Idea Behind the Blog!

The general areas of finance are business finance, personal finance, and public finance. Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money and risk and how they are interrelated. It also deals with how money is spent and budgeted. Here we are planning to write articles that have new dimension of finance

Finance Funda !!

Whether you’re young or old on the job scene, fresh out of college, or even an old-timer who wants to better manage finance, you can find the best and most practical advice on this site. You are provided with handy tips that can help promote your finance goals. It also ensures you get freedom in making a decision to select a financial plan you will absolutely love to do!

ICICI Bank Quarter 2 Net profit

ICICI Bank the second largest lender in India clocked a 2.6 per cent jump in its net profit in Q2 FY 10 and expects its loan growth to pick up and slippages to decline in the latter half of the fiscal.

It’s net profit in Q2 rose marginally from Rs 1014 crore to Rs 1040 crore.

The lender is continuing the process of reducing retail unsecured loans to 6-7 per cent of its total advances by end-fiscal in a bid to enhance its asset quality, its Managing Director & CEO, Chanda Kochhar, said.
In certain loan portfolios like Home Loan, car and project finance the bank sees double-digit growth, as there is a pick up in economic activities, Kochhar said.

However due to the sluggish growth in First half, the banks credit growth for the full year is likely to be in single digit

ICICI Bank, which was reducing its loan-book size, especially in the retail segment, has completed the first phase of its balance-sheet contraction, Kochhar said.

RELIANCE CHAIRMAN Takes Pay Cut by 66%….

mukesh ambani

Asia’s richest man, took a 66 percent pay cut to “set a personal example of moderation” after India’s government called for austerity in salaries of executives.

Mukesh Ambani, last year’s highest paid CEO of India Inc. has taken a sharp 66 per cent cut in his annual compensation, a move that could propel moderation of executive salaries in the country.

Recently corporate affairs minister Salman Kursheed and planning commission deputy chairman Montek Singh Ahluwalia had raised concern on ‘vulgar’ salaries paid to executives by companies.

Reliance Industries, India’s largest private sector company on Thursday said its recommendation committee recently had capped the compensation payable to chairman & managing director Mukesh Ambani at Rs 15 crore ‘reflecting his (Ambani’s) desire to set a personal example of moderation in executive compensation.’
Ambani’s revised package includes Rs 1.59 crore as salary, perks and retrial benefits and Rs 13.41 crore as commission for the year 2008-09. This is compared to total compensation of Rs 44.2 crore for 2007-08.

At the same time, India's most valued corporate house also announced a new structure for salaries and remuneration of top executives wherein the pay packets would be capped, as against the prevailing system of commission linked to profits.

The development comes amid debate on whether or not there should be regulation on salaries of CEOs following suggestions by Corporate Affairs Minister Salman Khursheed. The Minister had, however, felt that Boards and shareholders should decide the packages.

The salary component of Ambani’s total pay increased 25 percent to 15.9 million rupees, according to today’s statement.

India’s per capita gross domestic product rose to a record $724 last year, according to the World Bank.

Reliance Industries’ plan to pay shareholders dividend of 13 rupees a share means the Ambani family, which owns a 49 percent stake in India’s most valuable company, will get about 10 billion rupees, or 3.3 percent more payout than last year, according to Bloomberg calculations.

Mukesh’s estranged younger brother Anil Ambani on Sept. 22 said he will forego salary and commission from five of his group companies. Anil’s annual salary is about 300 million rupees, according to the Economic Times.

The Ambani brothers, India’s richest resident billionaires, split the business founded by their father Dhirubhai Ambani, in 2005.

Reliance Industries lowered the commission payable to Mukesh in accordance with limits set by shareholders, according to the statement. The Mumbai-based Reliance will also set the salaries of executives using a “capped structure method” instead of basing them on earnings, the company said.

Mukesh Ambani, a chemical engineer from the University of Bombay, is ranked seventh on Forbes’ 2009 ranking of the world’s billionaires with a net worth of $19.5 billion.

