Things To Ascertain Before Planning A Investment

Whenever we want to invest our hard earned money or buy any policy for our loved ones there are numerous things to be decided before even approaching a insurance advisor.  A good advisor helps you decide those things while many of them just focus on their monthly targets.  So let’s get prepared for those questions to avoid any misguidance or mismanagement of that hard earned money that rightfully belongs to you & your loved ones.

The questions that arise are :

  1. What is the PURPOSE of investing?
  2. What TARGET RETURNS can be gained from today’s investment?
  3. What is the investment BUDGET? &
  4. How much RISK TAKING CAPACITY do I have today as well as in future?

Purpose :

First question before doing anything in life is purpose of that act.

WHY should it be done?
WHAT benefits will I derive from doing that act?

Purpose of a investment can be short term like Tax Saving, Buying a automobile, etc. or a long term like Higher Education of your child, Buying Property, Marriage of your child & many other such things.

Plan wisely about your purpose as without it all your efforts may get wasted.

Target Saving :

Once purpose is decided, we need to ascertain how much money we intend to get from our investment so that our purpose gets served.

How much amount will be sufficient for your purpose in the future?

This question gets more tricky than we can think, so we need to be very clear about our purpose.  Take into consideration alternates to compensate if your investment is not enough when the day arrives.  Keep inflation rate in mind for calculating the value of your present investment in future.

Budget :

Once both above questions are answered you get the clear picture of what you need to invest & what you have to invest.

What you need to invest is derived by your

  1. Intended purpose,
  2. Present & future value of your money, &
  3. Returns you intend to earn in future from your investment made today.

What you have to invest can be decided by your

  1. Present household income,
  2. Present household expenses,
  3. Your emergency budget, &
  4. Short term savings.

Risk Taking Capacity :

More often than what we intend the amount to be invested & intended returns don’t match & this leads to the need to become a dare devil by taking risk.

Investment can be a tricky business as if your thinking is not matched by your advisor then everything done so far may go waste.  Advisor should be able to judge your risk taking capacity, importance of your hard earned money to you & your loved ones at present as well as in future.

Investments with guaranteed & safe returns like Traditional Insurance Plans, Bank Deposits etc grow slowly compared to unguaranteed returns like ULIP, Share market, Mutual Funds etc.

Manage your risk efficiently & with utmost care so that your limited resources can render intended results for your colorful future.

Take your time while planning your saving’s/investment’s as some brain storming initially can lead to your long time financial stability & sustainability.


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