Steps in Investment Planning & its Importance


Up until a few years ago, most Indians preferred to savea part of their income to meettheir long-term goals. According to the Aegon Retirement Readiness Survey in 2017, 75% of the Indian population were habitual savers. With time, however, a lot of people have chosen investment over savings. Investing allows you to reach your financial goals faster without having to worry about financial constraints.

Although investing is beneficial, doing it the right way will help you seek higher yields. Follow the steps given below before you begin your investment planning:

  1. Understand your investment goals

As a working professional, you might have both long- and short-term goals. While your long-term goals can be: a peaceful retirement, planning your child’s wedding, etc., your short-term goals can include purchasing a new house or a car, travelling, and so on.

Before choosing from among the various types of investments, it is imperative to understand your financial objectives. Identifying your goals and needs will help you to choose the right investment options.

  1. Start investing at an early age

Investment is a long-term affair, but for many of you, investing might be the last thing on your mind at a young age. However, the importance of investing is quite significant in the early years of your life.

When you start investing regularly at a young age, you have more time and liquidity to build an enormous corpus for the future.

  1. Evaluate your risk appetite

The most crucial step of investment planning is considering your risk appetite. Typically, your risk appetite depends on your current age and income.

When you’re younger, your risk appetite is usually high due to fewer financial responsibilities. Hence, you can invest in high-risk investment options to garner higher yields. As you grow older, your risk appetite gradually decreases as you become a husband ora father. Here, you can shiftto low-risk investment options that are safer for your future.

  1. Analyse the market

The current market scenario plays a significant role in your investment planning. Since the market is unpredictable, it is essential to analyse it before investing.

Analysing the market helps you shift your investments accordingly. For instance, when the market is down, you can choosethose types of investments that are safer. When the market bounces back, you can go back to equity assets to receive high returns.

  1. Choose the right investment product

There are various investment optionsavailable in the market today. Right from mutual funds to unit-linked insurance plans (ULIPs), you will find an array of investment options for your investment needs.

Since there are multiple types of investment tools, you would need to consider your age, risk appetite, and financial goals before choosing any. The right investment vehicle will help you grow your corpus as well as accomplish your needs in the future. If you are unable to understand which investment options are suitable for you, seek professional help to smoothen the process.

Investment planning is an essential part of your life, sodon’t neglect it. Instead, invest in the right investment options with the tips mentioned above to receive maximum benefits. Happy Investing!

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