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Everything About Investment Planning

Written by:

Ezekiel Chew

Last updated on:

January 29, 2024

Investment Planning

Contents

What is Investment Planning?

Investment Planning is a procedure that helps investors achieve their financial goals with their current financial condition. This involves setting up a financial plan after investment objectives have been identified.

The investment objectives of investment planning have to be feasible or achievable when all financial resources. There are so many investment opportunities, but without a plan, those investments are considered gambling.

Investment Planning

Also Read: What is Short Selling: Profit Making Strategy?

Back to top

Understanding Financial Goals

When making an investment plan, you need to clearly understand your short-term and long-term financial goals. Your goals could range from little expenses to even a retirement plan. Understanding these goals would enable you to implement the most appropriate investment strategy.

There are different categories your goals could fall under when looking to start investing. Understanding these categories helps make the best investment decisions. These categories include:

  • Safety: This is when your objective is to maintain your current financial position.
  • Income: Investments that provide active income.
  • Growth: These investments are aimed to achieve long-term goals and compounded wealth.
  • Tax Reduction: This investment is aimed towards the reduction of tax and may require tax professional services to render investment tax advice.

Back to top

Purpose of Investing

The major reason why people invest is for future purposes. Investing is one of the best ways to prepare for the future, though there is no guarantee you won't lose money. Successful investments are the best way to actively counter inflation. A financial professional could be hired for investment management to change the current financial situation while achieving desired goals and expectations.

Back to top

Balance Your Risk Tolerance and Time Horizon

Risk Management is a very vital aspect of investing. Assessing how much risk you can tolerate helps in maintaining your financial position. Taking more risk would mean more reward if the investment is successful, but if the investment fails you would incur a major loss. Investing involves risk, determining risk tolerance to enable you to make safer investments, so you would lose what you can afford to lose.

As the saying goes “Time is Money”, having a time horizon is knowing when you want to start selling from your investment portfolio. Most investors don't have a time frame when investing in real estate. Time horizon can help with retirement planning and could be the first step in creating a planned business portfolio.

Estimating your time horizon and risk tolerance is a management process that would focus on creating a reliable asset allocation to yield future results. You may need the assistance of a financial planner/advisor for informational purposes to help allocate your own finances.

Back to top

Investment Planning and Advisory Services

Acquiring knowledge on Investment Planning is necessary for a successful investment. Some people may not see the need to consult financial advisors for advisory services offered, but when dealing when large funds or limited money advisory services should be considered. Experts would give various strategies to manage different types of investments, can even recommend a broad range of insurance products to protect your investment.

Investments involve risks and could lead to loss of money. There is also no guarantee that an investment strategy would always work so use proper asset allocation.

Back to top

Savings and Financial Planning

Sometimes people confuse saving with making financial plans. Saving can be seen as an example of financial planning, but making financial plans goes way beyond saving. Saving is the process of setting aside a portion of your income for an expense, saving creates an emergency fund quickens retirement. Financial planning helps decide if to save, how much money to save, and what to do with your savings.

Investing is the ideal financial plan for income growth, some investments yield little to no returns. Some other investments can change in value and may pay interest or dividends . Real estate, stocks bonds, and social security show examples of investment. A mutual funds is a method of acquiring such investments and is an investment itself.

There are various factors to consider when making financial plans, and a registered investment advisor can help explain these factors better. These factors are:

Understanding the impact of time

Factoring in time is very important for your investment portfolio. Investments could need a short or long time to yield returns. Understanding the impact of time before investing could change the outcome of your investment. Selling your portfolio early or late could be the difference between profit and loss.

Build a plan that would grow with you

Having a plan is good but having a plan that grows with you is better. Before you invest in stocks, bonds, or securities offered on any exchange. It is advisable to do some research or seek help from an advisor. Over time after gaining some experience, you should come up with rules and notes that you follow. Focus on these rules and this would build a plan that grows with you.

Control your behavior biases or emotions

Greed and Fear are the most common emotions that affect your financial decisions. When you invest with proper risk management, an objective, and a plan you don't need to worry about the short-term price action of securities and assets. You should concern about your goals and ignore any noise, you won't sell your portfolio early or late.

Emotions

With a proper plan, you would not miss out on opportunities caused by fear. Stick to your plan and follow your rules. Never be influenced by your emotions.

Also Read: How To Make The Best Of A Trading Journal

Back to top

How do I Create a Solid Investment Plan?