NOKIA Reported a loss of 559 mn euros

Hit by hefty impairment charges and declining sales, Finnish mobile phone maker Nokia Corp plunged into a loss of euro 559 million in third quarter of this year.

In the year-ago period, the company had a net profit of euro 1.08 billion, Nokia said in a statement.

The company's net sales decreased to euro 9.81 billion in third quarter of 2009 from euro 12.23 billion in the same period last fiscal.

Nokia Siemens Networks, a 50:50 joint venture of Nokia Corp and German Siemens AG, had suffered non-cash asset impairment charges of euro 908 million and euro 29 million for restructuring and other one time charges.

"Our volumes and net sales were, however, somewhat constrained by component shortages we encountered across the portfolio. Challenging competitive factors and market conditions in the infrastructure and related services business necessitated non-cash impairment charges at Nokia Siemens Networks," Nokia CEO Olli-Pekka Kallasvuo said.

Nokia Siemens Networks, a 50:50 joint venture of Nokia Corp and German Siemens AG, had suffered non-cash asset impairment charges of 908 million euros and 29 million euros for restructuring and other one time charges.

The JV firm registered net sales of 2.8 billion euros, down 21 per cent from the same period last year and also witnessed a 14 per cent decline from the second quarter.

Market Reviews…. SENSEX on 17 month high….


The Bombay Stock Exchange benchmark Sensex on Wednesday surged to a new 17-month high by adding over 204 points on buying support particularly in banking and metal stocks amid strong cues from Asian markets.

The Sensex, which had closed with a hefty gain in previous session on Monday, added 204.44 points at 17,231.11, a level last seen on May 20, 2008. The benchmark touched the day`s high of 17,274.59 led by stocks in metal, banks and drugmaker companies.

Similarly, the wide-based National Stock Exchange index Nifty shot up by 63.95 points at 5,118.20.

Investors were also upbeat after a top policy adviser said the central bank was likely to hold interest rates at a near decade-low when it reviews policy on Oct. 27, reinforcing expectations the government's priority was to boost growth.

The 30-share BSE index closed up 1.2 percent, or 204.44 points, at 17,231.11, with 25 of its components advancing. It rose to 17,274.59 during trade, its highest since May 21, 2008.

"We may rise another 500-600 points from here but we should correct after that, as we have risen too fast," said Amitabh Chakraborty, president of equities at Religare Capital.

He said profit-taking was imminent.

The market has gained almost 79 percent so far this year, and the benchmark has more than doubled from 8,047.17 points struck in early March.

Brokers said markets were catching up with gains across the region on Tuesday when the domestic market was close due to state elections in Maharashtra.

They added that Asian shares were mostly firmer and the market was also underpinned by rising foreign portfolio flows.

The traders said the Sensex had gained almost 79 per cent this year as foreign funds stepped up purchases on the back of a recovering economy.

The FIIs pumped in nearly USD 13 billion into Indian stocks this year, almost putting back what they had pulled out in 2008 when the index slumped to more than half.

The market also got partial boost after HDFC Ltd reported a higher-than-expected 24 per cent rise in its second quarter net profit. The state-run lender, State Bank of India rose 4.46 per cent to Rs 2,269.45.

Healthcare sector index was an important participant in today`s rally as drugmakers`s price estimates were raised at Goldman, Sachs. Ranbaxy Laboratories, a third-biggest drugmaker by market value, advanced 1.17 per cent after Goldman Sachs increased share-price estimate by 23 per cent.

The metal, capital goods, auto and banking stocks lended maximum support to the market recording handsome gains. Metal index rose the most by 5.27 per cent to 15,587.83 followed by capital goods index up by 2.38 per cent to 14,185.34.

Telecom companies bucked the trend and dropped after slower subscriber additions at leading GSM mobile operators Bharti Airtel and Vodafone Essar in September amid intense price competition.

