A sound investment plan revolves its characteristic around the objective it is intended to achieve. In today’s world of quick and easy transactions along with rising inflation, it is becoming difficult to save money for future causes.
Any investment strategy requires patience and smart planning. Although, investments need not necessarily initiate frugal spending in the present, it does ask to cut out un-necessary and unplanned expenditures. Let us have a look at five strategies that have been followed from time unknown, to help create / choose a solid investment plan.
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The type of investment and the funds allocated varies whether the end wealth is for education, marriage or housing. These different uses run on three primary factors, that is, safety, income or growth. Each application results in a different amount of each of the three factors.
For instance, if the investment is for retirement, it calls for retirement schemes which ensure safe income collection over a long period of time. If the horizon is closer, the growth factor is more stressed.
- Fund Allocation
The second big question you will have to answer is, how much money are you setting aside for investments?
It is necessary to decide whether the investment would be made in a lump sum or in monthly allocations. Depending on the purpose of investment and the scheme, the initial amount to invest may vary. Also, it must be ensured that the money kept aside for investment must not fall back into the daily expenditure track in any case.
- Fund Requirement
The next factor that goes into making an investment plan is deciding when the fund would be required. If the money is required in the next year or two, the investment plan must stress on safety and good growth rates so that there could be a significant addition to the amount.
But, for a steady growth to occur with minimum risks, it is often advised to invest for a period of at least 5 years.
- Risk Capacity
You have to decide the amount of risk you are ready to bear for the investment. High return investments typically bear high degrees of risks and in order to curb that, investors are increasingly diversifying their investments.
No matter what, the investor has to be cautious about the movement of the market and target the degree of returns depending on how much risk he / she would be able to afford and the money that can be put back in the cycle of investment.
The market is flooded with investment platforms, one always seeming better than the other. But for the investor, it is essential to identify the above points and then pick the right one after going through all the remaining options available. Note that, reviewing the investments periodically is as important as the investment in itself.