Investment Planning

Chart 1: Steps of Financial Planning

Define current financial state and financial goals
Individuals must clearly understand their current financial state which will give them an idea about their earnings and expenses. This analysis will reveal the annual cost of living and indicate the savings (income less expenses) or surplus money available for investment. After getting an idea about the current financial standing, investors must analyse the financial needs and goals which will help them to understand what they hope to attain. Commonly observed goals include buying a house, funding child's education, retirement planning, etc. The process doesn't end in just identifying the needs and goals but also find out the resources and the time frame required to fulfill them. Any financial need or goal would translate into determining the tenure of the investment i.e. short-term (< 1 year), medium-term (1 - 5 years) and long-term (> 5 years).

Analyse the risk profile
Analysing an individual's risk profile is an important component of financial planning as the asset

  • Market Overview by
    Mr. Navneet Munot,
    CIO, SBI Mutual Fund