Bharti dropped 3.25 percent to 339.40 rupees and Reliance Communications fell 6.5 percent to 231.60 rupees.

Around 507 million shares changed hands on the Bombay Stock Exchange, with advancing shares outnumbering declining ones in the ratio of 1.6:1.

The 50-share NSE index closed 1.3 percent higher at 5,118.20.

Creating a Budget For Your Financial Plans….

Creating a budget may not sound like the most exciting thing in the world to do, but it is vital in keeping your financial house in order. Before you begin to create your budget it is important to realize that in order to be successful you have to provide as much detailed information as possible. Ultimately, the end result will be able to show where your money is coming from, how much is there and where it is all going.

Financial confident people work with a budget. A good budget ensures you live within your means hence avoid unnecessary spending. It also helps you save part of your income. In order for your budget to work for you then it should meet some standards. But one of the most crucial elements of a good financial plan is that it should always be based on your financial goals.

Budgeting is not just about keeping track of your expenditure but it also includes helping you meet your personal financial targets in life. This is because, without financial goals in life you will never be in control of your money. To improve your financial status, start planning your finances carefully.

  • Gather every financial statement you can. Includes bank statements, investment accounts, recent utility bills and any information regarding a source of income or expense. The key for this process is to create a monthly average.
  • Create a list of monthly expenses. Write down a list of all the expected expenses you plan on incurring over the course of a month. Includes a mortgage payment, car payments, auto insurance, groceries, utilities, entertainment, dry cleaning, auto insurance, retirement or college savings and essentially everything you spend money on.
  • Record all of your sources of income. No matter If you are self-employed or have any outside sources of income or If your income is in the form of a regular paycheck where taxes are automatically deducted. Record this total income as a monthly amount.
  • Break expenses into two categories: fixed and variable. Fixed expenses are those that stay relatively the same each month and are required parts of your way of living. Variable expenses are the type that will change from month to month and this category will be important while making adjustments.
  • Total your monthly income and monthly expenses. If your end result shows more income than expenses you are off to a good start. If you are showing a higher expense column than income it means some changes will have to be made.
  • Make adjustments to expenses. If you have accurately identified and listed all of your expenses the ultimate goal would be to have your income and expense columns to be equal. This means all of your income is accounted for and budgeted for a specific expense. If you are in a situation where expenses are higher than income you should look at your variable expenses to find areas to cut.
  • Review your budget monthly. It is important to review your budget on a regular basis to make sure you are staying on track. After the first month take a minute to sit down and compare the actual expenses versus what you had created in the budget.

Government Likely to Cut Air India Costs By 3000 Crores & Increase Revenues….


Civil Aviation Minister Praful Patel met Air India Unions and the management in Mumbai on Wednesday to review its rationalisation and turnaround plan.

The government is likely to infuse additional equity into ailing Air India, which has evolved a major revamp plan to cut costs by Rs 3,000 crore and increasing revenue by Rs 2,000 crore every year.

Addressing the media after the meeting, the minister said, "We have reviewed the functioning of Air India; we met unions and explained government plans to turn the airline around."

"One step would be induction of equity and the other restructuring high cost debt to low cost debt," he told reporters here after holding separate meetings with Air India employees unions and the management.

He assured that the government will infuse equity, but only if there is cost cutting in the airline.

"Air India employees have shown a lot of understanding. It seems management and unions can forge an understand of way forward," he said.

A draft note on equity infusion in Air India, prepared by the civil aviation ministry, is being sent to Cabinet Committee on Economic Affairs (CCEA), Patel said.

He said a series of measures to cut costs and enhance revenues would include returning leased planes and leasing out some new ones.

Air India, which is faced with losses estimated at over Rs 7,200 crore, has undertaken a major revamp plan parts of which have already come into effect, Patel said.