When creating an investment plan, there are some factors to take into consideration to build a solid investment plan. Setting a financial target is the first factor, investment without a target is not ideal. knowing why you are investing and stating your goals is the first step to having a solid investment goal.

Risk is the major component of an investment, you should never invest what you cannot afford to lose. Before investing you should process all the risks you are taking and be sure they are worth it. This is a very vital step and can help your portfolio.

Portfolio

Having knowledge of all available investment options helps build a vast portfolio. Avoid putting all your eggs in one basket, learn about other investment options. There are a lot of materials online, use search results to help build your knowledge.

Balance and monitor your investment

After making an investment, it is important to monitor it. Not monitoring investment is like a conduct business counting payments for services offered. Monitoring the growth and performance of your investment can help you balance your portfolio. Balancing your portfolio involves removing or putting money into your investments to achieve your goals.

Monitor Investment

Determine Mutual funds and asset allocation

A mutual fund is a company that manages a pool of funds belonging to investors, this pool of funds is used to invest in securities. Identifying the most appropriate mutual fund to invest with, involves proper research to know whose services help achieve your goals easier.

Mutual Funds

Asset allocation is a strategy implemented to manage assets. When investing it is important to allocate your resource properly to achieve optimum returns. This process may require professional services and would require factoring in time, money, risk, and other influencing factors.

Back to top

Conclusion

Investment Planning helps make smart investments. Experienced sources believed that if you are unable to make your own investment plans, you could hire professional services to undergo such a process with guidance.

Back to top

FAQs

What is investment planning?

This is establishing an extensive plan that aims at individual financial projects and implementations.

What are the steps of investment planning?

These steps include establishing a financial goal, having a risk management strategy, proper allocation of resources.

What are the 4 types of investments?

The four types of investments are equities (stocks), fixed-income and debt (bonds), money market and cash equivalents, and real estate.

Why is investment planning important?

Investment planning is important because it makes investing easier and increases the chances of success.

Back to top

 

About Ezekiel Chew​

Ezekiel Chew, founder and head of training at Asia Forex Mentor, is a renowned forex expert, frequently invited to speak at major industry events. Known for his deep market insights, Ezekiel is one of the top traders committed to supporting the trading community. Making six figures per trade, he also trains traders working in banks, fund management, and prop trading firms.

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Everything About Investment Planning

Written by:

Updated:

January 29, 2024

Investment Planning

Contents

What is Investment Planning?

Investment Planning is a procedure that helps investors achieve their financial goals with their current financial condition. This involves setting up a financial plan after investment objectives have been identified.

The investment objectives of investment planning have to be feasible or achievable when all financial resources. There are so many investment opportunities, but without a plan, those investments are considered gambling.

Investment Planning

Also Read: What is Short Selling: Profit Making Strategy?

Back to top

Understanding Financial Goals

When making an investment plan, you need to clearly understand your short-term and long-term financial goals. Your goals could range from little expenses to even a retirement plan. Understanding these goals would enable you to implement the most appropriate investment strategy.

There are different categories your goals could fall under when looking to start investing. Understanding these categories helps make the best investment decisions. These categories include:

  • Safety: This is when your objective is to maintain your current financial position.
  • Income: Investments that provide active income.
  • Growth: These investments are aimed to achieve long-term goals and compounded wealth.
  • Tax Reduction: This investment is aimed towards the reduction of tax and may require tax professional services to render investment tax advice.

Back to top

Purpose of Investing

The major reason why people invest is for future purposes. Investing is one of the best ways to prepare for the future, though there is no guarantee you won't lose money. Successful investments are the best way to actively counter inflation. A financial professional could be hired for investment management to change the current financial situation while achieving desired goals and expectations.

Back to top

Balance Your Risk Tolerance and Time Horizon

Risk Management is a very vital aspect of investing. Assessing how much risk you can tolerate helps in maintaining your financial position. Taking more risk would mean more reward if the investment is successful, but if the investment fails you would incur a major loss. Investing involves risk, determining risk tolerance to enable you to make safer investments, so you would lose what you can afford to lose.

As the saying goes "Time is Money", having a time horizon is knowing when you want to start selling from your investment portfolio. Most investors don't have a time frame when investing in real estate. Time horizon can help with retirement planning and could be the first step in creating a planned business portfolio.

Estimating your time horizon and risk tolerance is a management process that would focus on creating a reliable asset allocation to yield future results. You may need the assistance of a financial planner/advisor for informational purposes to help allocate your own finances.

