Investment Planning

Investment planning is all about selecting the right investment strategy to help you meet your financial goals. It usually begins after you have taken into account your current and expected income level. It is essential to take into account your ability to take risks while deciding on your investment mix.

For example: Mrs. Sunita Guha has invested her money in provident fund, fixed deposits and NSCs, believing that these investments would be enough to realize her goal of sending her son to a foreign university. However, this is not the case, as she has no idea about how much it would actually cost her in 10-15 years. Without having worked with real numbers, she does not have a realistic picture of what size her investment corpus should be or what is the right mix of investments that will help her realize her goal.

• It generates income and/ or capital gains.
• It provides you tax planning
• It increase future wealth
• It strengthens your investment portfolio

What are the main aspects of investment planning to be considered while selecting the right product? The two most important aspects involved in investment planning, that need to be considered while choosing the right product are –

• Understanding the need for capital growth or regular income
• Your risk appetite

Capital growth versus regular income

Every investment is subject to risk. Inflation, market fluctuations, economic policies, global economy etc are some of the elements that affect your money. Most often, investments that are prone to higher risks also offer higher returns to make it worthwhile for investors.

Hence it is very essential to analyze the risk-return ratio of the product and your risk taking ability, which depends on current and expected income level, savings, liabilities, lifestyle and responsibilities.

Determining your risk profile