Why proper financial planning is required?

The first thing we have to keep in mind that “We should be True To our self And Keep a Simple.”

Even though death and taxes are the only guarantees in life, a proper investment plan should drastically improve your odds of long-term success. However, it is unlikely that you will stick to your plan unless it fits your personality and you truly believe in it. Some investors consider the term “trader” a four-letter word. It’s just not in their DNA to actively trade their investment capital. On the other hand, some investors classify a position that they hold overnight as “long-term.” There are no right or wrong answers when it comes to one’s investment beliefs and investment plans will be as unique as the investors themselves. That said, your plan should only include strategies and time frames that you are comfortable executing. Be honest with yourself!

Financial planning helps you determine your short and long-term financial goals and create a balanced plan to meet those goals.

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The right investment should satisfy the following basic principles of investments: 

1. Safety 

2. Liquidity

 3. Risk level 

4. Transparency 

5. Return on investment

 

6. Exit route

Investment Planning also helps you to decide upon the right investment strategy. Besides your individual requirement, your investment strategy would also depend upon your age, personal circumstances and your risk appetite. These aspects are typically taken care of during investment planning. Investment Planning further helps you to strike a balance between risk and returns. By prudent planning, it is possible to arrive at an optimal mix of risk and returns, which suits your particular needs and requirements.

Apart from financial goals, the most important thing in financial-planning is investment plan. An investment plan is important because it creates a framework for every investment activity in which you will participate. It states what you will invest in, how you will invest, why you will invest, what percentage of your money you will invest, and so on. In short, your investment plan significantly affects your investment returns. Frame a investment plan well and then follow it carefully. Your investment plan is a detailed description of all the major components of your investment strategy. It will help you to do the following:Represent yourself. It explains your personal investment characteristics, such as your risk tolerance and your personal constraints, and how those relate to your asset allocation and targets.

Articulate what you will and will not do. This plan clearly states what you will and will not invest in and how you will invest, and also includes investment guidelines that will help you invest your money wisely and achieve your goals.

Provide an investment framework and guidelines for making wise investment choices. If you clearly think through and plan how you will invest now that you have few assets (and are not influenced by "fear and greed"), it will give you an investment framework and guidelines to help you reason through decisions which could have a major impact on future financial goals and retirement. If followed carefully, it will help you avoid poor investment decisions that could have major repercussions for your financial life, but only if you follow the plan.

You can place yourself in a great position, if you frame a good financial plan. It is normal and human to become isolated and depressed when we see our investments going down and there seems to be no answer. No matter, with all that is going on with the economy, there is always opportunity's in the #investment world. Even if the market is going up, down, or sideways, there is always money to be made.