Making a smart investment can indeed make your financial life better. It helps in providing enough funds to fulfil your dreams. Investment planning is very crucial before you begin with your investments. Nowadays, most of the people have a financial portfolio that consists of different types of investments such as stocks, bonds, gold, government schemes, money market instruments etc. So a proper investment plan is required to secure your financial future.
What is investment planning?
It is the process of recognising financial objectives and goals and converting them by building a plan. Investment planning is one of the main components of financial planning. Investment planning begins with the identification of objectives and goals. Then, as an investor, you need to match those goals with financial resources available to you. Nowadays, there are several investment vehicles to invest your money, the most common being equities, cash, bonds, property, money market instruments, etc. So according to the funds available, you can invest in these investment vehicles to obtain your objectives and goals.
How does investment planning work to make your financial life better?
Just how it’s crucial to understand the importance of saving, you need to know why you should plan your investments. Following are the advantages of investment planning:
- Provides a sense of security: Investment planning becomes important from the point of family security. God forbid, if anything happens to the working member or the sole breadwinnerof the family, then the other members of the family could be financially secure thanks to the investment.
- Helps to manage your income efficiently: It is possible to manage your income and expenditure with an investment plan efficiently. Managing your income aids to manage tax payments, other expenses, etc.
- Aids in financial understanding: Investment planning aidsto comprehend your present financial situation. This makes it easier for an investor to evaluate investment plan such asa retirement plan by having financial understanding.
- Acts as savings: As an investor, you should invest in those securitiesthat are highly liquid. Funds can be easily withdrawn from these investment vehicles in the case of an emergency.
- Enhances standard of living: The savings created by the investment is beneficial in tough times. For instance, the death of the only working person in the family can have a grave effect on the standard of living of the family to a great extent. That time the investment made by that individual can come in handy for the source of income to the family.
When one plans their investment, theymust control their sentiments and insteadfocus on their goals, how much and how often they can save. They should try to overlook the little dips in the market and seek to hold a long term perspective. They should not also fret over negative returns in the short run as it has the potential to turn back to progressive returns in the long run. So, try to havecontrol overyour emotions and stick with your investments. Happy investing!