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  • Benefits of Investment Planning
  • Efficiently manage income
  • Financial Understanding
  • Objectives of investment planning
  • Growth of Capital
  • Investing Tips for Beginners
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What is Investment Planning ?

Investment planning is the process of matching your financial goals and objectives with your financial resources. Investment planning is a core component of financial planning. There are thousands of different investments. The most commonly used are cash, equities, bonds and property.

Benefits of Investment Planning

Investment planning is important from the point of view of family security. If anything happens to the working member in the family then  the other members of the family will be financially secure by the investment.

It is quite possible to efficiently manage the income and expenditure of person with an investment plan. Managing income helps the person to manage other expenditures, tax payments etc.

Investment planning helps in understanding about our current financial situation. It becomes easy for an individual to evaluate investment or retirement plan by having financial understanding.

One should invest in those investment vehicles which are highly liquid. Funds can be easily taken out from those investments in the case of emergency.

The savings created by the investment is very useful in difficult times. For example, death of the working individual in the family affects the standard of living to a great extent. That time the investment made by the working person becomes useful source of income of the family.

Investing Tips for Beginners

Start sooner rather than later. Once you have an emergency fund in place and your debts in check, start investing. The sooner you start, the more risk you can afford to take and the more investment growth you’ll experience over time.

Diversify. As mentioned above, a key to successful investing is not putting all of your eggs in one basket. An easy way for young investors to diversify is by investing in mutual funds or exchange-traded funds.

Do your research – and don’t hesitate to ask an expert. If you’re unsure of where to start or simply don’t think you have the time to monitor and manage your portfolio, hire a financial advisor to help you. Smart Asset’s financial advisor matching tool makes it easier to find an advisor who meets your needs. Simply answer some questions about your financial situation and preferences and the program will pair you with up to three advisors in your area based on your responses. You can then read the advisors’ profiles and interview them to determine who you want to work with.

Objectives of investment planning

One of the main objectives of Investment planning is the safety of our family, in the terms of finance. One should also invest in safe investment vehicles.  Investment is money market is safer than bond market.

In order to generate greater income, we need to invest in higher risk investment vehicles to get higher income from it. Investors must analyse properly, evaluate their risk-return ratio and accordingly invest in appropriate asset classes in order to enjoy the benefit of maximisation of returns. Therefore a proper investment planning is very important.

Capital gain is different from the returns in the sense that they are only realized when the securities are sold at a higher price than the price in which it was originally purchased. Selling at a lower price leads to capital loss. Therefore investors who want capital gains should invest in securities for longer term.

An investor may take up those investments in order to opt for tax minimization as a part of his investment strategy. For example a rich businessman may want to seek those investments with favourable tax income in order to reduce tax.

Many investments are liquid which means they can be easily converted into cash. But achieving this level of liquidity requires sacrifice of certain level of income.

 

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