Investment planning is the process of matching your personal financial goals and objectives with your financial resources. Investment planning is an important component of financial planning.
Investment planning is a process that starts when you are clear on your financial goals and objectives. Our Financial Planning process is designed keeping in mind to help you get clear on how to match your financial resources to your financial objectives.
There are hundreds of different investments. The most common are cash, equities, bonds and property. Each of these has varied characteristics and a good investment plan will usually contain all of these.
By helping you set clear and measurable goals, we can search & match the most suitable mixture of investments to each specific goal in the most efficient way. From the beginning, it is important to build a strong foundation and as your circumstances change, we can help you make any necessary adjustments to keep your investment activity on track.
Investment planning starts after you have taken into account your current and expected income level and have laid down your future financial goals. The important aspects of investment planning are:
Capital growth v/s regular income: Investors aiming at long-term goals should focus on capital growth. A long-term investment will allow you to tide over rough times without changing your plans at all. Stocks, mutual funds and real estate represent good investment options for capital growth. On another hand, if you are investing to meet a short-term goal or to give you a steady flow of funds to complement your present salary, you should go for income investments. These investments generate a steady flow of income in the form of dividends and interest and include fixed-income investments, such as different types of bonds and certificates of deposit (CDs).
Risk: Every investment option presents its own unique risk-return trade-off. Generally, high-risk investments offer higher returns in order to make it worthwhile for investors to take on the additional risk. Investment planning should take into account an investor’s risk-taking strength, which depends on your current income level, savings, lifestyle cost and responsibilities.
Determine your investment profile: This can be done by considering your risk-taking ability. There are four types of investment profiles:
- Conservative (Low-Risk Tolerance): Such portfolios consist mainly (around 70%) of income assets, such as fixed interest and cash.
- Balanced (Average-Risk Tolerance): This applies to portfolios with an equal emphasis on growth & income assets.
- Growth (High-Risk Tolerance): These portfolios comprise mainly (up to 80%) of growth investments, such as different stocks and foreign currencies.
- High Growth or Aggressive (Very High-Risk Tolerance): This refers to portfolios consisting more than 90% of the funds in growth investments.
Review your investment plan at regular intervals: This helps in fine-tuning your portfolio to suit your current financial condition and a change in risk preference.
Benefits of Investment Planning:
Investment planning helps you:
- To generate income and/or capital gains.
- To consolidate your future wealth.
- To strengthen your investment portfolio.
- & save on taxes.
Get in touch with us today so that we can help you get started.
