What is Investment Planning? | 5 Tips for Proper Investment Planning

What is Investment Planning? | 5 Tips for Proper Investment Planning

What is Investment Planning? With suitable investments, it is easy to build a solid financial future. With the wrong ones, you could be losing money and jeopardizing your chances of building wealth. It’s important to know what type of investment strategy is best for you, whether you are just starting or nearing retirement. How can you choose? So in this discussion, we will try to answer all these questions.


What is Investment Planning?

Making an investment strategy entails more than just picking a few stocks to invest in. You must think about your current financial status as well as your long-term objectives. To determine your ideal asset allocation, you must also identify your timeline and how much risk you are ready to take.

5 Tips for Proper Investment Planning

1)Examine your current financial situation

The first stage in creating a long-term investing strategy is to assess your current financial condition. You must determine how much money you must invest. 

Making a budget to assess your monthly disposable income after expenses and emergency reserves is one way to do this. This can help you figure out how much you can afford to put into your business.

It’s also vital to think about how accessible (or liquid) your investments need to be. For example, if you need to cash out immediately, you should invest in more liquid assets, such as stocks, rather than real estate.

2)Determine your objectives

Why are you making this investment? What do you hope to achieve by earning money? This can range from purchasing a car in a few years to retiring comfortably in a few years.

You must also establish a goal timetable, commonly known as a time horizon. For example, how soon do you want to see a return on your investment? Do you want to see rapid results, or do you want to see your investment increase over time? 

You’ll need to ask yourself the above questions to choose the correct objectives for yourself.

3)Determine how much risk can you bear

The next step in developing your investment strategy is determining how much risk you are ready to accept. In general, the younger you are, the more chance you may take because your portfolio will have more time to recover from any losses. 

If you’re older, you should avoid high-risk investments and instead put more money into the beginning to boost growth.

Furthermore, riskier investments offer the potential for huge gains — as well as significant losses. Taking a gamble on a cheap stock or piece of real estate could payout, or it could backfire. If you wish to create money over time, a safer investment option may be preferable.

3)Decide where to invest.

The final stage is to choose where to put your money. You have a variety of investment accounts to choose from. 

Your budget, goals, and risk tolerance will all play a role in determining the best investment options for you. Consider stocks, bonds, and mutual funds, as well as long-term investments. You can also invest in assets such as real estate, art, and other physical goods. As per the current trend, you can choose virtual assets such as NFT & Cryptocurrency if your risk apatite is more.

Wherever you decide to invest, focus on diversifying your portfolio. You don’t want to put all of your money in stocks and risk losing it all. Instead, it’s preferable to divide your funds among a few different investment types that correspond to your objectives and risk tolerance.

4)Keep an eye on your investments.

It’s not a good idea to leave your investments alone once you’ve made them. You should check in on your assets now and again to see how they’re doing and whether you need to adjust.

For example, if you aren’t investing enough money each month and aren’t on track to meet your goals, or perhaps you are depositing more than you need to and are ahead of schedule. 

Or if you want to move your money to a more stable investment as you get closer to your long-term objectives, or perhaps your investments are performing well and you want to take on even more risk to achieve your goals sooner.

What is Investment Planning? | 5 Tips for Proper Investment Planning

Benefits of Investment Planning

Family Security:

From the standpoint of family security, investment planning is critical. For example, if the family’s working member dies, the investment will provide financial security to the other members of the family.

Efficiently manage earnings:

By using an investing strategy is feasible to manage a person’s income and expenses effectively. In addition, I am working income aids in managing other costs, such as tax payments.

Financial understanding:

Investment planning aids in gaining a better grasp of our existing financial status. Having a financial understanding makes evaluating an investment or retirement plan much more accessible.


Investing in highly liquid investment vehicles is a good idea. Then, in the case of an emergency, you can easily take back funds from those investments.

Standard of Living:

In difficult times, the savings generated by the investment are pretty beneficial. For example, the death of a family member who works has a significant impact on the family’s level of life. At that point, the working person’s investment becomes a valuable source of income for the family.

Investment VS speculation

When investors and traders strive to profit from market transactions, they take calculated risks. Thus, the main distinction between investing and speculating is the level of risk assumed in the trades.

The key difference:

  • · The amount of risk involved; is the main distinction between speculating and investing.
  • · By taking on an average or below-average amount of risk, investors attempt to generate a satisfactory return on their capital.
  • · Speculators are looking for abnormally high returns on bets that could go either way.
  • · Speculative traders typically employ trading tactics such as futures, options, and short selling.
What is Investment Planning? | 5 Tips for Proper Investment Planning

Investment planning for retirement

Why is retirement planning important?

Your income stops once you retire. Therefore, it will be difficult for you to maintain if you don’t have any savings or investments to fall back on. Also, if you save for retirement in a savings account, inflation will depreciate the value of your money by the time you need it. As a result, to combat inflation, you must choose the best retirement plan and begin investing in it.

Avenues of investment

An investment is the purchase of an asset to generate wealth through recurring income or profit from the asset’s sale. You must make investing selections as part of your financial planning.

1)National Pension Scheme (NPS)

The National Pension System (NPS) is a government program that aims to provide workers with social security. This scheme is open to employees in the public, government, and private sectors. 

NPS can also be invested in by those who work in the unorganized sector. Employees will invest in a pension account at regular intervals under this plan.

They can withdraw a portion of the corpus when they retire, while the remainder is paid out as a monthly income. In addition, contributions to the NPS are tax-deductible under Section 80C of the Income Tax Act of 1961.

2)Public provident funds (PPF) 

The Public Provident Fund (PPF) is a government-sponsored savings scheme under the Income Tax Act of 1961’s Section 80C. Investing in a PPF can save you up to Rs 46,800 each year in taxes. 

You can invest up to Rs 1,50,000 per year in these accounts, which have a 15-year lock-in period. Investing in a PPF is a great strategy to save for retirement because it has a high rate of return.

3)Mutual Funds (MFs) 

Mutual funds are one of the most significant private retirement plans available. These have the potential to provide yearly returns of 12 to 15%. You will also unlock the potential of compounding when you invest with a long-term view. 

Because retirement planning is done over a lengthy period, you can start investing actively in equity funds and then transition to debt funds as you get closer to retirement. This will ensure that you have amassed a sizable sum of money on which you may rely when you retire.

You may like to read: When Is The Correct Time For Mutual Fund Investment?

4)Fixed Deposit (FD)

You can put your savings and surplus fund into a bank deposit, which is a conventional method. You can set your money into recurring deposits (RDs). These accounts allow you to invest a certain amount regularly and provide significantly higher returns than a traditional savings account. You can invest in fixed deposits if you have a lump sum and want to put it aside for your retirement (FDs). FDs offer a desirable rate of return, and you might amass a substantial sum by the time you retire.


A wise investment can genuinely improve our financial situation. It will assist us in obtaining sufficient finances to realize our ambitions. 

Before investing, it is critical to plan. Most people nowadays have a portfolio that includes numerous investment vehicles such as equities, gold, bonds, government programs, and so on. As a result, a well-thought-out investment strategy is necessary to ensure our financial future.

Proper investment planning can assist us in making wise investments. We can hire a financial planner if we don’t have time to undertake our investment planning. 

They will assist us in constructing our investment portfolio based on our risk tolerance and present financial situation.


Anish is post graduate in commerce & management. He is a qualified Chartered Accountant & Information System Auditor with experience of more than 20 years in the field of management, accounting & taxation. He is visiting the faculty of various universities and providing career advice to aspirants Anish Agrawal has authored many books on Accountancy & Taxation.

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