Investment Planning: How to Make Proper Investment Plans


Smart investment is an integral part of financial planning as it helps in providing us enough funds that will guarantee of our financial stability in the future. Therefore marking good Investment planning  before investing is very important. 

There are different investment portfolios one can take advantage of. People have a portfolio that comprises of various investment files such as stocks, gold, bonds, government schemes etc. One needs proper investment plan to determine one’s investment mix that will secure one’s future financially.

What is Investment Planning?

Investment planning is the process of identifying financial goals and meeting them by building a plan. The investment planning process starts by first identifying goals and objectives, and then matching the goals with available financial resources. There are many investment opportunities available. We can invest in those investment portfolios that financial resources available can  afford to obtain our goals and objectives.

Benefits of Investment Planning

There are many benefits and importance of investment planning

  • Security
  • Efficient management of income
  • Savings
  • Financial knowledge
  • Improved standard of living
  • Capital growth
  • Tax minimization
  • Liquidity


Investment planning is important as it helps to protect you and your family against any eventualities. For instance, if lose your job or  incapacitated in any way, members of your family will be financially secure by the investment.

Efficiently Manage Income

Having investment plans helps to efficiently manage one’s income and expenditure. Managing income helps the one to manage expenditures, tax payments, and other expenditures.

Financial Understanding

Investment planning helps getting good knowledge of one’s current financial situation and future needs. It then equips one to evaluate investment or retirement plan by having financial understanding.


Investment planning helps to to save towards making investments

When you invest in highly liquid investment vehicles, you can easily taken out funds from those investments in the case of emergency.


One of the main objectives of Investment planning is the safety of one’s family, in the terms of finance. And investments should be made in safe investment vehicles to guarantee that.

Standard of Living

Investments create  savings create that will be very useful in difficult times. Lose of job or death of the working member of a family affects the standard of living of the family to a large extent. But if the working individual made investment, the family can fall back on the investment as useful source of income for the family.


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 Growth

Capital growth occurs when the securities are sold at a higher price than the price they were initially bought. And capital growth is different from the returns. Returns come in form of dividends. Selling securities at a price lower than they were originally purchased leads to capital loss. To get capital growth on your investment, you should consider investing in securities for longer period of time.

Tax Minimization

An individual may consider  taking up some investments in order to opt for tax minimization as a part of his investment strategy. Seeking those investments that have favourable tax income can be strategy to reduce tax.


Many investments are liquid — they can easily be converted into cash when you are in need of money.

Steps in Making a Good Investment Plans

1 Assess Your Current Financial Situation

The first step in making an investment plan for the future is to assess your present financial state. Your present financial situation includes your present income, financial responsibilities, etc. You need to figure out how much money you have to invest. Make a budget to evaluate your monthly disposable income after expenses and emergency savings. It will enable you to figure out how much you can comfortably afford to invest.

Assessing your present financial state helps you decide on how accessible, or liquid, you need your investments to be. If you would be needing cash inflows from your investment quickly, you may want to invest in more liquid assets, such as stocks, rather than in other assets like real estate.

2 Decide How Much and When to Save

It’s important that we save some chunk of income for rainy days and retirement. But when we have investment plans we would have to capture our investment funding in a savings plan.

Some of the investment products can be obtained with a very little amout So even if we have small money to save, we should not worry about it.

3 Define Financial Goals

At this point, you have to define your financial goals. Why do you want to invest? What are you hoping to achieve with your investment? It may be to buy a house before retirement, get car, be able to fund your children’s education or to leave inheritance for them.

In defining your financial goals you must answer the following questions: How fast do you want to make money from your investments? Do you interested in seeing quick growth in your investments? Or are you want investment that will  grow over time?

Your financial goals should revolve around safety, income and growth. Safety involves looking for ways to maintain your current level of wealth. Income is looking for investments that would provide active income to live off of. While  growth is wanting to build wealth over the long term. These three categories well help you to choose the best investment path for you.

4 Determine Risk Tolerance Level and Time Horizon

Another step in making investments plan is to decide on amount of risk you’re willing to take.

Risk management is very vital in making good investment. Therefore, in making your investment plans, you should set a limit or how much risk you can take.

In honestly, riskier investments have the potentials for higher returns, and also higher chances of losses. So, if you choose to take up investments with higher risks, you must be ready to withstand the shocks in the event of any eventualities. Taking a chance on an undervalued stock could turn into a gold mine for you,  or you could lose your investment. If you are interested in building wealth gradually over years, you may consider a safer investment path.

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