Quick Guide to Select the Right Investment Plan to Create Wealth

Quick Guide to Select the Right Investment Plan to Create Wealth

Financial planning is essential for all individuals as it not only helps in meeting the present but also future goals along dealing with unforeseen emergencies in life. In short, it provides much needed financial security that we all thrive for in life. Further, with the rapid rise in inflation in India, daily expenses tend to erode the value of savings, and an investment plan can help you in wealth creation efficiently. Financial planning via diversification also helps to harness the power of compounding and reduce the uncertainties arising from a volatile market scenario.

What is power of compounding? Simply put, it refers to the strategy that makes your money grow by earning interests on the principal amount as well as the accumulated interest over successive periods. So, to gain the maximum benefits from the power of compounding, make sure you choose the best investment options for your portfolio.

Below are a few pointers that will enable you to select the best investment optionsfor yourself and your family:

 Focus on Financial Goals

We all have different financial goals in life, be it long term or short term. Some milestones are significant in life. Be it buying a family car, your own house, your children's' education or their marriage; it is your responsibility to fulfil these needs. The alignment of these goals with the right investment plan is what matters the most.

Making a smart investment choice can make your financial life better. It will help in providing you with enough funds to make your dreams fulfilled.So,it would help if you enlisted your financial goals according to the horizon and then categorize them accordingly.

While enlisting your financial goals, there are mainly two types-- need-based goals and want-based goals. You must understand what your need is and should cover them as your priority. Thus, after covering your needs, you can plan for your wants with the surplus available with you.

Consider Current Liabilities 

When you start with your financial planning, you should first check the status of your net worth? What is your current net worth? What are your existing assets and liabilities?

An investment plan helps in understanding your current financial situation in a better way. It becomes easy for you to evaluate investment or retirement plan by having a sound financial understanding.Make sure you are aware of all the existing financial liabilities before making an investment plan. Analyze how realistic your goals are and how much you require to achieve them.

Compare Plans in Terms of their Benefits 

When building your financial portfolio, it is crucial to explore the best investment options. Research is, therefore, the primary task before investing your money. If you are investing in the stock market, research the company's history and performance, financial ratios, future growth and other factors.

With proper research, you can understand the different investment avenues and the risk associated with them. Research tells you which plan of investment is relatively safer for you, and which can expose you to volatility. Accordingly, you can make an investment planthat has multiple options to protect you from losing money in one particular investment.

Diversify Investment

There are several investment options available today, such as equities, bonds, and rel-estate. Each of these has different characteristics, and a good investment plan will usually contain a mix of all of these. Include the most suitable mixture of investments to each specific goal in the most efficient way. From the outset, it is essential to build a strong foundation, and as your circumstances change as time pass and you need to make necessary adjustments to keep on track.

As it is said not to put all your eggs in one basket, diversification is the key to a successful investment plan. You can better manage and improve the balance between risk and return by spreading your money across different investment options. Diversification can help you smooth out the returns while still achieving financial growth and reduce the overall risk in your investment plan.

Be Open-Minded and Invest Wisely

Before investing your money in any investment product, solid investment planning is required. If you do not put enough thought to the planning process, then all your investments can turn into a big mess. Therefore, an investment plan is crucial to your financial portfolio and life goals.

Different goals require a separate investment plan, such as for retirement or child education; you need to create two unique strategies. Investment plans offer various ways to invest your money as well as insure yourself. You can choose from ULIPs (Unit Linked Insurance Plans) to Online Saving Plans for the dual benefit of insurance and investment. So, research and determine your goals to make a robust and efficient investment plan.

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