What a tremendous feeling we experience in our gut when we get the first ever salary of our life. It is the time when we actually feel that, “yeah, finally we’ve grown up and started earning on our own”. At the early age very few people tend to manage their savings and earnings in proper avenues in order to get the extra benefits and security other than their regular income. They often fail to think of doing investment while celebrating their short term excitement. But one should have the realization of the fact that, this age is the most crucial age from which one should start investing.
Firstly, let us discuss why one should start investing early and not later..
- RETIREMENT SECURITY (Early planning= Higher returns)
- SELF-DISCIPLINE (Habit to save)
- REGULAR ASSESSMENT OF INCOME
- EXTRA BENEFITS FROM THE SAME SOURCE OF INCOME
- PREPARED FOR UNCERTAIN FUTURE (Financial aid)
- PROPER ALLOCATION OF FUNDS (Diversification to hedge the risk)
- MINIMIZATION OF UNPRODUCTIVE & POINTLESS EXPENDITURE
- TAX EXEMPTION THROUGH VARIOUS FUND SCHEMES
- SAFE, SECURED AND STRESS FREE LIFE AHEAD.
Now we have noticed some really convincing factors which encourages us to start doing investments. But the most important question which pops up in our mind while having a thought of investment is.. HOW? And WHERE?. Since we have discussed the ‘WHY’ factor, it is now important for you to know further about investment in brief.
- FINANCIAL GOALS AND PLANNING
It is so obvious that if you are planning to invest your money somewhere, you must have setup a goal about your return and the term in which you are investing. The main aim of planning is to ensure that people meet their personal and lifestyle goals and ensuring that they have enough income to live off in their retirement.
STEPS IN THE FINANCIAL PLANNING PROCESS:
Financial planning is the process of framing financial policies to ensure a balance between inflow and outflow of funds that helps in growth and expansion of the economy.
- CHOOSE A PROFESSIONAL FINANCIAL ADVISOR.
A trusted financial advisor can offer expert advice and help the client to create a personalized financial plan. It is important for a client to understand the financial planning services as it helps him to achieve his financial goals. An investor should be clear about the fees charged, the expected time frame and the frequency of annual review plans.
- IDENTIFY YOUR GOALS AND OBJECTIVES.
Make a list of your short term and long term goals and set the timelines for achieving them.
Before determining whether your goals are achievable, spend some time gathering your personal and financial data to access the current financial situation. For example, retirement planning, paying children’s fees.
- ANALYZE YOUR FINANCIAL STATUS.
The next step is to determine how to achieve your financial goals after they have been identified. Your financial advisor analyzes your finances and provide specific recommendations and strategies to achieve your short term and long term goals based on your time frame, risk tolerance and goals.
- IMPLEMENT YOUR PLAN.
Implementation means actually putting into action the recommendations and strategies provided by the financial advisor that will help the investor to achieve his short term and long term goals.
- PERIODICALLY REVIEW YOUR PLAN.
To ensure that your financial plan continues to meet your needs, your financial advisor will conduct periodic reviews. These reviews will keep a track of your financial progress and any changes if need to be made can be introduced.
Financial planning is an on-going continous process.
INVESTMENT ALTERNATIVES / AVENUES.
There are various investment alternatives which are available to an Indian investor. An investor may select one or a combination of the best investment options which appeals to him or her. The selection of the investment options also depend on the age, income, dependents etc. of a particular person. All investment avenues are differentiated based on their distinctive features in terms of risk, return, term etc.
The different types of investment avenue includes:
- Money Market Instrument
- Mutual Funds
- Preference Shares
- Real Estate
- Life Insurance
- Gold and Silver
- Equity Shares
- Debentures and Shares
- Non Marketable Financial Assets (post office, ppf, bank deposit, CD/PD).
Thus, there’s a vast scope in investing as there are ‘n’ number of options available in the market according to your requirement and risk tolerance capacity.
Be it any avenue, the early you start investing, higher are the returns you will get. Also, the early investment helps the individual to understand the market better and increase the risk taking ability in order to get the higher return on their investment.
If you found this article useful and want to know more about investment in detail, do like and share the article also comment down the queries (if any).
We’ll be happy to help!