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Why? Who needs Investment Planning ?
Investment Planning Service Choosing the Right Investment Options
Importance of Investment Planning  7 steps to better investment planning! Source 


Everyone needs to save for a rainy day. Once you have saved enough to take care of emergencies, you should start thinking about investing and to make your money grow. We can help you plan your investments so that you can reap adequate benefits and achieve your financial goals. 

Investment Planning Service includes:

  • Risk Profiling
  • Asset Allocation and Portfolio Construction
  • Creation and Accumulation of Wealth through Systematic Investment Plans (SIP)
  • Regular review of progress and Portfolio Rebalancing 

Essentially, Investment Planning involves identifying your financial goals throughout your life, and prioritising them. Investment Planning is important because it helps you to derive the maximum benefit from your investments.

Your success as an investor depends upon your ability to choose the right investment options. This, in turn, depends on your requirements, needs and goals. For most investors, however, the three prime criteria of evaluating any investment option are liquidity, safety and return.

Investment Planning also helps you to decide upon the right investment strategy. Besides your individual requirement, your investment strategy would also depend upon your age, personal circumstances and your risk appetite. These aspects are typically taken care of during investment planning.

Investment Planning also helps you to strike a balance between risk and returns. By prudent planning, it is possible to arrive at an optimal mix of risk and returns, that suits your particular needs and requirements.

Importance of Investment Planning

Investment means putting your money to work to earn more money. Done wisely, it can help you meet your financial goals like buying a new house, paying for college education of your children, of your enjoying a comfortable retirement, or whatever is important to you.

You do not have to be wealthy to be an investor. Investing even a small amount can produce considerable rewards over the long-term, especially if you do it regularly. But you need to decide about how much you want to invest and where . To choose wisely, you need to know the investment options thoroughly and their relative risk exposures.

Who needs Investment Planning ?

Investment planning is necessary for every one who wishes to achieve any financial goal. You have to plan your limited resources to avail the maximum benefit out of them. You should plan your investments to fulfill major needs like:

  • Creating wealth over the long term.
  • Acquring assets like a dream house or a dream car.
  • Fulfulling your need for financial security.

Thus, Investment Planning is nothing but a holistic approach to meet your life's goals.

Choosing the Right Investment Options

The choice of the best investment options for you will depend on your personal circumstances as well as general market conditions. For example, a good investment for a long-term retirement plan may not be a good investment for higher education expenses. In most cases, the right investment is a balance of three things: Liquidity, Safety and Return.  

how accessible is your money? How easily an investment can be converted to cash, since part of your   invested money must be available to cover financial emergencies.


what is the risk involved? The biggest risk is the risk of losing the money you have invested. Another equally important risk is that your investments will not provide enough growth or income to offset the impact of inflation, which could lead to a gradual increase in the cost of living. There are additional risks as well (like decline in economic growth). But the biggest risk of all is not investing at all.


what can you expect to get back on your investment? Investments are made for the purpose of generating returns. Safe investments often promise a specific, though limited return. Those that involve more risk offer the opportunity to make - or lose - a lot of money. 

To a large extent, the choice of the right investment option will also depend upon your financial goals.  For example, if you want to invest for funding your vacation next year, don't choose an investment vehicle that has a three-year lock-in. Similarly, if you want to invest for your daughter's marriage after   10 years, don't invest in 1yr bonds for the next 10 years. Instead, choose an option that matches your investment  horizon.

Risk and returns go hand in hand. Higher the risk, higher is the possibility of earning a good return. Thus, it follows that all types of investment have some form of risk attached to it. Theoretically, even 'safe' investments (such as bank deposits) are not without some element of risk. Broadly, here are the various types of risks that you might have to face as an investor.

Credit Risk

The risk is that the issuer of the security will default, or not repay the principal amount. This is valid for corporate bonds etc. 

Liquidity Risk

If you invest in securities, stocks, bonds, you are risking their sellability. In other words, your money gets stuck unnecessarily, creating an asset-liability mismatch. 

Market Risk

Financial markets are volatile in nature. Volatility means sudden swings in value from high to low, or the reverse. The more volatile an investment is, the more profit or loss you can make, since there can be a big spread between what you paid and what you sell it for. But you also have to be prepared for the price to drop by the same amount. Those who invest in stocks and mutual funds typically run this risk.

Interest Rate Risk

Depending on the interest rate movement in the economy, the rates of interest investment instruments may go up or come down, resulting in a subsequent reverse movement of their prices. Such a scenario of economic instability might effect mutual funds etc. The whole idea behind investment planning is to evaluate the risk associated with various type of investments and take steps so as to balance it with the desired return.

7 steps to better investment planning! Source:

Managing your investments becomes easy when you make it a habit to save, even if it’s very little money. You need to keep a meticulous account of personal income versus expenditure on a monthly basis before you start investing. Here are some steps you can follow:

Step 1: Create a budget and track your expenses

A budget helps you identify problem spending areas and also helps regulate your cash flow. Tracking your expenses against the budget helps you control spending and free up cash to clear existing debt and save for retirement or your child’s education. For example, your budget allocation includes a certain amount for groceries for a week. You discover on comparing that amount against actual expenses that you have overspent on buying additional items that you did not really need. This will caution you against making similar expenditure next week and at the end of the month, you will end up saving money!.

Step 2: Pay off your existing credit card debts

Are you surprised that paying off credit card debt is a step towards investments? Credit cards charge a high amount of interest along with the principal repayments. When you clear this amount, you‘ll be glad to realize that all the interest amounts and late fees you paid to credit cards can be utilized for your savings and investment program.

Step 3: Save effectively for a rainy day

Emergencies often arrive unannounced. Ensure that some money is set aside to cover monthly expenses for at least three months. These funds should be invested or set aside in instruments that can be readily accessed should you need cash. For example, keep these funds in a savings account in a bank or invest in a money-market mutual fund.

Step 4: Design a disciplined savings program

You can open a recurring deposit account. In this case a particular amount from your income gets deposited every month for a fixed tenure. You can also invest in a series of fixed deposits (FDs). For example, if your cash reserve is USD 24,000, this amount can be divided into six FDs of equal amounts, each with a 6-month maturity. At the end of 6 months, you’ll have a fixed deposit maturing every month. You can continue to roll them over to create a source of regular income and minimize risk. 

Step 5: Invest in education, pension, and retirement insurance plans

You can get life cover, education cover and save for retirement when you invest in insurance. Besides this, you get tax exemptions to reduce your current tax payout. For example, you can invest in the insurance plans which offer not only life insurance, but riders for investment of the premium amount so that you get good returns when you retire.

Step 6: Buy yourself your dream home

Investing in a house is one of the best investments you can make. First, your payments towards interest and real estate taxes are tax deductible. Second, your property increases in value over time.

Step 7: Invest in a diversified investment program or systematic investment plan

Your risk tolerance level goes a long way in defining your investment approach. If you’re not averse to taking risks, then you may want to invest in an equity based mutual fund. Else, you may want to invest in a plan that involves bonds and other safe securities. Also, ensure that you keep in mind your investment objectives before you subscribe to an investment plan.