Back to top

Investment Planning and Advisory Services

Acquiring knowledge on Investment Planning is necessary for a successful investment. Some people may not see the need to consult financial advisors for advisory services offered, but when dealing when large funds or limited money advisory services should be considered. Experts would give various strategies to manage different types of investments, can even recommend a broad range of insurance products to protect your investment.

Investments involve risks and could lead to loss of money. There is also no guarantee that an investment strategy would always work so use proper asset allocation.

Back to top

Savings and Financial Planning

Sometimes people confuse saving with making financial plans. Saving can be seen as an example of financial planning, but making financial plans goes way beyond saving. Saving is the process of setting aside a portion of your income for an expense, saving creates an emergency fund quickens retirement. Financial planning helps decide if to save, how much money to save, and what to do with your savings.

Investing is the ideal financial plan for income growth, some investments yield little to no returns. Some other investments can change in value and may pay interest or dividends. Real estate, stocks bonds, and social security show examples of investment. A mutual funds is a method of acquiring such investments and is an investment itself.

There are various factors to consider when making financial plans, and a registered investment advisor can help explain these factors better. These factors are:

Understanding the impact of time

Factoring in time is very important for your investment portfolio. Investments could need a short or long time to yield returns. Understanding the impact of time before investing could change the outcome of your investment. Selling your portfolio early or late could be the difference between profit and loss.

Build a plan that would grow with you

Having a plan is good but having a plan that grows with you is better. Before you invest in stocks, bonds, or securities offered on any exchange. It is advisable to do some research or seek help from an advisor. Over time after gaining some experience, you should come up with rules and notes that you follow. Focus on these rules and this would build a plan that grows with you.

Control your behavior biases or emotions

Greed and Fear are the most common emotions that affect your financial decisions. When you invest with proper risk management, an objective, and a plan you don't need to worry about the short-term price action of securities and assets. You should concern about your goals and ignore any noise, you won't sell your portfolio early or late.

Emotions

With a proper plan, you would not miss out on opportunities caused by fear. Stick to your plan and follow your rules. Never be influenced by your emotions.

Also Read: How To Make The Best Of A Trading Journal

Back to top

How do I Create a Solid Investment Plan?

When creating an investment plan, there are some factors to take into consideration to build a solid investment plan. Setting a financial target is the first factor, investment without a target is not ideal. knowing why you are investing and stating your goals is the first step to having a solid investment goal.

Risk is the major component of an investment, you should never invest what you cannot afford to lose. Before investing you should process all the risks you are taking and be sure they are worth it. This is a very vital step and can help your portfolio.

Portfolio

Having knowledge of all available investment options helps build a vast portfolio. Avoid putting all your eggs in one basket, learn about other investment options. There are a lot of materials online, use search results to help build your knowledge.

Balance and monitor your investment

After making an investment, it is important to monitor it. Not monitoring investment is like a conduct business counting payments for services offered. Monitoring the growth and performance of your investment can help you balance your portfolio. Balancing your portfolio involves removing or putting money into your investments to achieve your goals.

Monitor Investment

Determine Mutual funds and asset allocation

A mutual fund is a company that manages a pool of funds belonging to investors, this pool of funds is used to invest in securities. Identifying the most appropriate mutual fund to invest with, involves proper research to know whose services help achieve your goals easier.

Mutual Funds

Asset allocation is a strategy implemented to manage assets. When investing it is important to allocate your resource properly to achieve optimum returns. This process may require professional services and would require factoring in time, money, risk, and other influencing factors.

Back to top

Conclusion

Investment Planning helps make smart investments. Experienced sources believed that if you are unable to make your own investment plans, you could hire professional services to undergo such a process with guidance.

Back to top

FAQs

What is investment planning?

This is establishing an extensive plan that aims at individual financial projects and implementations.

What are the steps of investment planning?

These steps include establishing a financial goal, having a risk management strategy, proper allocation of resources.

What are the 4 types of investments?

The four types of investments are equities (stocks), fixed-income and debt (bonds), money market and cash equivalents, and real estate.

Why is investment planning important?

Investment planning is important because it makes investing easier and increases the chances of success.

Back to top

 

ezekiel chew asiaforexmentor

About Ezekiel Chew

Ezekiel Chew, founder and head of training at Asia Forex Mentor, is a renowned forex expert, frequently invited to speak at major industry events. Known for his deep market insights, Ezekiel is one of the top traders committed to supporting the trading community. Making six figures per trade, he also trains traders working in banks, fund management, and prop trading firms.

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