Patel's announcement comes just two weeks after executive pilots of Air India had struck work and gone on mass sick leave protesting cuts in their productivity linked allowances.

Caught on the backfoot , the management had deferred the cut and the government had formed a sub committee of the Air India board to examine the issue. There are 14 unions of pilots, cabin crew, engineers, officers and other employees in the airline.

"Air traffic has improved over the last six months and overall market scenario has definitely witnessed a slight improvement in the last month or two and that does send out a signal of cautious optimism that aviation industry would lead to a road to recovery though it may not be as thick as we witnessed a few years ago," he said.

Finance Problem? Here are 10 ways for you to earn extra income....

These days during price hikes in global market, some extra streams of income can add a major impact on your finances. All this is possible by doing some extra efforts. But before that we need to understand some basic things that we generally ignore….

Don’t ignore Second Income if it is coming in your hands
 Many people just ignore income sources which are very little according to them but they never know how valuable it can be.

Let’s see how….

After making a discussion with many people who are currently involved in extra income sources we found that here are a couple of different ways to look at an extra income. For example suppose you are earning $1,500 per month, then here are the following ways to look at benefits:

  1. Savings account: To earn $1,500 a month that is $18,000 per year in a savings account at 4%, you would need to save $450,000!
  2. Investment account: To earn $18,000 per year from investments at 10%, you would need to invest $180,000.
  3. Employment: For many, to get $18,000 per year in raises could take several years of dedicated service to your employer.
  4. Financial Freedom: Extra income of $1,500 per month could cover car payments, help pay down credit card debt, or cover some or even all of a mortgage payment.
From these facts we can conclude this point that even comparatively small amounts of extra income are useful to us in some situations.


What brings a rich source of Extra Incomes????

We all can get a second job to earn some extra income. But let us consider following factors to find out how we can generate multiple income streams….


Flexible: An Extra Income source should be flexible according to your time. For example, if you have a full time job, then the last and final thing you want is to working a number of hours each week at a second job.

Scalable: Income sources should have at least possibility of generating considerable amount of income.

Sustainable: The ideal extra income source will continue to generate cash even when you're not working at it. The idea is to build something that can eventually function without you.

Enjoyable: You must enjoy what you are doing at your second job. You should not feel boredom while doing work.

Inexpensive: Extra income should be royalty free and should not include any type of expenses from your pockets.

Let’s populate 10 Extra Income Ideas:

So let us see now that how to make an extra income source. You may want to choose something that fits your interests and personality and also You may have certain skills, training and education that will dictate what's best for you and you may choose anything from them. But one size never fits to all; So Let’s consider these 10 ideas:

  • Real estate investing: Real Estate investment is one of the best way to make and extra income however it requires expense and enormous potential. The current down turn in the market is an ideal time to buy a property.
  • Ebay Store: you can run an ebay store which is an online store in which you can market products and earn commission generated by the sales. Running an ebay store is now easier than ever before.
  • Realtor: This may seem like a crazy time to start selling real estate, but in a slow market a lot of the competition runs away. You'll need an initial investment to obtain your real estate license, but over the long term have the potential to make substantial income.
  • Website Design: Website design has become a growing industry with the continued growth of the Internet. And it is now-a-days a very good source to make online income as there are many online resources available that can easily master in website designing.
  • Graphic Artist: There are a lot of ways to generate money through graphics. Just the logo business alone could keep you busy if you have the artistic skills necessary to develop cool graphics.
  • Virtual Assistant: Now-a-days its trend of Virtual assistances. Virtual assistants don’t require their physical presence in the companies. Many virtual assistants from places like India are working full time for people in the U.S. Best VA’s can earn $30 to $50 per hour.
  • Freelance writer: If you have a good writing skill then you can earn great money by writing for others. If you don’t know how to start then you may Contact bloggers who are always looking for great writing. As blogs grow, they can afford to pay freelancers good money for quality articles. Websites looking to build links also hire freelancers to write guest posts to be published on blogs and websites.
  • Home business: The ideas and potential for a home business are limitless. One of the great benefits about running a home business is that it greatly reduces your initial investment.
  • Sell a product: you can sell different products which you can manufacture on your own or you can sell products of another company by the process of producing and marketing it.
  • Blogging: Making money online requires very little cash investment and can be done on your schedule from home.
Generating income (along with minimizing expenses) is the foundation of smarter money management. While earning extra income does take work, its payoff can be huge....

