.
* Thus, retirement planning is necessary for you to lead a comfortable life at the time of retirement.
5) Estate planning
* Estate planning is when you make important decisions about what happens to your money, assets, and liabilities after you pass away or if you become unable to make decisions for yourself.
* This includes things like choosing who will receive your assets, making sure debts and taxes are taken care of, and even deciding who will take care of your children or pets.
* People usually work with an attorney who knows estate law to help them plan.
* Some common steps in estate planning include making an inventory of what you own and owe and checking your bank account.
Process of Estate Planning
* Estate planning is the process of deciding what will happen to a person's assets after they pass away and how their financial affairs will be managed if they become unable to do so themselves. It's important to know that estate planning is not only for wealthy individuals; anyone can and should consider it.
* An estate includes things like houses, cars, investments, artwork, life insurance, pensions, and debts. People have different reasons for estate planning, such as preserving family wealth, providing for their spouse and children, funding education for future generations, or leaving a charitable legacy.
* The first step in estate planning is usually creating a will.
Other important tasks include
* Setting up trust accounts to reduce estate taxes and benefit specific beneficiaries.
* Designating a guardian for dependents who are still alive.
* Choosing an executor to oversee the will's instructions.
* Updating beneficiaries on life insurance policies, IRAs, and 401(k) accounts.
* Making funeral arrangements in advance.
* Making annual gifts to charities or nonprofits to lower the taxable estate.
* Creating a durable power of attorney to handle other assets and investments.
By taking these steps, individuals can ensure that their wishes are followed, their loved ones are provided for, and their assets are distributed as intended.
6) Cash flow planning
* Cash flow planning is all about managing and predicting how money comes into and goes out of someone's or a business's finances. It means keeping track of how much money is earned (income) and how much is spent (expenses) during a specific time, usually every month or year.
* The main goal of cash flow planning is to make sure there's enough money to cover important expenses, meet financial commitments, and achieve money-related objectives. It helps individuals and businesses make smart choices when it comes to spending, saving, and investing their money.
* Basically, cash flow planning involves creating a budget or financial plan that outlines the expected sources of income and estimates of expenses. By analyzing and keeping an eye on cash flow, it becomes possible to spot potential shortages or surpluses and adjust accordingly. This way, people can manage their money better and make informed decisions on how to use their resources effectively.
* When there's a clear understanding of cash flow, individuals and businesses can take proactive steps to ensure they have enough money to cover their needs, save for the future, and handle any unexpected financial challenges that might come up.
* Thus by doing financial planning in this way and by doing this 6-step planning you can become financially free.
Note: The next article is on the life cycle and wealth cycle in which I will tell you what percentage should be invested according to age and income.
I apologize for the grammatical errors.
Thank You!
Money_Dictators
By @Money_Dictators on @TradingView Platform
