Investment Planning – How to Create Investment Plans

Detailed Guide on Investment Planning Strategies and Benefits

Key Takeaways

Investment planning is the path to financial security.
Efficient investment planning helps you realise your personal and financial goals.
It involves informed asset allocation, tax planning, and preparing for financial contingencies.
Your financial plan should cover your short, medium, and long term goals based on your appetite to withstand risks.
You can appoint a financial manager to help plan your finances effectively.

If you wish to achieve the ultimate aim of financial security, you need to start investing early and sustain the investment efforts over the long term. You also need to chalk out an investment plan and stick to it, modifying it from time to time. Yes, Investment Planning is incredibly crucial if you wish to live a financially comfortable life. This article explains the need for investment planning, its benefits, and how to go about it.

What is Investment Planning?

Investment Planning is a process of creating a financial strategy to achieve your financial goals and objectives by regularly investing in various securities. It involves well-planned money management that leads to wealth creation through investments in tax savings schemes, thereby minimising your tax outgo. A well-defined financial plan helps you achieve your personal and financial goals, wherein assets are allocated to create returns based on your risk profiles and preferred investment tenures.

Benefits of Investment Planning

Ensures financial security of the kin

You can secure the financial future of your loved ones in the unlikely event of losing employment, or worse, accidents that lead to permanent disabilities or death.

Better income management

Investments plans allow you to manage your earnings precisely. You can create budgets for savings and expenditures.

Preparing for contingencies

Investment Planning also focuses on creating a corpus that can help you during financial emergencies like a sudden illness or damages to your income sources, properties, etc.

Things to Consider While Creating Investment Plans

Your investment plan should comprise a healthy mix of debt instruments that generate stable returns without compromising the security of your capital investment amount.
You can also invest in equities if you have a high-risk tolerance, wish to earn higher returns in a shorter duration and can withstand market volatility.
Plan your investments across various horizons to achieve short, medium, and long-term goals.
Tax minimisation is an integral part of investment planning. Select investment avenues that reduce your tax outgo.

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Steps to Create a Winning Investment Plan

Create a fool-proof asset allocation strategy and contemplate your goals before investing. Well defined objectives make investing easy.
Most market-linked investments involve high risk. So you must determine your risk appetite beforehand. Doing so helps you pick investment options that are more suitable to your risk profile.
Diversify your investment in such a way that you can earn high returns while reducing risks associated with capital erosion. Ensure you invest in a mix of Stocks, Mutual Funds, Sovereign gold bonds, Fixed Deposits, Real Estate and such types of investments for effective investment planning.
Investment planning is a continuous process. You must regularly monitor the performance of your investments. You should review your goals from time to time and modify your investment plan to fulfil unattained dreams.

Final Note

A well-thought investment plan helps you realise your dreams and meet your long-term goals. Consider appointing a financial manager to help carve your investment plan.

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*Disclaimer: This article is for information only. We recommend you get in touch with your income tax advisor or CA for expert advice.