Financial Planning For Recession....

We should not make any mistakes in our financial plans as recession is here. While we do not know how long or painful it will be….The stock market has lost more than 20% in the last 10 trading days.

But, there are steps which we can take to make us better prepare for difficult financial times ahead. There are some basic things we can do. We need to plan following things:

(1) Income (2) Expenses (3) Savings and (4) Investment.

Protect Your Income during a Recession

1. Protect Your Job: Protecting your job should be the number one priority by putting in a few extra hours, working a little harder, and improving your skill set. Those who stay employed during a recession generally ride out the storm just fine.

2. Be Ready For Layoffs: While we should do everything what we can to keep our jobs but some layoffs are unexpected. This means having your resume updated and knowing where you could apply for a job.

3. Earn Extra Money: Make extra money blogging, but that's just one of many, many ways. The beauty of extra income is that it goes right to the bottom line. It could make a huge difference if you ever lose your job.

Reduce Your Expenses during a Recession

1. Evaluate Your Mortgage: One of the positive elements of our current financial crisis is that interest rates are low. If you have an adjustable rate mortgage, it's time to see if you can refinance to a fixed rate loan. Notwithstanding what we all hear on TV or read in the papers, those with good credit can still get mortgages.

2. Refinance high interest credit cards: If you are paying high interest rates on credit cards then consider to move balances over to a 0% APR balance transfer card or a low interest credit card. When considering this option, keep in mind three things:

• The interest rate after the introductory offer: Zero percent introductory rates do not last forever, so make sure you know what the interest rate will be once the 0% expires.

• Balance transfer fees: Today, virtually all balance transfer credit card offers charge a fee for the transfer. Make sure to avoid unlimited fees if at all possible.

• Don't use the card for anything else: One of the big gotchas of credit card balance transfers is that if you use the card for purchases in addition to the balance transfer, your purchases usually get charged interest.

3. Reduce Spending: This is obvious, but it is important to recognize that there are many ways to cut spending. There are literally thousands of ways to save money. Pick those that work for you, and start saving now. As part of this, seriously consider a cash back credit card. If you pay off your balance every month.

Saving and Investing During a Recession

1. Don't stop saving for retirement: Do not sell any of your investments. As Warren Buffett would say, I'm trying to be "greedy when others are fearful”. Be persuaded that what we do with our investments now and in the immediate future will dictate more than anything.

2. Rethink your emergency fund: It is more important now than ever to have an emergency fund.

3. Don't rely on a home equity line of credit: This point is critical. You may have available credit on your home equity, but did you know the bank can eliminate that credit? Go find your home equity line agreement, and you will see that if the value of your home falls or your financial situation changes, the bank can reduce the amount of your available credit.

How To Invest Rs. 1,000 and get returns in lakhs

"No horse gets anywhere until he is harnessed. No stream or gas drives anything until it is confined. No river flow can be ever turned into light and power until it is tunneled. No life ever becomes great until it is focused, dedicated and disciplined."

Self-discipline is the ability to get yourself to take action regardless of your emotional state. The pinnacle of self-discipline is when you reach the point after making a conscious decision; it's virtually guaranteed you'll follow through on it. It is rightly said that 'we are what we repeatedly do; excellence, then, is not an act, but a habit.'

Building self-discipline

Self-discipline is like a muscle. The more you train it, the stronger it becomes. The less you train it, the weaker it becomes. Just as everyone has different muscular strength, we all possess different levels of self-discipline. Just as it takes muscle to build muscle, it takes self-discipline to build self-discipline.

Financial discipline

Saving money isn't all about whether or not you know how to score screaming bargains. It has more to do with your attitude towards money. As explained in the book The Millionaire Next Door by Thomas J. Stanley and William D. Danko, personal finance has as much to do with people's traits as with money. Many millionaires, in fact, have frugal ways. Understanding how personal traits can influence your finances is an essential ingredient for creating wealth. Self-discipline is one of the most important personal trait which acts as a leverage for building wealth.
Also the importance of setting and working towards your goals is obvious. If you don't know where you are going, it's difficult to get there. It helps your personal finances immensely if you have money goals and are motivated to reach the goals that you have set for yourself. Those who lack goals don't have a roadmap to take them to the financial destination they want.

When we talk about financial discipline, a systematic investment plan, SIP, is the most disciplined way of investing even in today's volatile stock market.

You often decide to start saving and investing regularly, but get caught up in day-to-day activities and forget to make the investment. SIP is a time-tested discipline that makes it easy to invest automatically. This is also known as rupee-cost averaging and can help put the power of compounding on your side.

The chart below shows how the power of compounding works in case of SIP. We have considered a SIP of Rs 1,000 per month for 20 years. Thus your total investment would be Rs 2.4 lakh at the end of the 20th eyar.

The corpus at the end of 20 years would depend on the returns that you will earn as shown below:

~ Growth @ 12 per cent: Rs 10 lakh (approximately)
~ Growth @ 15 per cent: Rs 15.15 lakh
~ Growth @ 18 per cent: Rs. 23.43 lakh

Things to take care if you are using credit card.

Credit card bills, when rising too fast, need constant monitoring. Any delay in the repayment can result in a serious financial hit because of the high interest cost and other charges that are levied.

At the same time, credit card companies continuously give offers to lure new customers from their existing bank. One such offer is the balance transfer facility. Here, a person is allowed to shift the outstanding amount on one credit card to another.

The additional incentive, most times, is that the transferred amount is not liable for any interest charge for a specific period or has a lower interest rate for a specific period of time. When faced with such offers, the question before cardholders is whether to accept it or not? There are a few situations when it makes sense to make this important switch.

For starters, a common grouse is dissatisfaction with the existing bank because of lack of proper facilities and services. The most common reason is the high interest rate being charged by the bank on the credit card outstanding. Also, service-related issues like non-receipt of bills on time, incorrect billing or inconvenient payment dates are common issues. In such a situation, the individual would be better-off, if they change the bank and their credit card by opting for balance transfer.

Then, there could be a situation where the individual is unable to service the loan. There are two types of situations that could lead to this. One is a temporary situation where the immediate cash flow of the person has been adversely impacted so they might have some problem in paying-off the accumulated debt for a few months. The other situation is when the debt has become too exorbitant, making it almost impossible to service it, at least in the short run.

In such a scenario, undertaking the process of balance transfer will ensure that the immediate pressure eases-off for some time. However, postponing the repayment just to buy time will not help.

Another reason why a person could opt for a balance transfer is when any special offers are made to them. For instance, there could a situation where a bank offers a long interest-free period like, six months to one year. Such a situation will give a fairly good period for the person to enjoy interest-free credit and hence, it might be a good option. Of course, there are other conditions like higher limit, lower rates of interest and convenient payment dates that make things attractive for a cardholder to move to another bank.

A word of caution though in some banks, the rate of interest may be zero in the initial months and they might be higher than your existing lender. In such cases, remember that the interim relief is just an eye wash. If you are not confident of the repayment abilities, then stay away from such offers.

Also, bring down your balance in that interest-free period drastically so that when the higher interest rate kicks in, the finances are not so badly impacted. Most importantly, remember that moving to another card saves you from the interest rate burden, but only temporarily. Use this window of opportunity to reduce the loan burden and do not start splurging, once you have been able to bring down your outstanding.

Why do we need Financial Planning ?

Prepare for financial emergencies

Life is full of testing times, and in almost every such situation having sound finances really help. Critical illness, accidents, death etc. limit or reduce our earning abilities. Having a corpus will help eliminate the pains associated with these emergencies to a great extent.

Get rid of debt

A good financial plan has a detailed cash flow analysis and takes into account the income, expenditure, life’s goals, and net worth. And if you have any debts, they are also taken care of. Good financial planning will help you eliminate high cost debts like credit card and personal loans as soon as possible.

Proper retirement planning

Retirement planning is a definite priority with every financial plan. Building a retirement corpus with proper investment advice and having assets that prepare you for a risk free and desired post retirement life, is not possible without a proper financial plan.

Creation of wealth

Financial planning creates a focused and systematic approach towards attaining life’s financial goals. A good financial planner will identify proper investment options for you, which will help you grow your money in a right way.

Financially Planning for Couples

Work out how finances will be handled. This is unique to each couple and their own capacities when it comes to spending and handling money. If one of the two people in the couple is better at handling finances, she should be in charge of paying bills, making contributions and keeping track of the budget.

Choose which type of bank account works better for your relationship. Most couples have joint accounts, but don't assume that's the only financially acceptable option. You may decide on a joint account plus separate accounts, or you may simply decide that you want to keep your finances separate. This is a common source of conflict between couples and something that must be worked out well in advance.

Decide on a spending plan. This means agreeing on how much money you will spend and how much you will save or invest. You also need to decide how much of the joint money can be used for personal things without having to consult the other person.

Open a savings account together. This is an investment for your future and something that will benefit your children later on. Set up rules regarding how and when this account can be accessed--for example, both of your signatures could be required to withdraw money. While trust is important when it comes to financially planning your future, you also want to make sure that you are both a part of all the big decisions regarding money.

Decide what happens with personal debt that is brought into the partnership. Ideally, both partners should start debt-free, but this is often not the case. College loans, credit card debt and small business loans are often carried into the relationship. When this happens, you need to make clear from the beginning how the debt will be handled and where the money to pay for it will come from.

Tips & Warnings

If your partner has ideas about money that are completely opposite to yours, you may have a hard time finding a middle ground to agree on. Try to work on the big issues first and then slowly resolve the details as you go along.

Financially Planning for Retirement

Start planning for retirement as early as possible. If you are in your 20s or 30s, think about investment, savings and IRAs. This is the right time to invest aggressively and take risks. Look into opportunities that offer the most return in the long run, since you can afford to wait the additional time to reap the benefits.

Set up a plan in steps. Financial experts recommend setting up goals based on where you want to be 7, 5 and 2 years before the actual retirement age. This will give you time to plan and execute a number of ideas and would allow you to modify the plan if you find that you are not able to meet those goals.

Make a plan to pay off all your debts long before you retire. It should be your goal to go into retirement with no outstanding credit-card debt, but you should also plan on finishing up your mortgage by the time you retire.
Decide how much money you need to live comfortably. Think about day-to-day expenses, but also add things you want to do that you are not doing right now, such as traveling or pursuing a hobby full time. Take inflation and price changes into consideration, and don't forget to plan for unforeseen circumstances.

Step up the intensity of your plan as you approach your actual retirement age. Catch up by increasing the amount and the frequency of your contributions, and invest in additional stocks if you can afford to do so.
Consider looking for the help of a financial planner to set up a good investment and savings plan. This is especially important if you have little to no knowledge about finances or if you are looking to invest large quantities of capital and need the guidance of a professional.

Tips & Warnings

Don't count on Social Security to carry you financially through your retirement years. Unforeseen circumstances can tap into your savings quickly.

If you find yourself far behind on payments and savings, consider getting a second job, downsizing to a smaller house or car or revising your budget so you can save more.